Quarterly Financial Report

Polar Knowledge Canada
Quarterly Financial Report
For the quarter ended December 31, 2020

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 2020-21 Main Estimates. 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 2020-21 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 2020-21 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, 2020, POLAR had total annual authorities of $32.5 million. Presented in Graph 1 below are the budgetary authorities and expenditures for the first three quarters of 2020-2021 et 2019-2020. For more details, refer to the Statement of Authorities.

Graph 1: Comparison of budgetary authorities and expenditures for the quarter ended December 31, 2020, and December 31, 2019
Graph 1

POLAR incurred a total of $4.9 million in expenditures in the third quarter and $15.3 million year to date, representing approximately 47% of the total available annual authorities. The expenses were allocated mostly to personnel and transfer payments, for amounts of $6.9 million and $2.8 million respectively, accounting for 45% and 18% of the total on a year to date basis. The remaining 37% primarily consists of expenses for repairs and maintenance, professional and special services, transportation and communications, rentals and utilities, materials and supplies. 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, 2020, the total authorities available for use for the year were $32.5 million. The reduction is primarily the result of additional funding received in 2019-2020 budget to cover the initial operating costs of the Canadian High Arctic Research Station campus, which officially opened on August 21, 2019. In addition, following a reallocation between operating funds and personnel funds, a reduction in budgetary authorities was applied in order to meet our obligations related to the employee benefit plan.

Significant Changes to Expenditures

(Please refer to the Departmental Budgetary Expenditures by Standard Object table)

Expenditures for the Quarter

Third quarter budgetary expenditures decreased from $5.4 million in 2019-20 to $4.9 million in 2020-21. This decrease of $0.5 million consists of variances associated with the following:

  • a decrease of $ 447K in transportation and communications due to travel restrictions imposed by the COVID-19 pandemic.

Expenditures year to date

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

  • Compared to the same period last year, in addition to the reduction of $879K for transport and communications, there was a decrease of $2.3 million for transfer payments as the COVID-19 pandemic continues to impact recipients' ability to travel and undertake field research in the North. In addition, expenses for the acquisition of machinery and equipment were higher by $383K during the previous fiscal year to prepare all sections of the campus prior to its official opening.

Risks and Uncertainties

Community buy-in, Pan-northern delivery, Inuit representation in POLAR positions as well as staff recruitment and retention remain key risks to POLAR's achievement of results related to its core responsibility. Furthermore, the COVID-19 pandemic is also creating challenges for POLAR in fiscal year 2020-2021 and, potentially, beyond. Multiple efforts are deployed in order to try to mitigate these risks.

Northern communities may not always see the direct benefits of activities undertaken by POLAR. POLAR is seeking to alleviate this risk through community outreach and engagement activities, by involving communities in projects, by developing local capacity as well as fostering an interest in science & technology in northern youth.

POLAR implemented the POLAR-specific Inuit Employment Plan (IEP) in order to achieve its obligation under the Nunavut Agreement to obtain 85% representation of Inuit across job groups and levels. Additionally, POLAR continues to support Pilimmaksaivik in the development and implementation of a whole-of-government approach to Inuit employment and training. To attract and retain scientific and technical staff to work in Cambridge Bay, POLAR targets vacant positions towards Nunavut Inuit and both early and late career scientists and personnel.

The COVID-19 pandemic could significantly impact POLAR’s program delivery. Research in the North relies heavily on the ability to travel to remote locations in a limited field season and engagement activities have historically taken the form of in-person gatherings which are currently not possible. Although POLAR is taking steps to alleviate these impacts, there is still a high level of uncertainty. POLAR will continue to monitor the situation and adapt its work accordingly.

Significant Changes in Relation to Operations, Personnel and Programs

The Minister of Northern Affairs, the Honourable Daniel Vandal, announced the appointment of a new President & CEO of Polar Knowledge Canada, Ms. Jennifer C. Hubbard, and four appointments to the organization's Board of Directors, including Mr. Joe Adla Kunuk as Chairperson as well as Dr. Karen Barnes, Ms. Kimberly Fairman, and Ms. Jacqueline Pepper-Journal as Board members.

The onset of the COVID-19 pandemic has had a negative impact on the planned delivery of POLAR's transfer payment programs in 2020-21. Due to travel and other restrictions imposed related to the pandemic, a portion of the transfer payment agreements POLAR anticipated entering this year could not be completed.

Approval by Senior Officials

Approved by:

________________________
Jennifer C. Hubbard, President & Chief Executive Officer
Ottawa, Canada

________________________
Renée McCarter, A/Executive Director, Corporate Services & Chief Financial Officer
Ottawa, Canada

Statement of Authorities (unaudited)

(in thousands of dollars)

Fiscal year 2020-2021 Fiscal year 2019-2020
Total available for use for the year ending March 31, 2021* Used during the quarter ended December 31, 2020 Year to date used at quarter end Total available for use for the year ending March 31, 2020 Used during the quarter ended December 31, 2019 Year to date used at quarter end
Vote 1 - Net operating expenditures 30,749 4,442 13,980 32,794 5,100 18,257
Budgetary statutory authorities 1,724 431 1,293 1,098 274 823
Total Budgetary authorities 32,473 4,873 15,273 33,892 5,374 19,080

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

Departmental budgetary expenditures by Standard Object (unaudited)

(in thousands of dollars)

Fiscal year 2020-2021 Fiscal year 2019-2020
Planned expenditures for the year ending March 31, 2021 Expended during the quarter ended December 31, 2020 Year to date used at quarter end Planned expenditures for the year ending March 31, 2020 Expended during the quarter ended December 31, 2019 Year to date used at quarter end
Expenditures:
Personnel 11,839 2,315 6,852 10,513 2,526 6,894
Transportation and communications 1,945 281 859 2,435 728 1,738
Information 375 41 146 556 36 137
Professional and special services 2,939 358 1,311 8,330 532 1,599
Rentals 1,208 231 773 1,168 250 754
Repair and maintenance 2,676 654 1,653 569 590 1,554
Utilities, materials and supplies 2,130 426 845 2,512 364 899
Acquisition of machinery and equipment 1,517 41 78 2,013 168 461
Transfer payments 7,796 527 2,760 5,796 181 5,047
Other subsidies and payments 48 (1) (4) - (1) (3)
Total budgetary expenditures 32,473 4,873 15,273 33,892 5,374 19,080
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