Quarterly Financial Report

Polar Knowledge Canada
Quarterly Financial Report
For the quarter ended September 30, 2021 (revised)

Erratum 1:

Date: November 22, 2022

Location: Departmental budgetary expenditures by Standard Object (unaudited), Planned expenditures for the year ending March 31, 2022, Amounts reported in Personnel, Repairs and Maintenance and Other Subsidies and Payments have been adjusted.

Rationale for the revision: Original amounts reported were not correct

Erratum 2:

Date: November 22, 2022

Location: Throughout the document, various corrections to grammar and minor wording.

Rationale for the revision: Original report was not correct

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 2021-22 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 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 2021-22 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 September 30, 2021, POLAR had total annual authorities of $ 33.3 million. Presented in Graph 1 below are the budgetary authorities and expenditures for the first two quarters 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 second quarter ended September 30, 2021, and September 30, 2020.
Graph 1

POLAR expended $ 12.6 million (38% of total authorities available for use), including Employee Benefit Plan (EBP), in the first two quarters of 2021-22 compared to $ 10.4 million in the same quarters of 2020-21. The expenses were allocated mostly to personnel expenditures in the amount of $4.8 million, accounting for 38% of total expenditures and transfer payments in the amount of $3.5 million, accounting for 28% of total expenditures. The remaining $ 4.3 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 September 30, 2021, the total budgetary authorities available for use for the year were $ 33.3 million, an increase of $ 8.2 million compared to the prior year. This increase is due to receiving full supply of the Main Estimates of 2021-22 as opposed to partial supply of 2020-21 as a result of the extension into the Fall of the Parliamentary supply study period in 2020-21 because of the Covid-19 pandemic.

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 $ 4.6 million in 2020-21 to $ 8.3 million in 2021-22. This increase of $ 3.7 million is largely due to the gradual resumption of activities, which had been limited since the start of the COVID-19 pandemic as well as variances associated with the following:

  • in the second quarter of 2021-22, transfer payment spending increased by $ 2.3 million due to the entry into force of new funding agreements;
  • an increase of $ 402k in repair and maintenance services due to the increase in prices related to the property management contract;
  • salary expenses increased by $ 323k due to the staffing of many positions since the start of the fiscal year.

Year to date

In addition to the quarterly details, there was a decrease of $ 192k 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:

  • 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 lifting of certain restrictions has allowed the resumption of several activities. Despite the renewed ability to travel and conduct in-person activities and the reopening of the Campus to researchers and visitors, the COVID-19 pandemic continues to create challenges. POLAR will monitor the situation while adhering to public health guidelines.

Approval by Senior Officials

Approved by:

________________________
Jennifer C. Hubbard, President & Chief Executive Officer
Cambridge Bay, Canada

________________________
Meghan Provost, Executive Director, Corporate Services & Chief Financial Officer
Ottawa, Canada

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 September 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 September 30, 2020 Year to date used at quarter end
Vote 1 - Net operating expenditures 30,844 7,840 11,724 23,386 4,210 9,538
Budgetary statutory authorities 2,456 431 862 1,724 431 862
Total Budgetary authorities 33,300 8,271 12,586 25,110 4,641 10,400

*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 September 30, 2021 Year to date used at quarter end Planned expenditures for the year ending March 31, 2021 Expended during the quarter ended September 30, 2020 Year to date used at quarter end
Expenditures:
Personnel 11,560 2,540 4,763 11,839 2,217 4,537
Transportation and communications 2,215 383 675 3,206 288 578
Information 344 16 38 219 14 105
Professional and special services 3,159 625 761 1,358 407 953
Rentals 1,309 394 620 1,329 292 542
Repair and maintenance 3,965 999 1,447 2,661 597 999
Utilities, materials and supplies 1,753 352 512 2,135 269 419
Acquisition of machinery and equipment 1,144 151 238 633 27 37
Transfer payments 7,796 2,812 3,533 7,796 533 2,233
Other subsidies and payments 55 (1) (1) - (3) (3)
Total budgetary expenditures 33,300 8,271 12,586 31,176 4,641 10,400
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