Quarterly Financial Report for the Quarter Ended December 31, 2020

Introduction
Highlights of fiscal quarter and fiscal year to date (YTD) results
Risk and uncertainties
Significant changes in relation to operations, personnel and programs
Statement of Authorities (unaudited)
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 December 31, 2020.

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

As of December 31, 2020, total authorities available for use for CIHR have increased by $436.2 million (36.8%) compared to December 31, 2019 as shown in the table below. The increase to CIHR’s total authorities available is due to:

$398.4 million of new funding as part of the Government’s COVID-19 response:
- $133.7 million of new funding for medical countermeasures pursuant to the Public Health Events of National Concern Payments Act;
- $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;
- $12.4 million of new funding for to support projects aligned with the mandate of the COVID-19 Immunity Task Force;
- $12.5 million of new funding for mitigation of health, social and economic risks;
- $10.5 million of new funding for medical countermeasures;
- $2.1 million of new funding for a pandemic response and health emergencies research plan;
- $1.2 million of new funding for federal investments in testing, contact tracing and data management pursuant to the Public Health Events of National Concern Payments Act;
$17.3 million increase to the Canada Research Chairs program, mainly due to increased funding from Budget 2018, a recalibration of funding across the Tri-Agencies, and a re-profile of a portion of lapsed funds from 2018-19 to the current fiscal year;
$11.5 million increase to new funding first announced in Budget 2018 to enhance support for health research;
$6.0 million increase in net transfers from other government departments for specific programs and initiatives;
$2.7 million of new funding for compensation adjustments from the Treasury Board Secretariat to reflect economic increases negotiated through recently signed collective agreements;
$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;
$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
$3.2 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 Business Led Network Centres of Excellence ($1.9 million) programs and Community Innovation Program ($0.8 million) and, less funds for Centres of Excellence for Commercialization and Research ($2.7 million), Network Centres of Excellence ($2.5 million), Canada Excellence Research Chairs ($0.7 million).

Total authorities used as of December 31, 2020 increased by $355.5 million (45.8%) as compared to the prior fiscal year due mainly to the grant payments towards the newly created funding mentioned above. CIHR has used 69.8% (65.5% in 2019-20) of its available authorities through the third quarter which is consistent with its annual spending pattern.

**Table 2.1.1 – Changes to annual authorities available and cumulative authorities used by vote** *($ thousands)*
	Annual authorities available	Cumulative authorities used	% used	Annual authorities available	Cumulative authorities used	% used	(1) vs (3)	(2) vs (4)
	2020-21			2019-20			Variance
	(1)	(2)		(3)	(4)
Vote 1 - Operating Expenditures	63,856	40,638	63.6%	59,188	43,739	73.9%	7.9%	(7.1%)
Vote 5 - Grants	1,215,927	882,329	72.6%	1,119,733	727,270	65.0%	8.6%	21.3%
Statutory Authorities – COVID-19	335,100	203,629	60.8%	N/A	N/A	N/A	N/A	N/A
Statutory Authorities – Employee benefits plan	7,039	4,995	71.0%	6,829	5,104	74.7%	3.1%	(2.1%)
Total	1,621,922	1,131,591	69.8%	1,185,750	776,113	65.5%	36.8%	45.8%

**Table 2.1.2 – Changes to annual authorities available and authorities used during the third quarter by vote** *($ thousands)*
	Annual authorities available	Q3 Authorities used	% used	Annual authorities available	Q3 Authorities used	% used	(1) vs (3)	(2) vs (4)
	2020-21			2019-20			Variance
	(1)	(2)		(3)	(4)
Vote 1 - Operating Expenditures	63,856	13,728	21.5%	59,188	15,080	25.5%	7.9%	-9.0%
Vote 5 - Grants	1,215,927	292,805	24.1%	1,119,733	169,282	15.1%	8.6%	73.0%
Statutory Authorities – COVID-19	335,100	8,159	2.4%	N/A	N/A	N/A	N/A	N/A
Statutory Authorities – Employee benefits plan	7,039	1,665	23.7%	6,829	1,701	24.9%	3.1%	-2.1%
Total	1,621,922	316,357	19.5%	1,185,750	186,063	15.7%	36.8%	70.0%

Vote 1 – Operating Expenditures

Total authorities available for use for Vote 1 - Operating expenditures increased by $4.7 million (7.9%) as at December 31, 2020 compared to the prior fiscal year. The increase to CIHR’s total authorities available is due to:

$2.2 million of new funding to support CIHR’s role in the Government’s COVID-19 response;
$2.7 million of new funding for compensation adjustments from the Treasury Board Secretariat to reflect economic increases negotiated through recently signed collective agreements;
$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
$1.0 million decrease in net transfers from other government departments for specific programs and initiatives.

Authorities used during the third quarter for Vote 1 – Operating Expenditures authorities have decreased by $1.4 million (-9.0%) 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 $3.1 million (-7.1%) as a result of the items discussed above. The percentage of operating authorities used has also decreased from the prior year (63.6% and 73.9% respectively) for the same reasons. Overall spending as of December 31, 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 December 31, 2020 were $1,215.9 million and included funding for the following transfer payment programs:

Grants for research projects and personnel support – $1,081.2 million
Canada First Research Excellence Fund (CFREF) – $43.8 million
Canada Graduate Scholarships (CGS) – $26.9 million
Networks of Centres of Excellence (NCE) – $19.2 million
Institute support grants – $14.5 million
Vanier Canada Graduate Scholarships – $8.4 million
Canada Excellence Research Chairs (CERC) – $7.3 million
Centres of Excellence for Commercialization and Research (CECR) – $7.0 million
Business–Led Networks of Centres of Excellence (BL-NCE) – $3.7 million
Canada 150 Research Chairs (C150) – $2.7 million
College and Community Innovation Program (CCI) – $1.2 million

Vote 5 – Grants authorities available for use increased by $96.1 million (8.6%) through the third quarter as compared to the prior fiscal year quarter as a result of:

$60.7 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;
- $12.4 million of new funding for to support projects aligned with the mandate of the COVID-19 Immunity Task Force;
- $10.0 million of new funding for medical countermeasures;
$17.3 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 and, a re-profile of a portion of lapsed funds from 2018-19 to the current fiscal year;
$10.6 million increase to new funding first announced in Budget 2018 to enhance support for health research;
$6.9 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, and;
$3.2 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 Business Led Network Centres of Excellence ($1.9 million) programs and Community Innovation Program ($0.8 million) and, less funds for Centres of Excellence for Commercialization and Research ($2.7 million), Network Centres of Excellence ($2.5 million), Canada Excellence Research Chairs ($0.7 million).

Grant authorities used during the third quarter of 2020-21 increased by $123.5 million (73.0%) 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 $155.1 million (21.3%) compared to the prior fiscal year.

The percentage of grant authorities used through the third quarter of 2020-21 (72.6%) increased from authorities used at the end of the third quarter of the prior fiscal year (65.0%). This is primarily due to the issuance of additional funding for COVID-19 research.

Overall spending as of December 31, 2020 is consistent with CIHR management expectations given the COVID-19 pandemic context.

Statutory Authorities

COVID-19

As of the third quarter of 2020-21, CIHR has received $335.1 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:

$133.7 million of new funding for medical countermeasures pursuant to the Public Health Events of National Concern Payments 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.
$1.2 million of new funding for federal investments in testing, contact tracing and data management pursuant to the Public Health Events of National Concern Payments Act

As of December 31, 2020, $203.6 million (60.8%) has been distributed, as payments were issued 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 $0.2 million (3.1%). The increase to CIHR’s statutory authorities available is due to:

$0.4 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 third quarter of 2020-21 is 71.0% 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 December 31, 2020, total authorities available for use by CIHR increased by $436.2 million (36.8%) compared to the prior fiscal year primarily due to increases related to COVID-19 funding. Total authorities used as at December 31, 2020 increased by $355.5 million (45.8%) compared to the prior fiscal year. These variances are reflected in Table 2.2.1 and 2.2.2 (where expenditure types are re-grouped into three categories: Personnel, Other Operating Expenditures and Transfer Payments) for further analysis.

**Table 2.2.1 – Changes to annual authorities available and cumulative authorities used by expenditure type** *($ thousands)*
	Annual authorities available	Cumulative authorities used	% used	Annual authorities available	Cumulative authorities used	% used	(1) vs (3)	(2) vs (4)
	2020-21			2019-20			Variance
	(1)	(2)		(3)	(4)
Personnel	56,785	42,759	75.3%	52,391	39,842	76.0%	8.4%	7.3%
Other Operating Expenditures	14,110	2,874	20.4%	13,626	9,001	66.1%	3.6%	(68.1%)
Transfer Payments	1,551,027	1,085,958	70.0%	1,119,733	727,270	65.0%	38.5%	49.3%
Total	1,621,922	1,131,591	69.8%	1,185,750	776,113	65.5%	36.8%	45.8%

**Table 2.2.2 – Changes to annual authorities available and authorities used during the third quarter by expenditure type** *($ thousands)*
	Annual authorities available	Q3 Authorities used	% used	Annual authorities available	Q3 Authorities used	% used	(1) vs (3)	(2) vs (4)
	2020-21			2019-20			Variance
	(1)	(2)		(3)	(4)
Personnel	56,785	14,509	25.6%	52,391	13,563	25.9%	8.4%	7.0%
Other Operating Expenditures	14,110	884	6.3%	13,626	3,218	23.6%	3.6%	(72.5%)
Transfer Payments	1,551,027	300,964	19.4%	1,119,733	169,282	15.1%	38.5%	77.8%
Total	1,621,922	316,357	19.5%	1,185,750	186,063	15.7%	36.8%	70.0%

Personnel and Other Operating Expenditures

Authorities available for Personnel Expenditures for the period ended December 31, 2020 increased by $4.4 million (8.4%) as compared to the prior year. Authorities available for Other Operating Expenditures increased by $0.5 million (3.6%). These variances are due to:

$2.7 million (Personnel) of new funding for compensation adjustments from the Treasury Board Secretariat to reflect economic increases negotiated through recently signed collective agreements;
$1.8 million (Personnel) and $0.8 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
$1.0 million (Other) decrease in net transfers from other government departments for specific programs and initiatives.

Personnel authorities used year to date increased by $2.9 million (7.3%) 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 third quarter (75.3%) is reasonable for this type of expenditure as they occur evenly through the year and is comparable to the prior fiscal year (76.0%). Overall spending as of December 31, 2020 is consistent with CIHR management expectations given the COVID-19 pandemic context.

Other Operating Expenditures used year to date decreased by $6.1 million (-68.1%) 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 third quarter (20.4%) is lower than expectation and prior fiscal year (66.1%) as a result of the aforementioned decreases. Overall spending as of December 31, 2020 is consistent with CIHR management expectations given the COVID-19 pandemic context.

Transfer Payments

Authorities available for the period ended December 31, 2020 increased by $431.3 million (38.5%) over the prior year due primarily due to additional funding for COVID-19 research as discussed in section 2.1.1. Authorities used through the third quarter increased by $358.7 million (49.3%) 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 third quarter of 2020-21 (70.0%) has increased from prior year (65.0%) as a result of the aforementioned funding for COVID-19 research and support.

2.3 Other Non-Financial Highlights

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

On October 9, Minister Hajdu announced an investment of more than $10.2 million in COVID-19 mental health and substance use research. This investment will support 55 research teams from across the country to tackle the mental health and substance use crisis that is emerging as a result of the COVID-19 pandemic.
On October 14, CIHR’s Vice-President of Research Programs released a message to the research community outlining CIHR’s commitment to enhancing equity, diversity, and inclusion in the research funding system. This message highlighted a series of immediate actions that CIHR would take to address inequities in the research funding system resulting from the COVID-19 pandemic.
On October 28, CIHR announced that it would join some of the world’s largest funders of health research and international non-governmental organizations by signing the World Health Organization’s Joint Statement on Public Disclosure of Results from Clinical Trials. By aligning with international best practices for clinical trial reporting, CIHR has demonstrated an ongoing commitment to advance open science and research excellence.
On November 10, CIHR launched a funding opportunity that would provide $6 million to create a Canadian Network of COVID-19 Clinical Trial Networks. This initiative was part of CIHR’s ongoing response to the COVID-19 pandemic. The network will address the need for coordination and collaboration between existing Canadian and international networks that are conducting clinical trials on COVID-19 diagnostics, vaccines, and treatments.
On November 26, CIHR and its partners (Arthritis Society, Canadian Cancer Society, Mental Health Commission of Canada, MS Society of Canada, Veterans Affairs Canada) have invested $19.3 million to support researchers who will explore the potential therapeutic benefits and harms associated with cannabis use in areas such as cancer, pain, neurodevelopment and Indigenous Peoples’ health.
On December 4, Minister Hajdu and Minister Schulte announced that CIHR and partners were investing $1.8 million to support 14 research teams across the country that will seek to strengthen pandemic preparedness in long-term care and retirement homes. The initiative was undertaken in response to the devastating effect of the COVID-19 pandemic in long-term care facilities in Canada.
On December 17, CIHR’s Vice-President of Research Programs announced CIHR’s intention to engage the research community in dialogue on systemic racism in Canada's health research funding system, starting with an online discussion in January 2021.

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 third 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 – 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, to be launched in 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. Work has begun on operational planning to determine how the priorities will be implemented. This will be a key focus for the Agency as it exits the BCP and resumes regular business operations.

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 achieve its operational objectives by leveraging its existing IT infrastructure. CIHR continues to explore technological innovations 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.

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. Longer term, as the organization resumes regular business operations, the HRB will reinitiate 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

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