Quarterly Financial Report
POLAR KNOWLEDGE CANADA
Quarterly Financial Report
For the quarter ended September 30, 2019
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 2019-20 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 2019-20 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 2019-20 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 September 30, 2019, POLAR had total annual authorities of $33.9 million. Presented in Graph 1 below are the budgetary authorities and expenditures for the second quarter of 2019-20 and 2018-19. For more details, refer to the Statement of Authorities.
Graph 1: Comparison of budgetary authorities and expenditures for the second quarter ended September 30, 2019, and September 30, 2018.
POLAR incurred a total of $5.5 million in expenditures in the second quarter and $13.7M year to date, representing approximately 40% of the total available annual authorities. The expenses were allocated mostly to transfer payments and personnel, for amounts of $4.9 million and $4.3 million respectively, accounting for 36% and 32% of the total on a year to date basis. The remaining 32% primarily consists of expenses for transportation and communications, professional and special services 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 September 30, 2019, the total budgetary authorities available for use for the year increased from $29.7 million in 2018-19 to $33.9 million in 2019-20. This increase in funding is primarily attributable to the transfer of operational responsibilities for the campus from Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) to POLAR. The funding will ensure the proper and effective operation and maintenance of the campus and will enable world-class cutting-edge research strengthening Canadian leadership in polar science and technology.
Significant Changes to Expenditures
(Please refer to the Departmental Budgetary Expenditures by Standard Object table)
Expenditures for the Quarter
Second quarter budgetary expenditures increased from $4.1 million in 2018-19 to $5.5 million in 2019-20. This increase of $1.4 million consists of variances associated with the following:
- a decrease of $ 341K in transfer payments mainly due to the timing of the approval of contribution agreements and payments
- an increase of $ 238K for salaries and benefits due to an increase in number of staff
- an increase of $ 255K for acquisition of machinery and equipment in order to prepare all sections of the campus prior to its official opening
- an increase of $ 926K for repair and maintenance following the award of POLAR's first contract for the repair and maintenance of the campus
- an increase of $ 394K for utilities, materials and supplies due to the transfer of housing units from CIRNAC to POLAR
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, there was an increase of $650K for professional and special services resulting from the growth of the organization and the opening of the campus. Mainly, services have been outsourced to prepare the campus for growing needs in information technology, information management and transfer of data.
Risks and Uncertainties
As a new agency, there are a number of risks outside of POLAR’s control that could 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 remains a possible risk given the opening of the Canadian High Arctic Research Station (CHARS) campus in Cambridge Bay, which serves as the headquarters of POLAR. 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 the objectives of the pan-northern Science and Technology (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. Additionally, POLAR has developed the POLAR-specific Inuit Employment Plan (IEP) 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.
Addressing the risks highlighted is important to the agency as successful mitigation will ultimately allow POLAR to implement its mandate and meet stakeholder expectations. While the opening of the CHARS campus on August 21, 2019 marked a major milestone for the agency, both POLAR and the Cambridge Bay community continue to be in a period of transition. POLAR remains commited to communicating the potential positive impact of the science and knowledge generated by the S&T program that will help Canadians better understand fundamental changes occurring in the Northern environment. Additionally, 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
The construction of the CHARS campus is nearing completion. In the meantime, as noted above, the official opening took place on August 21, 2019. Relocation of employees to Cambridge Bay has been on-going since 2017 and will continue as positions are staffed.
There have been no other significant changes to the programs or structure of POLAR since its establishment on June 1, 2015.
Approval by Senior Officials
David J. Scott, Ph.D., President & Chief Executive Officer
November 29, 2019
Julie Laghi, CPA, CMA, Executive Director and Chief Financial Officer
November 29, 2019
Statement of Authorities (unaudited)
(in thousands of dollars)
|Fiscal year 2019-20||Fiscal year 2018-19|
|Total available for use for the year ending March 31, 2020 *||Used during the quarter ended September 30, 2019||Year to date used at quarter-end||Total available for use for the year ending March 31, 2019 *||Used during the quarter ended September 30, 2018||Year to date used at quarter-end|
|Vote 1 – Net operating expenditures||32,794||5,268||13,157||28,638||3,868||10,321|
|Budgetary statutory authorities||1,098||275||549||1,017||254||509|
|Total Budgetary authorities||33,892||5,543||13,706||29,655||4,122||10,830|
*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 2019-20||Fiscal year 2018-19|
|Planned expenditures for the year ending March 31, 2020||Expended during the quarter ended September 30, 2019||Year to date used at quarter-end||Planned expenditures for the year ending March 31, 2019||Expended during the quarter ended September 30, 2018||Year to date used at quarter-end|
|Transportation and communications||2,435||726||1,010||2,729||814||1,012|
|Professional and special services||8,330||186||1,067||5,699||345||417|
|Repair and maintenance||569||928||964||309||2||2|
|Utilities, materials, and supplies||2,512||462||535||701||68||77|
|Acquisition of machinery and equipment||2,013||279||293||3,093||24||29|
|Other subsidies and payments||-||(2)||(2)||-||-||-|
|Total budgetary expenditures||33,892||5,543||13,706||29,655||4,122||10,830|
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