Quarterly Financial Report

For the quarter ended June 30, 2017

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 (A).  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. The purpose of POLAR 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 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 June 30, 2017, POLAR had total annual authorities of $21.6 million.  Presented in Graph 1 below are the budgetary authorities and expenditures for the first quarter 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 first quarter ended June 30, 2017, and June 30, 2016.

Graph 1: Comparison of budgetary authorities and expenditures for the first quarter ended June 30, 2017, and June 30, 2016.

POLAR incurred a total of $1.7 million in expenditures in the first quarter, representing approximately 8% of the total available annual authorities. The expenses were allocated mostly to personnel expenditures, for the amounts of $1.0 million, accounting for 59% of the total. The remaining 41% primarily consists of expenses for professional and special services, transfers payments and expenses for transport and communications. 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 June 30, 2017, the total budgetary authorities available for use for the year increased from $19.5 million in 2016-17 to $21.6 million in 2017-18.  The net increase is mainly due to the carry forward from 2016-17 of $2.5 million to meet the commitments related to contribution agreements.

Significant Changes to Expenditures

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

Expenditures for the Quarter

First quarter budgetary expenditures decreased from $2.2 million in 2016-17 to $1.7 million in 2017-18. This decrease of $0.5 million consists of variances associated with the following:

  • an increase of $ 264K for salaries and benefits due to an increase in number of staff;
  • an increase of $ 134K due to a lower need for temporary help services and an increase in scientific research services;
  • A decrease in transfer payments of $ 870K mainly due to the timing of the approval of contribution agreements and payments.

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

There has been no significant change to the programs or structure since POLAR was established on June 1, 2015.

Approval by Senior Officials

Approved by:


Original signed by

David J. Scott, Ph.D., President & Chief Executive Officer
Ottawa, Canada
August 25, 2017


Original signed by

Martin Turpin, Director and Chief Financial Officer
Finance and Facilities Management
Cambridge Bay, Canada
August 25, 2017

Statement of Authorities (unaudited)

(in dollars)
Fiscal year 2017-18 Fiscal year 2016-17
  Total available for use for the year ending
March 31, 2018 *
Used during the quarter ended
June 30, 2017
Year to date used at quarter end   Total available for use for the year ending
March 31, 2017 *
Used during the quarter ended
June 30, 2016
Year to date used at quarter-end
Vote 1— Program expenditures 20,963,206 1,561,421 1,561,421 18,853,197 2,046,837 2,046,837
Budgetary statutory authorities 631,025 157,756 157,756 622,077 155,519 155,519
Total Budgetary authorities 21,594,231 1,719,177 1,719,177 19,475,274 2,202,356 2,202,356
* Includes only Authorities available for use and granted by Parliament at quarter-end.

Departmental Budgetary Expenditures by Standard Object (unaudited) 

(in dollars)
  Fiscal year 2017-18 Fiscal year 2016-17
Planned expenditures for the year ending March 31, 2018 Expended during the quarter ended
June 30, 2017
Year to date used at quarter end Planned expenditures for the year ending March 31, 2017 Expended during the quarter ended
June 30, 2016
Year to date used at quarter-end
Expenditures:
Personnel 4,650,293 1,017,543 1,017,543 4,238,802 753,202 753,202
Transportation and communications 2,273,017 126,666 126,666 1,981,970 120,707 120,707
Information 509,567 13,285 13,285 330,328 3,018 3,018
Professional and special services 1,672,362 341,731 341,731 1,651,642 207,668 207,668
Rentals 2,231,380 4,745 4,745 550,547 33,040 33,040
Repair and maintenance 7,475 576 576 55,055 119 119
Utilities, materials and supplies 156,981 7,818 7,818 440,438 7,159 7,159
Acquisition of machinery and equipment 109,638 4,277 4,277 495,492 1,443 1,443
Transfer payments 9,983,518 206,010 206,010 9,731,000 1,076,000 1,076,000
Other subsidies and payments 0 -3,474 -3,474 0 0 0
Total net budgetary expenditures 21,594,231 1,719,177 1,719,177 19,475,274 2,202,356 2,202,356
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