Quarterly Financial Report

For the quarter ended December 31, 2015

Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. It should be read in conjunction with the 2015-16 Main Estimates, Supplementary Estimates A, 2015-16 and previous interim reports for the current year. This quarterly report has not been subject to an external audit or review.

Polar Knowledge Canada (POLAR) was created by the Canadian High Arctic Research Act and came into force by Order in Council on June 1, 2015. The purpose of POLAR is to advance knowledge of the Canadian Arctic in order to improve economic opportunities; environmental stewardship and the quality of life of its residents and all other Canadians; promote the development and dissemination of knowledge of the other circumpolar regions, including the Antarctic; strengthen Canada’s leadership on Arctic issues, and establish a hub for scientific research in the Canadian Arctic.

To find further information on the organization, interested parties can visit the Web site at the following address: https://www.canada.ca/en/polar-knowledge.html

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the department's spending authorities granted by Parliament and those used by the department consistent with the Main Estimates and Supplementary Estimates for the 2015-2016 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

POLAR uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of Fiscal Quarter and Fiscal Year-to-date (YTD) Results

POLAR’s financial structure is composed of voted program authorities and statutory authorities for contributions to employee benefit plans.

As POLAR was established on June 1, 2015, there were no authorities or expenditures in the previous fiscal year (2014-15); therefore, no variances can be reported in the comparison of results.

For the period ending December 31, 2015, POLAR had total authorities of $9.3 million. Presented in Chart 1 below are budgetary authorities and expenditures by the third quarter of 2015-16. For more details, refer to the Statement of Authorities.

Chart 1: Third Quarter Expenditures Compared to Annual Authorities

Chart 1: Third Quarter Expenditures Compared to Annual Authorities
Chart Description: For the period ending December 31, 2015, POLAR had total authorities of $9.3 million while expenses were $3.2 million in the first three quarters of fiscal year 2015-16.

POLAR incurred a total of $3.2 million in expenditures in the first three quarters. This represents approximately 34% of the total available authorities. The expenses of $3.2 million were allocated mostly to personnel expenditures and transfers for the amounts of $1.2 million and $1.1 million respectively, totalling 72% of total expenditure. The remaining 28% primarily comprises expenses for transport and communications, professional and special services and acquisition of machinery and equipment. Refer to the Departmental Budgetary Expenditures by Standard Object for more details.

Risks and Uncertainties

During the establishment of POLAR, four key risks and responses have been identified.

There is a low risk that POLAR will not have the requisite experienced human resources to establish the new departmental corporation and deliver programming successfully as an independent organization. This risk will be mitigated by the fact that the initial POLAR staff are experienced employees from the CPC who have been managing programs that have been transferred to POLAR. The Canadian Polar Commission (CPC) was operating as an independent departmental corporation for 24 years and all of its experience will be used. To ensure that POLAR has the capacity to run an effective, accountable organization from the beginning, key positions such as that of Chief Financial Officer were filled in early 2015 and later senior corporate positions.

There is also a low risk that the establishment of POLAR as a distinct organization and merging the CPC with it will require careful timing and management to ensure there are no delays to program delivery. The programs operated by the CPC and Indigenous and Northern Affairs, which have been, transferred to POLAR support polar researchers who undertake their research in the summer months. Delays in funding to recipients could disrupt research plans and/or the ability of recipients to deliver results as intended with attendant negative impacts on POLAR’s reputation as a new organization. POLAR will ensure continuity in program delivery by assuring that allocated funding to recipients will be delivered in a timely manner, thereby mitigating this risk.

Furthermore, there is a low risk that POLAR will not adequately manage stakeholder expectations. Buy-in of stakeholders is essential to maintaining the relevancy of POLAR’s work, as well as opportunities for collaborations and partnerships. The risk will be mitigated through POLAR’s continued engagement and consultation of stakeholders on an ongoing basis. Among POLAR’s engagement activities, multi-stakeholder advisory committees will be struck to help develop science and technology plans/priorities and review applications received in response to calls for proposals.

Lastly, POLAR faces a medium risk of not being able to attract and retain scientific and technical staff to work in Cambridge Bay, a small and remote community that experiences long winters and harsh weather conditions. Recruiting highly qualified staff needed for the CHARS science and technology activities may be challenging over the long term. Staffing approaches will include actively pursuing Northerners as well as scientific and professional employees to work at CHARS. Northerners are familiar with living in a Northern environment and often have family ties in the region. To date, there has been significant interest expressed by residents of Cambridge Bay and Canadians in the science and technology realm to work at CHARS. Community outreach targeting youth will also play an important role in promoting science and technology as viable northern career paths.

Significant Changes in Relation to Operations, Personnel and Programs

There have been no significant changes to programs or structure since POLAR was established on June 1, 2015.

Approved by:


David J. Scott, Ph.D.
President and CEO


Julie Brunet
Director of Corporate Service and Chief Financial Officer

Statement of authorities(unaudited)

(in dollars)

Fiscal year 2015-2016
Total available for use for the year ending March 31, 2016 * Used during the quarter ended December 31, 2015 Year-to-date used at quarter-end
Vote 1 – Program Expenditures 9,223,340 2,864,668 3,128,372
Statutory authorities 116,623 29,156 87,467
Total authorities 9,339,963 2,893,824 3,215,839

* Includes only Authorities available for use and granted by Parliament at quarter-end

Departmental budgetary expenditures by Standard Object(unaudited)

(in dollars)

Fiscal year 2015-2016
Planned expenditures for the year ending March 31, 2016 Expended during the quarter ended December 31, 2015 (Note 1) Year-to-date used at quarter-end
Expenditures:
Personnel 2,860,996 1,142,696 1,202,611
Transportation and communications 1,287,495 307,477 456,762
Information 258,196 21,889 51,556
Professional and special services 1,840,964 183,888 227,825
Rentals 358,287 28,402 31,606
Repair and maintenance 101,583 109 316
Utilities, materials and supplies 221,180 37,578 44,165
Acquisition of machinery and equipment 468,386 64,334 93,526
Transfer payments 1,892,972 1,097,507 1,097,507
Other subsidies and payments 49,905 9,944 9,965
Total net budgetary expenditures 9,339,963 2,893,824 3,215,839
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