Audit Committee
The full agenda, as filed
All 18 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.
AU3.1adopted
Financial Statements for the Year Ended December 31, 2018 - Agencies and Corporations (Part 1)
The following agencies and corporations have submitted 2018 Financial Statements and related documents to the Audit Committee for consideration: - Exhibition Place - Toronto Parking Authority - Toronto Public Library - Toronto Transit Commission - Toronto Zoo
The Audit Committee recommends that: 1. City Council receive for information, the 2018 Financial Statements and related documents for the following agencies and corporations: - Exhibition Place - Toronto Parking Authority - Toronto Public Library - Toronto Transit Commission - Toronto Zoo - Heritage Toronto - Toronto Atmospheric Fund - Yonge- Dundas Square.
Staff recommendation as filed
That: 1. City Council receive for information, the 2018 Financial Statements and related documents for the following agencies and corporations: - Exhibition Place - Toronto Parking Authority - Toronto Public Library - Toronto Transit Commission - Toronto Zoo
AU3.2amended
Business Improvement Areas (BIAs) - 2018 Audited Financial Statements - Report No. 1
The purpose of this report is to present the City of Toronto's (City) Business Improvement Areas (BIAs) audited financial statements and management letters for approval. The report contains the 2018 audited financial statements and management letters for forty-nine (49) entities and the 2017 audited financial statements and management letters for nine (9) entities. All 2017 audited financial statements have now been presented for approval, with the exception of Historic Queen BIA, which has not presented a budget request for approval since 2009, therefore, does not have any revenues or expenses to report. Audit recommendations, accepted by the respective BIA Boards of Management, are included in the attached management letters.
The Audit Committee recommends that: 1. City Council approve the 2018 audited financial statements and management letters of the forty-nine (49) Business Improvement Areas and the 2017 audited financial statements and management letters of the nine (9) Business Improvement Areas attached as Appendices A to BK to the report (June 3, 2019) from the Controller and the General Manager, Economic Development and Culture. 2. City Council direct those Business Improvement Areas with outstanding audit issues, to implement the management letter recommendations, and request the Auditor General to provide an update report to the October 25, 2019 meeting of the Audit Committee.
Staff recommendation as filed
The Controller and the Director of Business Growth Services, Economic Development and Culture recommend that: 1. City Council approve the 2018 audited financial statements and management letters of the forty-nine (49) Business Improvement Areas and the 2017 audited financial statements and management letters of the nine (9) Business Improvement Areas attached as Appendices A to BK of this report.
AU3.3amended
Arenas - 2018 Audited Financial Statements
The purpose of this report is to provide the Audit Committee and City Council with the 2018 audited financial statements of Arenas. The 2018 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 external auditor, Welch LLP, advise that they have provided their comments on internal controls to some organizations by way of a report to the Board. The Independent Auditor's Report, accompanying financial statements, and internal control letter (where applicable) is attached to this report.
The Audit Committee recommends that: 1. City Council receive the 2018 audited financial statements of Arenas attached to the report (June 13, 2019) from the Auditor General. 2. City Council direct those Arenas with outstanding audit issues, to implement the management letter recommendations, and request the Auditor General to provide an update report to the October 25, 2019 meeting of the Audit Committee.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive the 2018 audited financial statements of Arenas attached to this report.
AU3.4adopted
Community Centres - 2018 Audited Financial Statements
The purpose of this report is to provide the Audit Committee and City Council with the 2018 audited financial statements of Community Centres. The 2018 audited financial statements for the 10 Community Centres are presented to Audit Committee after approval by their respective Boards of Management. The external auditor, Welch LLP, advise that they have provided their comments on internal controls to some organizations by way of a report to the Board. Each Community Centre's Independent Auditor's Report, accompanying financial statements, and internal control letter (where applicable) is attached to this report.
The Audit Committee recommends that: 1. City Council receive the 2018 audited financial statements of Community Centres attached to the report (June 13, 2019) from the Auditor General.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive the 2018 audited financial statements of Community Centres attached to this report.
AU3.5adopted
The purpose of this report is to provide the Audit Committee and City Council with the status of financial statement audits of the City's Agencies and Corporations for the year ended December 31, 2018. The majority of the audits of the City's Agencies and Corporations have been completed and approved by their respective Boards. Any financial statements that are outstanding will be forwarded to Audit Committee as they become available.
The Audit Committee recommends that: 1. City Council receive the report (June 13, 2019) from the Auditor General on the status of the financial statement audits of the City's Agencies and Corporations for the year ended December 31, 2018.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report on the status of the financial statement audits of the City's Agencies and Corporations for the year ended December 31, 2018.
AU3.6amended
The Auditor General's Office conducts an annual follow-up review to determine the implementation status of recommendations in previously issued audit and investigation reports. This report provides information regarding the implementation status of recommendations issued to City agencies and corporations. The review results are reported to the respective Board of City agencies and corporations and then to City Council through the Audit Committee. Our 2019 follow-up review included 96 outstanding recommendations from the following three City agencies and corporations: - TO Live* - Toronto Parking Authority - Toronto Transit Commission *The report to the Board of Directors of TO Live relates to recommendations from an audit of the Sony Centre for the Performing Arts. As of December 31, 2017, there were 13 audit reports to agencies and corporations with 96 outstanding recommendations. Among the 96 recommendations, our review verified that 19 recommendations have been fully implemented, 61 recommendations have been partially implemented, and three recommendations are no longer applicable. The Auditor General has decided that the 13 recommendations arising from the 2015 audit of Toronto Parking Authority (TPA) real estate activities will no longer be included in her annual follow up process. Although, the recommendations are still relevant, as a result of the adoption of the City-wide real estate model, TPA no longer carries out real estate transactions on an independent basis. Given the extent of changes being made to the TPA real estate operations, the Auditor General would need to conduct an entirely new audit to be able to have a reasonable basis to form conclusions to confirm that the recommendations have been implemented. Continued efforts to implement all outstanding recommendations will provide additional benefits to City agencies and corporations such as cost savings, additional revenue and enhanced service delivery. The remaining 61 outstanding recommendations will be included in the next year's follow-up review together with the 37 recommendations included in audit reports issued to these agencies and corporations in 2018. Detailed results of our individual follow-up reviews of City agencies and corporations, as presented to their respective Boards, are enclosed as Attachments 1 through 3 and the Confidential Attachment 1. These reports provide further details regarding their respective recommendations and current implementation status. We express our appreciation for the co-operation and assistance we received from the management and staff of City agencies and corporations.
The Audit Committee recommends that: 1. City Council receive the report (June 3, 2019) from the Auditor General for information. 2. City Council direct that the confidential information contained in Confidential Attachment 1 to the report (May 31, 2019) from the Auditor General remain confidential in its entirety, as it pertains to a proposed or pending acquisition of land by the Toronto Parking Authority Board.
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 to the report dated May 31, 2019 remain confidential in its entirety, as it pertains to a proposed or pending acquisition of land by the Toronto Parking Authority Board.
AU3.7amended
City of Toronto - 2018 Audited Consolidated Financial Statements
This report presents the City of Toronto's (City), Audited Consolidated Financial Statements (Statements) for the year ended December 31, 2018, for approval, to Audit Committee and Council and provides highlights of the City's financial performance during 2018 and financial condition as of December 31, 2018. The City's financial statements have been prepared by management, who is responsible for ensuring that proper internal controls have been applied to the presentations in each statement. The City's auditors, PricewaterhouseCoopers LLP (PwC) are responsible for providing an opinion on the fair presentation of the financial statements in accordance with Public Sector Accounting Standards (PSAS). Audit Committee is responsible for approving the statements prior to City Council approval. The Statements are attached as Appendix A. In addition, Appendix B - 2018 Financial Statement Review, provides information about each statement and explains the City's revenue and expenditure activities and financial position for the audited fiscal year. The City of Toronto 2018 Year End Report to the Audit Committee (Year End Report), Appendix C, includes a draft of the external auditor's opinion on the Statements. The report contains two internal control recommendations, an unadjusted item for $85 Million which has been included on the Summary of Unadjusted items and the draft Independent Auditor's Report, which includes PwC's unqualified opinion as to the fair presentation of the Statements. The PwC final audit opinion will be received and dated the day following City Council approval.
The Audit Committee recommends that: 1. City Council approve the 2018 Audited Consolidated Financial Statements as attached in Appendix A to the report (June 28, 2019) from the Controller and the Chief Financial Officer and Treasurer. 2. City Council request the Chief Financial Officer and Treasurer and the Controller to review the way the City's budget documents and consolidated financial statement are prepared, with a view to increasing transparency and the ability of Members, staff and the public to easily understand the City's financial situation. This review should include current best practices in place nationally and internationally, and enable the financial statements to be an open data item. Further, request the Chief Financial Officer and Treasurer to report on this initiative to the Audit Committee, prior to the budget cycle of 2020. 3. City Council request the Chief Financial Officer and Treasurer to explore opportunities to make the consolidated financial statement an open data item.
Staff recommendation as filed
The Chief Financial Officer and Treasurer, and the Controller recommend that: 1. City Council approve the 2018 Audited, Consolidated Financial Statements as attached in Appendix A.
AU3.8adopted
Trust Funds - 2018 Audited Consolidated Financial Statements
The City of Toronto (City), its' agencies, and corporations are the beneficiaries of assets from third parties intended to be used for specific purposes. These assets, held mostly in cash and investments, are administered through the City and two of its' related parties. Although these trust funds are assets to the City and its consolidated parties, they are not included in the City's Consolidated Financial Statements. This report presents the City's Consolidated Trust Funds Financial Statements for the year ended December 31, 2018 and provides highlights of the Trust Funds' 2018 financial performance and financial condition as of December 31, 2018. The Trust Fund Financial Statements are audited by PricewaterhouseCoopers (PwC). The City received an unqualified audit opinion and no internal control recommendations related to the 2018 Trust Fund Financial Statements.
The Audit Committee recommends that: 1. City Council approve the 2018 Consolidated Financial Statements for the City of Toronto Trust Funds as attached in Appendix A to the report (June 12, 2019) from the Controller.
Staff recommendation as filed
The Controller recommends that: 1. City Council approve the 2018 Consolidated Financial Statements for the City of Toronto Trust Funds as attached in Appendix A of this report.
AU3.9adopted
Sinking Funds - 2018 Audited Financial Statements
The City of Toronto (City) maintains portfolios of sinking funds in order to build up funds used to repay City debt when it matures. Sinking fund contributions are invested; the investment earnings help reduce the amount of City own-source cash used to repay amounts borrowed. This report presents the City of Toronto's Sinking Funds Financial Statements for the year ended December 31, 2018 and provides highlights of the Sinking Funds' 2018 financial performance as of December 31, 2018. The Sinking Fund financial statements are audited by PricewaterhouseCoopers (PwC). The City received an unqualified audit opinion and no internal control recommendations related to the 2018 Sinking Fund financial statements.
The Audit Committee recommends that: 1. City Council approve the 2018 Sinking Funds Statements as attached in Appendix A to the report (June 10, 2019) from the Controller.
Staff recommendation as filed
The Controller recommends that: 1. City Council approve the 2018 Sinking Funds Statements as attached in Appendix A of this report.
AU3.10amended
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 Infrastructure and Development Services. Our 2019 follow-up review included 53 outstanding recommendations from 12 audit reports issued between 2011 and 2017 for the following six City divisions: - City Planning - Fire Services - Municipal Licensing & Standards - Toronto Building - Toronto Water - Transportation Services Our review verified that 15 recommendations (28 per cent) have been fully implemented and 37 recommendations (70 per cent) have been partially implemented and one recommendation (2 per cent) is 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. The remaining 37 outstanding recommendations will be included in the next year's follow-up review together with the 21 recommendations included in audit reports issued to City divisions in Infrastructure and Development Services in 2018. Detailed results of our follow-up review together with management comments and action plan are included in Attachments 1 through 3. We express our appreciation for the co-operation and assistance we received from management and staff of City divisions in Infrastructure and Development Services during this year's follow-up review process.
The Audit Committee recommends that: 1. City Council request the City Manager to report to the October 25, 2019 meeting of the Audit Committee on a process to track and report on a quarterly basis, progress on management's implementation and target completion date of outstanding audit recommendations, with emphasis on those identified by the Auditor General as items of greatest concern.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU3.11adopted
Pension, Payroll and Employee Benefits - Update on AU7.2 PPEB Audit Recommendations
The purpose is to provide an update of the Pension, Payroll and Employee Benefits Audit recommendations related to items 3, 7 and 15 of report AU7.2 Management of the City's Employee Extended Health and Dental Benefits, Phase One: The City Needs to Ensure Adequate Detection and Review of Potentially Excessive and Unusual Drug Claims.
The Audit Committee: 1. Received the report (June 13, 2019) from the Controller for information.
Staff recommendation as filed
The Controller recommends that: 1. The Audit Committee receive this report for information.
AU3.12amended
This report responds to Audit Committee's request to report on the Information and Technology Division's outstanding audit recommendation wherein the Chief Information Officer was requested to develop a Cyber Security Program that supported ongoing vulnerability assessment and penetration testing using industry standards applied by subject matter experts. The City already has a foundation of cyber security measures in place to protect the City's information technology systems. The Auditor General's recommendations will enhance existing cyber security practices and assist with the detection, prevention and responses to future cyber threats. The City launched its formal Cyber Security Program in 2017 to enhance security capabilities given the increasing complexity in cyber security. The objective of this Program is to identify and mitigate IT-related risks that directly affect the corporate technology environment that City Divisions rely upon when servicing the residents and the public who expect the provision of secure and reliable City services. One component of the Cyber Security Program includes the analysis of resources and funding requirements to develop and implement improvements to vulnerability assessments and penetration testing functions. In addition, the City plans to implement new vulnerability management capabilities as part of a strategy to engage a Managed Security Services Provider (MSSP) and develop partnerships with industry experts. Further to the above recommendation, the Chief Information Officer, in collaboration with the Auditor General's Office, will be issuing a comprehensive Audit Report to Audit Committee for its meeting on October 25, 2019. This report will provide a comprehensive review of all audit recommendations (including both public and confidential) received to date.
The Audit Committee recommends that: 1. City Council request the City Manager, the Chief Information Officer and the City Clerk to co-ordinate and develop standard incident management procedures including communication protocols to address incidents involving cyber attacks/information breaches. The procedures and protocols should include: a. Guidelines describing the sequence of actions that should take place as soon as staff become aware of a cyber attack/information breach incident. b. Communication protocols detailing key contact names, functions and contact information for staff to receive guidance. c. Reports to be completed by the affected organization, detailing the date of incident, systems affected, information compromised, and other relevant details. d. Communications to the media/public, where required, including privacy protocols. The incident management procedures and communication protocols should be liaised across the City, including agencies and corporations. 2. City Council request the City Manager, in consultation with the Chief Information Officer, to implement appropriate cyber security training which should be mandatory for all City staff.
Staff recommendation as filed
The Chief Information Officer recommends that: 1. Audit Committee receive this report for information.
AU3.13amended
Audit of City Cleaning Services: Outstanding Recommendations of Greatest Concern
At its meeting of May 3, 2019, the Audit Committee directed staff to report back on recommendations 3 and 9 from the Auditor General's 2016 report "Audit of City Cleaning Services - Part 2: Maximizing Value from Cleaning Contracts." This report responds to this request for information and presents an overview of actions that Facilities Management has undertaken, and will continue to over the next few years, to address these recommendations. This includes the consolidation and standardization of custodial contracts and services in support of the City-Wide Real Estate transformation, which will consolidate and standardize facilities management functions City-wide; the development of new contract controls; and quality assurance measures. The report provides further detail on next steps that will be taken to ensure these recommendations are implemented and benefits will be realized.
The Audit Committee requested: 1. The General Manager, Facilities Management, to provide detailed reasons why Recommendations 3 and 9 contained in the Auditor General's 2016 report on Cleaning Services, have not been implemented, with specifics on which resources it would take for full implementation. 2. The Auditor General report with any further recommendations necessary. Both reports to be submitted to the October 25, 2019 meeting of the Audit Committee.
Staff recommendation as filed
The Interim General Manager, Facilities Management recommends that: 1. The Audit Committee receive this report for information.
AU3.14amended
The Auditor General's Annual Work Plan includes a series of ongoing and upcoming audits along the housing continuum. The focus of this audit is the administration of the City's centralized waiting list for rent-geared-to-income (RGI) assistance. For many people, this list is the gateway to stable housing and access to financial assistance for housing in Toronto. This audit is timely as the City develops its new housing and homelessness action plan for the next 10 years. The findings and recommendations can assist the City in setting its priority actions to more expeditiously open up and fill social housing spaces. Although we recognized the City requires more social housing units to meet the demand for subsidized housing, there is an opportunity to make better use of the existing units. We have made recommendations to break down barriers that keep people from moving along the housing continuum towards stable housing. These are categorized into four areas and highlight that the City needs to: 1. Improve the integrity of waiting list data to know exactly who is actively waiting and eligible for RGI housing assistance - so that units can be filled fairly and as quickly as possible 2. Review whether the City is properly prioritizing applicants and identify opportunities to better assess and rank applicants' needs for faster access to social housing and RGI assistance 3. Make better use of housing units, including units used for other purposes, thereby opening doors for more people to access RGI housing 4. Strengthen controls related to administering RGI assistance and increase service integration efforts across income-based programs Our audit provides a total of 28 recommendations for the City, TCHC, and other housing providers to work together to open doors and help more individuals and families to achieve stable housing.
The Auditor General recommends that: 1. City Council request the General Manager, Shelter, Support and Housing Administration Division, to design and implement procedures to ensure compliance with the legislated requirement to review eligibility of applicants on the centralized waiting list for rent-geared-to-income at least once every 24 months after they have been added to the list. Such procedures to ensure: a. applicants are advised of the need to maintain contact with the Access to Housing business unit at least once in every 24-month period to ensure their information is kept up-to-date and to re-affirm continued eligibility for rent-geared-to-income assistance b. all attempts to contact each applicant are sufficiently tracked so that Access to Housing can identify all applications that should be changed to inactive status and subsequently cancelled c. action is taken to make applications inactive and to cancel applications, if there is no response to outreach attempts by City staff in accordance with policies and procedures. 2. City Council request the General Manager, Shelter, Support and Housing Administration Division, to review the applicants on the centralized waiting list for rent-geared-to-income and develop meaningful categories to support the effective management, including accurate reporting of the number of active and eligible applicants. 3. City Council request the General Manager, Shelter, Support and Housing Administration Division, to: a. develop clear guidelines for housing providers on the circumstances under which an offer for rent-geared-to-income housing can be withdrawn and not be considered a refusal. Such guidelines to also clearly indicate how to record the reasons for withdrawals or refusals in the centralized waiting list information system b. implement monitoring procedures to ensure housing providers are not recording refusals of offers as withdrawals such that households can circumvent the Housing Services Act's limit on the number of refusals allowed before the applicant is removed from the centralized waiting list. 4. City Council request the General Manager, Shelter, Support and Housing Administration Division, to recommend to the Minister of Municipal Affairs and Housing to consider revising the Housing Services Act, 2011 to be aligned with the Long Term Care Homes Act regarding refusals of pre-selected housing choices and to only accommodate refusals under clearly defined set of exceptional circumstances. 5. City Council request the General Manager, Shelter, Support and Housing Administration Division, to ensure that applicants on the centralized waiting list for rent-geared-to-income understand the importance of choosing only those buildings they are willing to move into and the consequences of such choices. 6. City Council request the General Manager, Shelter, Support and Housing Administration Division, to increase the information made available to enable rent-geared-to-income applicants to make better informed choices about buildings they are willing to move into. 7. City Council request the General Manager, Shelter, Support and Housing Administration Division, to ensure applicants for rent-geared-to-income assistance are required to identify: a. the preferred method(s) of contact that will result in a 48-hour response such as phone, email, or mobile messaging b. an alternate contact person or support organization in Canada designated to respond on their behalf, if necessary. 8. City Council request the General Manager, Shelter, Support and Housing Administration Division, to review additional steps to cost-effectively enhance how Access to Housing communicates with and reminds applicants on the centralized waiting list for rent-geared-to-income to keep their application information accurate and up-to-date. 9. City Council request the General Manager, Shelter, Support and Housing Administration Division, in consultation with the City Solicitor, to review and implement technology-based communication methods that allow the Division to more efficiently and cost-effectively: a. serve notice of decisions related to household applications on the centralized waiting list for rent-geared-to-income b. make contact with applicants to confirm their ongoing interest, update their address, phone number, income, housing preferences, and other information. 10. City Council request the General Manager, Shelter, Support and Housing Administration Division, to a. review the City's local priority rules for selecting households from the waiting list for rent-geared-to-income and recommend to City Council any additional priority rules that should be adopted to support selection of households based on an applicant's level of need; and b. where additional priority rules are established, ensure the waiting list information system supports selection based on these priorities; and, if necessary, develop a process to perform an objective assessment of each applicant's need for rent-geared-to-income assistance in order to determine their priority in being selected from the centralized waiting list. 11. City Council request the General Manager, Shelter, Support and Housing Administration Division, to establish local rules for: a. asset limits for rent-geared-to-income recipients b. total household income limits and prioritize access to rent-geared-to-income assistance based on household income. 12. City Council request the General Manager, Shelter, Support and Housing Administration Division, in consultation with the City's Medical Officer of Health, to review the types of housing preferences or restrictions for preferred rent-geared-to-income housing units to assess if there is a bona fide need to accommodate and develop local rules to manage such requests. 13. City Council request the General Manager, Shelter, Support and Housing Administration Division to consider establishing local rules prioritizing access to rent-geared-to-income assistance for those households that currently do not receive rent-geared-to-income assistance or reside in social housing. 14. City Council request the General Manager, Shelter, Support and Housing Administration Division, to ensure greater integration of services and supports is provided for vulnerable clients in the shelter system as they transition from homelessness to stable housing including confirming that those experiencing homelessness receive appropriate priority status on the centralized waiting list for rent-geared-to-income. 15. City Council request the General Manager, Shelter, Support and Housing Administration Division, to review and, if appropriate, report to City Council through the Planning and Housing Committee on how the City can meet the mandated rent-geared-to-income assistance service level prescribed in the Housing Service Act, 2011. This review should consider how portable housing benefits can be used where vacancies in the physical social housing stock are limited, and determine how much funding would be needed as well as the source of such funds in order to come into compliance. 16. City Council request the General Manager, Shelter, Support and Housing Administration Division, in collaboration with the Chief Executive Officer, Toronto Community Housing Corporation, to ensure that a maximum number of social housing units are being used for housing and to complete a review of all housing units that are used for other purposes; and, establish a process that requires service manager approval prior to the removal of any housing units from service. 17. City Council request the General Manager, Shelter, Support and Housing Administration Division to: a. work, in collaboration with the Chief Executive Officer, Toronto Community Housing Corporation, to develop an interim process to efficiently and publicly post information on buildings with hard-to-rent vacancies to support applicants in making more informed housing choices b. leverage any existing solutions with City and agency partners to provide support for rent-geared-to-income applicants to access the internet at various city sites such as, emergency shelters, social services offices, local libraries, and community centres. 18. City Council request the General Manager, Shelter, Support and Housing Administration Division, to review and revise the local rules in order to effectively re-house over-housed rent-geared-to-income tenants into a suitable housing unit. In conducting the review, the Division consider: a. evidence available on the number of preferences that will support efficient and timely re-housing of an over-housed household including benchmarking with other jurisdictions b. implications of imposing an over-housed surcharge on households who refuse to be re-housed in a timely manner. 19. City Council request the General Manager, Shelter, Support and Housing Administration Division, to develop system controls to automatically determine the maximum number of bedrooms a rent-geared-to-income applicant is eligible for based on household composition and the City's occupancy standards. 20. City Council request the General Manager, Shelter, Support and Housing Administration Division, in consultation with the City's Medical Officer of Health, to: a. identify the medical circumstances that would warrant a rent-geared-to-income household to have more bedrooms than specified in the local occupancy standards and update local rules accordingly b. develop and implement a process to review and approve requests for an additional bedroom to accommodate medical conditions, including documentation that should be obtained to support such requests, based on criteria to be included in local rules. 21. City Council request the General Manager, Shelter, Support and Housing Administration Division, in consultation with the Chief Executive Officer, Toronto Community Housing Corporation, to consider the feasibility of using TCHC vacant units held for revitalization to meet the demand for emergency shelter as an alternative to hotels or other temporary shelter options. 22. City Council request the General Manager, Shelter, Support and Housing Administration, to implement and ensure compliance with procedures to oversee rent-geared-to-income households not selected from the centralized waiting list, including procedures and controls to: a. identify and review all current referral agreements to develop a comprehensive inventory of agency referral agreements and the respective number of housing units to be filled through referral agreements b. ensure all current and future referral agreements are approved by the City c. ensure there is a record of all households that are granted rent-geared-to-income assistance and housed through any alternate arrangement in the centralized waiting list information system. 23. City Council request the General Manager, Shelter, Support and Housing Administration, to enforce the regular review of housing providers and ensure they are completed as required in compliance with policies and procedures and to take corrective action to address any problems identified in the course of such reviews. 24. City Council request the General Manager, Shelter, Support and Housing Administration, to ensure the internal controls to review rent-geared-to-income housing providers are reviewed and strengthened to address weaknesses identified from the occurrence of fraud. 25. City Council request the General Manager, Shelter, Support and Housing Administration Division, to strengthen internal controls which ensure households on the centralized waiting list and those receiving rent-geared-to-income are eligible. 26. City Council request the General Manager, Shelter, Support and Housing Administration Division, to review how, going forward, the City, as service manager, may be able to centralize and integrate initial and ongoing eligibility reviews and income verification for all housing subsidy programs currently dispersed amongst multiple groups (Access to Housing, other City business units, Toronto Community Housing Corporation, and eventually other housing providers) for greater efficiency and oversight. 27. City Council request the General Manager, Shelter, Support and Housing Administration Division, in consultation with the City's Chief Information Officer, to ensure: a. that progress is made to select a vendor and develop an implementation plan for the new choice-based system for selecting households to receive rent-geared-to-income assistance b. the new technology includes appropriate system access controls, input and validation controls to prevent data entry errors c. exception monitoring controls are developed, including regular reports to support the detection of errors or irregular activity. 28. City Council request the General Manager, Shelter, Support and Housing Administration Division, to collaborate with the General Managers of Employment and Social Services and Children's Services divisions to ensure implementation of the Human Services Integration project achieves service efficiencies in administering these income based subsidy programs. In the short term, this will include one income assessment process and in the longer term this should be expanded to include other common functions. The implementation should include a rationalization of resources. 29. City Council request the General Manager, Shelter, Support and Housing Administration, to accelerate implementation of recommendations to ensure rules are updated to allow households with greatest need to receive priority, and that over-housed tenant situations are optimized as quickly as possible. 30. City Council request the General Manager, Shelter, Support and Housing Administration, to report quarterly to City Council, through the Economic and Community Development Committee, on the centralized waiting list for social housing, such report to contain the following details: - the number of people on the waitlist - the number of vacant rentable units - the number of units filled - the number of refused offers - the number of withdrawn offers - any other relevant information. 31. City Council request the General Manager, Shelter, Support and Housing Administration, through the implementation of the new Choice Based Model for access to social housing, to expand access to information available through the City's Open Data portal, and report to the Audit Committee by Q4 of 2020, on the status of implementation. The General Manager be requested to engage Toronto's civic tech community on this project.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council request the General Manager, Shelter, Support and Housing Administration Division, to design and implement procedures to ensure compliance with the legislated requirement to review eligibility of applicants on the centralized waiting list for rent-geared-to-income at least once every 24 months after they have been added to the list. Such procedures to ensure: a. applicants are advised of the need to maintain contact with the Access to Housing business unit at least once in every 24-month period to ensure their information is kept up-to-date and to re-affirm continued eligibility for rent-geared-to-income assistance b. all attempts to contact each applicant are sufficiently tracked so that Access to Housing can identify all applications that should be changed to inactive status and subsequently cancelled c. action is taken to make applications inactive and to cancel applications, if there is no response to outreach attempts by City staff in accordance with policies and procedures. 2. City Council request the General Manager, Shelter, Support and Housing Administration Division, to review the applicants on the centralized waiting list for rent-geared-to-income and develop meaningful categories to support the effective management, including accurate reporting of the number of active and eligible applicants. 3. City Council request the General Manager, Shelter, Support and Housing Administration Division, to: a. develop clear guidelines for housing providers on the circumstances under which an offer for rent-geared-to-income housing can be withdrawn and not be considered a refusal. Such guidelines to also clearly indicate how to record the reasons for withdrawals or refusals in the centralized waiting list information system b. implement monitoring procedures to ensure housing providers are not recording refusals of offers as withdrawals such that households can circumvent the Housing Services Act's limit on the number of refusals allowed before the applicant is removed from the centralized waiting list. 4. City Council request the General Manager, Shelter, Support and Housing Administration Division, to recommend to the Minister of Municipal Affairs and Housing to consider revising the Housing Services Act, 2011 to be aligned with the Long Term Care Homes Act regarding refusals of pre-selected housing choices and to only accommodate refusals under clearly defined set of exceptional circumstances. 5. City Council request the General Manager, Shelter, Support and Housing Administration Division, to ensure that applicants on the centralized waiting list for rent-geared-to-income understand the importance of choosing only those buildings they are willing to move into and the consequences of such choices. 6. City Council request the General Manager, Shelter, Support and Housing Administration Division, to increase the information made available to enable rent-geared-to-income applicants to make better informed choices about buildings they are willing to move into. 7. City Council request the General Manager, Shelter, Support and Housing Administration Division, to ensure applicants for rent-geared-to-income assistance are required to identify: a. the preferred method(s) of contact that will result in a 48-hour response such as phone, email, or mobile messaging b. an alternate contact person or support organization in Canada designated to respond on their behalf, if necessary. 8. City Council request the General Manager, Shelter, Support and Housing Administration Division, to review additional steps to cost-effectively enhance how Access to Housing communicates with and reminds applicants on the centralized waiting list for rent-geared-to-income to keep their application information accurate and up-to-date. 9. City Council request the General Manager, Shelter, Support and Housing Administration Division, in consultation with the City Solicitor, to review and implement technology-based communication methods that allow the Division to more efficiently and cost-effectively: a. serve notice of decisions related to household applications on the centralized waiting list for rent-geared-to-income b. make contact with applicants to confirm their ongoing interest, update their address, phone number, income, housing preferences, and other information. 10. City Council request the General Manager, Shelter, Support and Housing Administration Division, to a. review the City's local priority rules for selecting households from the waiting list for rent-geared-to-income and recommend to City Council any additional priority rules that should be adopted to support selection of households based on an applicant's level of need; and b. where additional priority rules are established, ensure the waiting list information system supports selection based on these priorities; and, if necessary, develop a process to perform an objective assessment of each applicant's need for rent-geared-to-income assistance in order to determine their priority in being selected from the centralized waiting list. 11. City Council request the General Manager, Shelter, Support and Housing Administration Division, to establish local rules for: a. asset limits for rent-geared-to-income recipients b. total household income limits and prioritize access to rent-geared-to-income assistance based on household income. 12. City Council request the General Manager, Shelter, Support and Housing Administration Division, in consultation with the City's Medical Officer of Health, to review the types of housing preferences or restrictions for preferred rent-geared-to-income housing units to assess if there is a bona fide need to accommodate and develop local rules to manage such requests. 13. City Council request the General Manager, Shelter, Support and Housing Administration Division to consider establishing local rules prioritizing access to rent-geared-to-income assistance for those households that currently do not receive rent-geared-to-income assistance or reside in social housing. 14. City Council request the General Manager, Shelter, Support and Housing Administration Division, to ensure greater integration of services and supports is provided for vulnerable clients in the shelter system as they transition from homelessness to stable housing including confirming that those experiencing homelessness receive appropriate priority status on the centralized waiting list for rent-geared-to-income. 15. City Council request the General Manager, Shelter, Support and Housing Administration Division, to review and, if appropriate, report to City Council through the Planning and Housing Committee on how the City can meet the mandated rent-geared-to-income assistance service level prescribed in the Housing Service Act, 2011. This review should consider how portable housing benefits can be used where vacancies in the physical social housing stock are limited, and determine how much funding would be needed as well as the source of such funds in order to come into compliance. 16. City Council request the General Manager, Shelter, Support and Housing Administration Division, in collaboration with the Chief Executive Officer, Toronto Community Housing Corporation, to ensure that a maximum number of social housing units are being used for housing and to complete a review of all housing units that are used for other purposes; and, establish a process that requires service manager approval prior to the removal of any housing units from service. 17. City Council request the General Manager, Shelter, Support and Housing Administration Division to: a. work, in collaboration with the Chief Executive Officer, Toronto Community Housing Corporation, to develop an interim process to efficiently and publicly post information on buildings with hard-to-rent vacancies to support applicants in making more informed housing choices b. leverage any existing solutions with City and agency partners to provide support for rent-geared-to-income applicants to access the internet at various city sites such as, emergency shelters, social services offices, local libraries, and community centres. 18. City Council request the General Manager, Shelter, Support and Housing Administration Division, to review and revise the local rules in order to effectively re-house over-housed rent-geared-to-income tenants into a suitable housing unit. In conducting the review, the Division consider: a. evidence available on the number of preferences that will support efficient and timely re-housing of an over-housed household including benchmarking with other jurisdictions b. implications of imposing an over-housed surcharge on households who refuse to be re-housed in a timely manner. 19. City Council request the General Manager, Shelter, Support and Housing Administration Division, to develop system controls to automatically determine the maximum number of bedrooms a rent-geared-to-income applicant is eligible for based on household composition and the City's occupancy standards. 20. City Council request the General Manager, Shelter, Support and Housing Administration Division, in consultation with the City's Medical Officer of Health, to: a. identify the medical circumstances that would warrant a rent-geared-to-income household to have more bedrooms than specified in the local occupancy standards and update local rules accordingly b. develop and implement a process to review and approve requests for an additional bedroom to accommodate medical conditions, including documentation that should be obtained to support such requests, based on criteria to be included in local rules. 21. City Council request the General Manager, Shelter, Support and Housing Administration Division, in consultation with the Chief Executive Officer, Toronto Community Housing Corporation, to consider the feasibility of using TCHC vacant units held for revitalization to meet the demand for emergency shelter as an alternative to hotels or other temporary shelter options. 22. City Council request the General Manager, Shelter, Support and Housing Administration, to implement and ensure compliance with procedures to oversee rent-geared-to-income households not selected from the centralized waiting list, including procedures and controls to: a. identify and review all current referral agreements to develop a comprehensive inventory of agency referral agreements and the respective number of housing units to be filled through referral agreements b. ensure all current and future referral agreements are approved by the City c. ensure there is a record of all households that are granted rent-geared-to-income assistance and housed through any alternate arrangement in the centralized waiting list information system. 23. City Council request the General Manager, Shelter, Support and Housing Administration, to enforce the regular review of housing providers and ensure they are completed as required in compliance with policies and procedures and to take corrective action to address any problems identified in the course of such reviews. 24. City Council request the General Manager, Shelter, Support and Housing Administration, to ensure the internal controls to review rent-geared-to-income housing providers are reviewed and strengthened to address weaknesses identified from the occurrence of fraud. 25. City Council request the General Manager, Shelter, Support and Housing Administration Division, to strengthen internal controls which ensure households on the centralized waiting list and those receiving rent-geared-to-income are eligible. 26. City Council request the General Manager, Shelter, Support and Housing Administration Division, to review how, going forward, the City, as service manager, may be able to centralize and integrate initial and ongoing eligibility reviews and income verification for all housing subsidy programs currently dispersed amongst multiple groups (Access to Housing, other City business units, Toronto Community Housing Corporation, and eventually other housing providers) for greater efficiency and oversight. 27. City Council request the General Manager, Shelter, Support and Housing Administration Division, in consultation with the City's Chief Information Officer, to ensure: a. that progress is made to select a vendor and develop an implementation plan for the new choice-based system for selecting households to receive rent-geared-to-income assistance b. the new technology includes appropriate system access controls, input and validation controls to prevent data entry errors c. exception monitoring controls are developed, including regular reports to support the detection of errors or irregular activity. 28. City Council request the General Manager, Shelter, Support and Housing Administration Division, to collaborate with the General Managers of Employment and Social Services and Children's Services divisions to ensure implementation of the Human Services Integration project achieves service efficiencies in administering these income based subsidy programs. In the short term, this will include one income assessment process and in the longer term this should be expanded to include other common functions. The implementation should include a rationalization of resources.
AU3.15adopted
This report presents the results of the Auditor General's audit of the Engineering and Construction Services Division. The objective of the audit was to assess the ECS Division's contract management processes and controls over capital construction work. The audit focused on assessing the effectiveness, efficiency and economy of the management of construction and consulting contracts. Phase one resulted in a report entitled "Phase One: Controls over Substantial Performance and Warranty Inspection Processes Should be Strengthened", which was presented to the Audit Committee on July 13, 2018. https://www.toronto.ca/legdocs/mmis/2018/au/bgrd/backgroundfile-117959.pdf Phase two of this audit, the subject of this report, focuses on change order management. This phase two report highlights areas to improve the management of change orders in ECS contracts. Although change orders can occur on construction contracts, this report highlights the need for staff to comply with ECS guidelines and to improve oversight of change orders to ensure the City receives the best value for money. ECS has good procedural documentation and guidelines to support the change order process. However: 1. Staff did not always adhere to these guidelines. Controls over change order approvals and compliance needs strengthening. 2. Documentation was either missing or needs improving for some important areas including price negotiations, liability assessment for errors and omissions, verification of work completed, and change order support. 3. There are also opportunities to: (a) minimize design errors and omissions, and (b) where appropriate, pursue recovery for design errors and omissions. Our audit provides a total of four recommendations to improve effectiveness, efficiency, and economy of the construction change management process.
The Audit Committee recommends that: 1. City Council request the Chief Engineer and Executive Director, Engineering and Construction Services, to: a. establish a process and criteria to review and assess liabilities arising from third-party errors and omissions. b. implement enhancements to the Project Tracking Portal to track the reasons for change orders for analysis and process improvements on an Engineering and Construction Services-wide basis. c. analyze the root causes for change orders, change order costs, and track recoveries from third parties on account of errors and omissions. d. ensure that future bridge rehabilitation project tenders are based on recent condition assessments, undertaken within five years of the construction tender preparation. e. formalize the implementation of the Professional Services Performance Evaluation, recently piloted by Engineering and Construction Services, to include consequences for poor performance up to and including suspension. 2. City Council request the Chief Engineer and Executive Director, Engineering and Construction Services, to: a. establish specific service standards for the timely approval of change directives and change orders after finalizing the scope of work and pricing. b. ensure that work only commences after either a change directive or change order is issued which includes a clear and documented agreement on pricing and scope. For time-sensitive changes, staff should obtain appropriate approval via e-mail and expeditiously follow-up with change order documentation. c. ensure that delegated signing authority limits are enforced and that each signature on a change order is individually dated. d. establish a formal 'Record of Evaluation and Negotiation' template to internally document the negotiations with contractors over the cost of work and also the assessment of price reasonability. e. ensure that a change directive is always issued for quantity overruns that are expected to exceed a set threshold as outlined in Engineering and Construction Services's Capital Works Procedures Manual. 3. City Council request the Chief Engineer and Executive Director, Engineering and Construction Services, to: a. in consultation with Corporate Finance, the Fair Wage Office, Legal Services and Purchasing and Materials Management, establish uniform labour burden rates to be used across all construction contracts. b. ensure that change work is properly tracked and monitored for unit price, time and material, and lump-sum change orders, and that the payment is made after work has been properly verified. c. ensure that substantial scope changes are minimized after the contract is awarded. Where it is not possible to avoid such changes, the Client Division should be fully informed of the impact of substantial scope changes on contract costs and timelines. d. ensure that project documentation on externally managed contracts are always retained within the Engineering and Construction Services Division. e. measure and monitor change order costs. 4. City Council request the Chief Engineer and Executive Director, Engineering and Construction Services, to: a. review and update the contract language relating to Specific Condition 32 to remove any ambiguity. b. at the time of construction contract close-out, calculate the cost of engineering associated with the contract and summarize and review on an annual basis the overall cost of engineering as a percentage of construction costs with a view to evaluating whether the cost of engineering is reasonable. c. implement edit checks into the Project Tracking Portal to prevent errors and to ensure the accuracy and completeness of important contract information such as tender award date, purchase order date, and substantial completion date. Further, these edit checks should ensure that standard contract naming conventions are used. d. ensure that production and training data in the Project Tracking Portal are segregated to maintain data integrity. e. develop and implement a standard procedure for transferring funds from unused tender line items to contingency through the use of change orders. f. ensure that contingency items such as miscellaneous items, provisional items and various allowances are appropriately tagged in the Project Tracking Portal for tracking, monitoring and analysis of contingency usage.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council request the Chief Engineer and Executive Director, Engineering and Construction Services, to: a. establish a process and criteria to review and assess liabilities arising from third-party errors and omissions. b. implement enhancements to the Project Tracking Portal to track the reasons for change orders for analysis and process improvements on an ECS-wide basis. c. analyze the root causes for change orders, change order costs, and track recoveries from third parties on account of errors and omissions. d. ensure that future bridge rehabilitation project tenders are based on recent condition assessments, undertaken within five years of the construction tender preparation. e. formalize the implementation of the Professional Services Performance Evaluation, recently piloted by Engineering and Construction Services, to include consequences for poor performance up to and including suspension. 2. City Council request the Chief Engineer and Executive Director, Engineering and Construction Services, to: a. establish specific service standards for the timely approval of change directives and change orders after finalizing the scope of work and pricing. b. ensure that work only commences after either a change directive or change order is issued which includes a clear and documented agreement on pricing and scope. For time-sensitive changes, staff should obtain appropriate approval via e-mail and expeditiously follow-up with change order documentation. c. ensure that delegated signing authority limits are enforced and that each signature on a change order is individually dated. d. establish a formal 'Record of Evaluation and Negotiation' template to internally document the negotiations with contractors over the cost of work and also the assessment of price reasonability. e. ensure that a change directive is always issued for quantity overruns that are expected to exceed a set threshold as outlined in ECS's Capital Works Procedures Manual. 3. City Council request the Chief Engineer and Executive Director, Engineering and Construction Services, to: a. in consultation with Corporate Finance, the Fair Wage Office, Legal Services and Purchasing and Materials Management, establish uniform labour burden rates to be used across all construction contracts. b. ensure that change work is properly tracked and monitored for unit price, time and material, and lump-sum change orders, and that the payment is made after work has been properly verified. c. ensure that substantial scope changes are minimized after the contract is awarded. Where it is not possible to avoid such changes, the Client Division should be fully informed of the impact of substantial scope changes on contract costs and timelines. d. ensure that project documentation on externally managed contracts are always retained within the ECS Division. e. measure and monitor change order costs. 4. City Council request the Chief Engineer and Executive Director, Engineering and Construction Services, to: a. review and update the contract language relating to Specific Condition 32 to remove any ambiguity. b. at the time of construction contract close-out, calculate the cost of engineering associated with the contract and summarize and review on an annual basis the overall cost of engineering as a percentage of construction costs with a view to evaluating whether the cost of engineering is reasonable. c. implement edit checks into the Project Tracking Portal to prevent errors and to ensure the accuracy and completeness of important contract information such as tender award date, purchase order date, and substantial completion date. Further, these edit checks should ensure that standard contract naming conventions are used. d. ensure that production and training data in the Project Tracking Portal are segregated to maintain data integrity. e. develop and implement a standard procedure for transferring funds from unused tender line items to contingency through the use of change orders. f. ensure that contingency items such as miscellaneous items, provisional items and various allowances are appropriately tagged in the Project Tracking Portal for tracking, monitoring and analysis of contingency usage.
AU3.16adopted
Audit of Interface Invoice Payments - Improving Contract Management and Payment Processes
The Auditor General's 2018 Audit Work Plan included an audit of interface billing vendors. To save invoice processing costs, the City processes a significant number of invoices (over 30% of total City payments) through the interface bill payment process. This process allows vendors to submit multiple invoices through a consolidated electronic file. The objective of this audit was to evaluate the controls over the vendor interface billing and payment processes. The audit identified opportunities to leverage data to improve strategic procurement, contract management and payment processes. This report highlights continuous improvement opportunities in three areas: 1. Monitoring goods listed in the contract against actual usage - We recommend, where possible, tracking and analyzing usage prior to proceeding with new procurements so that the City receives the most competitive prices and that the integrity of the procurement process is maintained. 2. Setting up interface billing processes and contracts properly - The City is missing out on some discounts and volume rebates due to inadequate set-up of various records. The City lost over $300,000 in early payment discounts and volume rebates on selected vendors during January 2015 to June 2018. The City has an opportunity to improve controls so that it properly captures these discounts. 3. Improving contract management practices - Contract management processes for interface billing payments are not efficient. The City can improve its contract management, strategic procurement and payment processes by developing data needs upfront, during the procurement process, and electronically capturing usage information across divisions to better analyze usage against the contracted items and verify payments. The recommendations included in this report relates to control design and are applicable to all types of payment methods, interface and non-interface payments including the new Purchase-to-Pay(P2P) process the City is currently implementing. Implementing the 20 recommendations in this report will support the City in its continuous improvement of controls over the purchase and payment for goods and services, and improve the processing of interface bills. When the City moves to a new system, such as the new Purchase-to-Pay (P2P) solution, the recommendations should be included in the control design.
The Audit Committee recommends that: 1. City Council request the Chief Purchasing Officer to work with the Controller to: a. standardize and refine product purchases across divisions b. capture data to track usage and compare against the goods and services specified in the contract c. expand data analytics to centrally monitor and analyze expenditures as part of the contract management and payment process d. develop a reporting process to identify large deviations in goods purchased, from the goods specified in contracts, documenting the reasons for the deviation, and estimating the financial impact. 2. City Council request the Controller to develop a process to verify the accuracy of early payment discounts for both interface and non-interface payment vendors. The 'discount lost' report should be updated to identify and include discounts lost on interface payments. 3. City Council request the Controller to automate recording, monitoring and collection of volume rebates. Outstanding amounts of volume rebates should be followed-up on, including those identified during the audit. 4. City Council request the Chief Purchasing Officer to compare the current list of volume rebate vendors with City contracts to identify any vendors offering discounts but which may have been omitted from the existing manually maintained list. 5. City Council request the Chief Purchasing Officer to review and update the procedures related to contract set-up in SAP so the detailed line items are entered in the system in accordance with the contract. 6. City Council request the Chief Purchasing Officer to develop criteria and procedures for limiting the use of 'miscellaneous category' in contracts. Any excess expenditures under the miscellaneous category over a specified limit should be reported as exceptions to respective Division Heads. 7. City Council request the Controller to evaluate whether controls can be automated to identify invalid/expired contracts used in interface payment files before they are processed in SAP. If developing such a control is cost-prohibitive, alternate procedures should be developed in coordination with divisions to ensure interface payment files are correctly prepared. 8. City Council request the City Manager to advise Division Heads to ensure compliance with purchasing policies and procedures. Contract spend reports provided by Purchasing and Materials Management Division should be reviewed in a timely manner and contract target values be amended, where required, before additional funds are committed. 9. City Council request the Chief Information Officer to develop policies and procedures to review SAP access for divisions so that they can periodically review whether staff access to systems is appropriate, and make any necessary changes in a timely manner. 10. City Council request the Controller to evaluate the feasibility of establishing a Centralized Contract Management Unit/Centre of Excellence to look after City-wide contracts, where possible. The Unit should be responsible for: a. performing continuous controls monitoring on contracts, including analyzing divisional purchases, consolidating overall trends, and monitoring contract compliance b. developing criteria for providing exception reports to divisions on contract compliance, for example, purchase of goods not listed in the contract, and following up with divisions on any potential changes required to contracts c. developing processes and guidelines for divisions to improve automation and consistency in ordering, receiving and paying for goods and services. 11. City Council request the General Manager, Fleet Services, to take the lead in: a. developing a periodic review process with the Vendor on competitive pricing of parts that are being supplied to the City. A criteria should be developed to have adequate parts covered under each review. Results of price adjustments should be documented after each review b. developing a process to approve new parts prices in the system c. co-ordinating the auto parts price management processes with other City divisions for their review and implementation. 12. City Council request the General Manager, Fleet Services, to develop processes: a. to reconcile auto parts purchases, returns and prices between the City's inventory system and the vendor's billing system on an ongoing basis b. to resolve reconciliation issues in a timely manner and only those invoices should be paid that reconciles with the City records. 13. City Council request the General Manager, Fleet Services, to review price and quantity variances identified during this audit. Any overpayments and/or outstanding credits identified should be recovered from the vendor. Reasons why these variances occurred should be documented and appropriate controls implemented. 14. City Council request the Director, Real Estate Services, to develop a process for updating properties owned or leased by the City including changes to the ownership in a central database. The database should be used to reconcile addresses with the hydro invoice payment system on a periodic basis, and any hydro services identified as not related to the City should be terminated. 15. City Council request the Director, Environment and Energy Division, to perform a one-time validation of those accounts that do not have a specific service address, with respective divisions and establish a baseline for future validation. 16. City Council request the General Manager, Facilities Management Division to develop: a. a complete list of all City-owned transformers b. a process for validating city's records of transformers with hydro service provider for eligible credits. Further, the transformer list should become part of the Facilities maintenance program. 17. City Council request the General Manager, Facilities Management Division, to develop a process to monitor demand for City-owned transformers in order to ensure appropriate credits are received when credit thresholds are achieved. 18. City Council request the Director, Environment & Energy Division, to review other utility payments for address reconciliations and to implement similar controls as recommended for hydro service payments. 19. City Council request the Director, Accounting Services, to improve the duplicate payment check criteria and recover the outstanding duplicate and /or incorrect payments identified during the audit. 20. City Council request the City Manager to forward this report to Division Heads and Chief Executive Officers of major City agencies and corporations, and request them to review and consider implementing the recommendations that are relevant to their respective operations, in particular, recommendations relating to purchasing, payment and contract management related areas.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council request the Chief Purchasing Officer to work with the Controller to: a. standardize and refine product purchases across divisions b. capture data to track usage and compare against the goods and services specified in the contract c. expand data analytics to centrally monitor and analyze expenditures as part of the contract management and payment process d. develop a reporting process to identify large deviations in goods purchased, from the goods specified in contracts, documenting the reasons for the deviation, and estimating the financial impact. 2. City Council request the Controller to develop a process to verify the accuracy of early payment discounts for both interface and non-interface payment vendors. The 'discount lost' report should be updated to identify and include discounts lost on interface payments. 3. City Council request the Controller to automate recording, monitoring and collection of volume rebates. Outstanding amounts of volume rebates should be followed-up on, including those identified during the audit. 4. City Council request the Chief Purchasing Officer to compare the current list of volume rebate vendors with City contracts to identify any vendors offering discounts but which may have been omitted from the existing manually maintained list. 5. City Council request the Chief Purchasing Officer to review and update the procedures related to contract set-up in SAP so the detailed line items are entered in the system in accordance with the contract. 6. City Council request the Chief Purchasing Officer to develop criteria and procedures for limiting the use of 'miscellaneous category' in contracts. Any excess expenditures under the miscellaneous category over a specified limit should be reported as exceptions to respective Division Heads. 7. City Council request the Controller to evaluate whether controls can be automated to identify invalid/expired contracts used in interface payment files before they are processed in SAP. If developing such a control is cost-prohibitive, alternate procedures should be developed in coordination with divisions to ensure interface payment files are correctly prepared. 8. City Council request the City Manager to advise Division Heads to ensure compliance with purchasing policies and procedures. Contract spend reports provided by Purchasing and Materials Management Division should be reviewed in a timely manner and contract target values be amended, where required, before additional funds are committed. 9. City Council request the Chief Information Officer to develop policies and procedures to review SAP access for divisions so that they can periodically review whether staff access to systems is appropriate, and make any necessary changes in a timely manner. 10. City Council request the Controller to evaluate the feasibility of establishing a Centralized Contract Management Unit/Centre of Excellence to look after City-wide contracts, where possible. The Unit should be responsible for: a. performing continuous controls monitoring on contracts, including analyzing divisional purchases, consolidating overall trends, and monitoring contract compliance b. developing criteria for providing exception reports to divisions on contract compliance, for example, purchase of goods not listed in the contract, and following up with divisions on any potential changes required to contracts c. developing processes and guidelines for divisions to improve automation and consistency in ordering, receiving and paying for goods and services. 11. City Council request the General Manager, Fleet Services, to take the lead in: a. developing a periodic review process with the Vendor on competitive pricing of parts that are being supplied to the City. A criteria should be developed to have adequate parts covered under each review. Results of price adjustments should be documented after each review b. developing a process to approve new parts prices in the system c. co-ordinating the auto parts price management processes with other City divisions for their review and implementation. 12. City Council request the General Manager, Fleet Services, to develop processes: a. to reconcile auto parts purchases, returns and prices between the City's inventory system and the vendor's billing system on an ongoing basis b. to resolve reconciliation issues in a timely manner and only those invoices should be paid that reconciles with the City records. 13. City Council request the General Manager, Fleet Services, to review price and quantity variances identified during this audit. Any overpayments and/or outstanding credits identified should be recovered from the vendor. Reasons why these variances occurred should be documented and appropriate controls implemented. 14. City Council request the Director, Real Estate Services, to develop a process for updating properties owned or leased by the City including changes to the ownership in a central database. The database should be used to reconcile addresses with the hydro invoice payment system on a periodic basis, and any hydro services identified as not related to the City should be terminated. 15. City Council request the Director, Environment & Energy Division, to perform a one-time validation of those accounts that do not have a specific service address, with respective divisions and establish a baseline for future validation. 16. City Council request the General Manager, Facilities Management Division to develop: a. a complete list of all City-owned transformers b. a process for validating city's records of transformers with hydro service provider for eligible credits. Further, the transformer list should become part of the Facilities maintenance program. 17. City Council request the General Manager, Facilities Management Division, to develop a process to monitor demand for City-owned transformers in order to ensure appropriate credits are received when credit thresholds are achieved. 18. City Council request the Director, Environment & Energy Division, to review other utility payments for address reconciliations and to implement similar controls as recommended for hydro service payments. 19. City Council request the Director, Accounting Services, to improve the duplicate payment check criteria and recover the outstanding duplicate and /or incorrect payments identified during the audit. 20. City Council request the City Manager to forward this report to Division Heads and Chief Executive Officers of major City agencies and corporations, and request them to review and consider implementing the recommendations that are relevant to their respective operations, in particular, recommendations relating to purchasing, payment and contract management related areas.
AU3.17withdrawn
Previous Audit Reports - Common Themes and Issues
The purpose of this report is to advise Audit Committee that the Auditor General will be submitting a report entitled "Previous Audit Reports - Common Themes and Issues" for the Committee's consideration on June 28, 2019.
Item AU3.17 was withdrawn at Audit Committee on June 28, 2019.
AU3.18received
Process to Obtain External Audit Services for 2020-2024 Inclusive
The purpose of this report is to advise the Audit Committee on the process to obtain external audits of the annual financial statements for the City and certain of its agencies and corporations. The existing contract for external audit services expires with the completion of the financial statement audits for the year ending December 31, 2019.
The Audit Committee received this Item for information.