Audit Committee
The full agenda, as filed
All 13 items in the clerk’s order. Each carries the city’s own words: the staff recommendation, what the body decided, and its status. Nothing below is written by us.
AU1.1amended
Election of Chair - Audit Committee
Election of the Chair of the Audit Committee under Municipal Code Chapter 27, Council Procedures, Appendix AII, for a term of office starting on February 22, 2019 and ending December 31, 2020, and until a successor is appointed.
The Audit Committee: 1. Elected Councillor Stephen Holyday as Chair of the Audit Committee for a term of office starting February 22, 2019 and ending December 31, 2020, and until a successor is appointed. ______________ There was one nomination. The Clerk declared Councillor Stephen Holyday the Chair of the Audit Committee.
AU1.2amended
Election of Vice Chair - Audit Committee
Election of the Vice Chair of the Audit Committee under Municipal Code Chapter 27, Council Procedures, Appendix AII, for a term of office starting on February 22, 2019 and ending December 31, 2020, and until a successor is appointed.
The Audit Committee: 1. Elected Councillor John Filion as Vice Chair of the Audit Committee for a term of office starting February 22, 2019 and ending December 31, 2020, and until a successor is appointed. ______________ There was one nomination. The Clerk declared Councillor John Filion the Vice Chair of the Audit Committee.
AU1.3received
The Audit Committee: Roles and Responsibilities
In today's environment, audit committees are widely regarded as one of the cornerstones of an organization's oversight process. Audit committees are considered to have important governance responsibilities related not only to public financial reporting, internal controls and management of financial risks, but also to the oversight of an organization's values and ethics. The Audit Committee is a Special Committee of City Council reporting directly to City Council. The roles and responsibilities of the Audit Committee are outlined in the Toronto Municipal Code. Leading practices for effective audit committees require that their roles and responsibilities be clearly communicated to their members on an ongoing basis. This report is meant to address this requirement.
The Audit Committee: 1 Received the report (January 31, 2019) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. Audit Committee receive this report for information.
AU1.4amended
2018 Annual Report - Demonstrating the Value of the Auditor General’s Office
This report provides information on the Auditor General's Office 2018 activities and financial and non-financial benefits. In 2018, the Auditor General's Office issued 18 reports including 12 performance audit reports, one investigative report, three recommendation follow-up reports, and two annual reports. In addition, the Auditor General's Fraud and Waste Hotline processed 643 complaints containing approximately 1,000 allegations. The Auditor General's Office calculates the return on every dollar invested in the Office by comparing the ratio of five-year audit costs to the cumulative estimated five-year realized savings. Since 2014, total one-time and projected five-year cost savings and revenue increases are approximately $303.7 million. The cumulative costs of operating the Auditor General's Office since 2014 were approximately $25.9 million. For every $1 invested in the Auditor General's Office, the return on investment was approximately $11.7. The identification of cost savings and increased revenue is only one component of the Auditor General's mandate. Equally important is the ongoing evaluation of governance, risk management and internal controls. However, the benefits resulting from these audits are not easily quantified in financial terms.
The Audit Committee recommends that: 1. City Council acknowledge the importance of timely and forthcoming information from City Divisions, Agencies, and Corporations, including the Toronto Transit Commission, to support the work of the Auditor General, and encourage the Auditor General to report to the Audit Committee any instances of delay. 2. City Council receive the report (February 6, 2019) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU1.5adopted
2018 Annual Report on the Fraud and Waste Hotline
This report represents the 2018 annual report on fraud, waste and wrongdoing at the City including the activities of the Fraud and Waste Hotline Program (the Hotline Program). It highlights the complaints that have been communicated to the Auditor General's Office. It does not represent an overall picture of fraud or other wrongdoing across the City. In 2018, 643 complaints comprised of approximately 1,000 allegations were received by the Auditor General's Office. The Hotline Program has helped to reduce losses and resulted in the protection of City assets. The cumulative total of actual and potential losses for complaints received in previous years (2014 to 2018) is more than $14.8 million (actual) plus $3.2 million (potential) had the fraud not been detected. Additional benefits that are not quantifiable include: - the deterrence of fraud or wrongdoing - strengthened internal controls - improvements in policies and procedures - increased operational efficiencies - the ability to use complaint data to identify trends, address risks, make action-oriented recommendations to management and inform the audit work plan.
The Audit Committee recommends that: 1. City Council receive the report (February 6, 2019) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU1.6adopted
Auditor General's Office 2019 Operating Budget
This report transmits to the Audit Committee the 2019 Operating Budget request for the Auditor General's Office. Chapter 3 of the Toronto Municipal Code states that "The Auditor General shall submit his or her annual budget request to the Audit Committee for consideration and recommendation to Council". In normal circumstances, the budget of the Auditor General's Office would be considered by the Audit Committee in October, prior to its submission to the Budget Committee. Due to the election and the compressed budget process time frame, this was not possible. Therefore, the Auditor General's Office 2019 Operating Budget was submitted for consideration by the Budget Committee at its meeting on February 4 and 6, 2019. The Audit Committee will consider the Auditor General's report and 2019 Operating Budget request at its meeting on February 22, 2019. The Audit Committee will submit its recommendation regarding the Auditor General's 2019 Operating Budget to Council through Executive Committee at its meeting on March 4, 2019, so that the recommendations from both the Budget Committee and the Audit Committee are before the Executive Committee at the same time. This approach is consistent with the past practice taken following the 2014 election. The current Budget Chief and the former Chair of the Audit Committee have been updated on the approach being taken this year.
The Audit Committee: 1. Approved the Auditor General's Office 2019 Operating Budget, attached to the report (January 21, 2019) from the Auditor General. 2. Directed that the Auditor General's Office 2019 Operating Budget be forwarded to the Executive Committee for its meeting on March 4, 2019 for consideration with the Budget Committee recommendations for the 2019 annual budget of the City of Toronto.
Staff recommendation as filed
The Auditor General recommends that: 1. Audit Committee approve the Auditor General's Office 2019 Operating Budget request, and direct that its recommendation and the attached report from the Auditor General be forwarded to Executive Committee for its meeting on March 4, 2019 for consideration with the Budget Committee recommendations for the 2019 annual budget of the City of Toronto.
AU1.7adopted
Auditor General's Office 2019 Work Plan
The Auditor General's audits and investigations provide independent information for City Council to hold City administrators accountable for providing stewardship over public funds. The Auditor General's work helps to identify and mitigate risks the City faces, improve accountability, strengthen management controls, and enhance the efficiency and effectiveness of City operations. The purpose of this report is to provide City Council with an overview of the work the Auditor General plans to conduct in 2019. Audit projects included in the annual Work Plan are identified through a risk assessment process conducted periodically by the Office, a review of emerging issues and an analysis of trends in allegations made to the Fraud and Waste Hotline. The Auditor General also considers the views and experience of City Councillors and City management. The Auditor General anticipates that the need for highly complex and in-depth forensic investigations will continue. This will require a significant commitment of resources, given the increasing complexity of complaints received by the Fraud and Waste Hotline. The Auditor General may amend the annual Work Plan if new priorities arise. In accordance with Chapter 3 of the Toronto Municipal Code, City Council may add to the annual audit plan by a two-thirds vote of all Council members.
The Audit Committee recommends that: 1. City Council receive the Auditor General's 2019 Work Plan, attached to the report (February 6, 2019) from the Auditor General.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive the Auditor General's 2019 Work Plan.
AU1.8amended
The Auditor General's Office conducts an annual follow-up review to determine the implementation status of recommendations in previously issued audit reports. The results of the review are reported to City Council through the Audit Committee. This report provides information regarding the implementation status of audit recommendations issued to City divisions in Corporate Services and Finance and Treasury Services. The report also provides information on the potential cost savings from the outstanding audit recommendations in response to a motion adopted by the Audit Committee at its July 4, 2016 meeting. Our 2018 follow-up review included 169 outstanding recommendations (including public and confidential recommendations) in audit reports for the following nine City divisions: - Accounting Services - Environment and Energy - Facilities Management - Financial Planning - Information and Technology - Pension, Payroll and Employee Benefits - Purchasing and Materials Management - Revenue Services - 311 Toronto As of December 31, 2016, there were 35 audit reports to divisions in Corporate Services and Finance and Treasury Services with 169 outstanding recommendations. Among the 169 recommendations, our review verified that 30 recommendations (18 per cent) have been fully implemented, 135 recommendations (80 per cent) have been partially implemented and four recommendations (2 per cent) are no longer applicable. Continued efforts to implement outstanding recommendations will provide additional benefits to the City such as cost savings, improved controls, and enhanced service delivery. We express our appreciation for the co-operation and assistance we received from management and staff during this year's follow-up review process.
The Audit Committee recommends that: 1. City Council receive the report (February 6, 2019) from the Auditor General for information. 2. City Council direct that the confidential information contained in Confidential Attachment 1 to the report (February 6, 2019) from the Auditor General, remain confidential in its entirety, as it involves the security of property belonging to the City of Toronto, it is about labour relations or employee negotiations, and it is about litigation or potential litigation that affects the City of Toronto.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information. 2. City Council direct that the confidential information contained in Confidential Attachment 1 remain confidential in its entirety, as it involves the security of property belonging to the City of Toronto, it is about labour relations or employee negotiations, and it is about litigation or potential litigation that affects the City of Toronto.
AU1.9amended
Auditor General's 2018 Consolidated Status Report on Follow-up of Outstanding Audit Recommendations
This consolidated year-end report summarizes the 2018 recommendation follow-up results of all City divisions, the City Manager's Office, Agencies and Corporations, and recommendations issued by the Auditor General's Forensic Unit. The report provides the status of audit recommendations issued prior to December 31, 2016. A total of 323 outstanding recommendations were included in the 2018 follow-up review. Among the 323 recommendations, our review verified that 72 recommendations (22 per cent) have been fully implemented, and 20 recommendations (6 per cent) are no longer applicable. There are 231 recommendations (72 per cent) that remain not fully implemented. Continued efforts to implement outstanding recommendations will provide additional financial and non-financial benefits to the City and its Agencies and Corporations. These benefits include cost savings, additional revenue, enhanced service delivery, and improved controls. We express our appreciation for the co-operation and assistance we received from the management and staff of City divisions, the City Manager's Office and the Agencies and Corporations.
The Audit Committee recommends that: 1. City Council receive the report (February 6, 2019) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU1.10amended
Auditor General's Office - Forensic Unit Status Report on Outstanding Recommendations
This report provides information regarding the implementation status of publicly reported recommendations made by the Forensic Unit of the Auditor General's Office. These recommendations were made in the context of the annual reports on the Fraud and Waste Hotline and other special reviews conducted. Confidential recommendations may also be made to management as a result of investigations. The implementation status of confidential recommendations is communicated directly to the City Manager. Following up on outstanding recommendations from previous reports is important and ensures that management has taken appropriate action to implement recommendations. From January 1, 2007 to December 31, 2016, a total of 30 recommendations made by the Forensic Unit were reported publicly. Twenty-nine of the recommendations were implemented before 2017. One recommendation remains outstanding and was included in the 2018 follow-up review. Management reported that this recommendation was not fully implemented and therefore we did not conduct any work on this recommendation. Continued efforts to implement outstanding recommendations will provide additional benefits to the City through cost savings, additional revenue, control improvements and enhanced service delivery.
The Audit Committee recommends that: 1. City Council receive the report (February 6, 2019) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU1.11adopted
Results of 2018 External Quality Control Review
Compliance with Government Auditing Standards is an important component of audit quality and is critical in maintaining credibility with City Council, management and taxpayers. Government Auditing Standards require that audit organizations performing audits in accordance with Generally Accepted Government Auditing Standards undergo an external peer review every three years. Chapter 3 of the Toronto Municipal Code also requires that the "Auditor General shall undergo an external peer review once every three years to ensure compliance with government auditing standards" and that "the results of the external peer review shall be reported to Council through the Audit Committee". An external peer review answers the question, "Who audits the auditor?" This report provides the results of the External Quality Control Review performed by the Association of Local Government Auditors (ALGA) for the period January 1, 2015 through December 31, 2017. The Auditor General's Office received the highest possible rating on its peer review - the fifth time the Office has received this rating.
The Audit Committee recommends that: 1. City Council receive the report (January 30, 2019) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU1.12received
City of Toronto Audit Plan for the Year Ending December 31, 2018
PricewaterhouseCoopers presenting an Audit Plan for the 2018 audit for the consolidated financial statements of the City of Toronto, prepared in accordance with Canadian public sector accounting standards. The plan includes PWC's view on audit risks, the nature, extent and timing of audit work, as well as proposed fees and terms of engagement.
The Audit Committee received for information, the Audit Plan for the 2018 audit of the consolidated financial statements of the City of Toronto, submitted by PricewaterhouseCoopers, LLP.
Staff recommendation as filed
That the Audit Committee receive for information, the Audit Plan for the 2018 audit of the consolidated financial statements of the City of Toronto, submitted by PricewaterhouseCoopers, LLP.
AU1.13received
Financial Statements for the Year Ended December 31, 2017 - Agencies and Corporations (Part 2)
City Council has received and forwarded the 2017 Financial Statements of the following corporation to the Audit Committee for information: - Toronto Hydro Corporation.
The Audit Committee received for information, the 2017 Financial Statements and related documents for the following corporation, having regard that the Statements have previously been considered by City Council: - Toronto Hydro Corporation.
Staff recommendation as filed
That: 1. The Audit Committee receive for information, the 2017 Financial Statements and related documents for the following corporation, having regard that the Statements have previously been considered by City Council: - Toronto Hydro Corporation