Audit Committee
The full agenda, as filed
All 12 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.
AU6.1amended
Employee Health Benefits Fraud Involving a Medical Spa
This report summarizes an investigation into allegations of health benefits fraud involving three City of Toronto employees. It is our view that health benefits fraud against the City occurred on several occasions in this case. We bring this matter to the attention of City Council, City management and City employees for three reasons: 1. To communicate that by implementing past Auditor General recommendations, the City now has a more robust claims monitoring regime and an audit system in place that will likely catch more fraud. Fraud detection and fraud prevention help improve the sustainability of benefit plans. 2. To report that management is taking appropriate actions to address all concerns raised in this case, including referring some matters to regulatory bodies for further consideration. 3. To make City employees aware of the increased sophistication in monitoring benefit claims and to stress the importance of not becoming involved in schemes like the one identified in this report. The case revolves around three City employees and the spouses of two of the City employees (the claimants), who independently attended a medical spa to receive treatment for various conditions. These claimants received documentation stating that a doctor (an obstetrician and gynecologist) diagnosed them with the skin condition of actinic keratosis and prescribed the drug Levulan Kerastick (Levulan) to them as the treatment. They received invoices from the spa stating they had been treated with Levulan for the condition of actinic keratosis (and other conditions). Actinic keratosis treatments with Levulan are covered by the City health benefits plan, whereas many other treatments offered by medical spas are not covered. They all submitted claims that were reimbursed by the City's health benefits plan. The claims submissions process is basically an honour system. It is the employee's responsibility to ensure the claims they submit for reimbursement are legitimate and correct. Audits and reviews are conducted after claims are submitted. Our investigation was extensive and involved interviews with the City employees, the spa owner, the spa's chief operations officer and three spa employees who treated the claimants. We also reviewed treatment records, spa invoices, spa receipts, emails, and analyzed health claim data. We sought information from subject matter experts in handwriting, dermatology, and pharmacology. We also conducted research on the drug Levulan and how it is dispensed, the condition actinic keratosis, and the rules for physicians and nurses in Ontario. Although fraud has occurred, we cannot be absolutely sure of the extent and depth of the role or the exact knowledge of each person or organization (the spa, the doctor, some of the City employees, the treating technicians and/or registered practical nurse) played in these events because the very nature of a fraud often involves information that is concealed, altered and/or fabricated. In our view, not all those interviewed were always truthful or forthright. However, based on all of the evidence we have reviewed, the diagnoses recorded on the Drug Special Authorization Forms were false and/or misleading for two of the employees. For the last employee, the invoices contain diagnoses she said she did not have. Some of the reimbursements helped employees to pay for treatments that were not covered by the City's health benefits plan. In all three cases, it is our view that health benefits fraud has occurred. It is not the Auditor General's role to determine the consequences for employees found to have committed benefits fraud - that is up to City management. The lessons employees should take away from this investigation is that the City is much better at detecting benefits fraud and that benefits fraud can have repercussions beyond the loss of benefits: it can include termination of employment, criminal charges and regulatory investigations. The Auditor General has made five recommendations to help the City learn from this investigation.
The Audit Committee recommends that: 1. City Council direct the City Manager to provide an update on actions taken related to the report (October 14, 2020) from the Auditor General, including any referrals that are made to other agencies and regulatory bodies. 2. City Council request the Director, Pension, Payroll and Employee Benefits, and Green Shield Canada, to implement training for staff around the issue of health benefits fraud; and this should be recurring and updated as the nature of common types of fraud evolve. 3. City Council request the Director, Pension, Payroll and Employee Benefits, to undertake extra verification procedures to examine health claims coming from health spas. 4. City Council request the Director, Pension, Payroll and Employee Benefits, to direct all employees in this case to reimburse the City of Toronto for all past claims for themselves and their spouses for services involving the spa because they are not properly supported by legitimate invoices for approved services. 5. City Council request the Director, Pension, Payroll and Employee Benefits, to seek reimbursement from the employees in this case for all unsupported claims involving the spa and report on the status of the recovery and any resulting police or regulatory body investigation into the conclusions of the Auditor General's report. 6. City Council request the Director, Pension, Payroll and Employee Benefits, to seek to include in future collective agreements that health services must be medically necessary and that "off-label" use be supported by a physician and authorized by Green Shield Canada prior to reimbursement.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council request the Director, Pension, Payroll and Employee Benefits, and Green Shield Canada, to implement training for staff around the issue of health benefits fraud. This should be recurring and updated as the nature of common types of fraud evolve. 2. City Council request the Director, Pension, Payroll and Employee Benefits, undertake extra verification procedures to examine health claims coming from health spas. 3. City Council request the Director, Pension, Payroll and Employee Benefits, to direct all employees in this case to reimburse the City for all past claims for themselves and their spouses for services involving the spa because they are not properly supported by legitimate invoices for approved services. 4. City Council request the Director, Pension, Payroll and Employee Benefits, seek to include in future collective agreements that health services must be medically necessary, and that 'off-label' use be supported by a physician and authorized by Green Shield Canada (GSC) prior to reimbursement. 5. City Council to direct the City Manager to provide an update on actions taken related to this report, including any referrals that are made to other agencies and regulatory bodies.
AU6.2amended
Keeping our roads and sidewalks salted and cleared of snow during winter months helps to ensure that the people travelling in the City of Toronto are safe and have a reliable transportation network. The Auditor General's 2019 Audit Work Plan included a review of winter operations at Transportation Services Division. This report presents the results of Phase One of the operational review, which focused on whether the Division meets the council-approved service levels for winter road maintenance and whether it manages contracts, evaluates contractor performance, and holds contractors accountable as per the contract terms. The second phase will consider the operating efficiencies and the cost-benefits of contracting out versus in-house delivery of winter services. We have made recommendations that will help the Division ensure a safe and reliable transportation network in the City of Toronto. These highlight that the City needs to: 1. Fully leverage GPS technology and modernize its processes to efficiently and effectively manage the service levels, contractor performance, and accountability. 2. Monitor, manage, and resolve contractor performance issues such as contractors starting their shifts late, claiming more hours than worked, taking excessive stop times, and operating without functioning GPS devices. 3. Improve clarity and consistency in contract design for the next contract cycle , so that contracts are clearly understood by all parties and that Transportation Services manages to the express terms of the contract going forward. 4. Develop Key Performance Indicators for winter operations and contractor performance, and measure outcomes to ensure contractors meet the required service levels. Our audit provides 22 recommendations that will help the Division improve the efficiency and effectiveness of the winter road maintenance program, including resolving contract management and contractor performance issues, and measuring and meeting the Council-approved service levels.
The Audit Committee recommends that: 1. City Council request the City Manager to: a. coordinate with Heads of Divisions for those using GPS technology, including Transportation Services, to ensure that the contract with the City's GPS vendor meets the needs of the divisions and the City of Toronto; and b. forward the report (October 8, 2020) from the Auditor General to all other Heads of Divisions for those using GPS technology and centrally oversee that the City's divisions are fully utilizing GPS technology and letting go of inefficient manual processes. 2. City Council request the City Manager to work together with the Heads of Divisions using GPS technology and the Chief Technology Officer to prepare plans with specific deliverables and timelines to modernize processes and integrate technology solutions with the GPS system. 3. City Council request the City Manager, in consultation with the Auditor General, to report to the Audit Committee in the first quarter of 2021 with recommendations on policies and/or processes that would provide a system of review and audit of both in-house and contracted services within each City division and that improves accountability to approved service levels and delivers on outcomes that ensure optimal value for taxpayer dollars. 4. City Council request the General Manager, Transportation Services, to fully utilize the GPS technology available, which includes real-time exception reports, notifications, and route completion and performance reports, to better monitor contractor performance. 5. City Council request the General Manager, Transportation Services, to prepare a plan with specific deliverables and timelines to modernize processes and integrate technology solutions with its GPS system. 6. City Council request the General Manager, Transportation Services, to ensure that staff use GPS information and reporting to monitor route completion, departure and return times, late starts, excessive stop times, and vehicle locations for operational as well as standby purposes and assess liquidated damages where applicable. 7. City Council request the General Manager, Transportation Services, to ensure that winter maintenance vehicles are equipped with a GPS device on an immediate and urgent basis and to report the status to the November 19, 2020 Audit Committee meeting. 8. City Council request the General Manager, Transportation Services, to review and reconcile the winter maintenance fleet to the inventory of GPS devices and to test the function, time accuracy, and status reporting mechanism of GPS devices for the 2020-2021 maintenance season and implement a weekly review and testing of the system on an ongoing basis. 9. City Council request the General Manager, Transportation Services, to work with the GPS provider and, after every plowing event, to run reports on departure and return times, including stopping times to late starts, stopping times, departure and return times, and tracking, and to conduct reviews and reconciliations and to report on the success and outcome of this process to the Audit Committee by the third quarter of 2021. 10. City Council request the General Manager, Transportation Services, to develop clear guidelines and allowances for acceptable stop times, break times, and the valid operational reasons for taking these stops and breaks. 11. City Council request the General Manager, Transportation Services, to improve how it documents and tracks vehicle breakdowns and the deployment of spare vehicles. 12. City Council request the General Manager, Transportation Services, to: a. ensure that all vehicles, including spares, are properly marked with vehicle identification numbers; b. conduct daily physical verification of contractor vehicles on standby, including spares, and document and compare the observations to contractor standby logs; and c. require the contractor to obtain prior approval from the contract administrator when a vehicle needs to go off-site for any reason and document the expected return date. 13. City Council request the General Manager, Transportation Services, to: a. improve documentation of assigned routes (and kilometres) and completed routes by contractor as well as ensure that explanations are documented for when routes are not fully completed; and b. examine the cases where routes do not appear to be completed for potential valid operational reasons and evaluate whether related issues need to be addressed. 14. City Council request the General Manager, Transportation Services, to clarify wording in future winter maintenance contracts concerning: a. the contractor's obligation to detect and report GPS device malfunctioning within a set timeframe; b. reasonable stop and break times; c. preventing vehicle swapping between routes and locations to ensure that GPS device information is accurate; and d. provisions for the assessment and enforcement of liquidated damages, including clarifying the expectation for when the work commences. 15. City Council request the General Manager, Transportation Services, to reassess and document the rationale for liquidated damages amounts in the next contract cycle, taking into account past claims against the City and other potential losses, to ensure that the liquidated damages amounts are fair and supportable. 16. City Council request the General Manager, Transportation Services, to coordinate with the City Manager to discuss and make improvements to the contract with the GPS vendor related to GPS repairs and turnaround time for devices. 17. City Council request the General Manager, Transportation Services, to establish a formal process to: a. ensure that GPS devices are installed and functioning in all contractor vehicles, including spares; b. track all GPS devices and monitor them regularly to ensure that the devices are functioning properly; c. periodically reconcile GPS billings; d. monitor and ensure that GPS functionality issues are being reported to the GPS vendor and repaired on a timely basis; and e. monitor the calibration and functionality of salt spreaders. 18. City Council request the General Manager, Transportation Services, to: a. develop a policy and procedure manual for winter operations, including best practices for contract management and best practices for assessing and charging liquidated damages; b. standardize processes and forms for monitoring contractor performance and for assessing and charging liquidated damages; and c. ensure that staff verify and review contractors' operating and standby logs, using GPS data, for the accuracy of timing and services provided before approving payment. 19. City Council request the General Manager, Transportation Services, to provide additional training to ensure that staff have an up-to-date and clear understanding of their roles and responsibilities as well as strong knowledge of winter maintenance contract management policies and procedures. 20. City Council request the General Manager, Transportation Services, to consult with Legal Services in relation to the approach to take on the definition and charging of standby payments for the remainder (two years) of the current contract cycle. 21. City Council request the General Manager, Transportation Services, to work together with Legal Services on a detailed review of the contract documents and Request for Quote for the next contract cycle and make the necessary improvements to ensure internal consistency, consistent use of terminology and defined terms, and simplification for implementation. 22. City Council request the General Manager, Transportation Services, to ensure that the management and payment for services is consistent with the express terms of the contract for the next contract cycle. 23. City Council request the General Manager, Transportation Services, to perform a cost-benefit analysis of in-house versus outsourced delivery of its winter road maintenance program to determine whether it would be beneficial or not to increase the level of in-house delivery. 24. City Council request the General Manager, Transportation Services, to: a. develop meaningful Key Performance Indicators to measure the achievement of Council-approved service levels; b. develop performance metrics for the next contract cycle to measure and monitor contractor performance; c. improve processes and documentation to have relevant and readily-available information to measure the Key Performance Indicators; and d. publicly report on the Key Performance Indicators on at least an annual basis. 25. City Council request the General Manager, Transportation Services, to work with the GPS vendor to configure the: a. route completion report to provide accurate information and develop other GPS reports for measuring contractor performance and service levels; and b. GPS system's geofencing feature to monitor contractors' adherence to their designated routes. 26. City Council request the General Manager, Transportation Services, to analyze legal claims information and 311 service requests on a regular basis to provide additional indicators of where contractor performance needs closer monitoring. 27. City Council request the General Manager, Transportation Services, to develop a reporting process regarding complaints received about winter maintenance and to develop a process to include complaints in contract management and contractor performance evaluations, with a special emphasis on recurring issues.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council request the General Manager, Transportation Services Division, to fully utilize the GPS technology available, which includes real-time exception reports, notifications, and route completion and performance reports, to better monitor contractor performance. 2. City Council request the City Manager to: a. coordinate with Heads of Divisions for those using GPS technology, including Transportation Services, to ensure the contract with the City's GPS vendor meets the needs of the Divisions and City. b. forward this audit report to all other Heads of Divisions for those using GPS technology and centrally oversee that the City's Divisions are fully utilizing GPS technology and letting go of inefficient manual processes. 3. City Council request the General Manager, Transportation Services Division, to prepare a plan with specific deliverables and timelines to modernize processes and integrate technology solutions with its GPS system. 4. City Council request the City Manager to work together with the Heads of Divisions using GPS technology and the Chief Technology Officer, to prepare plans with specific deliverables and timelines to modernize processes and integrate technology solutions with the GPS system. 5. City Council request the General Manager, Transportation Services Division, to ensure staff use GPS information and reporting to monitor route completion, departure and return times, late starts, excessive stop times, and vehicle locations for operational as well as standby purposes, and assess liquidated damages where applicable. 6. City Council request the General Manager, Transportation Services Division, to develop clear guidelines and allowances for acceptable stop times, break times, and the valid operational reasons for taking these stops and breaks. 7. City Council request the General Manager, Transportation Services Division, to improve how it documents and tracks vehicle breakdowns and the deployment of spare vehicles. 8. City Council request the General Manager, Transportation Services Division, to: a. ensure all vehicles, including spares, are properly marked with vehicle identification numbers, b. conduct daily physical verification of contractor vehicles on standby, including spares, and document and compare the observations to contractor standby logs, and c. require the contractor to obtain prior approval from the contract administrator when a vehicle needs to go off-site for any reason and document the expected return date. 9. City Council request the General Manager, Transportation Services Division, to: a. improve documentation of assigned routes (and kilometers) and completed routes by contractor, as well as ensure explanations are documented for when routes are not fully completed, and b. examine the cases where routes do not appear to be completed for potential valid operational reasons and evaluate whether related issues need to be addressed. 10. City Council request the General Manager, Transportation Services Division, to clarify wording in future winter maintenance contracts concerning: a. contractor's obligation to detect and report GPS device malfunctioning within a set timeframe, b. reasonable stop and break times, c. preventing vehicle swapping between routes and locations to ensure GPS device information is accurate, and d. provisions for the assessment and enforcement of liquidated damages including clarifying the expectation for when the work commences. 11. City Council request the General Manager, Transportation Services Division, to reassess and document the rationale for liquidated damages amounts in the next contract cycle taking into account past claims against the City and other potential losses, to ensure that the liquidated damages amounts are fair and supportable. 12. City Council request the General Manager, Transportation Services Division, to coordinate with the City Manager to discuss and make improvements to the contract with the GPS vendor related to GPS repairs and turn-around time for devices. 13. City Council request the General Manager, Transportation Services Division, to establish a formal process to: a. ensure GPS devices are installed and functioning in all contractor vehicles, including spares, b. track all GPS devices and monitor them regularly to ensure the devices are functioning properly, c. periodically reconcile GPS billings, d. monitor and ensure GPS functionality issues are being reported to the GPS vendor and repaired on a timely basis, and e. monitor the calibration and functionality of salt spreaders. 14. City Council request the General Manager, Transportation Services Division, to: a. develop a policy and procedure manual for winter operations, including best practices for contract management, and best practices for assessing and charging liquidated damages, b. standardize processes and forms for monitoring contractor performance and for assessing and charging liquidated damages, and c. ensure staff verify and review contractors' operating and standby logs, using GPS data, for accuracy of timing and services provided before approving payment. 15. City Council request the General Manager, Transportation Services Division, to provide additional training to ensure staff have an up-to-date and clear understanding of their roles and responsibilities, as well as strong knowledge of winter maintenance contract management policies and procedures. 16. City Council request the General Manager, Transportation Services Division, to consult Legal services in relation to the approach to take on the definition and charging of standby payments for the remainder (two years) of the current contract cycle. 17. City Council request the General Manager, Transportation Services Division, to work together with Legal services on a detailed review of the contract documents and Request for Quote for the next contract cycle, and make the necessary improvements to ensure internal consistency, consistent use of terminology and defined terms, and simplification for implementation. 18. City Council request the General Manager, Transportation Services Division, to ensure that the management and payment for services is consistent with the express terms of the contract for the next contract cycle. 19. City Council request the General Manager, Transportation Services Division, to perform a cost-benefit analysis of in-house versus outsourced delivery of its winter road maintenance program, to determine whether it would be beneficial or not to increase the level of in-house delivery. 20. City Council request the General Manager, Transportation Services Division, to: a. develop meaningful Key Performance Indicators (KPIs) to measure the achievement of Council-approved service levels, b. develop performance metrics for the next contract cycle to measure and monitor contractor performance, c. improve processes and documentation to have relevant and readily available information to measure the KPIs, and d. publicly report on the KPIs on at least an annual basis. 21. City Council request the General Manager, Transportation Services Division, to work with the GPS vendor to configure the: a. route completion report to provide accurate information, and develop other GPS reports for measuring contractor performance and service levels, and b. GPS system's geofencing feature to monitor contractors' adherence to their designated routes. 22. City Council request the General Manager, Transportation Services Division, to analyze legal claims information and 311 service requests on a regular basis to provide additional indicators of where contractor performance needs closer monitoring.
AU6.3adopted
This report presents the results of the Auditor General's review of the City's affordable home ownership program (the "Program"). The Program has been a long-standing initiative in the City's affordable housing strategy. Over the last decade, the Program's goals have included assisting low and moderate-income renters in Toronto to purchase affordable homes and realize the benefits of home ownership. The audit focuses on assessing the extent to which City's Program is achieving the City's housing objectives to help low and moderate-income households achieve home ownership. The City's affordable home ownership program is part of its response to addressing the housing needs in Toronto. Our audit makes 11 recommendations that will help position the Housing Secretariat to refresh how it manages the Program to achieve the results intended by City Council. It identifies ways they can strengthen accountability and deliver on their objectives and expected outcomes by: 1. Assessing the extent to which the Program is achieving housing objectives and outcomes 2. Supporting Program intent by strengthening Program design 3. Promoting consistent and impactful outcomes through enhanced City oversight
The Audit Committee recommends that: 1. City Council request the Executive Director, Housing Secretariat, in collaboration with the General Manager, Shelter, Support and Housing Administration, to: a. develop mechanisms to assess the outcomes of the Affordable Home Ownership Program, including the extent to which the Program is effectively contributing towards the City's housing priorities; and, in doing so, the Executive Director, Housing Secretariat, should also review and implement the relevant outstanding recommendations from its 2012 study; and b. consider and recommend enhancements or adjustments to the Affordable Home Ownership Program and/or level of funding, if outcomes are not being effectively achieved through the Program in its current form. 2. City Council request the Executive Director, Housing Secretariat, to define the targeted level of housing affordability it aims to provide through its Affordable Home Ownership Program and give consideration to: a. aligning the definition with other municipal/provincial definitions; b. setting limits on gross debt service ratios for eligibility; and c. establishing maximum purchase price limits that are at, or below, the average market values for that unit type/size and that will support the City's desired level of affordability. 3. City Council request the Executive Director, Housing Secretariat, to analyze the extent to which the Affordable Home Ownership Program has helped households in purchasing homes that are affordable to them (i.e., whether or not loan recipients meet the targeted level of housing affordability); and this analysis should, in turn, be considered when assessing the overall impact of funding on the achievement of housing objectives and outcomes. 4. City Council request the Executive Director, Housing Secretariat, to confirm that the information households provide for loan eligibility purposes is consistent with what they submit to their third-party lenders who assess whether the purchasers can carry the cost of ownership when approving them for a primary mortgage; this will help better assess if they have included all income and asset sources, particularly where they appear to have exceeded the targeted level of housing affordability. 5. City Council request the Executive Director, Housing Secretariat, to pursue measures related to ongoing affordability that the City should implement; and this could include: a. pursuing legislative changes for ongoing affordability outside of the Planning Act (i.e., to allow the City to enter into housing agreements with ongoing affordability conditions like tenure of housing and resale price restrictions that can be registered on title); and b. considering other non-legislative options to offer ongoing affordability, including exercising the option to purchase terms on resale. 6. City Council request the Executive Director, Housing Secretariat, to: a. require proponents to track and report the reasons why loan discharges and/or unit resales have occurred; this information should be used when assessing the overall impact of funding; and b. obtain and review calculations and supporting documents for loan and capital appreciation repayments to the City to ensure that amounts calculated by proponents and repaid to the City are accurate and reasonable. 7. City Council request the Executive Director, Housing Secretariat, to pursue changes to Affordable Home Ownership Program requirements that will support prioritization of affordable home ownership opportunities and funding based on local needs and City priorities; in setting priorities, the City should consider collecting data on the types of applicants who applied to/expressed interest in opportunities at affordable home ownership developments; and, in doing so, the Executive Director, Housing Secretariat, should consult with key stakeholders, including proponents, and consider best practices from other jurisdictions to ensure any changes support intended program outcomes. 8. City Council request the Executive Director, Housing Secretariat, to implement enhanced program guidelines to ensure that loan recipients meet the spirit of the Affordable Home Ownership Program; and this may include: a. limits on assets. This should consider purchasers' bank and investment balances and the amount of personal funds available to pay for deposits, down payments, and/or upgrades; b. a minimum number of years where applicants must demonstrate they meet income requirements. Income documentation should be as current as possible to reflect applicants' true financial pictures at the time of application; income requirements should also consider and address circumstances where there are changes to household composition or income after the time of application; c. restrictions on residency, whereby applicants who are currently living in Toronto prior to applying are prioritized; and City Council request that, in enhancing the above guidelines, the Executive Director, Housing Secretariat, should consult with key stakeholders, including proponents, and consider best practices from other jurisdictions to ensure that any changes best support intended program outcomes. 9. City Council request the Executive Director, Housing Secretariat, to: a. ensure that future Affordable Home Ownership Program delivery agreements are clear on the number of modest units at affordable prices proponents are expected to provide. Targets should reflect the level of affordability that the City intends to create and the amount of loan funding allocated to the development should support this objective; b. improve monitoring of proponent sales of affordable units and the issuance of loans in order to more proactively address challenges in creating the expected number of affordable home ownership opportunities. Where proponents do not achieve targets, the City should assess the root causes and determine if program adjustments are required as part of its overall program evaluation; and c. improve the timeliness with which unused funding for affordable home ownership loans is returned to the City so that it can be made available to better support other housing opportunities and priorities. 10. City Council request the Executive Director, Housing Secretariat, to implement a formally documented review process to ensure that: a. all applicant, unit eligibility, ongoing occupancy, and other delivery agreement requirements for the Affordable Home Ownership Program have been met. Loan files should be reviewed for any discrepancies between documents (i.e., to ensure that information reported between documents is consistent) and appropriate follow-up action, in collaboration with proponents, should be taken to ensure that eligibility requirements have been met; and b. information provided by proponents on semi-annual reports is accurate and consistent with loan files submitted. To allow for effective program evaluation, reports should capture all loan sources, including amounts provided directly by proponents. 11. City Council request the Executive Director, Housing Secretariat, to: a. provide enhanced guidance on how proponents should validate and document that income, legal status, residential tenancy, and other delivery agreement requirements for the Affordable Home Ownership Program have been met (i.e., what documents to obtain and review); and b. provide guidance on what proponents should be looking for when reviewing eligibility documentation and how to properly document and follow up on any discrepancies noted.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council request the Executive Director, Housing Secretariat, in collaboration with the General Manager, Shelter, Support and Housing Administration Division to: a. develop mechanisms to assess the outcomes of the affordable home ownership program, including the extent to which the program is effectively contributing towards the City's housing priorities. In doing so, the Housing Secretariat should also review and implement the relevant outstanding recommendations from its 2012 study. b. consider and recommend enhancements or adjustments to the affordable home ownership program and/or level of funding, if outcomes are not being effectively achieved through the program in its current form. 2. City Council request the Executive Director, Housing Secretariat, to define the targeted level of housing affordability it aims to provide through its affordable home ownership program and give consideration to: a. aligning the definition with other municipal/provincial definitions; b. setting limits on gross debt service ratios for eligibility; c. establishing maximum purchase price limits, that are at or below the average market values for that unit type/size and that will support the City's desired level of affordability. 3. City Council request the Executive Director, Housing Secretariat, to analyze the extent to which the affordable home ownership program has helped households in purchasing homes that are affordable to them (i.e. whether or not loan recipients meet the targeted level of housing affordability). This analysis should, in turn, be considered when assessing the overall impact of funding on the achievement of housing objectives and outcomes. 4. City Council request the Executive Director, Housing Secretariat, to confirm that the information households provide for loan eligibility purposes is consistent with what they submit to their third-party lenders, who assess whether the purchasers can carry the cost of ownership when approving them for a primary mortgage. This will help better assess if they have included all income and asset sources, particularly where they appear to have exceeded the targeted level of housing affordability.   5. City Council request the Executive Director, Housing Secretariat, to pursue measures related to ongoing affordability that the City should implement. This could include: a. pursuing legislative changes for ongoing affordability, outside of the Planning Act (i.e. to allow the City to enter into housing agreements with ongoing affordability conditions like tenure of housing and resale price restrictions that can be registered on title). b. considering other non-legislative options to offer ongoing affordability, including exercising option to purchase terms on resale. 6. City Council request the Executive Director, Housing Secretariat, to: a. require proponents to track and report the reasons why loan discharges and/or unit resales have occurred. This information should be used when assessing the overall impact of funding. b. obtain and review calculations and supporting documents for loan and capital appreciation repayments to the City to ensure amounts calculated by proponents and repaid to the City are accurate and reasonable. 7. City Council request the Executive Director, Housing Secretariat, to pursue changes to affordable home ownership program requirements that will support prioritization of affordable home ownership opportunities and funding based on local needs and City priorities. In setting priorities, the City should consider collecting data on the types of applicants who applied to/ expressed interest in opportunities at affordable home ownership developments. In doing so, the Housing Secretariat should consult with key stakeholders, including proponents, and consider best practices from other jurisdictions to ensure any changes support intended program outcomes. 8. City Council request the Executive Director, Housing Secretariat, to implement enhanced program guidelines to ensure loan recipients meet the spirit of the affordable home ownership program. This may include: a. limits on assets. This should consider purchasers' bank and investment balances and the amount of personal funds available to pay for deposits, down payments and/or upgrades. b. a minimum number of years where applicants must demonstrate they meet income requirements. Income documentation should be as current as possible to reflect applicants' true financial pictures at the time of application. Income requirements should also consider and address circumstances where there are changes to household composition or income after the time of application. c. restrictions on residency, whereby applicants who are currently living in Toronto prior to applying are prioritized. In enhancing guidelines, the Housing Secretariat should consult with key stakeholders, including proponents, and consider best practices from other jurisdictions to ensure any changes best support intended program outcomes. 9. City Council request the Executive Director, Housing Secretariat, to: a. ensure future affordable home ownership program delivery agreements are clear on the number of modest units at affordable prices proponents are expected to provide. Targets should reflect the level of affordability the City intends to create and the amount of loan funding allocated to the development should support this objective. b. improve monitoring of proponent sales of affordable units and issuance of loans in order to more proactively address challenges in creating the expected number of affordable home ownership opportunities. Where proponents do not achieve targets, the City should assess the root causes and determine if program adjustments are required as part of its overall program evaluation. c. improve the timeliness with which unused funding for affordable home ownership loans is returned to the City so that it can be made available to better support other housing opportunities and priorities. 10. City Council request the Executive Director, Housing Secretariat, to implement a formally documented review process to ensure that: a. all applicant, unit eligibility, ongoing occupancy and other delivery agreement requirements for the affordable home ownership program have been met. Loan files should be reviewed for any discrepancies between documents (i.e. to ensure information reported between documents is consistent) and appropriate follow-up action, in collaboration with proponents, should be taken to ensure eligibility requirements have been met. b. information provided by proponents on semi-annual reports is accurate and consistent with loan files submitted. To allow for effective program evaluation, reports should capture all loan sources, including amounts provided directly by proponents. 11. City Council request the Executive Director, Housing Secretariat, to: a. provide enhanced guidance on how proponents should validate and document that income, legal status, residential tenancy and other delivery agreement requirements for the affordable home ownership program have been met (i.e. what documents to obtain and review). b. provide guidance on what proponents should be looking for when reviewing eligibility documentation and how to properly document and follow-up on any discrepancies noted.
AU6.4amended
Continuous Controls Monitoring Program: Opportunities to Reduce Cost of Dental Benefits
The objective of the Continuous Controls Monitoring Program is to use data analytics techniques to provide reports for management to proactively monitor financial transactions, detect unusual expenses and identify areas where internal controls could be strengthened. The City of Toronto (City) provides extended health and dental benefits coverage to its employees and retirees, their spouses and eligible dependents in accordance with City policies and collective agreements. In 2019 the City spent $152 million to provide employee health benefits. Dental benefits amounted to $51.9 million. Testing of controls to ensure claims are reasonable and legitimate and reviewing plan design provides assurance to City Council that the City is receiving the best value. We did not conduct an audit, but used extensive data analytics techniques combined with selective testing to form an assessment of how the City is doing in this area. We followed-up all observations with the plan administrator and discussed with the management to form our assessment. What we found: Overall, we found the plan administrator has good controls in place. 1. Pension, Payroll and Employee Benefits Division (PPEB) has followed the AG's past recommendations to include strong upfront controls for benefits management. 2. Controls appear to be working. 3. Although we identified some claims would benefit from further review, nothing came to our attention that would suggest fraud. Our findings are consistent with an independent third-party audit conducted by PPEB. 4. Where we identified some claims for a deeper review, in some cases the plan administrator had already picked up the items for review themselves. This is good news and it provides us with confidence that the controls are in place and operating. 5. Employees would benefit by having better training on using benefits and how to verify services being charged by dentists. Enhancing the continuous review of trends and expenses using advanced data analytics will help to control costs. These measures will continue on a go-forward basis to help ensure the long-term sustainability of plan. There are also opportunities for savings. We have identified cost saving opportunities through analyzing data and benchmarking with other levels of government. The City should consider: 1. exploring plan design changes, such as, harmonization of benefit plans among various groups of staff for major dental services. 2. having annual maximum allowable amounts on basic and comprehensive dental services categories. 3. when negotiating future employment agreements, whether there is an opportunity to reduce dental costs by establishing some co-insurance payments by plan members. This measure appears to be in line with other public service plans. The savings could be further enhanced if these measures are extended to other health benefits and across the City Agencies and Corporations. Our recommendations are related to the following three areas: 1. Exploring options for plan design changes to reduce the dental benefit costs. The City pays 100 percent of basic and comprehensive basic dental procedures. We have identified cost saving opportunities, for example, considering co-insurance payments by plan members and having annual maximum allowable amounts on dental services. 2. Improving controls through ongoing review of atypical benefit claims. Enhancing the continuous review of trends and expenses using advanced data analytics would help control costs. These measures will continue to help ensure the long-term sustainability of the benefit plans. 3. Improving awareness among City plan members of dental services and related charges. This will help plan members understand their dental coverage and common dental services and related fees. An informed review by plan members of the charges billed by practitioners will complement other recommended controls. We have made four recommendations. Implementation of the recommended changes discussed in this report could result in significant annual savings. We have provided potential savings in various plan design change scenarios. The realized savings will be reported after plan design changes are evaluated and implemented.
The Audi Committee recommends that: 1. City Council request the City Manager to forward the report (October 8, 2020) from the Auditor General, on as needed basis, to selected Agencies and Corporations and request that they review and consider implementing similar controls recommended in this report that are relevant to their respective organizations. 2. City Council request the Controller, in consultation with the Benefits Plan Administrator, the Chief People Officer, and the City Solicitor, to undertake a review of dental benefit plan coverages and industry standards and best practices to consider opportunities for changes to the City's coverage to provide cost effective dental benefits; and a process should be established for: a. consultation, on a periodic basis, with industry experts and the Benefits Plan Administrator to identify industry standards and acceptable practices for dental benefits coverage limits, particularly in areas where use by the City's plan members is significantly higher than industry standards or benchmarks; and b. recommending reasonable maximum plan coverages for the appropriate services, such as the benchmark averages provided by the Benefits Plan Administrator and examples provided by the Auditor General; consideration for special circumstances should be provided, where necessary; and the identified cost saving opportunities should also be considered for other benefit plans and implemented across the City and its Agencies and Corporations. 3. City Council request the Controller, in consultation with the Benefits Plan Administrator, to review the identified exceptions and select the instances (outliers) that require a detailed review, including obtaining records from the service providers. Results of the review to be documented for corrective actions. These actions may include: a. recovery of cost where applicable; b. communicating instances with practitioners/service providers and patients; and c. identifying potential new systematic controls and developing management information reports for ongoing monitoring; and any findings and realized savings should be documented to inform future Benefit Plan design. 4. City Council request the Controller, in consultation with the Benefits Plan Administrator, to develop an information guide and online training for plan members to understand their dental plan coverage and common dental treatment services and related fees. Plan members should be advised to review and assess the fees charged for their services at the time of each visit. 5. City Council request the Director, Pension, Payroll and Employee Benefits, in consultation with the Chief People Officer and the City Solicitor, to explore introducing co-pays for the dental and health benefits at the respective joint union-management benefit committees and explore introducing co-pays for the dental and health benefits for the non-union/management benefits plan.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council request the Controller in consultation with the Benefits Plan Administrator, Chief People Officer and the City Solicitor to undertake a review of dental benefit plan coverages and industry standards and best practices to consider opportunities for changes to the City's coverage to provide cost effective dental benefits. A process should be established for: - Consultation, on a periodic basis, with industry experts and the benefits plan administrator to identify industry standards and acceptable practices for dental benefits coverage limits, particularly in areas where use by the City's plan members is significantly higher than industry standards or benchmarks; and - Recommending reasonable maximum plan coverages for the appropriate services, such as the benchmark averages provided by the benefits plan administrator and examples provided by the Auditor General. Consideration for special circumstances, should be provided, where necessary. The identified cost saving opportunities should also be considered for other benefit plans and implemented across the City and its Agencies and Corporations. 2. City Council request the Controller in consultation with the Benefits Plan Administrator to review the identified exceptions and select the instances (outliers) that require a detailed review including obtaining records from the service providers. Results of the review should be documented for corrective actions. These actions may include: a. recovery of cost where applicable, b. communicating instances with practitioners/service providers and patients, c. identifying potential new systematic controls and developing management information reports for ongoing monitoring. Any findings and realized savings should be documented to inform future Benefit Plan design. 3. City Council request the Controller in consultation with the Benefits Plan Administrator develop an information guide and online training for plan members to understand their dental plan coverage and common dental treatment services and related fees. Plan members should be advised to review and assess the fees charged for their services at the time of each visit. 4. City Council request the City Manager to forward this report on as needed basis to selected Agencies and Corporations and request that they review and consider implementing similar controls recommended in this report that are relevant to their respective organizations.
AU6.5adopted
Auditor General's Follow-Up of the Outstanding Recommendations - New Improved Automated Process
The Auditor General reviews the implementation status of outstanding audit recommendations, and reports the review results to City Council through the Audit Committee. As of September 30, 2020, there were 749 outstanding recommendations, 296 were identified as high priority. This year, our Office implemented a new audit management technology solution designed for auditors to manage all aspects of the audit. As an extension to the new system, we integrated continuous tracking of the implementation status of audit recommendations. The new technology will improve the efficiency and timeliness of how we collect information from management for the follow-up reviews. This report describes the new follow-up process and the Auditor General's plan to restart the follow-up work beginning November 2020.
The Audit Committee recommends that: 1. City Council receive the report (October 8, 2020) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU6.6adopted
The Auditor General undertakes a risk-based approach to audit selection. To identify audit priorities for her Audit Work Plan, every five years the Auditor General performs an extensive risk assessment of the operations of the City divisions and its major agencies and corporations included in her mandate. The results of the Auditor General's last city-wide risk assessment were reported in 2015. In accordance with the Auditor General's 2020 Audit Work Plan, the Auditor General initiated a city-wide risk and opportunity assessment in early 2020. The purpose of the Auditor General's city-wide risk and opportunity assessment is to inform the development of her risk-based Audit Work Plan. It helps to ensure that all significant areas of the City are evaluated from an audit risk perspective by using uniform criteria to identify areas that may warrant audit attention. Determining which areas to audit and the appropriate allocation of audit resources is essential in maximizing the value of an effective audit process. The Auditor General's 2020 city-wide risk and opportunity assessment is still underway and the purpose of this report is to inform the Audit Committee of progress to date. In 2020, the Auditor General's city-wide risk and opportunity assessment also includes the Toronto Public Library and Toronto Police Service. Both of these Boards have requested the Auditor General to perform this assessment. The proposed risk-based audit plans will be reported to their separate Boards in October/November 2020, before they are presented to the City Audit Committee. We would like to include any emerging higher risk audit areas in the Auditor General's 2021 Audit Work Plan which will be presented to Audit Committee in November 2020. The potential audit projects that can be completed will be subject to available resourcing. We plan to report our preliminary results as part of the Auditor General's 2021 Audit Work Plan with additional updates next year.
The Audit Committee recommends that: 1. City Council receive the report (October 8, 2020) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU6.7adopted
Review of 260 Eighth Street Land Transaction: No Wrongdoing Identified
This report provides the Auditor General's findings from reviewing the 2018 sale of a property at 260 Eighth Street in Etobicoke, Ontario (the Property). This review was initiated based on concerns brought forward by a complainant in relation to the sale of the Property. They included that the sale amount of the Property was less than market value, the approval process for the sale of the Property was not conducted in accordance with City guidelines, and the best value for the Property was not attained. We conducted an investigative review to evaluate whether there was evidence to support concerns of wrongdoing. This does not constitute an audit conducted in accordance with Generally Accepted Government Auditing Standards (GAGAS). However, we believe we have performed sufficient work in satisfaction that there was no wrongdoing in this transaction. The Auditor General's review including hiring a designated professional real estate appraiser to conduct an independent appraisal of the Property. Based on this review, it was concluded that there was insufficient evidence to support a claim that the Property was sold at less than market value. We also reviewed the process surrounding the special meeting related to this transaction. Proper procedures appear to have been followed in the process, including the notice for and conduct of the special meeting of the Boards of Build Toronto and Toronto Port Lands Company which occurred on April 15, 2019. Given that the sale price of the Property was at fair market value and the appropriate processes were followed in the notice for and conduct of the special meeting, we decided not to investigate the matter of obtaining the best value for the property by maximizing the number of jobs. It is important to note that during our review, no evidence came to our attention to sufficiently support or refute the job creation numbers by any of the proponents or that would suggest that the Property's successful purchasers are likely to create fewer jobs than other developers. Finally, there was a question regarding whether late, unsolicited offers received should have been accepted. In our view, it was appropriate for CreateTO to proceed with the agreement it already had in place, considering that fair market value was being received from the successful proponent, as well as the complexity of the transaction and environmental issues on the Property. In addition, it is important for the public to be able to rely on the City's open bidding process.
The Audit Committee recommends that: 1. City Council receive the report (October 6, 2020) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU6.8adopted
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, 2019.
The Audit Committee recommends that: 1. City Council receive the report (October 8, 2020) from the Auditor General on the status of the financial statement audits of the City of Toronto's Agencies and Corporations for the year ended December 31, 2019.
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, 2019.
AU6.9adopted
The following agencies have submitted 2018 and 2019 Financial Statements and related documents for the years ended December 31, 2018 and December 31, 2019 to the Audit Committee for consideration: - Exhibition Place - Heritage Toronto - TO Live (formerly operating as the Hummingbird Centre for the Performing Arts, operating as Civic Theatres Toronto) - Toronto Atmospheric Fund - Toronto Parking Authority - Toronto Public Library - Toronto Transit Commission - Toronto Zoo - Yonge-Dundas Square In addition, City Council has received and forwarded the 2019 Financial Statements and related documents for the year ended December 31, 2019 for the following corporations and partnered corporation to the Audit Committee for information: - Build Toronto - Casa Loma Corporation - Lakeshore Arena Corporation - Toronto Community Housing Corporation - Toronto Hydro Corporation - Toronto Pan Am Sports Centre Inc. - Toronto Port Lands Company
The Audit Committee recommends that: 1. City Council receive for information the 2018 and 2019 Financial Statements and related documents for the years ended December 31, 2018 and December 31, 2019 for the following City of Toronto Agencies: - Exhibition Place - Heritage Toronto - TO Live (formerly operating as the Hummingbird Centre for the Performing Arts, operating as Civic Theatres Toronto) - Toronto Atmospheric Fund - Toronto Parking Authority - Toronto Public Library - Toronto Transit Commission - Toronto Zoo - Yonge-Dundas Square
Staff recommendation as filed
That: 1. City Council receive for information the 2018 and 2019 Financial Statements and related documents for the years ended December 31, 2018 and December 31, 2019 for the following agencies: - Exhibition Place - Heritage Toronto - TO Live (formerly operating as the Hummingbird Centre for the Performing Arts, operating as Civic Theatres Toronto) - Toronto Atmospheric Fund - Toronto Parking Authority - Toronto Public Library - Toronto Transit Commission - Toronto Zoo - Yonge-Dundas Square 2. The Audit Committee receive for information the 2019 Financial Statements and related documents for the year ended December 31, 2019 for the following corporations and partnered corporation, having regard that the 2019 Financial Statements and related documents have previously been considered by City Council: - Build Toronto - Casa Loma Corporation - Lakeshore Arena Corporation - Toronto Community Housing Corporation - Toronto Hydro Corporation - Toronto Pan Am Sports Centre Inc. - Toronto Port Lands Company
AU6.10adopted
Arenas - 2019 Audited Financial Statements
The purpose of this report is to provide the Audit Committee and City Council with the 2019 audited financial statements of Arenas. The 2019 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 where they have comments on internal controls, they would provide these by way of a report to the Board. The Independent Auditor's Report and accompanying financial statements for the four completed City Arenas are attached to this report. The audits of the remaining four Arenas are in progress at the time of preparation of this report.
The Audit Committee recommends that: 1. City Council receive the 2019 audited financial statements of the Arenas attached to the report (October 8, 2020) from the Auditor General.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive the 2019 audited financial statements of Arenas attached to this report.
AU6.11adopted
Community Centres - 2019 Audited Financial Statements
The purpose of this report is to provide the Audit Committee and City Council with the 2019 audited financial statements of Community Centres. The 2019 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 2019 audited financial statements of the Community Centres attached to the report (October 8, 2020) from the Auditor General.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive the 2019 audited financial statements of Community Centres attached to this report.
AU6.12adopted
Non-Competitive Award of Contracts for IT and Cybersecurity Audits
The City of Toronto, is increasingly conducting business and key operations using innovative technology solutions. This makes operations more efficient and enhances the delivery of City services to citizens and businesses. However, this comes with increased risk of cyberattacks and data breaches as threat actors are becoming more sophisticated with their attacks. The Auditor General recognizing the increased risks of cyberattacks has been proactive in performing cybersecurity audits at the City. Performing Information Technology (IT) penetration testing (Pen Testing) and vulnerability assessments (VA) is complex and requires highly trained IT security experts and specialized testing tools and software. Each tester must have a police security clearance to perform assessments on critical technology systems. In 2019, the Auditor General presented her report "Cyber Safety: A Robust Cybersecurity Program Needed to Mitigate Current and Emerging Threats" at the City Council meeting on October 29 and 30, 2019. At the meeting the recommendation "City Council request the City Manager, in consultation with the Auditor General, to report by the December 17 and 18, 2019 meeting of City Council on mechanisms required that would enable the Auditor General to conduct risk assessments or investigate cyber security for City Agencies and Corporations not currently within the Auditor General's purview" was adopted. To mitigate emerging cybersecurity threats the Auditor General increased the number of cybersecurity audits on her workplan. The Auditor General has now sole sourced several work assignments to the Firm that won a competitive bid in 2019 for a cybersecurity audit. We selected this Firm because the only other proponent that bid has since performed consulting work for the City, so there is an independence issue. The selected Firm has the expertise in cybersecurity and provided very competitive rates. The selected Firm is familiar with the current state of City system architecture and this knowledge is key. As most of the pre-qualified Firms have expressed little interest on bidding for these assignments, the Auditor General expects to continue to sole source such projects to the Firm. The Auditor General intends to revisit the sole source arrangement during latter half of 2021 to evaluate and determine other procurement choices. The Auditor General expects that the aggregate value of all contracts for various technology and cybersecurity audits at the City and its Agencies and Corporations may exceed $500,000 in total. Therefore, the purpose of this report is to keep Audit Committee and Council apprised of the non-competitive nature of these procurements.
The Audit Committee recommends that: 1. City Council authorize the Auditor General to award new non-competitive contracts through her pre-qualified roster for IT and cybersecurity audit work, with the aggregate total amount of projects to exceed $500,000 if it is to conduct critical systems cybersecurity work.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council authorize the Auditor General to award new non-competitive contracts through her pre-qualified roster for IT and cybersecurity audit work. The aggregate total amount of projects may exceed $500,000 if it is to conduct critical systems cybersecurity work.