Quarterly Financial Report
Polar Knowledge Canada
Quarterly Financial Report
For the quarter ended June 30, 2021
Statement Outlining Results, Risks and Significant Changes in Operations, Personnel and Programs
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 2021-22 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 2021-22 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 2021-22 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, 2021, POLAR had total annual authorities of $ 32.2 million. Presented in Graph 1 below are the budgetary authorities and expenditures for the first quarter of 2021-22 and 2020-21. For more details, refer to the Statement of Authorities.
Graph 1: Comparison of budgetary authorities and expenditures for the first quarter ended June 30, 2021, and June 30, 2020.
POLAR expended $ 4.3 million (13% of total authorities available for use), including Employee Benefit Plan (EBP), in the first quarter of 2021-22 compared to $ 5.8 million in the same quarter of 2020-21. A significant part of the expenditures relates to personnel, and totals $ 2.2 million (52% of total expenditures). The remining $ 2.1 million primarily includes transfer payments, repair and maintenance services, and transportation and communications costs. 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, 2021, the total budgetary authorities available for use for the year were $ 32.2 million. This increase in funding is maily due to the 2020-21 Main Estimates which were not approved by parliament because of restrictions caused by the COVID-19 pandemic.
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 $ 5.8 million in 2020-21 to $ 4.3 million in 2021-22. This decrease of $ 1.5 million mainly consists of variances associated with the following:
- a decrease of $ 980K in transfer payments is due to the completion of a number of multi-year funding agreements in fiscal year 2020-21. In addition, the majority of new agreements for 2021-22 are expected to come into effect in September 2021;
- a decrease of $ 410K for professional and special services following the completion of work in cyber and IT security in 2020-21 and a postponement in the execution of a project started in the first quarter of 2020-2021;
- a decrease of $ 97K for salaries and benefits due to departures of employees who will be replaced in the future;
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:
- Involving and supporting community participation early, and in every stage of projects that impact them;
- Communicating POLAR’s commitments under memoranda of understanding with Indigenous partners, and taking meaningful action to implement these commitments; and
- Addressing internal capacity challenges through timely recruitment including the ongoing implementation of its Inuit Employment Plan to attract, develop and retain talent.
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:
- Supporting the implementation of projects and initiatives by developing and applying contingency measures, such as alternative program delivery options including virtual online seminars and workshops;
- Planning knowledge management and engagement activities and events in a way that they can be safely performed under pandemic restrictions (e.g., virtual events);
- Engaging local expertise and experience (e.g., the Hunters and Trappers Organization, Nunavut residents, etc.) to support to POLAR’s activities (such as performing ongoing monitoring of changes in the environment); and,
- Updating partners and stakeholders as disruptions affect program initiatives, commitments and planned results.
Significant Changes in Relation to Operations, Personnel and Programs
The COVID-19 pandemic continues to 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.
Approval by Senior Officials
Jennifer C. Hubbard, President & Chief Executive Officer
Meghan Provost, Executive Director, Corporate Services & Chief Financial Officer
Statement of Authorities (unaudited)
(in thousands of dollars)
|Fiscal year 2021-2022||Fiscal year 2019-2020|
|Total available for use for the year ending March 31, 2022*||Used during the quarter ended June 30, 2021||Year to date used at quarter end||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|
|Vote 1 - Net operating expenditures||29,761||3,884||3,884||22,090||5,328||5,328|
|Budgetary statutory authorities||2,456||431||431||1,724||431||431|
|Total Budgetary authorities||32,217||4,315||4,315||23,814||5,759||5,759|
* 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 June 30, 2021||Year to date used at quarter end||Planned expenditures for the year ending March 31, 2021||Expended during the quarter ended June 30, 2020||Year to date used at quarter end|
|Transportation and communications||1,848||292||292||3,206||290||290|
|Professional and special services||2,495||136||136||1,358||546||546|
|Repair and maintenance||2,847||448||448||2,661||402||402|
|Utilities, materials and supplies||1,817||160||160||2,135||150||150|
|Acquisition of machinery and equipment||213||87||87||633||10||10|
|Other subsidies and payments||55||-||-||-||-||-|
|Total budgetary expenditures||32,217||4,315||4,315||31,178||5,759||5,759|
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