Quarterly Financial Report for the Quarter Ended December 31, 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 December 31, 2021.

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

As of December 31, 2021, total authorities available for use for CIHR have decreased by $230.9 million (-14.2%) compared to December 31, 2020 as shown in the table below. This decrease is in large part due to the decrease in COVID-19 funding in the third quarter of 2021-22 as explained below.

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;
• $3.3 million increase in net transfers from other government departments for specific programs and initiatives;
• $1.8 million increase to new funding first announced in Budget 2019 for Supporting Graduate Students Through Research Scholarships program;
• $1.7 million increase in the operating budget carryforward;
• $0.9 million of new funding for compensation adjustments from the Treasury Board Secretariat to reflect economic increases negotiated through signed collective agreements;
• $0.8 million increase to new funding first announced in Budget 2019 for Paid Parental Leave for Student Researchers;
• $0.9 million decrease in funding due to various immaterial adjustments;
• $1.0 million decrease in the operating travel budget as proposed in Budget 2021; 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 ($0.6 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 ($1.2 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 $254.1 million ($398.4 million received in 2020-21 as compared to $144.3 million received in 2021-22). New COVID-19 funding received in 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;
• 18.3 million of new funding for the Centre for Research on Pandemic Preparedness and Health Emergencies;
• $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 December 31, 2021 decreased by $235.9 million (-20.8%) compared to the prior fiscal year due mainly to the decrease in COVID-19 grant payments in 2021-22. CIHR has used 64.4% (69.8% in 2020-21) of its available authorities through the third 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 $2.2 million (3.5%) as at December 31, 2021 compared to the prior fiscal year. The increase to CIHR’s total authorities available is due to:

• $2.8 million of new funding for the Centre for Research on Pandemic Preparedness and Health Emergencies;
• $1.7 million increase in the operating budget carryforward;
• $1.5 million increase to new funding first announced in Budget 2018 to enhance support for health research;
• $0.4 million of new funding for compensation adjustments from the Treasury Board Secretariat to reflect economic increases negotiated through signed collective agreements;
• $0.2 million decrease in operating costs due to immaterial adjustments;
• $0.4 decrease in operating funding for medical countermeasures research;
• $0.8 million decrease in net transfers from other government departments for specific programs and initiatives;
• $1.0 million decrease in the operating travel budget as proposed in Budget 2021; and,
• $1.8 million decrease in operating funding for a pandemic response and health emergencies research plan.

Authorities used during the third quarter for Vote 1 – Operating Expenditures have increased by $1.0 million (7.4%) as compared to the prior fiscal year. This small 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. Actual year to date operating expenditures have increased by $3.9 million (9.5%) from the prior year due to the aforementioned reasons. As well, the percentage of operating authorities used has increased from the prior year (67.4% and 63.6% respectively) for the same reasons.

Overall spending as of December 31, 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 December 31, 2021 were $1,317.2 million and included funding for the following transfer payment programs:

• Grants for research projects and personnel support – $1,183.8 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) – $1.8 million

Vote 5 and Statutory Grant authorities available for use decreased by $233.8 million (-15.1%) as of December 31, 2021 as compared to the prior fiscal year. This decrease to CIHR’s total grant authorities available is mainly due to the decrease in COVID-19 funding in the third quarter of 2021-22 as explained below.

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;
• $4.1 million increase in net transfers from other government departments for specific programs and initiatives;
• $1.8 million increase to new funding first announced in Budget 2019 for Supporting Graduate Students Through Research Scholarships program;
• $0.8 million increase to new funding first announced in Budget 2019 for Paid Parental Leave for Student Researchers;
• $0.8 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 ($0.6 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 ($1.2 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 $254.8 million ($395.8 million received in 2020-21 as compared to $141.0 million received in 2021-22). New COVID-19 funding received in 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 the Centre for Research on Pandemic Preparedness and Health Emergencies;
• $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 third quarter of 2021-22 was similar to the prior fiscal year quarter with only a small increase of $7.1 million (2.4%). Year to date grant expenditures decreased by $240.2 million (-22.1%). This is due mainly to the decrease in COVID-19 grant payments in 2021-22.

The percentage of grant authorities used through the third quarter of 2021-22 (64.2%) decreased from authorities used at the end of the third quarter of the prior fiscal year (70.0%). This is mainly due to the aforementioned decrease in COVID-19 grant payments in 2021-22.

Overall spending as of December 31, 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 $0.7 million (9.4%). The increase to CIHR’s statutory authorities available is due to:

• $0.5 million increase due to new funding for the Centre for Research on Pandemic Preparedness and Health Emergencies;
• $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; and
• $0.4 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 third quarter of 2021-22 is 70.2% 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 December 31, 2021, total authorities available for use by CIHR have decreased by $230.9 million (-14.2%) compared to the prior fiscal year. This decrease is in large part due to the decrease in COVID-19 funding in the third quarter of 2021-22. Total authorities used as of December 31, 2021 decreased by $235.9 million (-20.8%) 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 December 31, 2021 increased by $1.5 million (2.6%) as compared to the prior year. Authorities available for Other Operating Expenditures increased by $1.4 million (9.9%). These variances are due to:

• $2.4 million (Personnel) and $0.9 million (Other) of new funding for the Centre for Research on Pandemic Preparedness and Health Emergencies;
• $2.4 million (Other) increase and $0.7 million (Personnel) decrease in the operating budget carryforward;
• $1.5 million (Other) increase to new funding first announced in Budget 2018 to enhance support for health research;
• $0.9 million (Personnel) of new funding for compensation adjustments from the Treasury Board Secretariat to reflect economic increases negotiated through signed collective agreements;
• $0.9 million increase (Personnel) and $1.0 million decrease (Other) due to various immaterial adjustments;
• $0.2 million (Personnel) decrease and $0.6 million decrease (Other) in net transfers from other government departments for specific programs and initiatives;
• $1.0 million (Other) decrease in the operating travel budget as proposed in Budget 2021; and
• $1.8 million (Personnel) decrease and $0.8 (Other) decrease in funding to support CIHR’s role in the Government’s COVID-19 response.

Personnel authorities used year to date increased by $3.5 million (8.3%) 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 third quarter (79.5%) is reasonable for this type of expenditure as they occur evenly through the year and, is comparable to the prior fiscal year (75.3%).

Other Operating Expenditures used year to date increased by $0.7 million (25.6%) compared to the prior fiscal year. This increase is primarily due to increased spending on various professional and special services, (such as translation services, language/online training and IT consultants), as well as, higher expenditures on prepaid software licenses, software maintenance fees and the maintenance of IT infrastructure equipment. These increases were offset by a decrease in travel and hospitality expenditures as a result of the ongoing COVID-19 pandemic, as well as, a decrease in spending on office equipment for use in employees’ homes.

Overall spending as of December 31, 2021 is consistent with CIHR management expectations given the COVID-19 pandemic context.

Transfer Payments

Authorities available for the period ended December 31, 2021 decreased by $233.8 million (-15.1%) over the prior year is mainly due to the decrease in COVID-19 funding in the third quarter of 2021. Authorities used during the quarter ended December 31, 2021 slightly increased by $7.1 million (2.4%). The percentage of grant authorities used through the third quarter of 2021-22 (64.2%) decreased from the prior year (70.0%) as a result of the decrease in COVID-19 grant payments in 2021-22.

2.3 Other Non-Financial Highlights

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

In October, CIHR announced a partnership with the Social Sciences and Humanities Research Council under the Race, Gender and Diversity Initiative. Together, the agencies will support social sciences and humanities projects on the themes of race, gender, and diversity with a focus on health.

On November 25, CIHR and Juvenile Diabetes Research Foundation (JDRF) Canada announced the funding of new research teams that will work to develop new approaches to preventing, treating, and caring for Canadians living with diabetes. The funding of these research teams was part of CIHR’s 100 Years of Insulin: Accelerating Canadian Discoveries to Defeat Diabetes initiative.

On December 9, CIHR announced the funding of 70 research projects focused on understanding and mitigating the impact of the COVID-19 pandemic on children, youth and families. These projects are part of CIHR’s ongoing investments in research to support Canada’s response to the pandemic.

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.

Following resumption of normal activities after CIHR’s activation of its business continuity plans (BCP), in accordance with the Policy on Government Security in response to COVID-19, CIHR developed its 2021-22 and 2022-23 CRP in fall 2021 that focuses on the key strategic, operational and horizontal risks across the organization. Key risks identified in the 2021-22 and 2022-23 CRP are as follows.

Risk 1 – Organizational Capacity

There is a risk that as the organization embraces a broader mandate within the evolving health research ecosystem, it will impact its ability to deliver optimally on its mandate.

CIHR’s newly established Planning, Evaluation and Results branch is leading the organization’s integrated planning process to enable CIHR to effectively plan by implementing a prioritization process that enables the execution of operational resource requirements across the organization.

Prioritization of activities based on strategic importance is underway and will evolve through continued involvement of the CIHR Senior Operations Committee. This integrated planning approach will provide inputs for further analysis of the impact on operational capacity.

The organizational structure of CIHR is being updated to reflect changes to CIHR’s business model, with staffing of new business units underway or nearing completion. The Human Resources Branch (HRB) continues to address critical and emerging staffing needs to ensure the continued effective and efficient delivery of strategic actions and core functions throughout the pandemic.

Risk 2 – Effective Cyber Security Solutions

There is a risk that successful cyber attacks on CIHR will compromise CIHR’s assets and researchers’ intellectual property and disrupt CIHR’s ability to deliver on programs defined by the CIHR Act.

As demonstrated during the COVID-19 pandemic, CIHR has been able to continue to deliver its core business by leveraging its existing IT infrastructure and deploying new IT solutions to support pandemic-impacted business functioning. CIHR continues to explore technological innovations to ensure business continuity and uninterrupted service delivery, such as the deployment of Host Based sensors for enhanced monitoring. The Digital and Security Services (DSS) branch has refreshed the CIHR Department Security Plan and is implementing controls moving forward to address key gaps as identified in the plan.

Risk 3 - Delivery of the Strategic Plan Year 1 and 2 Action Plans

There is a risk that the context of the continuing pandemic could lead to an inability to fully implement some activities in year 1 and 2 of the 2021-31 Strategic Plan.

A detailed monitoring and reporting process has been developed to support progress tracking of the activities that support implementation of the Strategic Plan including designated accountable leads for each priority. This process includes the establishment of a workplan for each Strategic Plan priority, mid-year progress reports, and year-end report development summarizing achievements of previous years’ actions for internal and external audiences.

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

On November 17, CIHR announced that it would end the appointment of the Scientific Director of the CIHR Institute of Indigenous Peoples’ Health and initiate a process to appoint a new Scientific Director in consultation with the Indigenous health research community.

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
February 25, 2022

5. Statement of Authorities (unaudited)

For the quarter ended December 31, 2021

6. Departmental budgetary expenditures by Standard Object (unaudited)

For the quarter ended December 31, 2021

Date modified:

2022-02-24