Quarterly Financial Report

Statement Outlining results, risks and significant changes in operations, personnel and programs

Introduction

This quarterly financial report has been prepared as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This report should be read in conjunction with the 2017-18 Main Estimates and Supplementary Estimates (B). This quarterly report has not been subject to an external audit or review.

Polar Knowledge Canada (POLAR) was created pursuant to the Canadian High Arctic Research Station Act and came into force on June 1, 2015. POLAR’s mandate is to advance knowledge of the Canadian Arctic 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.

Further information on the mandate, roles, responsibilities and programs of POLAR can be found by accessing the 2017-18 Main Estimates.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes POLAR's spending authorities granted by Parliament and those used by POLAR, consistent with the Main Estimates for the 2017-18 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 money 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

POLAR uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results 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.

For the period ending December 31, 2017, POLAR had total annual authorities of $22.3 million. Presented in Graph 1 below are the budgetary authorities and expenditures for the first three quarters of 2017-18 and 2016-17. For more details, refer to the Statement of Authorities.

Graph 1: Comparison of budgetary authorities and expenditures for the fiscal quarter ended December 31, 2017, and December 31, 2016.

POLAR incurred a total of $13.2 million in expenditures in the first three quarters, representing approximately 59% of the total available annual authorities. The expenses were allocated mostly to personnel expenditures in the amount of $3.9 million, accounting for 30% of the total and transfer payments in the amount of $6.5 million, accounting for 49% of the total. The remaining 21% mainly consists of expenses for professional and special services, transport and communications and rentals. Refer to the Departmental Budgetary Expenditures by Standard Object for more details.

Significant Changes to Authorities

(Please refer to the Statement of Authorities table)

As of December 31, 2017, the total budgetary authorities available for use for the year increased from $17.3 million in 2016-17 to $22.3 million in 2017-18. The net increase can be explained by the reprofilings from 2016-17 to 2017-18 of $2.5 million to meet the commitments related to contribution agreements, of $0.6 million from 2016-17 for the relocation of employees to our headquarters in Cambridge Bay and the reprofiling from 2017-18 to 2018-19 of $0.4 million to fulfill committed transfer payment agreements.

Significant Changes to Expenditures

Expenses for the quarter

At the end of the third Quarter, budgetary expenditures had increased by $2.0 million compared to the same period last year. Significant changes result primarily from the following:

  • An increase of $493 thousand for salaries and benefits is due to an increase in number of staff.
  • An increase of $520 thousand for transportation and communications is mainly due to the relocation of employees in Cambridge Bay as well as a Board of Directors and all-staff meeting in Ottawa.
  • Professional and special services decreased by $ 148 thousand mainly due to a decrease in Temporary Help Services.
  • An increase in transfer payments of $1.2 million mainly due to the timing of the approval of contribution agreements and payments.

Year to date

Supplementary significant changes from the previous year to date result primarily from the following:

  • Compared to the same period last year, there was an increase of $1.2 million for salaries and benefits due to an increase in employee staffing. There was also an increase of $4.8 million in transfer payments since the majority of agreements where approved and payments completed in this period.

Risks and Uncertainties

As a new agency, there are a number of risks outside of POLAR’s control that can potentially impact the achievement of planned results. Efforts are underway to try to mitigate these risks through sustained engagement, capacity building, funding programs, partnership development and staffing processes.

Community buy-in is one possible risk given the upcoming opening of the CHARS campus in Cambridge Bay, which will serve as the headquarters of POLAR. The internal conditions influencing this risk include the ongoing staffing process and relocation of employees to Nunavut, the recently launched Grants and Contributions competitive funding process and ongoing community engagement. Stakeholder expectations regarding the benefits derived from the CHARS campus are extremely high in terms of employment opportunities for local people, economic development in Nunavut, and support for local businesses and organizations. POLAR is seeking to mitigate this risk through outreach and engagement, hiring of local people, and support for education programs and science camps in Cambridge Bay. There are also expectations by other jurisdictions in Canada’s North regarding the ability of POLAR’s programs to have an impact in other areas of Canada (specifically Yukon, the Northwest Territories, Nunavik and Nunatsiavut) as well as the trickledown effect from having the CHARS campus as a “hub” for national and international science activities.

Inability to deliver on objectives of the pan-northern S&T Program is a specific risk for POLAR as a science-based agency. The scope of the S&T program is very broad and has increased expectations by partner organizations for POLAR to be fulfilling a world-class science function as well as a coordination role in Canada on Arctic and Antarctic science. The breadth and complexity of this work will make delivery a challenge with current resource levels. To mitigate this risk, POLAR is developing partnerships to help address gaps in capacity and science expertise. Partnership efforts include multiple stakeholders, such as federal government departments/agencies, northern organizations, territorial governments, academia, Indigenous organizations and international players.

Recruitment and retention of highly-qualified staff will be an ongoing risk for POLAR. Many factors, including the interest, availability and preparedness of Inuit for positions within POLAR, will have implications for POLAR’s obligations under the Nunavut Agreement to work towards 85% representation of Inuit across job groups and levels. Although POLAR will continue to give preference to job applicants who self-identify as Inuit under the Nunavut Agreement, increasing Inuit representation will be especially challenging given that there are science-specific classifications and post-graduate (M.Sc., Ph.D.) education requirements for many positions related to the S&T program. This risk is compounded by the fact that the CHARS campus is in a small Northern community with a limited local labour pool for science-focused positions. As a result, POLAR will continue to support Pilimmaksaivik in the development and implementation of a whole-of-government (WoG) approach to Inuit employment and training, and develop and implement a POLAR-specific Inuit Employment and Pre-employment Training Plan that supplements and leverages WoG initiatives. This includes continuing efforts to support long-term capacity building among youth in Nunavut, including through funding science camps and workshops.

It may be challenging to attract and retain scientific and technical staff to work in Cambridge Bay, therefore, measures will be implemented to attract early and late-career researchers for employment opportunities with POLAR, and promote POLAR and the CHARS campus to the Canadian academic community.

Addressing the risks highlighted is important to the agency as successful mitigation will ultimately allow POLAR to implement its mandate and meet stakeholder expectations. The upcoming opening of the CHARS campus will be a key transition period for the organization and for the Cambridge Bay community. In addition, the potential positive impact of the science and knowledge generated by the S&T program will help Canadians better understand fundamental changes occurring in the Northern environment Employment and training opportunities offered by POLAR in Cambridge Bay should also contribute positively to the economic development of the region.

Significant Changes in Relation to Operations, Personnel and Programs

Construction of the CHARS campus is nearing completion and the opening is scheduled for next fiscal year. Relocation of employees to Cambridge Bay has been ongoing throughout the year and will continue as new positions are staffed. Although new Public Account initiatives are being implemented, changes in structure will affect POLAR only in the new fiscal year. POLAR has no significant changes to its programs or structure since it was established on June 1, 2015.

Approval by Senior Officials

Approved by:

 

 

________________________
David J. Scott, Ph.D., President & Chief Executive Officer 
Ottawa, Canada
February 27, 2018

 

 

 

________________________
Martin Turpin, Director and Chief Financial Officer
Finance and Facilities Management
Cambridge Bay, Canada
February 27, 2018

Polar Knowledge Canada

Quarterly Financial Report

For the quarter ended December 31, 2017

Statement of Authorities (unaudited)

(in dollars)

Fiscal year 2017-2018 Fiscal year 2016-2017
Total available for use for the year ending March 31, 2018 * Used during the quarter ended December 31, 2017 Year to date used at quarter-end Total available for use for the year ending March 31, 2017 * Used during the quarter ended December 31, 2016 Year to date used at quarter-end
Vote 1 – Program expenditures 21,699,620 5,295,562 12,727,788 16,672,324 3,264,295 6,410,177
Budgetary statutory authorities 631,025 157,756 473,269 622,077 155,519 466,558
Total Budgetary authorities 22,330,645 5,453,318 13,201,057 17,294,401 3,419,814 6,876,735

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

 

 

Departmental budgetary expenditures by Standard Object (unaudited)

(in dollars)

Fiscal year 2017-2018 Fiscal year 2016-2017
Planned expenditures for the year ending March 31, 2018 Expended during the quarter ended December 31, 2017 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2017 Expended during the quarter ended December 31, 2016 Year to date used at quarter-end
Expenditures:
Personnel 6,639,825 1,450,590 3,917,043 4,238,802 967,615 2,764,284
Transportation and communications 2,276,008 749,158 1,273,320 1,981,970 228,683 894,131
Information 180,257 37,216 75,489 330,328 102,204 145,348
Professional and special services 1,858,933 80,894 757,252 1,644,642 258,580 694,490
Rentals 1,090,189 196,133 582,996 550,547 157,202 354,990
Repair and maintenance 35,000 625 1,871 55,055 5,500 5,619
Utilities, materials, and supplies 348,743 28,583 61,953 440,438 16,998 47,892
Acquisition of land, building, and works 0 0 0 362,645 20,280 254,279
Acquisition of machinery and equipment 266,321 8,842 28,844 495,492 17,843 30,793
Transfer payments 9,635,263 2,889,973 6,507,304 7,194,482 1,674,909 1,674,909
Other subsidies and payments 0 -696 -5015 0 0 0
Total net budgetary expenditures 22,330,534 5,453,318 13,201,057 17,294,401 3,419,814 6,876,735

 

 

 

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