Quarterly Financial Report for the Quarter Ended June 30, 2021

Table of contents

1. Introduction
2. Highlights 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 2021-22 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 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 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 2021-22, as well as budget adjustments approved by Treasury Board up to June 30, 2021.

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

As of June 30, 2021, total authorities available for use for CIHR have increased by $299.1 million (28.1%) compared to June 30, 2020 as shown in the table below. This increase is in large part due to CIHR receiving the full supply of the Main Estimates in the first quarter of 2021-22 compared to the first quarter of 2020-21, where $302.1 million was still to be supplied via the Main Estimates.

The remaining variance is due to the following:

• $19.2 million increase to new funding first announced in Budget 2018 to enhance support for health research;
• $3.6 million of new funding for compensation adjustments from the Treasury Board Secretariat to reflect economic increases negotiated through signed collective agreements;
• $1.8 million increase to new funding first announced in Budget 2019 for Supporting Graduate Students Through Research Scholarships program;
• $1.6 million increase in net transfers from other government departments for specific programs and initiatives;
• $0.8 million increase to new funding first announced in Budget 2019 for Paid Parental Leave for Student Researchers;
• $0.3 million decrease in funding due to various immaterial adjustments; and
• $2.6 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 2021-22 for College and Community Innovation Program ($0.7 million) and Centres of Excellence Commercialization and Research ($0.2 million) and, less funds for Canada Excellence Research Chairs ($0.7 million), Business Led Network Centres of Excellence ($1.3 million) and Network Centres of Excellence ($1.5 million).

In addition to the above, and as the COVID-19 pandemic continues to evolve, the Government of Canada endeavours to address the ongoing health research needs related to the pandemic. Total funding provided to CIHR for COVID-19 decreased by $27.1 million ($153.1 million received in Q1 of 2020-21 as compared to $126.0 million received in Q1 of 2021-22). New COVID-19 funding received in Q1 of 2021-22 is comprised of the following:

• $111.0 million in funding re-profiled from 2020-21 to the current fiscal year for medical countermeasures to fund research in priority areas and to fill knowledge gaps;
• $15.0 million of new funding for medical countermeasures to procure newly authorized therapeutics for the treatment of COVID-19 and to support related research;

Total authorities used as of June 30, 2021 increased by $57.6 million (25.5%) compared to the prior fiscal year due mainly to the grant payments towards the newly created funding mentioned above. CIHR has used 20.8% (21.2% in 2020-21) 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 increased by $17.6 million (39.0%) as at June 30, 2021 compared to the prior fiscal year. This increase is in part due to CIHR receiving the full supply of the Main Estimates in the first quarter of 2021-22 compared to the first quarter of 2020-21, where $14.5 million was still to be supplied via the Main Estimates.

The remaining variance is due to the following:

• $3.0 million of new funding for compensation adjustments from the Treasury Board Secretariat to reflect economic increases negotiated through signed collective agreements;
• $1.5 million increase to new funding first announced in Budget 2018 to enhance support for health research;
• $0.5 million increase in net transfers from other government departments for specific programs and initiatives;
• $1.8 million decrease in funding for a pandemic response and health emergencies research plan; and
• $0.1 million decrease in operating costs due to immaterial adjustments.

Authorities used during the first quarter for Vote 1 – Operating Expenditures authorities have increased by $0.9 million (6.9%) as compared to the prior fiscal year. This variance is primarily due to an increase in personnel costs as a result of the yearly salary increase. This increase is offset by various immaterial decreases in operating expenditures. The percentage of operating authorities used has decreased from the prior year (22.4% and 29.2% respectively) as a result of the aforementioned difference in the supply of the Main Estimates.

Overall spending as of June 30, 2021 is consistent with CIHR management expectations given the COVID-19 pandemic context.

Vote 5 – Grants and Statutory Authorities – COVID-19

Authorities available for use for Vote 5 – Grants as of June 30, 2021 were $1,294.9 million and included funding for the following transfer payment programs:

• Grants for research projects and personnel support – $1,161.8 million
• Canada First Research Excellence Fund (CFREF) – $43.8 million
• Canada Graduate Scholarships (CGS) – $28.6 million
• Networks of Centres of Excellence (NCE) – $17.7 million
• Institute support grants – $14.1 million
• Vanier Canada Graduate Scholarships – $8.4 million
• Centres of Excellence for Commercialization and Research (CECR) – $7.2 million
• Canada Excellence Research Chairs (CERC) – $6.7 million
• Canada 150 Research Chairs (C150) – $2.7 million
• Business–Led Networks of Centres of Excellence (BL-NCE) – $2.4 million
• College and Community Innovation Program (CCI) – $1.5 million

Vote 5 and Statutory Grant authorities available for use increased by $281.1 million (27.7%) as of June 30, 2021 as compared to the prior fiscal year. This increase to CIHR's total grant authorities available is mainly due to CIHR receiving the full supply of the Main Estimates in the first quarter of 2021-22 compared to the first quarter of 2020-21, where $287.6 million was still to be supplied via the Main Estimates.

The remaining variance is due to the following:

• $17.7 million increase to new funding first announced in Budget 2018 to enhance support for health research;
• $1.8 million increase to new funding first announced in Budget 2019 for Supporting Graduate Students Through Research Scholarships program;
• $1.0 million increase in net transfers from other government departments for specific programs and initiatives;
• $0.8 million increase to new funding first announced in Budget 2019 for Paid Parental Leave for Student Researchers;
• $0.2 million decrease in funding due to various immaterial adjustments; and
• $2.6 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 2021-22 for College and Community Innovation Program ($0.7 million) and Centres of Excellence Commercialization and Research ($0.2 million) and, less funds for Canada Excellence Research Chairs ($0.7 million), Business Led Network Centres of Excellence ($1.3 million) and Network Centres of Excellence ($1.5 million).

In additional to the above, and as the COVID-19 pandemic continues to evolve, the Government of Canada endeavours to address the ongoing health research needs related the pandemic. Grant funding provided to CIHR for COVID-19 decreased by $25.0 million ($151.0 million received in the first quarter of 2020-21 compared to $126.0 million received in the first quarter of 2021-22). New COVID-19 funding received in the first quarter of 2021-22 is comprised of the following:

• $111.0 million in funding re-profiled from 2020-21 to the current fiscal year for medical countermeasures to fund research in priority areas and to fill knowledge gaps;
• $15.0 million of new funding for medical countermeasures to procure newly authorized therapeutics for the treatment of COVID-19 and to support related research;

Grant authorities used during the first quarter of 2021-22 increased by $56.7 million (26.8%) 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 decreased from the prior year (20.6% and 20.8% respectively). This is mainly due to the aforementioned difference in the supply of the Main Estimates.

Overall spending as of June 30, 2021 is consistent with CIHR management expectations given the COVID-19 pandemic context.

Statutory Authorities

Contribution to employee benefit plans

Budgetary statutory authorities representing CIHR's contribution to employee benefit plans available for use increased year over year by $0.3 million (3.8%). The increase to CIHR's statutory authorities available is due to:

• $0.5 million increase due to new funding for compensation adjustments from the Treasury Board Secretariat to reflect economic increases negotiated through signed collective agreements;
• $0.1 million increase in funding due to various immaterial adjustments;
• $0.3 million decrease as a result of decreased funding to support CIHR's role in the Government's COVID-19 response.

Actual spending for statutory authorities in the first quarter of 2021-22 is 25.0% 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 June 30, 2021, total authorities available for use by CIHR increased by $299.1 million (28.1%) compared to the prior fiscal year. This increase is in part due to CIHR receiving the full supply of the Main Estimates in the first quarter of 2021-22 compared to the first quarter of 2020-21, where $302.1 million was still to be supplied via the Main Estimates. Total authorities used as of June 30, 2021 increased by $57.6 million (25.5%) 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 June 30, 2021 increased by $14.4 million (34.8%) as compared to the prior year. Authorities available for Other Operating Expenditures increased by $3.7 million (35.9%). This increase to CIHR's authorities available is partly due to CIHR receiving the full supply of the Main Estimates in the first quarter of 2021-22 compared to the first quarter of 2020-21, where $11.2 million (Personnel) and $3.2 million (Other) was still to be supplied via the Main Estimates. This increase was also a result of the following:

• $3.6 million (Personnel) of new funding for compensation adjustments from the Treasury Board Secretariat to reflect economic increases negotiated through signed collective agreements;
• $1.5 million (Other) increase to new funding first announced in Budget 2018 to enhance support for health research;
• $1.0 million (Personnel) increase and $1.0 million (Other) decrease as a result of an internal transfer;
• $0.7 million (Other) increase and $0.3 million decrease (Personnel) in net transfers from other government departments for specific programs and initiatives;
• $1.3 million (Personnel) decrease and $0.7 (Other) decrease in funding to support CIHR's role in the Government's COVID-19 response; and
• $0.2 million (Personnel) increase due to other immaterial adjustments.

Personnel authorities used in the first quarter increased by $1.0 million (7.2%) compared to the prior fiscal year. This increase is mainly due to the yearly salary increase. The percentage of authorities used for Personnel Expenditures in the first quarter (26.3%) is reasonable for this type of expenditure. However, the percentage of authorities used has decreased from last year (32.9% in 2020-21) as a result of CIHR receiving the full supply of the Main Estimates in 2021-22.

Other Operating Expenditures used in the first quarter increased by $0.1 million (5.2%) compared to the prior fiscal year. This small increase is primarily due to increased spending on professional and special services, such as translation services and language/online training, as well as slightly higher expenditures on office equipment for use in employees' homes in light of CIHR staff working remotely compared to this time last year.

Overall spending as of June 30, 2021 is consistent with CIHR management expectations given the COVID-19 pandemic context.

Transfer Payments

Authorities available for the period ended June 30, 2021 increased by $281.2 million (27.7%) over the prior year due primarily to CIHR receiving the full supply of the Main Estimates in the first quarter of 2021-22 compared to the first quarter of 2020-21. Authorities used during the quarter ended June 30, 2021 increased by $56.6 million (26.8%) due to increased grant payments resulting from expected increased authorities available for use. The percentage of grant authorities used in the first quarter of 2021-22 (20.6%) is similar to the authorities used in the first quarter of 2020-21 (20.8%). However, the percentage of grant authorities used in the first quarter of 2020-21 was inflated due to the reduced supply of the Main Estimates.

2.3 Other Non-Financial Highlights

Other non-financial highlights for the first quarter of 2021-22 include:

• In April, CIHR launched the first video in new series called "Ask a Scientist". The video featured CIHR's President explaining the science behind the mRNA COVID-19 vaccines and Canada's contribution to their development.
• On April 7, CIHR launched a funding opportunity that will support the development and vitality of the official language minority communities in health research. This initiative supports CIHR's commitment to promoting inclusivity and serving the needs of researchers working in both of Canada's official languages.
• On May 31, CIHR launched a framework for action on global health research. The framework is the product of extensive consultations with the research community. It encourages Canada's global health researchers to continue to work in concert with their colleagues in every country of the world to achieve the greatest health impacts and equity for all. The framework is a deliverable under CIHR's Action Plan for 2021-2022.
• On June 23, CIHR launched a new national training platform under its Strategy for Patient-Oriented Research. The platform will enhance the teaching of patient-oriented research and better integrate patients in research and health care.

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 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, and the CRP process was paused. CIHR's corporate risk management activities in the first quarter relate to re-establishing the CRP and identifying the key risks to actively manage and monitor for the remainder of 2021-2022. The CRP is being finalized over the summer and will be ready for implementation in the fall of 2021. It will focus on the key strategic, operational and horizontal risks across the organization.

Key risks from last year that are being closed out as CIHR transitions to the 2021 CRP are as follows.

Risk 1 – Implementing the New Strategic Plan - There is a risk that the implementation of CIHR's strategic plan (to achieve its objectives as defined by the CIHR) Act may be hindered by gaps in governance, operational planning and change management practices.

CIHR has developed a new strategic plan for the Agency and launched it in February 2021. Due to the pandemic, the original launch date of June 2020 was delayed. This provided an opportunity to revise the plan's priorities based on new issues the pandemic brought to light. In spring 2021, the organization completed an operational planning process to ensure that the priorities in the Action Plan for Year 1 (2021–22) were appropriately resourced.

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

Despite the COVID-19 pandemic, CIHR continues to deliver on its operational objectives by leveraging its existing IT infrastructure and new deploying new IT solutions to support pandemic-impacted business functioning.

The COVID-19 pandemic has caused numerous disruptions in the way CIHR conducts business. In light of the ongoing need to maintain social distancing measures, CIHR is required to change of the way business is conducted to ensure business continuity. CIHR's peer review process, as an example, in particular, was specifically impacted by these measures. Traditionally, the majority of CIHR peer review was completed via in-person peer review committee meetings held in Ottawa. Until the current travel and physical distancing measures are lifted, in-person peer review meetings are not feasible.

In April 2020, CIHR adopted Microsoft Teams as its main on-line collaboration and communication tool. This tool provides CIHR staff the ability to effectively and securely communicate and collaborate with employees within CIHR and the Government of Canada while also being able to take advantage of its integration features with other MS Office 365 suite of applications (such as Outlook). This solution was successfully adopted to facilitate remote peer review meetings.

CIHR continues to explore technological innovations to ensure business continuity and uninterrupted service delivery.

Risk 3 – Human Resources Capacity - There is a risk that the CIHR is not adequately resourced to deliver on priorities, projects and key commitments. Beyond this, there is an additional 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.

Beginning Fall 2021, CIHR branches will be required to submit detailed human resources plans, in addition to their operational plans, that accurately reflects the resources required to deliver on current programs, services and projects (new and existing), the way in which those resources will be acquired and the timeline to do so. A Human Resource Planning Framework that is integrated into CIHR's operational planning cycle will support this activity.

The Human Resources Branch (HRB) has addressed critical and emerging staffing needs to ensure the continued effective and efficient delivery of programs and services throughout the pandemic. The HRB is currently reviewing internal processes and policies to maintain competitiveness within the labour market, support inclusion, and attract diverse talent. The HRB is reinitiating work on a Human Resources Planning Framework that will support senior management in identifying current and future human resources needs to achieve its objectives, particularly those related to the new strategic plan.

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

Effective April 2nd, 2021, John-Patrick Moore assumed the duties of the acting Chief Audit and Evaluation Executive.

Approval by Senior Officials

Approved by:

[original signed by]

Catherine MacLeod
A/President

[original signed by]

Sylvie Gareau, CPA, CA
A/Chief Financial Officer

Ottawa, Canada
August 26, 2021

5. Statement of Authorities (unaudited)

For the quarter ended June 30, 2021

6. Departmental budgetary expenditures by Standard Object (unaudited)

For the quarter ended December 31, 2020

Date modified:

2021-08-26