Quarter ended December 31, 2022

Polar Knowledge Canada

Quarterly Financial Report

For the quarter ended December 31, 2022

Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act, in the form and manner prescribed by the Treasury Board. This quarterly financial report should be read in conjunction with the 2022-23 Main Estimates and Supplementary Estimates (B), 2022-23. This quarterly financial 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 2022-23 Departmental Plan.

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 and Supplementary Estimates for the 2022-23 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.

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 the fiscal quarter and fiscal year-to-date (YTD) results

The following graph provides a comparison of the total budgetary authorities and year to date expenditures for the third quarter of the current and previous fiscal years for POLAR’s combined operating and statutory authorities.

Budgetary Authorities and Budgetary Expenditures

Graph 1: Comparison of budgetary authorities and expenditures for the third quarter ended December 31, 2022, and December 31, 2021.

Significant Changes to Authorities

As reflected in the Statement of Authorities (Annex 1), for the period ending December 31, 2022, the total budgetary authorities available for use increased by $3.49 million (10.5%) for the current fiscal year compared to the prior year. This increase is due to $3.00 million in reprofiled funds from the previous year, $0.33 million in Personnel authorities due to pay increases, and $0.16 million increase in other statutory and program expenditures.

Significant Changes to Year-to-Date Expenditures

As reflected in the Departmental budgetary expenditures by Standard Object (Annex 2), at the end of the third quarter of 2022-23, total expenditures were $19.28 million, compared to $19.05 million reported for the same period in 2021-22, representing a slight increase of $0.23 million (1.2%).

Risks and Uncertainties

POLAR has identified key risks to the achievement of results related to its core responsibility, which are as follows:

Relationship and Reputational Risks – Much 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. As POLAR prepares to take over the custodianship of Canadian High Arctic Research Station infrastructure, this includes the risk of being unable to fully operationalize the research station without adequate long-term funding. Should this risk materialize, important partners, particularly Indigenous groups, and communities, may perceive POLAR as not fulfilling its commitments.

POLAR will mitigate these relationships and reputational risks by:

• Developing a multi-year Real Property Strategy, and defining and seeking long-term financial requirements to fully operationalize CHARS infrastructure; 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 – As the world moves past the crisis phase of the pandemic, there is becoming a more balanced and sustainable approach to the long-term management of COVID-19. However, with the reduction/removal of restrictions, there is a continued risk that increased health and safety measures could be reimplemented which could prevent POLAR from completing activities or fulfilling commitments planned for 2022-23.

Significant Changes in Relation to Operations, Personnel and Programs

POLAR continues to remain vigilant while embracing the lifting of restrictions related to COVID-19. Despite the renewed ability to travel and conduct in-person activities, and the reopening of Canadian High Arctic Research Station to researchers and visitors, the COVID-19 pandemic continues to create challenges notably as it relates to procurement and supply chain issues.

Approval by Senior Officials

Approved by,

The original version was signed by

• Jennifer C. Hubbard
  President & Chief Executive Officer
  Cambridge Bay, Canada
  February 19, 2023
• Suzanne Kerr, CPA, CGA
  Executive Director, Corporate Services & Chief Financial Officer
  Ottawa, Canada
  February 20, 2023

Annex 1

Statement of Authorities (unaudited)

(In thousands of dollars)	Fiscal year 2022-23			Fiscal year 2021-22
	Total available for use for the year ending March 31, 2023	Used during the quarter ended December 31, 2022	Year to date used at quarter end	Total available for use for the year ending March 31, 2022	Used during the quarter ended December 31, 2021	Year to date used at quarter end
Vote 1 - Net operating expenditures	34,313	6,619	17,966	30,844	6,033	17,757
Budgetary statutory authorities	2,479	438	1,312	2,456	431	1,293
Total Budgetary authorities	36,792	7,057	19,278	33,300	6,464	19,050

Annex 2

Departmental budgetary expenditures by Standard Object (unaudited)

(In thousands of dollars)	Planned expenditures for the year ending March 31, 2023	Expended during the quarter ended December 31, 2022	Year to date used at quarter end	Planned expenditures for the year ending March 31, 2022	Expended during the quarter ended December 31, 2021	Year to date used at quarter end
Expenditures
Personnel	13,724	3,220	8,286	11,560	2,714	7,477
Transportation and communications	2,397	548	1,542	2,215	668	1,343
Information	114	59	69	344	29	67
Professional and special services	5,279	920	1,380	3,159	383	1,144
Rentals	1,717	272	708	1,309	333	953
Repair and maintenance	2,521	914	2,027	3,965	467	1,914
Utilities, materials and supplies	1,460	266	849	1,753	355	867
Acquisition of machinery and equipment	1,729	53	227	1,144	31	269
Transfer payments	7,796	796	4,175	7,796	1,484	5,017
Other subsidies and payments	55	9	15	55	0	(1)
Total Budgetary expenditures	36,792	7,057	19,278	33,300	6,464	19,050