Quarterly Financial Report for the Quarter Ended June 30, 2018

Table of contents

1. Introduction
2. Hightlights of fiscal quarter and fiscal year to date (YTD) results
3. Risk 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 2018-19 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. CIHR's Health Research Roadmap II: Capturing Innovation to Produce Better Health and Health Care for Canadians presents CIHR’s vision to capture excellence and accelerate health innovation via three strategic directions, including:

1. Promoting excellence, creativity and breadth in health research and knowledge translation;
2. Mobilizing health research for transformation and impact; and
3. Achieving organizational excellence.

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 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 for the 2018-19 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. 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 provided in the Main Estimates for fiscal year 2018-19 up to June 30, 2018.

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

As of June 30, 2018, total authorities available for use for CIHR have increased by $16.8 million (1.6%) compared to June 30, 2017 as shown in the table below. The increase to CIHR’s total authorities available is due to:

• $7.4 million increase 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;
• $4.7 million increase announced in Budget 2017 for the Canada 150 Research Chairs program;
• $2.5 million increase announced in Budget 2017 for adapting to the impacts of climate change;
• $2.0 million increase announced in Budget 2017 to support the Canadian Drugs and Substance Strategy;
• $0.4 million increase in net transfers from other government departments for specific programs and initiatives; and
• $0.2 million decrease to statutory authorities due to Central Agency and other adjustments.

Total authorities used as at June 30, 2018 have also increased by $9.6 million (4.9%) as compared to the prior fiscal year due mainly to the grant payments towards the newly created programs mentioned above. CIHR has used 18.4% (17.8% in 2017-18) of its available authorities through the first quarter, which is consistent with its annual spending pattern.

Vote 1 – Operating Expenditures

Total authorities available for use for Vote 1 - Operating expenditures have increased minimally by $0.3 million (0.5%) as at June 30, 2018 as compared to the prior fiscal year as a result of :

• $0.2 million in increased operating funding announced in Budget 2017 for adapting to the impacts of climate change; and
• $0.1 million in increased operating funding announced in Budget 2017 to support the Canadian Drugs and Substance Strategy.

Operating expenditures authorities used during the first quarter have increased by $0.6 million (4.8%) as compared to the prior fiscal year due to increased Personnel, rentals, professional and special services, as well as Transportation and communications expenditures.

Vote 5 – Grants

Authorities available for use for Vote 5 - Grants have increased by approximately $16.7 million (1.6%) in the first quarter as compared to the prior fiscal year quarter, as a result of:

• $7.4 million increase resulting from CIHR’s participation in tri-agency programs in collaboration with NSERC and SSHRC;
• $4.7 million increase announced in Budget 2017 for the Canada 150 Research Chairs program;
• $2.3 million increase announced in Budget 2017 for adapting to the impacts of climate change;
• $1.9 million increase announced in Budget 2017 to support the Canadian Drugs and Substance Strategy; and
• $0.4 million increase in net transfers from other government departments for specific programs and initiatives.

Grant authorities used during the first quarter of 2018-19 have increased by $9.0 million (5.0%) as compared to the prior fiscal year quarter due to increased grant payments resulting from the increased authorities available for use. The percentage of grant authorities used is consistent with the prior year (18.0% and 17.5%, respectively) as grants are typically paid out in bi-monthly installments starting in May of each fiscal year.

Overall spending as at June 30, 2018 is consistent with management expectations.

Statutory Authorities

Budgetary statutory authorities (representing CIHR’s contribution to employee benefit plans) available for use decreased marginally year over year by $0.2 million (2.6%). The decrease to CIHR’s statutory authorities available is due to Central Agencies adjustments.

Actual spending for statutory authorities in the first quarter of 2018-19 is 25.0% of the total available authorities for use for the year which is as expected given these expenditures are distributed equally throughout the fiscal year.

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

As of June 30, 2018, total authorities available for use by CIHR have increased by $16.8 million (1.6%) as compared to the prior fiscal year due to increased funding received. Total authorities used as at June 30, 2018 have increased by $9.6 million (4.9%) as compared to the prior fiscal year. These increases are reflected in Table 2.2.1 (where expenditure types are re-grouped into three categories: Personnel, Other Operating Expenditures and Grants) for further analysis.

Personnel and Other Operating Expenditures

Authorities available for Personnel Expenditures for the period ended June 30, 2018 have increased by $0.1 million (0.2%) as compared to the prior year. Authorities available for Other Operating Expenditures have also increased by $0.1 million (0.3%). These increases are due to:

• Additional funding received for operating expenditures announced in Budget 2017 for adapting to the impacts of climate change ($0.1 million - Personnel and $0.1 million - Other Operating);
• Additional funding announced in Budget 2017 to support the Canadian Drugs and Substance Strategy ($0.1 million - Personnel); and
• Decrease in statutory authorities due to Central Agencies adjustments ($0.1 million - Personnel).

Personnel authorities used year to date increased minimally by $0.2 million (1.6%) as compared to the prior fiscal year. The percentage of authorities used for Personnel Expenditures in the first quarter (27.1%) is reasonable for this type of expenditure and is comparable to the prior fiscal year (26.7%).

Other Operating Expenditures used in the first quarter increased marginally by $0.4 million (14.4%) as compared to the prior fiscal quarter. The increase is mainly the result of greater expenditures in Transportation and communications, Rentals, and Professional and special services, each increased by $0.1 million.

Grants

Authorities available for the period ended June 30, 2018 have increased by $16.7 million (1.6%) over the prior year due primarily to additional health research funding discussed in section 2.1.1. Authorities used during the quarter ended June 30, 2018 have also increased by 5.0% due to increased grant payments resulting from the increased authorities available for use. The percentage of grant authorities used in the first quarter of 2018-19 (18.0%) is consistent with authorities used as at June 30th of the prior fiscal year (17.5%).

2.3 Other Non-Financial Highlights

Other non-financial highlights for the first quarter of 2018-19 include:

• On June 13, 2018, the Honourable Catherine McKenna, Minister of Environment and Climate Change, on behalf of Kirsty Duncan, Minister of Science and Minister of Sport and Persons with Disabilities, and Ginette Petitpas Taylor, Minister of Health, announced the launch of a new Collaborative Health Research Projects competition with the goal of bridging artificial intelligence (AI), health research and, for the first time, the social sciences and humanities. The fresh approach to research funding will encourage greater collaboration across disciplines that will produce new medical practices and technologies. A total of $24.0 million is available, of which almost $6.0 million is being reserved for projects that investigate the ethical, legal, and societal impacts associated with the spread of AI through the health sector.

3. Risk and uncertainties

CIHR is funded through voted parliamentary spending authorities used for operating expenditures and transfer payments, as well as statutory authorities. As a result, its operations are impacted by any changes to funding approved through Parliament. Therefore, 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.

In 2017, Canada’s Fundamental Science Review made a number of recommendations that will shape the future direction and actions of CIHR. As part of these recommendations, a Canada Research Coordinating Committee was established which includes the presidents of the three federal granting councils. This committee will have an oversight role and will seek to harmonize the work of the three federal granting agencies, helping to ensure that our research funding processes are coordinated and that our research investments are aligned with our most urgent health priorities, as stated in the open letter from the Minister of Science, the Honourable Kirsty Duncan, and the Minister of Health, the Honourable Ginette Petitpas Taylor.

To help deliver on its corporate priorities, government-wide priorities, and overall mandate, CIHR will continue to engage its research communities and external stakeholders through its partnership and stakeholder strategy. In addition, through the Government of Canada's Health Portfolio Sex and Gender-Based Analysis (SGBA) Policy and CIHR’s Equity Framework, CIHR will continue to work to ensure equity, diversity, and inclusion in its business practices. As well, to build a healthier future for First Nations, Inuit and Métis Peoples, CIHR will continue to address the ongoing, long-standing gap in health status between Indigenous and non-Indigenous Peoples in Canada through its health research programs and policies.

In addition, CIHR announced a new President and recruited two new Institute Scientific Directors, with a third to be recruited in 2018–19. Minister Petitpas Taylor also announced the appointment of six leading researchers to the Governing Council of CIHR. This will lead to a new phase in the development of CIHR's strategic directions and priorities.

Given this organizational context, CIHR’s management has identified its strategic priorities. The first is to position CIHR in such a way that it contributes to creating coherence in the current science environment within the Government of Canada, including supporting the Government’s response to the Fundamental Science Review. Related to this priority, there is a risk that CIHR will be insufficiently nimble to shape and adapt to the Government of Canada’s new science environment due to the current allocation of resources, as well as issues of timing and flexibility.

The second identified strategic priority is to ensure that CIHR can deliver on the full scope of its mandate in order to shape and be responsive to emerging Government of Canada and partner priorities through effective organizational structures, governance, and processes. Given its current capacity, there is a risk that CIHR will be unable to respond due to an inability to harmonize and improve the mechanisms that support access, efficiency, and collaboration within the Canadian funding research ecosystem.

CIHR is committed to a disciplined, integrated risk management process in its daily operations. CIHR’s Corporate Risk Profile (CRP) is updated twice annually and provides a proactive response to manage and monitor risks to ensure its ability to operationalize processes, achieve outcomes and deliver on its mandate. CIHR has identified the following four key risks and related mitigations in its CRP that support its ability to deliver on its strategic plan and meet the research community’s expectations as detailed in the table below.

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

Effective April 3, 2018, Adrian Mota assumed the position of Associate Vice-President, Research, Knowledge Translation and Ethics on a two-year term (formerly the Director General, Operations Support).

On May 30, 2018, the Honourable Ginette Petitpas Taylor, Minister of Health, announced the appointment of six top Canadian health researchers to the Governing Council of CIHR. These appointments took effect on May 24, 2018.

On June 20, 2018, Canada’s Minister of Health announced the appointment of Dr. Michael Strong as the new President of CIHR. He will assume the position on October 1, 2018.

Approval by Senior Officials

Approved by:

[original signed by]

Michel Perron
Acting President

[original signed by]

Thérèse Roy, FCPA, FCA
Chief Financial Officer
Vice-President, Resource Planning and Management

Ottawa, Canada
August 29, 2018

Date modified:

2018-08-24