Quarterly Financial Report

Polar Knowledge Canada
Quarterly Financial Report
For the quarter ended June 30, 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 June 30, 2020, POLAR had total annual authorities of $23.8 million. Presented in Graph 1 below are the budgetary authorities and expenditures for the first quarter of 2020-21 and 2019-20. For more details, refer to the Statement of Authorities.

Graph 1: Comparison of budgetary authorities and expenditures for the first quarter ended June 30, 2020, and June 30, 2019.
Graph 1

POLAR incurred a total of $5.8 million in expenditures in the first quarter and $5.8 million year to date, representing approximately 24% of the total available annual authorities. The expenses were allocated mostly to personnel and transfer payments, for amounts of $2.3 million and $1.7 million respectively, accounting for 40% and 30% of the total on a year to date basis. The remaining 30% primarily consists of expenses for transportation and communications, professional and special services, rentals and repairs and maintenance. 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, 2020, the total budgetary authorities available for use for the year were of $23.8 million. This decrease in funding is due to the Main Estimates not having been approved by parliament because of restrictions caused by the Covid-19 pandemic. POLAR expects its full supply by December 2020.

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 $8.2 million in 2019-20 to $5.8 million in 2020-21. This decrease of $2.4 million consists of variances associated with the following:

  • an increase of $ 366K in repairs and maintenance is mainly due to a coding correction. In 2019-20, some costs for repairs and maintenance were incorrectly coded to professional and special services. There have been no significant variances for expenditures related to repairs and maintenance this fiscal year when compared to last fiscal year;
  • an increase of $ 5an increase of $ 200K in rentals is mainly due to the transfer of housing units from Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) to POLAR, and the addition of new housing units acquired since Q1 of FY 2019-20;
  • a decrease of $ 2.9M in transfer payments is mainly due to delays entering into funding agreements as the COVID-19 pandemic continues to impact recipients' ability to travel and undertake field research in the North;
  • an increase of $ 126K for salaries and benefits due to an increase in number of staff;
  • a decrease of $ 335K for professional and special services resulting from a coding correction and from services being managed internally in information management and data transfer; and
  • an increase of $ 77K for utilities, materials and supplies resulting from the transfer of housing units from Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) to POLAR, and the cost for utilities for new housing units acquired since Q1 of FY 2019-20.

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.

The inability to deliver on objectives of the Pan-northern science and technology program is another key risk for POLAR. Enhancing partnerships to conduct science and technology projects across the North and increasing cooperation between other federal departments are among the ways that POLAR will mitigate this risk.

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 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 into this year will likely be deferred to next year.

Approval by Senior Officials

Approved by:

________________________
Julie Laghi, CPA, CMA, A/President & Chief Executive Officer
Ottawa, Canada
August 27,2020

________________________
Julie Laghi, CPA, CMA, Executive Director Corporate Services & Chief Financial Officer
Corporate Services
Ottawa, Canada
August 27,2020

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 June 30, 2020 Year to date used at quarter end Total available for use for the year ending March 31, 2020 Used during the quarter ended June 30, 2019 Year to date used at quarter end
Vote 1 - Net operating expenditures 22,090 5,328 5,328 31,704 7,889 7,889
Budgetary statutory authorities 1,724 431 431 1,098 274 274
Total Budgetary authorities 23,814 5,759 5,759 32,802 8,163 8,163

*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 June 30, 2020 Year to date used at quarter end Planned expenditures for the year ending March 31, 2020 Expended during the quarter ended June 30, 2019 Year to date used at quarter end
Expenditures:
Personnel 11,839 2,320 2,320 9,423 2,194 2,194
Transportation and communications 3,206 290 290 2,435 284 284
Information 219 91 91 556 11 11
Professional and special services 1,358 546 546 8,330 881 881
Rentals 1,329 250 250 1,168 50 50
Repair and maintenance 2,661 402 402 569 36 36
Utilities, materials, and supplies 2,135 150 150 2,512 73 73
Acquisition of machinery and equipment 633 10 10 2,013 14 14
Transfer payments 7,796 1,700 1,700 5,796 4,620 4,620
Other subsidies and payments - - - - - -
Total budgetary expenditures 31,178 5,759 5,759 32,802 8,163 8,163
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