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.
AU11.1amended
Auditor General's 2021 Annual Report - Demonstrating the Value of the Auditor General's Office
This report provides information on the Auditor General's Office 2021 activities and financial and non-financial benefits achieved by the City through its implementation of report recommendations. In 2021, the Auditor General's Office presented 14 audit, review and investigation reports, three follow-up reports and seven administrative reports. Additionally, our Fraud and Waste Hotline was as busy as ever managing hundreds of complaints and conducting several complex investigations. We also continued important reviews of the Toronto Police Service, the Toronto Transit Commission's IT infrastructure, the Toronto Building Division, and of Toronto's shelter system. Every year, we demonstrate the value our Office brings with a quantified return on investment. 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. The City achieved savings of $464.8 million over the last five years by implementing my reports' recommendations. The cumulative costs of operating the Auditor General's Office since 2017 were approximately $31.2 million. This means for every dollar invested in the Auditor General's Office, there was a return of about $14.90. 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, the impacts of which are not always easily quantified in financial terms.
The Audit Committee recommends that: 1. City Council request the Auditor General to consider adding, as part of the Auditor General's 2022 Work Plan, an audit of the City of Toronto's snow clearing performance, including the winter storm on January 17, 2022. 2. City Council direct that Confidential Attachment 1 to the report (February 4, 2022) from the Auditor General remain confidential in its entirety, as it contains information explicitly supplied in confidence to the Auditor General by another level of government or a Crown agency and financial information supplied in confidence to the Auditor General which, if disclosed, could reasonably be expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council direct that Confidential Attachment 1 to this report remain confidential in its entirety, as it contains information explicitly supplied in confidence to the Auditor General by another level of government or a Crown agency and financial information supplied in confidence to the Auditor General which, if disclosed, could reasonably be expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization.
AU11.2adopted
Auditor General's 2021 Annual Report on the Fraud and Waste Hotline
This report represents the 2021 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 2021, 820 complaints comprised of approximately 1,200 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 actual and potential losses from complaints received from 2017 to 2021 is more than $28.2 million (actual losses) plus $970,000 (potential losses) 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; and - the ability to use complaint data to identify trends, address risks, make action-oriented recommendations to management and inform our audit work plan.
The Audit Committee recommends that: 1. City Council receive the report (February 4, 2022) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU11.3amended
A policy objective of the City's Official Plan is to preserve and protect the stock of affordable rental housing. City of Toronto Municipal Code Chapter 667, Residential Rental Property Demolition and Conversion Control, sets out the City's requirements under Section 111 of the City of Toronto Act, 2006 and implementation of its Official Plan policy which requires that where six or more rental units will be lost due to redevelopment, the same number of rental units must be replaced in the new development. Simply speaking, the City's rental replacement policies and ensuing agreements were designed to preserve rental stock by requiring that: 1. demolished rental units are replaced with the same number, size, and type of rental units. 2. existing tenants have the right to return to the same size and type of unit, should they choose to do so. 3. replacement units are charged at similar rents and annual rent increases meet the provincial rent guidelines. It is important to recognize that our reading of the Official Plan policy for rental replacements and Chapter 667 of the Municipal Code, as well as discussions with the City Planning Division and Legal Services Division indicates that the primary purpose of Section 111 agreements was to preserve residential rental housing. From what has been written into the Section 111 agreements, it appears that the City's rental replacement policies and processes were not designed for a supplementary purpose - to provide access to affordable rental replacement units based on financial need. Through our review of ten Section 111 agreements covering over 80 per cent of affordable rental replacement housing units in developments that were fully or partially occupied from 2012 through 2021, we have identified that: - Section 111 agreements generally require that affordable rental replacement units be offered to the public on a "fair and open basis" - but agreements do not clearly specify what is meant by "fair and open basis". - Section 111 agreements generally do not include eligibility requirements for new tenants of available affordable rental replacement units, such as income limits, asset limits, or other limitations on ownership interests in residential property. - City divisions responsible for administering affordable rental housing are working towards harmonizing their processes and requirements for tenant access and eligibility going forward. Our audit findings and recommendations focus on what City Planning can do going forward to continue to enhance its agreements and processes to better align with the City's priorities for making affordable rental replacement housing accessible to all households based on financial need. This includes: a. Strengthening requirements for offering affordable rental replacement units through fair, open and transparent processes; b. Standardizing affordable rental housing eligibility requirements including updating Section 111 Agreements; and c. Harmonizing processes and requirements for administering affordable rental housing.
The Audit Committee recommends that: 1. City Council request the Chief Planner and Executive Director, City Planning, in consultation with the City Solicitor and other City divisions that oversee affordable housing, to: a. report back to City Council, through the Planning and Housing Committee, on the merits of amending rental replacement policies, including City of Toronto Municipal Code Chapter 667, Residential Rental Property Demolition and Conversion Control, to include clear expectations of how future affordable rental replacement units are made available in a fair and open manner to the general public; b. ensure that future affordable rental replacement agreements between the City of Toronto and owners include clear, specific requirements for owners to provide formal access plans; such plans to describe, to the satisfaction of the Chief Planner and Executive Director, City Planning, how information about affordable rental replacement opportunities are to be advertised to the general public, including lower-income households, and how new tenants of affordable rental replacement units are to be selected; and c. implement proactive monitoring processes that ensure sufficient evidence, to the satisfaction of the Chief Planner and Executive Director, City Planning, is obtained from owners to demonstrate compliance with required access plans and all other contractual requirements. 2. City Council request the Chief Planner and Executive Director, City Planning, in consultation with the City Solicitor and other City divisions that oversee affordable housing, to: a. review City of Toronto Municipal Code Chapter 667, Residential Rental Property Demolition and Conversion Control and determine whether affordable housing principles and definitions consistent with amended Official Plan definitions of affordable rent and/or By-law 1756-2019, Municipal Housing Facility can be incorporated into City of Toronto Municipal Code Chapter 667, Residential Rental Property Demolition and Conversion Control and all Section 111 agreements containing affordable rental replacement units going forward; b. ensure that future Section 111 agreements include terms that support the City of Toronto's ability to require tenant eligibility criteria and verification practices consistent with City of Toronto Municipal Code Chapter 667, Residential Rental Property Demolition and Conversion Control, should affordable housing principles and definitions be adopted; and c. implement processes to verify compliance with any eligibility requirements incorporated into executed agreements. 3. City Council direct that Confidential Attachment 1 to the report (February 17, 2022) from the Auditor General remain confidential in its entirety, as it deals with litigation or potential litigation affecting the City of Toronto. 4. City Council direct that Confidential Attachment 1 to the supplementary report (February 14, 2022) from the City Solicitor remain confidential, as it contains advice or communications that are subject to solicitor-client and litigation privilege.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council request the Chief Planner and Executive Director, City Planning, in consultation with the City Solicitor and other City divisions that oversee affordable housing, to: a. report back to City Council, through the Planning and Housing Committee, on the merits of amending rental replacement policies, including City of Toronto Municipal Code Chapter 667, Residential Rental Property Demolition and Conversion Control, to include clear expectations of how future affordable rental replacement units are made available in a fair and open manner to the general public; b. ensure that future affordable rental replacement agreements between the City and owners include clear, specific requirements for owners to provide formal access plans; such plans to describe, to the satisfaction of the Chief Planner and Executive Director, City Planning, how information about affordable rental replacement opportunities are to be advertised to the general public, including lower-income households, and how new tenants of affordable rental replacement units are to be selected; and c. implement proactive monitoring processes that ensure sufficient evidence, to the satisfaction of the Chief Planner and Executive Director, City Planning, is obtained from owners to demonstrate compliance with required access plans and all other contractual requirements. 2. City Council request the Chief Planner and Executive Director, City Planning, in consultation with the City Solicitor and other City divisions that oversee affordable housing, to: a. review City of Toronto Municipal Code Chapter 667, Residential Rental Property Demolition and Conversion Control and determine whether affordable housing principles and definitions consistent with amended Official Plan definitions of affordable rent and/or By-law 1756-2019, Municipal Housing Facility can be incorporated into City of Toronto Municipal Code Chapter 667, Residential Rental Property Demolition and Conversion Control and all Section 111 agreements containing affordable rental replacement units going forward; b. ensure future Section 111 agreements include terms that support the City's ability to require tenant eligibility criteria and verification practices consistent with City of Toronto Municipal Code Chapter 667, Residential Rental Property Demolition and Conversion Control, should affordable housing principles and definitions be adopted; and c. implement processes to verify compliance with any eligibility requirements incorporated into executed agreements. 3. City Council direct that Confidential Attachment 1 to this report remain confidential in its entirety, as it deals with litigation or potential litigation affecting the City of Toronto.
AU11.4adopted
At its meeting on December 9, 2021, the Toronto Community Housing Corporation (TCHC) Board of Directors considered the attached report entitled, "Toronto Community Housing Corporation - Embedding Accountability into Service Delivery: Lessons Learned from the Audit of Contracted Property Management Services". The Board adopted the following recommendations, as made in the report: 1. The Board request the Chief Executive Officer, Toronto Community Housing Corporation, to: a. review property management service delivery expectations for the maintenance, operation and repair of buildings and identify where minimum mandatory standards, specifications, and requirements vary from building to building. b. clarify to its service providers (be it internal TCHC staff, TCHC vendors, or contracted property managers and their subtrades) any additional expectations and requirements not captured in existing contracts and service-level agreements to ensure performance requirements are consistently defined for the entire TCHC portfolio. c. implement a process to ensure updated versions of relevant TCHC standards, specifications, and requirements are applied to all service providers whenever TCHC revises its requirements to support consistent service delivery across all TCHC buildings. 2. The Board request the Chief Executive Officer, Toronto Community Housing Corporation, to review and update how TCHC measures and evaluates performance against its objectives, expectations and/or priorities for day-to-day property management across its entire portfolio. In doing so, TCHC should: a. develop additional methods of measuring performance, including additional key performance indicators to monitor and measure performance against TCHC's desired outcomes. Such methods and measures should address, among other things, quality of completed property management work (e.g. preventative maintenance, routine repairs and maintenance work orders, cleaning, etc.). b. develop ways to measure tenant satisfaction in order to decipher who is responsible for improving their performance (be it TCHC internal staff, TCHC vendors, or contracted service providers and their subtrades). 3. The Board request the Chief Executive Officer, Toronto Community Housing Corporation, to ensure data used to assess, compare, and report on performance and outcomes is collected in a consistent manner across the TCHC portfolio, and that the data collected is accurate, complete and reliable. 4. The Board request the Chief Executive Officer, Toronto Community Housing Corporation, to: a. obtain and retain key supporting documents, including site sign-in/sign-out logs, service tickets, preventative maintenance reports, and other records to support expenditures charged to TCHC by its service providers. b. verify the services are delivered in accordance with the RFP/contracts before payment is made. c. implement a process for periodic internal audits or other independent reviews to confirm that internal controls to ensure expenses are valid and work has been completed, are consistently implemented in practice. 5. The Board request the Chief Executive Officer, Toronto Community Housing Corporation, to review third-party contracts for the maintenance, operation and repair of buildings across TCHC's entire portfolio to: a. ensure they do not exceed the costs of similar contracts for residential properties of a similar type, age and condition. b. identify opportunities to achieve better value for money through economies of scale, by procuring and awarding contracts that enable all vendors to provide services to all its buildings regardless of whether they are directly managed or managed by contracted property managers. 6. The Board request the Chief Executive Officer, Toronto Community Housing Corporation, to implement robust monitoring processes to verify that property management (including operations and maintenance) service providers are meeting performance requirements, including the quality of workmanship and conformity to specifications and requirements. Such processes should include: a. conducting, with sufficient frequency, site visits, inspections or reviews and documenting the results. b. reviewing tenant complaints to identify trends in concerns with the conformity of specific categories of work. c. enhanced monitoring in areas where there is a higher prevalence of tenant complaints, lower tenant satisfaction ratings, and potential for health and safety risks. d. documenting concerns raised and responses from service providers on any remedial action that has been taken. 7. The Board request the Chief Executive Officer, Toronto Community Housing Corporation, to strengthen how TCHC oversees the quality of subcontractors engaged to perform work in its buildings by: a. verifying that subcontractors engaged meet TCHC's qualification requirements for its own vendors. b. ensuring TCHC has an up-to-date list of all the subcontractors engaged to work in its buildings. 8. The Board request the Chief Executive Officer, Toronto Community Housing Corporation, to implement a process for documenting, escalating, and following up on service provider performance issues to ensure corrections are made in a timely manner. Such processes should include documenting results of actions that respond to: a. performance issues identified through inspections and review of records. b. performance issues identified through comparison of performance to KPI, tenant complaints, and tenant satisfaction surveys. c. performance issues identified in annual contractor performance evaluations. d. performance issues identified in letters of non-compliance. 9. The Board request the Chief Executive Officer, Toronto Community Housing Corporation, in consultation with legal counsel, to review incentive fee structures in contracts and supporting processes to be able to exercise contract clauses in order to support continuous improvement of performance by service providers. 10. The Board request the Chief Executive Officer, Toronto Community Housing Corporation, to provide data-driven reporting that supports the Board's decision making and ability to hold management accountable for continuous improvement and better outcomes. 11. The Board forward this report to City Council for information through the City's Audit Committee. A copy of the Secretary's Certificate regarding this matter is attached.
The Audit Committee recommends that: 1. City Council receive the item for information.
Staff recommendation as filed
The Board of Directors of the Toronto Community Housing Corporation recommends that: 1. City Council receive the item for information.
AU11.5adopted
The Auditor General has proactively raised concerns about evolving cybersecurity threats to the City and its Agencies and Corporations. These threats are real and large-scale attacks have disrupted public services in jurisdictions across North America and around the world, such as emergency response systems, utility services and law enforcement operations. A SCADA system, also known as an Operational Technology (OT) system, is used to control industrial processes at facilities like water and wastewater treatment plants and at energy, utilities and transportation facilities. Toronto Water uses this system to manage and control critical infrastructure equipment and processes used in the treatment and distribution of water. Recognizing the need to protect critical water assets, the Auditor General initiated an audit of the SCADA system in 2019 and expedited the follow-up review of the audit recommendations in 2021. The 2019 audit was the Office's first critical infrastructure audit of the City's Operational Technology (OT) systems. The objective of the 2021 follow-up review was to assess the adequacy of controls in place to address potential threats to the SCADA network, systems and applications, and to review actions taken by management since the 2019 audit. The Auditor General made 11 confidential recommendations in the 2019 SCADA audit. Given the importance of critical infrastructure systems and evolving cybersecurity threats, the Auditor General re-tested the controls to verify the implementation of recommendations. At the November 2021 Audit Committee, we provided our public report and a high-level confidential presentation on the implementation status of the recommendations. During our follow-up review, we determined that seven recommendations are fully implemented. An overview of the results is contained in Attachment 1. The details of management actions on each confidential recommendation are presented separately to this report in Confidential Attachment 1.
The Audit Committee recommends that: 1. City Council direct that Confidential Attachment 1 to the report (February 4, 2022) from the Auditor General be released publicly at the discretion of the Auditor General, after discussions with the appropriate City Officials.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council direct that Confidential Attachment 1 to this report from the Auditor General be released publicly at the discretion of the Auditor General, after discussions with the appropriate City Officials.
AU11.6adopted
Status of the Governance Framework for Effective Cyber Security Management
This report provides an update on the approach the Office of the CISO (OC) has taken in developing a governance structure to effectively identify, plan for and mitigate cybersecurity risks across the City of Toronto, including all City divisions, agencies and corporations, and the governance framework to ensure that City divisions, agencies and corporations are effectively managing their cybersecurity risks and responding as new risks arise.
The Audit Committee recommends that: 1. City Council direct that Confidential Attachment 1 to the report (February 4, 2022) from the Chief Information Security Officer remain confidential in its entirety, as it pertains to the security of the property of the City of Toronto.
Staff recommendation as filed
The Chief Information Security Officer recommends that: 1. City Council direct that Confidential Attachment 1 remain confidential in its entirety, as it involves the security of the property of the City of Toronto.
AU11.7adopted
At its meeting on November 9, 10, and 12, 2021, City Council directed the Fire Chief and General Manager - Emergency Management to report back with an update on the implementation of recommendations emerging from Item AU10.4, Auditor General's Cybersecurity Review: Toronto Fire Services Critical Systems Review in the first quarter of 2022. Details on the implementation of specific recommendations are provided in Confidential Attachment 1.
The Audit Committee recommends that: 1. City Council direct that Confidential Attachment 1 to the report (February 8, 2022) from the Acting Fire Chief and General Manager - Emergency Management, Toronto Fire Services remain confidential in its entirety, as it pertains to the security of the property of the City of Toronto.
Staff recommendation as filed
The Acting Fire Chief and General Manager - Emergency Management, Toronto Fire Services recommends that: 1. City Council direct that Confidential Attachment 1 remain confidential in its entirety, as it involves the security of the property of the City of Toronto.
AU11.8forwarded without recommendation
On February 9, 2021, the Auditor General released a report entitled "Getting to the Root of the Issues: A Follow-Up to the 2019 Tree Maintenance Services Audit", which was tabled at the Audit Committee meeting on February 16, 2021. Council provided direction to Parks, Forestry and Recreation (PFR) to report to each meeting of the Audit Committee on experiences and data collected on the performance of Urban Forestry Contractors and City crews. Council also directed the City Manager to provide a consolidated summary and analysis of all forestry services related complaints in 2021. The purpose of this report is to provide an update on experiences and data collected on the performance of Urban Forestry Contractors and City crews to the end of the previous tree maintenance contracts, June 30, 2021, and for the first five months of the new contracts. The report also provides a summary of Forestry Operations complaints and the actions and outcomes arising from these complaints.
The Audit Committee submits the Item to City Council without recommendation.
Staff recommendation as filed
The General Manager, Parks, Forestry and Recreation recommends that: 1. The Audit Committee receive this report for information.
AU11.9adopted
Status of Audit Recommendations for Parks, Forestry and Recreation
At its meeting on July 7, 2021, the Audit Committee requested the General Manager, Parks, Forestry and Recreation to report back to the Audit Committee with an update on the status of completed and uncompleted recommendations. This report provides updated management responses and explanations for delays in implementing recommendations related to the following Auditor General reports: - Review of Urban Forestry - Ensuring Value for Money for Tree Maintenance Services (2019) - Review of Urban Forestry - Permit Issuance and Tree By-law Enforcement Require Significant Improvement (2018) - Parks, Forestry and Recreation - Capital Program - The Backlog in Needed Repairs Continues to Grow (2009) Recommendations from the Auditor General's Getting to the Root of the Issues: A Follow-Up to the 2019 Tree Maintenance Services Audit, brought to City Council in April 2021, were not included in the Auditor General's July 7 update on outstanding recommendations and therefore are not in scope of the Audit Committee's request. Parks, Forestry and Recreation (PFR) continues to make significant progress on implementing recommendations. While a number of recommendations have been fully implemented, others are not fully implemented but significant progress has been made and full implementation is dependent on the completion of cross-divisional technology solutions and policies, approved staffing complement, and continued monitoring to demonstrate effectiveness.
The Audit Committee: 1. Received the report (February 1, 2022) from the General Manager, Parks, Forestry and Recreation for information.
Staff recommendation as filed
The General Manager, Parks, Forestry and Recreation recommends that: 1. The Audit Committee receive this report for information.
AU11.10adopted
City of Toronto Audit Planning Report for the Year Ended December 31, 2021
KPMG LLP presenting the City of Toronto Audit Planning Report for the Year Ended December 31, 2021 for the 2021 audit of the consolidated financial statements for the City of Toronto, prepared in accordance with Canadian Public Sector Accounting Standards.
The Audit Committee: 1. Received the City of Toronto Audit Planning Report for the Year Ended December 31, 2021 (January 17, 2022) from Kevin Travers, Lead Audit Engagement Partner, KPMG LLP for information.
Staff recommendation as filed
That: 1. The Audit Committee receive the City of Toronto Audit Planning Report for the Year Ended December 31, 2021 (January 17, 2022) from Kevin Travers, Lead Audit Engagement Partner, KPMG LLP for information.
AU11.11adopted
The purpose of this report is to provide the Audit Committee and City Council with the 2020 audited financial statements of Arenas and the status of 2020 audited financial statements for Arenas. The 2020 audited financial statements for the eight City Arenas are presented to the Audit Committee after approval by their respective Boards or Committees of Management. The audited financial statements for one Arena was previously presented at the November 2021 Audit Committee. This report presents the Independent Auditor's Report, accompanying financial statements and management letters (if applicable) for five additional Arenas. Of the remaining two Arenas, the audit for one is completed but pending Board approval and the audit for the other is in progress. Depending on when the last two remaining audits are finalized, the Independent Auditor's Reports, accompanying financial statements and management letters (if applicable) of those Arenas will be presented at a subsequent meeting of the Audit Committee. In addition, the 2019 audited financial statements for seven arenas were presented at previous Audit Committee meetings. The audit of the remaining one Arena remains in progress at the time of preparation of this report.
The Audit Committee recommends that: 1. City Council receive the 2020 Audited Financial Statements and Management Letters, where applicable, for the George Bell Arena, the Larry Grossman Forest Hill Memorial Arena, the Moss Park Arena, the North Toronto Memorial Arena, and the William H. (Bill) Bolton Arena in Attachments 1 to 5 to the report (January 31, 2022) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive the 2020 Audited Financial Statements and Management Letters, where applicable, for the Arenas in Attachments 1 to 5 to this report for information.
AU11.12adopted
Community Centres - 2020 Audited Financial Statements for Scadding Court Community Centre
The purpose of this report is to provide the Audit Committee and City Council with the 2020 audited financial statements of Scadding Court Community Centre. The 2020 audited financial statements for the 10 Community Centres are presented to Audit Committee after approval by their respective Boards of Management. Of the 10 City Community Centres, the audited financial statements for nine Community Centres were previously presented, eight at the July 2021 Audit Committee and one at the November 2021 Audit Committee. This report presents the 2020 Independent Auditor's Report and accompanying financial statements for the one remaining Community Centre.
The Audit Committee recommends that: 1. City Council receive the 2020 Audited Financial Statements for Scadding Court Community Centre in Attachment 1 to the report (January 31, 2022) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive the 2020 Audited Financial Statements of Scadding Court Community Centre in Attachment 1 to this report for information.
AU11.13adopted
Bob Gore, Robert Gore & Associates Chartered Professional Accountants reporting on the Auditor General's Office of the City of Toronto - Report on the Results of Applying Specified Auditing Procedures to Financial Information Other Than Financial Statements for the Year Ended December 31, 2020.
The Audit Committee recommends that: 1. City Council receive the report (January 27, 2022) from Bob Gore, Robert Gore & Associates Chartered Professional Accountants for information.
Staff recommendation as filed
That: 1. City Council receive the report (January 27, 2022) from Bob Gore, Robert Gore & Associates Chartered Professional Accountants for information.