Audit Committee
The full agenda, as filed
All 8 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.
AU11.1adopted
Auditor General's 2025 Annual Report - Demonstrating the Value of the Auditor General's Office
This report provides information about the Auditor General's Office 2025 activities and the financial and non-financial benefits achieved by the City through its implementation of Auditor General report recommendations. In 2025, the Auditor General's Office completed 12 impactful audit, investigation, and other subject matter reports, containing 81 recommendations, as well as our 2025 follow-up reports. Every year we share the measurable financial impact of our work through a quantified return on investment. The City has achieved cumulative one-time and annually recurring savings projected over a five-year period totaling over $342 million (as reported in our 2021 to 2025 Annual Reports) by implementing our recommendations. The cumulative cost of operating the Auditor General's Office from 2021 to 2025 was approximately $35.2 million. Based on these numbers, for every dollar invested in the Auditor General's Office there was a return of $9.74. Equally important are the non-financial benefits that arise from our work. These include improvements to the effectiveness of City programs, systems, processes, and controls. Our recommendations also help to ensure City resources are used efficiently to deliver services and programs that improve life for Torontonians.
The Audit Committee recommends that: 1. City Council receive the report (January 29, 2026) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU11.2adopted
Auditor General's 2025 Annual Report on the Fraud and Waste Hotline
The Auditor General's 2025 annual report on fraud, waste and wrongdoing at the City highlights information about Fraud and Waste Hotline (the Hotline) activity, including background information, detailed statistics, and complaint summaries. It represents an overview of fraud that was reported to us through the Hotline. In 2025, the Auditor General's Fraud and Waste Hotline received 697 complaints representing approximately 1,150 allegations. This is similar to the number of complaints received in 2024 (679 complaints and 1,050 allegations). We continue to manage a high volume of allegations, which has remained relatively consistent over the past five years, averaging approximately 1,210 allegations per year. With almost 15,350 complaints received since 2002, the Hotline has helped reduce the City's losses and protect its assets. The actual and potential losses from complaints received from 2021 to 2025 are $6.3 million (actual losses) plus $4 million (potential losses) had fraud not been detected. Additional non-quantifiable benefits include: - the deterrence of fraud or wrongdoing - strengthened internal controls - policy and procedure improvements - increased operational efficiencies - using complaint data to identify trends and emerging issues, make results-oriented recommendations to management, and inform our Audit Work Plan
The Audit Committee recommends that: 1. City Council receive the report (January 29, 2026) 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
The purpose of this report is to update the Audit Committee on the Auditor General's decision in considering City Council's request to include an investigation into SmartTrack implementation in her 2026 Work Plan, and to report back on any required changes to the timeline of other work in her Work Plan. The report also provides some background information and an event chronology (Attachment 1) related to the SmartTrack program. For background, the SmartTrack program's scope has decreased and changed over the past 10 years. In 2015, the then Mayor initially envisioned 13 new stations (and nine existing GO stations for 22 station stops total). City Council later approved six new stations in 2016, as recommended in a staff report following a detailed technical analysis. In 2021, the number of stations was reduced to five stations. Subsequently, due to cost pressures on the SmartTrack program, the provincial government committed $226 million in funding in June 2023 to deliver the five-station scope. In late 2024, to address additional cost pressures identified by the Province, City Council approved deferring two of the five stations. No further funding was made available by the City or provincial or federal levels of government. In considering City Council's request, the Auditor General and her staff met with the City's Transit Expansion Division, and reviewed relevant agreements, documents, and information to better understand the roles and responsibilities of the City, Province and Metrolinx for the SmartTrack program, as well as potential risks and issues. The City's Transit Expansion Division acts as a project facilitator and coordinates between all City divisions, the Toronto Transit Commission, Metrolinx, and other orders of government. Metrolinx's role in the SmartTrack program includes delivering the program by designing and building the SmartTrack stations. Typically, the City oversees a vendor and holds them accountable for service deliverables and timelines through managing an agreement with them, which could include incentives and consequences. However, Metrolinx is a Provincial agency and not a typical vendor of the City. The SmartTrack program's stations are being built on the GO Transit rail corridors owned by Metrolinx, impacting its existing GO routes / schedules / stations. As such, Metrolinx has the unique position of acting as the rail authority and can close rail lines and divert trains to build SmartTrack stations. Consequently, Metrolinx is leading the SmartTrack program as the City's delivery agent. This means Metrolinx oversees all aspects of SmartTrack from contractor procurement to deciding how best to use and manage City-provided funds. Since Metrolinx is an agency from a higher order of government, the Province of Ontario, the City sometimes has limited visibility into Metrolinx's decisions. The City's SmartTrack Main Agreement with Metrolinx does require regular reporting from Metrolinx to the Transit Expansion Division on the delivery of the program, requires Metrolinx to obtain the City's approval for any design and construction of City infrastructure, and also provides an established tiered governance structure for potential escalation, including up to the Province. However, the City must rely on its relationship with Metrolinx to address any SmartTrack delivery and schedule issues. In the Auditor General's view, she could provide the greatest value in auditing the SmartTrack program by auditing Metrolinx. The audit could examine whether any cost escalations over the past few years could have potentially been prevented through better planning and efficiencies by Metrolinx. The audit could also examine how SmartTrack program funding is used, and potentially how Metrolinx manages procurements and contracts. However, since the City does not have an audit clause in its agreement with Metrolinx and it is a provincial agency, the Toronto Auditor General does not have the authority or mandate to conduct an audit or investigation of Metrolinx. Currently, the Ontario Auditor General has the authority to conduct an audit of Metrolinx. A recommendation is included in this report to consider adding an audit clause in the agreements between the City and Metrolinx when a majority of the capital funding is being provided by the City of Toronto. Currently, the Toronto Auditor General could only examine the role of the City's Transit Expansion Division in the SmartTrack program. In the Auditor General's view, auditing the Transit Expansion Division would not adequately address the risks and potential issues of the SmartTrack program or City Council's request, as it would not be able to investigate how the funding is used, nor how Metrolinx manages procurements and contracts related to the SmartTrack program. Therefore, no changes have been made to the Auditor General's 2026 Work Plan for this request. If the City's contractual right to audit Metrolinx changes in the future, this could be reconsidered at that time.
The Audit Committee recommends that: 1. City Council request the City Manager, in consultation with Legal Services, to consider including an audit clause in agreements between the City of Toronto and Metrolinx when a majority of the capital funding is being provided by the City of Toronto, to allow the City of Toronto the right to audit Metrolinx's records related to meeting the deliverables and terms of the agreements. 2. City Council direct that Confidential Attachment 1 to this report (January 29, 2026) remain confidential in its entirety as it contains commercial information supplied in confidence to the City of Toronto, 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, and contains information explicitly supplied in confidence to the City of Toronto by the Province of Ontario. 3. City Council request the Chief Purchasing Officer and Executive Director, Internal Audit, to report to the May 1, 2026 meeting of Audit Committee on the City's contract management, control of cost escalations, and lack of audit requirement in the SmartTrack contracts, and whether they ensured value for money and project delivery timelines, and what requirements should be considered in future.
Staff recommendation as filed
The Auditor General recommends: 1. City Council request the City Manager, in consultation with Legal Services, to consider including an audit clause in agreements between the City of Toronto and Metrolinx when a majority of the capital funding is being provided by the City of Toronto, to allow the City of Toronto the right to audit Metrolinx's records related to meeting the deliverables and terms of the agreements. 2. City Council direct that Confidential Attachment 1 to this report (January 29, 2026) remain confidential in its entirety as it contains commercial information supplied in confidence to the City of Toronto, 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, and contains information explicitly supplied in confidence to the City of Toronto by the Province of Ontario.
AU11.4amended
Common Themes and Issues from Auditor General’s Previous Reports (2020-2025)
Over the years, the Auditor General has issued a significant number of reports and recommendations to provide independent assessments on the quality of stewardship over public funds and whether value for money is achieved in operating City divisions, and certain City agencies and corporations. The Auditor General periodically issues a report to highlight common themes and summarize findings from previous reports. Where similar findings emerge in several reports, they likely represent systemic issues found across multiple divisions, agencies and corporations requiring ongoing management attention. This report covers common themes and issues from Auditor General audit and subject matter reports published from 2020 to 2025. It highlights three common themes that, if addressed organization-wide, will help the City improve its effectiveness and efficiency in achieving its objectives. Two of these themes (B and C below) were identified in our 2020 report and are worth reiterating, as they continue to be identified in more recent Auditor General reports. The three common themes are: A. Demonstrating Accountability for Achieving Program Objectives Consistently and Cost Effectively B. Strengthening Contractor Oversight and Accountability through Effective Procurement and Contract Management C. Modernizing Processes, Leveraging Data, and Enhancing Information Technology Governance and Collaboration to Deliver Efficient and Effective Service This report, together with previous Auditor General findings and recommendations, should be taken as an opportunity to learn from past reports on various divisions, agencies, and corporations.
The Audit Committee recommends that: 1. City Council request the City Manager to forward this report to Division Heads and Heads and Boards of the City's major agencies and corporations and request them to review and consider the relevance of the themes identified in the report for their respective operations and any actions that may need to be taken. 2. City Council request the City Manager to report to the first scheduled Audit Committee meeting in 2027 with an update on actions taken to address the Auditor General's identified common themes and issues throughout City divisions, including but not limited to program and individual performance management and accountability systems, leadership development, staff training, policies and procedures, external and agency relationship management instruments, industry standards adoption, regular reporting and review systems, organizational competency, best practices and centres of excellence development.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council request the City Manager to forward this report to Division Heads and Heads and Boards of the City's major agencies and corporations and request them to review and consider the relevance of the themes identified in the report for their respective operations and any actions that may need to be taken.
AU11.5adopted
At its meeting on December 5, 2025, the Board of Governors of Exhibition Place considered Item EP20.1 and made recommendations to City Council. Summary from the report (November 21, 2025) from the Auditor General: The Exhibition Place is an agency of the City of Toronto and managed by the Board of Governors of Exhibition Place. As Canada's largest exhibition and convention centre, the Exhibition Place is used for conventions, conferences, trade shows, entertainment and sporting events, public celebrations, festivals, and cultural attractions, generating over $594.5 million per year in economic impact. Technology plays a vital role in all aspects of the Exhibition Place's operations and services. Given the size of the operations, and the services that Exhibition Place provides, the Auditor General included a cybersecurity audit of the Exhibition Place in her 2025 Work Plan. This audit is conducted in two phases. Phase One of this audit focused on: - Physical security at selected facilities, - User access management, and - Social engineering and staff awareness. Phase Two, which is in progress, will include an overall assessment of Exhibition Place's networks, systems, and application security and will be reported to the Board in April 2026. This report includes five administrative recommendations. The confidential findings and recommendations are contained in Confidential Attachment 1 to this report. A separate confidential detailed technical report has been provided to management with technical details to guide them in addressing the report findings and recommendations. Management agrees with the recommendations contained in the Confidential Attachment 1, which also includes management's response.
The Audit Committee recommends that: 1. City Council authorize the public release of Confidential Attachment 1 to the report (November 21, 2025) from the Auditor General at the discretion of the Auditor General, after discussions with the appropriate Exhibition Place and City officials.
Staff recommendation as filed
The Board of Governors of Exhibition Place recommends that: 1. City Council authorize the public release of Confidential Attachment 1 to the report (November 21, 2025) from the Auditor General at the discretion of the Auditor General, after discussions with the appropriate Exhibition Place and City officials.
AU11.6adopted
City of Toronto Audit Planning Report for the Year Ended December 31, 2025
This report presents the external auditor (KPMG LLP)'s audit planning report for the City of Toronto's audited consolidated financial statements for the year ended December 31, 2025.
The Audit Committee: 1. Received the audit planning report, submitted by KPMG LLP, for the City of Toronto's audited consolidated financial statements for the year ended December 31, 2025 for information.
Staff recommendation as filed
The Controller and Chief Accountant recommends that: 1. Audit Committee receive KPMG LLP's audit planning report for the City of Toronto's audited consolidated financial statements for the year ended December 31, 2025 for information.
AU11.7amended
City Council, through Item AU10.3, directed Infrastructure Services to report to the Audit Committee on the basis for requesting Paid Duty Officers for Toronto Water, the Toronto Transit Commission, and Transportation Services construction and maintenance projects, including examples of common instructions provided to Paid Duty Officers and alternative options for their use. This report responds to that direction by outlining the circumstances under which Paid Duty Officers are requested, the operational and decision-making framework used to assess the need for police authority in work zones, the type of activities Paid Duty Officers are typically instructed to perform, and the situations in which alternative resources such as Traffic Agents or Traffic Control Persons may be appropriate. Paid Duty Officers are deployed in complex traffic scenarios where enforcement authority is required, such as construction near signalized intersections, school zones, high-pedestrian areas, or situations requiring regulatory enforcement or rolling closures. Transportation Services staff provide direction to Paid Duty Officers, Traffic Agents, and other traffic management personnel to ensure that their activities align with the operational needs of each closure. This may include prioritizing turning movements at intersections, facilitating transit movements on diversion routes, or managing emerging congestion points to maintain safety, mobility, and overall network performance. Decisions regarding Paid Duty Officer deployment are made on a site-specific basis using professional engineering judgement, guided by the Ontario Traffic Manual Book 7, and in collaboration with Transportation Services, construction applicants, and the Toronto Police Service.
The Audit Committee recommends that: 1. City Council receive the report (January 29, 2026) from the General Manager, Transportation Services for information.
Staff recommendation as filed
The General Manager, Transportation Services, recommends that: 1. Audit Committee receive this report for information.
AU11.8adopted
The purpose of this report is to provide the Audit Committee and City Council with a status update on the 2024 audited financial statements of Arenas. The 2024 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 financial statements for six Arenas were previously presented at the July 11 and November 5, 2025 Audit Committee. At the time of preparation of this report, there were 2024 audited financial statements available for one Arena. The audit for the one remaining Arena was awaiting board approval. The Independent Auditor's Report, accompanying financial statements and management control letter (if applicable) will be presented at a subsequent meeting of the Audit Committee.
The Audit Committee recommends that: 1. City Council receive the 2024 audited financial statements and management letter for the Ted Reeve Community Arena in attachment 1 to the report (February 2, 2026) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive the 2024 audited financial statements and management letter, where applicable, for the Arena in attachment 1 to this report for information.