Quarterly Financial Report for the Quarter Ended September 30, 2020

Table of contents

1. Introduction
2. Highlights of fiscal quarter and fiscal year to date (YTD) results
3. Risks and uncertainties
4. Significant changes in relation to operations, personnel and programs
5. Statement of Authorities (unaudited)
6. Departmental budgetary expenditures by Standard Object (unaudited)

1. Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. It should be read in conjunction with the 2020-21 Main Estimates. It has not been subject to an external audit or review nor has it been subject to the approval of the Audit Committee.

1.1 Authority, mandate and programs

The Canadian Institutes of Health Research (CIHR) is the Government of Canada's health research funding agency. It was created in June 2000 by the Canadian Institutes of Health Research Act with a mandate “to excel, according to internationally accepted standards of scientific excellence, in the creation of new knowledge and its translation into improved health for Canadians, more effective health services and products and a strengthened Canadian health care system”.

CIHR invests in high quality health research and health research personnel to help create and apply new knowledge that can improve health outcomes for Canadians, lead to innovative products and services that improve Canada's health care system, and create high quality employment and commercial opportunities.

Further details on CIHR’s mandate and programs can be found in Part II of the Main Estimates and the Department Plan.

1.2 Basis of presentation

This quarterly report has been prepared by CIHR management using an expenditure basis of accounting. The accompanying Statement of Authorities includes CIHR’s spending authorities granted by Parliament and those used by CIHR, consistent with the Main Estimates supplied thus far 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 monies can be spent by the Government of Canada (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.

CIHR 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.

2. Highlights of fiscal quarter and fiscal year to date (YTD) results

This quarterly financial report reflects the results of the current fiscal period in comparison to the authorities supplied by the Main Estimates to date for fiscal year 2020-21, as well as budget adjustments approved by Treasury Board up to September 30, 2020. Due to the COVID-19 pandemic and limited sessions in the spring for Parliament to study supply, the Standing Orders of the House of Commons were amended to extend the study period into the Fall. As such, CIHR has been supplied with 75% of the proposed 2020-21 Main Estimates, and is expected to receive full supply in December 2020. This delay in supply does not pose a risk on CIHR’s ability to proceed with ongoing financial commitments.

2.1 Financial Highlights – Statement of Authorities (Refer to Section 5)

As of September 30, 2020, total authorities available for use for CIHR have decreased by $25.4 million (-2.2%) compared to September 30, 2019 as shown in the table below. The decrease to CIHR’s total authorities available is due to the $302.1 million still to be supplied via the Main Estimates as well as by:

• $240.6 million of new funding as part of the Government’s COVID-19 response:
  • $112.7 million of new funding for the pandemic response and health emergencies research plan pursuant to the Public Health Events of National Concern Payments Act;
  • $87.5 million of new funding for the support of students during COVID-19 pursuant to the Public Health Events of National Concern Payments Act;
  • $25.8 million of new funding for emergency research and innovation response measures;
  • $12.5 million of new funding for mitigation of health, social and economic risks;
  • $2.1 million of new funding for a pandemic response and health emergencies research plan;
• $20.3 million increase to the Canada Research Chairs program, mainly due to increased funding from Budget 2018, as well as a recalibration of funding across the Tri-Agencies;
• $11.5 million increase to new funding first announced in Budget 2018 to enhance support for health research;
• $2.1 million increase in net transfers from other government departments for specific programs and initiatives;
• $1.9 million of new funding for research to eliminate cervical cancer in Canada;
• $1.5 million increase to new funding first announced in Budget 2019 for Supporting Graduate Students Through Research Scholarships program;
• $0.4 million increase to new funding first announced in Budget 2019 for Paid Parental Leave for Student Researchers;
• $0.2 million increase in funding due to various insignificant adjustments;
• $0.1 million decrease in the operating budget carryforward;
• $0.3 million decrease in funding of operating and statutory items due to various adjustments and contributions required by Central Agencies; and
• $1.4 million decrease resulting from CIHR’s participation in tri-agency programs in collaboration with the Natural Sciences and Engineering Research Council (NSERC) and the Social Sciences and Humanities Research Council (SSHRC). Funding for these programs varies by fiscal year as CIHR is allocated funding following each distinct competition depending on the successful applicants’ alignment with CIHR’s health-related mandate. CIHR received more funds in 2020-21 for Canada Excellence Research Chairs ($3.1 million) and Business Led Network Centres of Excellence ($1.9 million) programs and less funds for Centres of Excellence for Commercialization and Research ($2.7 million), Network Centres of Excellence ($2.5 million), Canada 150 Research Chairs ($1.0 million) and College and Community Innovation Program ($0.2 million).

Total authorities used as of September 30, 2020 increased by $225.2 million (38.2%) as compared to the prior fiscal year due mainly to the grant payments towards the newly created funding mentioned above. CIHR has used 70.6% (50.0% in 2019-20) of its available authorities through the first quarter. This increase is due to the aforementioned delay in supply of the Main Estimates, as well as the rapid issuance of payments for COVID-19 research and support funding. These increases were offset by fewer operating costs as a result of the pandemic situation as discussed below.

Vote 1 – Operating Expenditures

Total authorities available for use for Vote 1 - Operating expenditures decreased by $12.7 million (-21.5%) as at September 30, 2020 compared to the prior fiscal year. The decrease to CIHR’s total authorities available is due to the $14.5 million still to be supplied via the Main Estimates offset by:

• $1.8 million of new funding to support CIHR’s role in the Government’s COVID-19 response;
• $0.9 million increase to new funding first announced in Budget 2018 to enhance support for health research;
• $0.1 million increase in funding due to various insignificant adjustments;
• $0.1 million decrease due to various adjustments and contributions required by Central Agencies;
• $0.1 million decrease in the operating budget carryforward; and
• $0.8 million decrease in net transfers from other government departments for specific programs and initiatives.

Authorities used during the second quarter for Vote 1 – Operating Expenditures authorities have decreased by $1.4 million (-9.5%) as compared to the prior fiscal year. This variance is primarily due to significant decreases in travel, hospitality and meeting room rentals as these activities have ceased during the COVID-19 pandemic, as well as decreases in spending on software development consultants for projects completed or put on hold while CIHR focused on delivery of critical operations, service and program delivery during the pandemic. These decreases were somewhat offset by increases to personnel costs mainly as a result of retroactive salary increases processed late in the prior fiscal year, as well as incremental spending on office equipment for use in employees’ homes in light of CIHR staff working remotely as a result of the pandemic.

Actual year to date operating expenditures have decreased by $1.8 million (-6.1%) as a result of the items discussed above. The percentage of operating authorities used has increased from prior year (57.9% and 48.4% respectively) as a result of the aforementioned reduced supply of the Main Estimates, offset by the variances discussed above. Overall spending as of September 30, 2020 is consistent with CIHR management expectations given the COVID-19 pandemic context.

Vote 5 – Grants

Authorities available for use for Vote 5 – Grants as of September 30, 2020 were $901.0 million and included funding for the following transfer payment programs^{Footnote 1}:

• Grants for research projects and personnel support – $800.9 million
• Canada First Research Excellence Fund (CFREF) – $32.8 million
• Canada Graduate Scholarships (CGS) – $20.2 million
• Networks of Centres of Excellence (NCE) – $14.4 million
• Institute support grants – $10.7 million
• Vanier Canada Graduate Scholarships – $6.3 million
• Canada Excellence Research Chairs (CERC) – $5.4 million
• Centres of Excellence for Commercialization and Research (CECR) – $5.3 million
• Business–Led Networks of Centres of Excellence (BL-NCE) – $2.8 million
• Canada 150 Research Chairs (C150) – $2.0 million
• College and Community Innovation Program (CCI) – $0.2 million

Vote 5 – Grants authorities available for use decreased by $213.0 million (-19.1%) as of September 30, 2020 compared to the prior fiscal year. The decrease to CIHR’s total authorities available is due to the $287.6 million still to be supplied via the Main Estimates offset by:

• $38.3 million of new funding as part of the Government’s COVID-19 response:
  • $25.8 million of new funding for emergency research and innovation response measures;
  • $12.5 million of new funding for mitigation of health, social and economic risks;
• $20.3 million increase to the Canada Research Chairs program, mainly due to increased funding from Budget 2018, as well as a recalibration of funding across the Tri-Agencies;
• $10.6 million increase to new funding first announced in Budget 2018 to enhance support for health research;
• $2.9 million increase in net transfers from other government departments for specific programs and initiatives;
• $1.9 million of new funding for research to eliminate cervical cancer in Canada;
• $1.5 million increase to new funding first announced in Budget 2019 for Supporting Graduate Students Through Research Scholarships program;
• $0.4 million increase to new funding first announced in Budget 2019 for Paid Parental Leave for Student Researchers;
• $0.1 million increase in funding due to various insignificant adjustments; and
• $1.4 million decrease resulting from CIHR’s participation in tri-agency programs in collaboration with the Natural Sciences and Engineering Research Council (NSERC) and the Social Sciences and Humanities Research Council (SSHRC). Funding for these programs varies by fiscal year as CIHR is allocated funding following each distinct competition depending on the successful applicants’ alignment with CIHR’s health-related mandate. CIHR received more funds in 2020-21 for Canada Excellence Research Chairs ($3.1 million) and Business Led Network Centres of Excellence ($1.9 million) programs and less funds for Centres of Excellence for Commercialization and Research ($2.7 million), Network Centres of Excellence ($2.5 million), Canada 150 Research Chairs ($1.0 million) and College and Community Innovation Program ($0.2 million).

Grant authorities used during the second quarter of 2020-21 increased by $17.9 million (5.0%) compared to the prior fiscal year quarter due to increased grant payments resulting from the increased authorities available for use. Similarly, year to date grant expenditures have increased by $31.2 million (5.7%) compared to the prior fiscal year.

The percentage of grant authorities used through the second quarter of 2020-21 (65.4%) increased from authorities used at the end of the second quarter of the prior fiscal year (50.1%). This is due to the aforementioned reduced supply of the Main Estimates, as well the rapid issuance of funding for COVID-19 research.

Overall spending as of September 30, 2020 is consistent with CIHR management expectations given the COVID-19 pandemic context.

Statutory Authorities

COVID-19

As of the second quarter of 2020-21, CIHR has received $200.2 million of statutory funding in support of the Government’s COVID-19 response pursuant to the Public Health Events of National Concern Payments Act which was enacted in Part 3 of the COVID-19 Emergency Response Act:

• $112.7 million of new funding for the pandemic response and health emergencies research plan; and
• $87.5 million of new funding for the support of students during COVID-19.

As of September 30, 2020, $195.5 million (97.6%) has been distributed, as payments were issued rapidly in response to the pandemic.

Contribution to employee benefit plans

Budgetary statutory authorities representing CIHR’s contribution to employee benefit plans available for use increased year over year by $0.1 million (1.7%). The increase to CIHR’s statutory authorities available is due to:

• $0.3 million increase as part of new funding to support CIHR’s role in the Government’s COVID-19 response; and
• $0.2 million decrease in funding of statutory items due to various adjustments and contributions required by Central Agencies.

Actual spending for statutory authorities through the second quarter of 2020-21 is 48.0% of the total available authorities for use for the year, which is consistent with CIHR management expectations given that this expenditure is distributed equally throughout the fiscal year.

2.2 Financial Highlights – Statement of Departmental Budgetary Expenditures by Standard Object (Refer to Section 6)

As of September 30, 2020, total authorities available for use by CIHR decreased by $25.4 million (-2.2%) compared to the prior fiscal year. The decrease to CIHR’s total authorities available is due to the $302.1 million still to be supplied via the Main Estimates, offset mainly by increases related to COVID-19 funding. Total authorities used as at September 30, 2020 increased by $225.2 million (38.2%) compared to the prior fiscal year. These variances are reflected in Table 2.2.1 (where expenditure types are re-grouped into three categories: Personnel, Other Operating Expenditures and Transfer Payments) for further analysis.

Personnel and Other Operating Expenditures

Authorities available for Personnel Expenditures for the period ended September 30, 2020 decreased by $10.0 million (-19.0%) as compared to the prior year. Authorities available for Other Operating Expenditures decreased by $2.6 million (-19.3%). The decrease to CIHR’s total authorities available is due to the $11.2 million (Personnel) and $3.2 million (Other) still to be supplied via the Main Estimates offset by:

• $1.3 million (Personnel) and $0.7 million (Other) of new funding to support CIHR’s role in the Government’s COVID-19 response, as previously outlined in Section 2.1;
• $0.1 million (Personnel) and $0.8 million (Other) increase to new funding first announced in Budget 2018 to enhance support for health research;
• $0.1 million (Personnel) increase in funding due to various insignificant adjustments;
• $0.3 million (Other) decrease due to various adjustments and contributions required by Central Agencies;
• $0.3 million (Personnel) decrease and $0.2 million (Other) increase in the operating budget carryforward; and
• $0.8 million (Other) decrease in net transfers from other government departments for specific programs and initiatives.

Personnel authorities used year to date increased by $2.0 million (7.5%) compared to the prior fiscal year mainly as a result of retroactive salary increases processed late in the prior fiscal year. The percentage of authorities used for Personnel Expenditures through the second quarter (66.6%) is higher than the prior fiscal year (50.2%) as a result of the aforementioned reduced supply of the Main Estimates. Overall spending as of September 30, 2020 is consistent with CIHR management expectations given the COVID-19 pandemic context.

Other Operating Expenditures used year to date decreased by $3.8 million (-65.6%) compared to the prior fiscal year. This decrease is primarily due to significant decreases in travel, hospitality and meeting room rentals as these activities have ceased during the COVID-19 pandemic, as well as decreases in spending on software development consultants for projects completed or put on hold while CIHR focused on delivery of critical operations, service and program delivery during the pandemic. These decreases were somewhat offset by increased spending on office equipment for use in employees’ homes. The percentage of authorities used for Other Operating Expenditures through the second quarter (18.1%) is lower than expectation and prior fiscal year (42.4%) as a result of the aforementioned decreases, offset by reduced supply of the Main Estimates. Overall spending as of September 30, 2020 is consistent with CIHR management expectations given the COVID-19 pandemic context.

Transfer Payments

Authorities available for the period ended September 30, 2020 decreased by $12.8 million (-1.1%) over the prior year due primarily due to the aforementioned reduced supply of the Main Estimates, offset by additional health research funding discussed in section 2.1.1. Authorities used through the second quarter increased by $227.0 million (40.7%) due to increased grant payments resulting from expected increased authorities available for use as well as the rapid issuance of funding for COVID-19 research and support. The percentage of transfer payment authorities used through the second quarter of 2020-21 (71.3%) has increased from prior year (50.1%) as a result of the aforementioned reduced supply of the Main Estimates, offset by funding for COVID-19 research and support.

2.3 Other Non-Financial Highlights

Other non-financial highlights for the second quarter of 2020-21 include:

• On July 23, 2020, Minister Tassi, on behalf of the Minister Hajdu, announced an investment of $5.7 million from CIHR to support Sepsis Canada, a new national research network that will improve the treatment and recovery of sepsis patients. Sepsis Canada brings together 190 clinicians, scientists, and patients representatives across the country.
• On September 15, 2020, CIHR participated in the launch of the Government of Canada’s new Safeguarding Your Research portal, which provides tools for the academic community to self-evaluate and, when necessary, take actions to mitigate any security, safety, economic, or geopolitical risks associated with their research, their research partnerships and their international travel.
• On September 18, 2020, CIHR announced that it would be resuming strategic funding opportunities. The funding opportunities were temporarily paused so that CIHR could redeploy its resources to deliver a rapid research response to COVID-19 and ensure the delivery of the Project Grant competition.
• On September 30, 2020, CIHR, SSHRC and NSERC announced the members of a new tri-agency Reference Group for the Appropriate Review of Indigenous Research. The Reference Group will provide advice and guidance on the development and implementation of culturally appropriate review approaches and practices for research conducted by and with First Nations, Inuit and Métis Peoples.

3. Risk and uncertainties

CIHR is funded through voted parliamentary spending authorities and statutory authorities for operating expenditures and transfer payments. As a result, its operations are impacted by any changes to funding approved through Parliament. Delivering programs and services may depend on several risk factors such as economic fluctuations, technological and scientific development, evolving government priorities, and central agency or government-wide initiatives.

CIHR is committed to a disciplined, risk management process in its daily operations. Based on departmental best practices, the Corporate Risk Profile (CRP) is updated bi-annually and provides a proactive response to manage and monitor risks to ensure CIHR’s ability to operationalize its activities, achieve outcomes and deliver on its mandate.

The Policy on Government Security requires federal departments and agencies to establish business continuity plans (BCP). In response to COVID-19, CIHR activated its BCP that focused its activities on the delivery of critical operations, service and program delivery. As part of the BCP activation, CIHR’s risk landscape has shifted, including deferring the launch of CIHR’s Strategic Plan until later in the year. CIHR’s corporate risk management activities in the second quarter relate to the BCP and the future return to the 160 Elgin workplace, with the understanding that the CRP will be revisited as CIHR deactivates its BCP and returns to steady-state operations. Until that time, CIHR continue to monitor the following risks.

Risk 1 - Developing the New Strategic Plan - There is a risk that CIHR’s development of a strategic plan to achieve its objectives as defined by the CIHR Act may be hindered by gaps in governance and change management practices.

CIHR has made significant progress in developing a new strategic plan for the Agency. Consultations with internal and external stakeholders were held throughout 2019 and a set of draft priorities has been established by CIHR’s Governing Council. Due to the pandemic, the project was paused for two months, which also provided an opportunity to revise the draft priorities based on new issues the pandemic brought to light. As this will require additional internal and external consultations, a new launch date to replace the June 2020 launch that had been intended is being planned. This delay provides additional time to advance work on operational planning to determine how the priorities will be implemented, which had already commenced.

Risk 2 - Effective Digital Solutions - Failure to deliver and support effective digital and security solutions may result in the inability for the organization to deliver on the objectives as defined by the CIHR Act.

As seen from the COVID-19 pandemic, CIHR has been able to continue to perform its operations by leveraging its existing IT infrastructure. CIHR continues to explore and avail itself of technological solutions to ensure business continuity and uninterrupted service delivery.

Risk 3 - Human Resources Capacity - There is a risk that, without proactive strategies and a cohesive organizational design to attract and retain key talent, CIHR will not have the human resource capacity required to deliver on its current programs and services and to respond to future priorities.

In 2019-20, the Human Resources Branch (HRB) began developing a Human Resources planning framework to assist senior management with identifying current and future human resources needs in order to achieve strategic priorities and deliverables at portfolio and organizational levels. The objective of this collaborative process is to ensure that CIHR has the right people in the right place at the right time. The HR planning framework is intended to operate in tandem with an overall operational planning process. The operational planning process, including the HR planning component, were placed on hold in March 2020 when pandemic measures came into effect. As the operational planning process is reestablished, so too is the Human Resources planning process.

As a means of supporting the organization during the pandemic, HRB established a process whereby critical and emerging staffing needs are identified and prioritized by CIHR senior management to ensure that CIHR delivers on current programs and services. Immediate capacity pressures are therefore being addressed. HRB has undertaken a staffing capacity analysis that will inform future staffing prioritization processes.

With a look to future capacity pressures, HRB is reviewing its job classification and compensation systems to maintain competitiveness within the federal labour environment. Completion of the project is scheduled for 2021-22.

As well, HRB is reviewing employment-related policies and business processes, applying mental health and equity lenses to support inclusion and attract diverse talent.

4. Significant changes in relation to operations, personnel and programs

There were no significant changes in relation to operations, personnel and programs during the quarter.

Approval by Senior Officials

Approved by:

[original signed by]

Michael J. Strong, MD, FRCPC, FAAN, FCAHS
President

[original signed by]

Dalia Morcos Fraser, CPA, CMA
Chief Financial Officer

Ottawa, Canada
November 27, 2020

Date modified:

2020-11-27