Quarterly Financial Report

Polar Knowledge Canada

Quarterly Financial Report

For the quarter ended December 31, 2021

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 2021-2022 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 which 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 2021-2022 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 2021-2022 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, 2021, POLAR had total annual authorities of $ 33.3 million. Presented in Graph 1 below are the year-to-date budgetary authorities and expenditures for the current and prior year. For more details, refer to the Statement of Authorities.

Graph 1: Comparison of budgetary authorities and expenditures for the third quarter ended December 31, 2021, and December 31, 2020.

This graph is described in the following paragraph

POLAR expended $19.05 million (57% of total authorities available for use), including Employee Benefit Plan (EBP) year-to-date, compared to 47% in the same period of the prior year. The expenses were allocated mostly to personnel expenditures in the amount of $7.477 million, accounting for 39% of total expenditures and transfer payments in the amount of $5.017 million, accounting for 26% of total expenditures. The remaining $6.556 million primarily includes repair and maintenance services, professional and special services, transportation and communications, as well as 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, 2021, the total budgetary authorities available for use for the year were $33.3 million, an increase of $0.827 million compared to the prior year. This increase is mainly due to the authority to spend funds received through the conduct of its operations under section 6(2) of the Canadian High Arctic Research Station Act.

Significant Changes to Expenditures

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

Expenditures for the Quarter

Third quarter budgetary expenditures increased from $4.9 million in 2021-22 to $6.5 million in 2021-22. This increase of $1.6 million is largely due to the resumption of activities, which had been limited since the start of the COVID-19 pandemic as well as variances associated with the following:

Year to date

In addition to the quarterly details, there was a decrease of $167k in professional and special services expenses compared to the previous year. This variation results from the completion of cybersecurity and IT security work in 2020-21.

Risks and Uncertainties

POLAR has identified key risks to the achievement of results related to its core responsibility. These risks and measures to mitigate them are as follows:

Relationship and Reputational Risks

The majority of POLAR's operations and planned activities rely on collaboration and partnerships with other federal organizations, northern and Indigenous organizations and communities, and academia. These relationships include specific obligations outlined in treaties and self-government agreements; signed memoranda of understanding with Indigenous organizations; service agreements with other federal organizations; and others.

There is a risk that POLAR will be unable to complete planned activities due to internal capacity challenges or dependency on inputs from other organizations over which POLAR has limited control. Should this risk materialize, important partners, particularly Indigenous groups and communities, may perceive these delays as POLAR not fulfilling its commitments.

POLAR will mitigate these relationship and reputational risks by:

Pandemic-Related Risks

In 2020-21, travel-related restrictions and other pandemic health and safety measures significantly impacted POLAR's planned activities, essentially cancelling the 2020 field season, and closing the CHARS campus and facilities to the public. There is a risk that ongoing health and safety measures, including travel restrictions, will prevent POLAR from completing activities or fulfilling commitments planned for 2021-22.

POLAR will mitigate this risk by:

Significant Changes in Relation to Operations, Personnel and Programs

The continued evolution of pandemic-related restrictions has created ambiguity in the timing of departmental activities. While some activities resumed in in 2021-22, additional restrictions were imposed near the end of Q3. POLAR will monitor the situation while adhering to public health guidelines.

Approval by Senior Officials

Approved by:

STATEMENT OF AUTHORITIES (unaudited)

(In thousands of dollars) Fiscal year 2021-2022 Fiscal year 2020-2021
Total available for use for the year ending March 31, 2022* Used during the quarter ended December 31, 2021 Year to date used at quarter end 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
Vote 1 - Net operating expenditures 30,844 6,033 17,757 30,749 4,442 13,980
Budgetary statutory authorities 2,456 431 1,293 1,724 431 1,293
Total Budgetary authorities 33,300 6,464 19,050 32,473 4,873 15,273

* 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 2021-2022 Fiscal year 2020-2021
Planned expenditures for the year ending March 31, 2022 Expended during the quarter ended December 31, 2021 Year to date used at quarter end Planned expenditures for the year ending March 31, 2021 Expended during the quarter ended December 31, 2020 Year to date used at quarter end
Expenditures
Personnel 11,560 2,714 7,477 11,839 2,315 6,852
Transportation and communications 2,215 668 1,343 1,945 281 859
Information 344 29 67 375 41 146
Professional and special services 3,159 383 1,144 2,939 358 1,311
Rentals 1,309 333 953 1,208 231 773
Repair and maintenance 3,965 467 1,914 2,676 654 1,653
Utilities, materials and supplies 1,753 355 867 2,130 426 845
Acquisition of machinery and equipment 1,144 31 269 1,517 41 78
Transfer payments 7,796 1,484 5,017 7,796 527 2,760
Other subsidies and payments 55 - (1) 48 (1) (4)
Total Budgetary expenditures 33,300 6,464 19,050 32,473 4,873 15,273
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