Audit Committee
The full agenda, as filed
All 21 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.
AU9.1adopted
2020 Audited Financial Statements - Consolidated City, Sinking Funds, and Consolidated Trust Funds
This report presents the City of Toronto's (City) Audited Consolidated Financial Statements (Statements), the Audited Sinking Fund Financial Statements (Sinking Funds) and the Consolidated Trust Funds Financial Statements (Trust Funds) for the year ended December 31, 2020, for approval, to the Audit Committee and City Council. The report provides highlights of financial performance and financial condition as at December 31, 2020. All City financial statements are prepared in accordance with Public Sector Accounting Standards (PSAS) established by the Public Sector Accounting Board (PSAB) of the Chartered Professional Accountants (CPA) of Canada. The Statements include all City divisions and entities within the City's control; a full list is included in Note 1 accompanying the Statements. In 2020, the City recognized financial assets of $14.1 billion, liabilities of $22.7 billion, and non-financial assets, consisting mainly of the tangible capital assets necessary for the delivery of City services, of $37.0 billion. The City's net debt of $8.6 billion is the amount of future revenues required to fulfill current liabilities. The City's 2020 revenues of $14.0 billion include $1.1 billion from Safe Restart Funding ($913 million) received in response to pressures arising from the COVID-19 pandemic on municipal operations, transit services and public health efforts, along with Social Services Relief Funds ($165 million) for shelters. Total expenditures recognized were $12.4 billion; the City managed its expenses in 2020 by implementing $559 million in cost mitigation strategies, such as workforce restraints and spending constraints, in order to address financial challenges caused by COVID-19. Consistent with municipalities across Canada, Toronto adopts a cash basis of accounting for budgeting purposes, however, the annual audited financial statements are reflected using an accrual basis of accounting consistent with Public Sector Accounting Standards. The reconciliation between the two methods is driven primarily by the capitalization of tangible capital assets and amortization. In the audited financial statements, the City recognized an accounting surplus of $1.6 billion reflective of the capital asset investment during 2020. The Sinking Funds build up and invest funds, which form part of the City's consolidated cash balances, used to repay City debt when it matures, reducing the amount of City own-source cash required to repay amounts borrowed. The Trust Funds are assets benefitting the City and its agencies and corporations, mainly held in cash and investments, administered through the City and two of its related parties, the Toronto Police Services Board and the St. Lawrence Centre for the Arts (TO Live). Although these trust funds are assets to the City and its consolidated entities, they represent liabilities to third parties and therefore, are not included in the City's consolidated financial statements. The City's management is responsible for preparing the Statements, Sinking Funds and Trust Funds in accordance with Public Sector Accounting Standards (PSAS), as well as ensuring that appropriate internal controls are in place to safeguard the City's assets and financial information. The City's 2020 auditors, KPMG LLP (KPMG), are responsible for providing an opinion on the fair presentation of these financial statements in accordance with PSAS. KPMG performs audit procedures in order to gather sufficient and appropriate audit evidence with which to form an opinion on the City's statements. In performing their work, KPMG may recommend adjustments to balances or note disclosures, or process or internal control improvements. The Audit Committee is responsible for approving the financial statements prior to City Council approval. The Statements are attached as Appendix A. In addition, Appendix B - 2020 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 Sinking Funds are attached as Appendix C. The Trust Funds are attached as Appendix D. In addition, Appendix E details Trust Funds Account Descriptions as at December 31, 2020. KPMG's Year End 2020 Audit Findings Report comprises a separate submission to the Audit Committee. KPMG has issued an unqualified audit opinion on the City's 2020 Statements, the Sinking Funds and the Trust Funds.
The Audit Committee recommends that: 1. City Council approve the 2020 Audited Consolidated Financial Statements in Appendix A to the report (June 22, 2021) from the Chief Financial Officer and Treasurer and the Controller. 2. City Council approve the 2020 Audited Sinking Fund Financial Statements in Appendix C to the report (June 22, 2021) from the Chief Financial Officer and Treasurer and the Controller. 3. City Council approve the 2020 Audited Consolidated Trust Funds Financial Statements in Appendix D to the report (June 22, 2021) from the Chief Financial Officer and Treasurer and the Controller.
Staff recommendation as filed
The Chief Financial Officer and Treasurer and the Controller recommend that: 1. City Council approve the 2020 Audited Consolidated Financial Statements in Appendix A to this report. 2. City Council approve the 2020 Audited Sinking Fund Financial Statements in Appendix C to this report. 3. City Council approve the 2020 Audited Consolidated Trust Funds Financial Statements in Appendix D to this report.
AU9.2received
The City of Toronto Audit Findings Report for the Year Ended December 31, 2020
Kevin Travers, Lead Audit Engagement Partner, KPMG LLP and Maria Khoushnood, Audit Senior Manager and Project Manager, KPMG LLP will give a presentation on The City of Toronto Audit Findings Report for the Year Ended December 31, 2020.
The Audit Committee: 1. Received the presentation (May 21, 2021) from Kevin Travers, Lead Audit Engagement Partner, KPMG LLP and Maria Khoushnood, Audit Senior Manager and Project Manager, KPMG LLP, headed "The City of Toronto Audit Findings Report for the Year Ended December 31, 2020", for information.
AU9.3adopted
This report summarizes the changes impacting the City of Toronto (the City)'s obligatory reserve funds (deferred revenues), and reserves and Council-directed reserve funds (accumulated surplus) as at December 31, 2020. The City's deferred revenues (obligatory reserve funds) and reserves and Council-directed reserve funds (accumulated surplus) are subject to annual changes based on funding contributions, transfers, and drawdowns, which are authorized by legislation, third-party agreements, and Council's approvals. The tables and appendices reflect information by major category. As at December 31, 2020, the City recognized $7,585.8 million of deferred revenues (obligatory reserve funds) and reserves and Council-directed reserve funds (accumulated surplus), which consist of the following balances: - committed funds for legislated, contractually bound or Council-directed activities ($5,983.2 million); - committed funds to offset capital costs and pressures on rate-based activities ($678.3 million); and - uncommitted and available funds for the City to respond to various unanticipated costs and to stabilize various funding sources, including the tax base ($924.3 million). The uncommitted funds balance of $924.3 million includes the City's Tax Rate Stabilization Reserve balance of $704.6 million. Due to the uncertainty of the financial impact of the COVID-19 pandemic, the City deferred a number of capital projects to be funded from Capital from Current and the Provincial Gas Tax, in addition to reallocating capital funding from permanent underspending, in order to make a one-time contribution of $377.4 million to the reserve, in addition to a one-time contribution to the reserve of $212.8 million from the 2019 City operating surplus. Additional net amounts totalling $23.4 million were contributed to the reserve in 2020. These Council approved contributions will be used to offset COVID-19 financial impacts in the event adequate Federal/Provincial Safe Restart funding support is not provided in 2021 and going forward. The reported balances include Council approved reserve and reserve fund loans that were granted to various agencies, City programs, and external parties, which must be repaid to the respective deferred revenues (obligatory reserve funds) and reserves and Council-directed reserve funds (accumulated surplus).
The Audit Committee: 1. Received the report (June 22, 2021) from the Chief Financial Officer and Treasurer for information.
Staff recommendation as filed
The Chief Financial Officer and Treasurer recommends that: 1. The Audit Committee receive this report for information.
AU9.4adopted
Financial Statements for the Year Ended December 31, 2020 - Agencies
The following agencies have submitted 2020 Financial Statements and related documents for the year ended December 31, 2020 to the Audit Committee for consideration: - Exhibition Place - Heritage Toronto - TO Live - Toronto Atmospheric Fund - Toronto Parking Authority - Toronto Public Library - Toronto Transit Commission - Toronto Zoo - Yonge-Dundas Square
The Audit Committee recommends that: 1. City Council receive the 2020 Financial Statements and related documents for the year ended December 31, 2020 from the following City of Toronto Agencies for information: - Exhibition Place - Heritage Toronto - TO Live - 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 2020 Financial Statements and related documents for the year ended December 31, 2020 for the following agencies: - Exhibition Place - Heritage Toronto - TO Live - Toronto Atmospheric Fund - Toronto Parking Authority - Toronto Public Library - Toronto Transit Commission - Toronto Zoo - Yonge-Dundas Square
AU9.5adopted
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, 2020.
The Audit Committee recommends that: 1. City Council receive the report (June 22, 2021) 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, 2020 for information.
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, 2020.
AU9.6amended
Auditor General's Status Report on Outstanding Recommendations
The Auditor General reviews the implementation status of recommendations made through her audit and investigation reports. The results of the review are reported to City Council through the Audit Committee. Our Office implemented a new audit management technology solution. As an extension of the new system, we integrated continuous tracking of the implementation status of the recommendations in 2020. As of June 1, 2021, City Divisions have reported 163 recommendations have been fully implemented and action continues on another 349 recommendations. There are also another 176 open recommendations from reports issued to Agencies and Corporations as well as 61 open recommendations from investigations and Fraud and Waste Hotline reports. The current status of open recommendations, as reported by management, is summarized in Table 1. Table 1 - Current Status of Open Recommendations Issued Between September 2005 and October 2020 Description Implementation Status Reported by Management as of June 1, 2021 Fully Implemented No Longer Relevant In Progress 2 (Not Fully Implemented) Total City Audit Reports 1 163 4 349 516 Agencies and Corporations 70 5 101 176 Investigation and Fraud and Waste Hotline Reports 33 1 27 61 1 The Auditor General also made 37 recommendations in separate management letters for less significant issues identified during audits to City divisions and Agencies and Corporations. The follow-up results are reported to the City Manager or the Head of the respective Agency and Corporation. 2 The Auditor General's system is updated on a continuous basis by management. Recommendations reported as fully implemented after June 1, 2021 are still included in this column. Of the 516 audit recommendations issued to City divisions, 236 are considered high priority recommendations where a significant potential for savings, or health and safety risks, or risks to the City's reputation are involved. In addition, recommendations that have remained outstanding for over five years are also considered high priority. Given the large number of recommendations reported by management as fully implemented, we focused on verifying the status of high priority recommendations, followed by other recommendations management reported as fully implemented at the beginning of January 2021. This report includes the results of our follow-up of 115 audit recommendations from reports issued to City divisions that management reported as fully implemented. Of the 115 recommendations, we verified that 74 (64 per cent) were fully implemented and one (1 per cent) was not applicable. However, we determined that 40 (35 per cent) were not fully implemented because the steps undertaken or the extent of the improvement did not fully address the issue or the intent of the recommendation, or management was unable to provide sufficient evidence of actions taken. It is important that management adequately review actions taken to implement a recommendation before asserting a recommendation has been fully implemented. If actions taken are not sufficient to address the intent of recommendations, or there is insufficient evidence to confirm the recommendation has been implemented, reporting a recommendation as fully implemented may be providing false assurance that identified risks have been appropriately addressed and the Auditor General's limited resources are wasted when the implementation of the recommendation needs to be re-audited a second time. Table 2 below summarizes the results of our Office's follow-up validation of those recommendations management reported as fully implemented. Table 2 - Results of the Auditor General's Review of the Recommendations Management has Reported as Fully Implemented Description Management Assertions Validation by Auditor General's Office In Progress Status of Recommendations Based on Auditor General's Follow-Up FI High Priority FI Other No Longer Relevant Total High Priority Other Total FI NFI FI NA NFI City Manager's Office 2 0 0 2 1 0 1 0 0 0 1 Community and Social Services 9 14 0 23 4 4 2 0 0 13 19 Infrastructure and Development Services 17 28 0 45 20 5 4 13 0 3 25 Corporate Services 34 31 3 68 38 11 5 13 0 1 30 Finance and Treasury Services 30 39 0 69 29 14 2 14 1 9 40 Total Recs 92 112 3 207 92 34 14 40 1 26 115 The fully implemented (FI) recommendations the Auditor General's Office has validated are included in Attachment 1. The no longer relevant (NA) recommendation the Auditor General's Office has validated is included in Attachment 2. The high priority recommendations that have not yet been fully implemented (NFI) as at June 1, 2021, together with management comments on progress, action plans and implementation due dates are included in Attachment 3. Management also reported recommendations as fully implemented or no longer applicable. We are in the process of validating that the recommendations are fully implemented. Management's actions to address these recommendations are described in Attachment 4. The status of fraud and waste investigation recommendations is included as an attachment. Recommendations from fraud and waste investigation reports that have been reported by management as fully implemented were not included in the scope of our current follow-up review. We will be undertaking work to validate management's assertions in the near future. Management's actions to address these recommendations are included in Attachment 6. All confidential recommendations are included in Confidential Attachment 1.
The Audit Committee recommends that: 1. City Council direct that Confidential Attachment 1 to the report (June 21, 2021) from the Auditor General remain confidential in its entirety, as it involves the security of the property of the City of Toronto or local boards, labour relations or employee negotiations, litigation or potential litigation affecting the City of Toronto or local boards or discusses a position, plan, procedure, criteria or instruction to be applied to any negotiations carried on or to be carried on by or on behalf of the City of Toronto or local boards.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council direct that the confidential information contained in Confidential Attachment 1 remain confidential in its entirety, as it involves the security of the property of the City or local boards, labour relations or employee negotiations, litigation or potential litigation affecting the City or a local board, or discusses a position, plan, procedure, criteria or instruction to be applied to any negotiations carried on or to be carried on by or on behalf of the City or local board.
AU9.7amended
The Auditor General reviews the implementation status of recommendations made through her audit and investigation reports. The results of the review are reported to City Council through the Audit Committee. The Auditor General has conducted a number of audits since 2015 to assess cybersecurity controls of the City's IT infrastructure, systems, and applications. As per the Auditor General's latest report, there are 43 recommendations related to cybersecurity that have not been fully implemented. The Office of the CISO currently has access to 28 of those recommendations through the audit tracking tool, TeamMate. At its meeting on April 7 and 8, 2021, City Council adopted Item AU8.5, Auditor General's Follow-Up of the Outstanding Recommendations - Status Update, without amendments and without debate. http://app.toronto.ca/tmmis/viewAgendaItemHistory.do?item=2021.AU8.5 At its February 16, 2021 meeting, the Audit Committee recommended that: "City Council request the Chief Information Security Officer to report to the May 31, 2021 meeting of the Audit Committee on the implementation status of all outstanding cybersecurity-related audit recommendations, including: a. high priority recommendations where there are still significant risks; b. risks being faced by the City of Toronto as a result of not implementing audit recommendations; c. a risk assessment identifying the impact of the risks after considering any current vulnerabilities; d. any other security risks being faced as a result of the changing cyber threat landscape; and e. short-, medium-, and long-term plans identifying what needs to be done to reduce the risk level for the City of Toronto in an expedited fashion." The Office of the CISO has conducted an assessment based on the above criteria and this report provides an update on the status of high priority outstanding recommendations. As the May 31, 2021 Audit Committee meeting was cancelled, this report is being tabled for the July 7, 2021 Audit Committee meeting. This report pertains to the 28 high priority cybersecurity recommendations currently accessible to the Office of the CISO in TeamMate. The Office of the CISO will continue its assessment of the remaining recommendations, including an assessment of additional security risks related to the changing cyber threat landscape. The Office of the CISO will report on these additional recommendations at the next Audit Committee meeting. The Office of the CISO (OC) has assessed the residual risk of the high priority recommendations based on remediation progress and compensating controls in the current environment. In summary, 3 of the recommendations have been fully implemented. Additionally, the OC has determined that 21 of the 28 recommendations remain on track to be implemented within 2021 (short and medium terms). The assessment has identified 13 high risk recommendations plus 3 additional risks the City faces due to the continuously changing cyber threat landscape. Due to the recent global attacks on the critical infrastructure, it's therefore extremely important that the implementation of these recommendations be expedited. Table 1 below captures the status of all 28 recommendations* as shown in TeamMate and their associated risk ratings based on the risk assessment (*as of June 22, 2021): Category High Risk Medium Risk Low Risk Total Cyber Risk Program 3 1 2 6 Policies and Standards 4 1 5 Threat Management 5 1 6 Technical Standards 4 1 1 6 Awareness and Training 2 2 Fully Remediated 1 2 3 TOTAL 13 7 8 28 Table 2 below highlights the associated remediation timeline for open recommendations: Remediation Timeline High Risk Medium Risk Low Risk Total Short Term (September 30, 2021) 6 3 4 13 Medium Term (December 31, 2021) 5 1 2 8 Long Term (September 30, 2022) 1 3 4 TOTAL 12 7 6 25* * 3 recommendations are fully implemented. Other Major Risks (in addition to open recommendations) The ever-evolving cyber threat landscape can create new and unexpected challenges for the City. Social engineering, ransomware and increased use of third party software are some other major cybersecurity risks that could impact the City's critical infrastructure in the near future. Management Actions The following actions are underway in partnership with the Technology Services Division (TSD) to reduce the cyber risk exposure at the City: Short Term - On boarded cybersecurity vendor partner and MSSP (managed security services provider), in partnership with TSD, to help standardize cybersecurity policies, procedures, tools and threat management practices across the City. Medium Term - Implementing cybersecurity controls along with logging and monitoring tools across all City divisions (IT infrastructure, systems and applications). Long Term - Achieve long term cyber maturity tied back to ISO 27001/NIST Frameworks, implement Threat Risk Assessments (TRA) and Cyber Risk Assessments (CRA) on an ongoing basis. Additionally, the City should continue to work on projects such as Microsoft 365, Privileged Access Management (PAM) and Cloud Security implementation to limit the risks emerging from access controls, third party software and cloud computing.
The Audit Committee recommends that: 1. City Council request the Auditor General to report to the November 2, 2021 meeting of the Audit Committee with an update on outstanding cybersecurity recommendations from Auditor General reports. 2. City Council request the Chief Information Security Officer and relevant City division heads to accelerate the implementation of outstanding cybersecurity recommendations from Auditor General reports and to accelerate compliance with cybersecurity standards. 3. City Council request the Chief Technology Officer to expedite the implementation of high-priority cybersecurity recommendations. 4. City Council direct that Confidential Attachment 1 to the report (June 22, 2021) from the Interim Chief Information Security Officer remain confidential in its entirety, as it involves the security of property belonging to the City of Toronto. 5. City Council direct that Confidential Attachment 1 to the supplementary report (July 6, 2021) from the Auditor General be released publicly at the discretion of the Auditor General, after discussions with the appropriate City Officials, as it contains information involving the security of property belonging to the City of Toronto or one of its Agencies and Corporations.
Staff recommendation as filed
The Interim Chief Information Security Officer recommends that: 1. City Council direct that Confidential Attachment 1 remain confidential in its entirety, as it involves the security of property belonging to the City of Toronto.
AU9.8adopted
On February 9, 2021, the Auditor General released a report entitled "Getting to the Root of the Issues: A Follow-Up to the 2019 Tree Maintenance Services Audit", which was tabled at the Audit Committee meeting on February 16, 2021. The Audit Committee made recommendations, subsequently adopted by Council, aimed at strengthening Parks, Forestry and Recreation's (PFR) oversight, monitoring and contract management related to tree maintenance services. PFR agreed with the assessment and recommendations and established a 30/60/90 Day Plan of Action to advance deliverables related to the report's recommendations to improve crew oversight, enhance contract management and improve productivity and operational efficiency. Council provided direction to PFR to report to the May 31, 2021 meeting of the Audit Committee with an update on the progress made with respect to the 90 Day Plan of Action and further to report to each regular meeting of the Audit Committee on experiences and data collected on the performance of Urban Forestry Contractors and City crews. Due to the cancellation of the May 31, 2021 Audit Committee meeting, this report has been redirected to the July 7, 2021 Audit Committee meeting. Further, PFR provided a 30-day update at the City Council meeting on April 7 and 8, 2021 and a 60-day update at the City Council meeting on May 5 and 6, 2021. The purpose of this report is to provide a progress update on the 90 Day Action Plan and introduce a framework which will be used for the regular reporting back to the Audit Committee on experiences and data collected on the performance of Urban Forestry Contractors and City crews.
The Audit Committee: 1. Received the report (June 22, 2021) from the General Manager, Parks, Forestry and Recreation for information.
Staff recommendation as filed
The General Manager, Parks, Forestry and Recreation recommends that: 1. The Audit Committee receive this report for information.
AU9.9adopted
Getting to the Root of the Issues - Parked Vehicle Performance Improvements
On February 9, 2021, the Auditor General released a report entitled "Getting to the Root of the Issues: A Follow-Up to the 2019 Tree Maintenance Services Audit", which was tabled at the Audit Committee meeting on February 16, 2021. The report included 18 recommendations for consideration by City Council, that are aimed to strengthen Parks, Forestry and Recreation's (PFR) oversight, monitoring and contract management related to tree maintenance services to ensure value for money for the City. The purpose of this report is to respond to Council's direction that the General Manager, PFR, in consultation with the City Solicitor, the Executive Director, Municipal Licensing and Standards, and the Toronto Police Service, report to the May 31, 2021 meeting of the Audit Committee on an improved system to deal with parked cars that impede tree maintenance crews which could include options to expedite the removal of legally-parked cars, including the feasibility of issuing legal notices to residents to authorize the expedited removal of parked vehicles. Due to the cancellation of the May 31, 2021 Audit Committee meeting, this report has been redirected to the July 7, 2021 Audit Committee meeting.
The Audit Committee: 1. Received the report (June 22, 2021) from the General Manager, Parks, Forestry and Recreation for information.
Staff recommendation as filed
The General Manager, Parks, Forestry and Recreation recommends that: 1. The Audit Committee receive this report for information.
AU9.10adopted
Oversight of Tree Maintenance Service Contracts
This report responds to a recommendation adopted at the Audit Committee's February 2021 meeting to report on ways to ensure adequate performance measures and oversight of all City tree maintenance service contracts, including methods to guard against payments for work not stipulated in the contracts or for work falsely reported, and for the termination of contracts due to evidence of performance that does not meet the terms and conditions of the contract. The City has implemented a number of approaches to strengthen oversight and management of tree maintenance service contracts. These include: - Increased the number of staff performing crew oversight inspections; - Doubled the number of weekly daily log reviews; - Hired a third party service provider to perform physical observations of crews; - Held emergency meetings with vendors and issued letters of expectations; - Hold regular meetings with vendors to review performance and issues including but not limited to findings related to crew observations, deficiencies, and time management; - Implemented new/updated guidelines (Daily Work Activity Report, Forestry Performance Inspection Report, Towing, Hydro Hold-off); - Implemented new tracking spreadsheets (Centralized parked car call log, emergency hold-off log); and - Utilizing Management Services, a branch within Parks, Forestry and Recreation to provide additional assurance of oversight. Further, the City has incorporated additional measures into the new tree maintenance services contracts which commence July 1, 2021, including: - Introduction of unit rate pricing for some maintenance activities which will: - reduce paying for supportive and non-productive time; - transfer day-to-day oversight of crews to the vendors; and - require suppliers to meet minimum productivity requirements; - Full access to live GPS systems for further oversight; - Clarified roles and responsibilities outlining expectations of suppliers; - Service level agreements (SLAs) to address operational deficiencies; and - Several qualitative factors, such as quality control plans, innovative/value-added services and risk mitigation strategies, were included in the scoring evaluation of bids. In addition, the City is developing processes to strengthen contract management practices across Divisions. This will include the development of a working group to lead the development and implementation of policies and procedures in collaboration with Ernst and Young to enhance contract management and operational productivity and efficiency.
The Audit Committee: 1. Received the report (June 22, 2021) from the City Manager, the Chief Procurement Officer and the General Manager, Parks, Forestry and Recreation for information.
Staff recommendation as filed
The City Manager, the Chief Procurement Officer and the General Manager, Parks, Forestry and Recreation recommend that: 1. The Audit Committee receive this report for information.
AU9.11amended
Winter Road Maintenance Program - Phase 2 Analysis: Deploying Resources
As the City prepares to enter into a new set of multi-year winter maintenance contracts, it is important to analyze if the City was receiving the best value for money from the existing multi-million dollar contracts. Transportation Services currently has 47 seven-year winter maintenance contracts, valued at approximately $450 million, which are due for renewal in 2022. The Auditor General's report in Attachment 1 with confidential portions in Confidential Attachment 1, considers whether the City was receiving the best value for money from its past contracts, as well as opportunities for improved efficiency and cost-effectiveness in the contract services model going forward. A Negotiated Request for Proposal (nRFP) process for the next round of winter maintenance services contracts is currently underway. The 2022 procurement for Winter Maintenance Services was tendered on May 7, 2021. The bidding process has closed and the Division is starting the evaluation stage. It is anticipated the contracts will be awarded this fall.
The Audit Committee recommends that: 1. City Council adopt the confidential instructions to staff in Confidential Attachment 1 to the report (June 22, 2021) from the Auditor General. 2. City Council request the General Manager, Transportation Services to: a. identify and remediate data entry errors and omissions in the Toronto Maintenance Management System (TMMS) database for its winter maintenance program as part of an ongoing quality control process; and b. implement system-based controls such as data edit controls to validate data entry and protect key fields in the Toronto Maintenance Management System (TMMS) database. 3. City Council request the General Manager, Transportation Services to use the data from its Toronto Maintenance Management System (TMMS) database to measure and monitor contractor performance, analyze operational trends and inform decision-making. 4. City Council authorize the public release of Confidential Attachment 1 to the report (June 22, 2021) from the Auditor General, headed "Winter Road Maintenance Program - Phase 2 Analysis: Deploying Resources", following the Transportation Services Division's recommendation of the award for winter maintenance service contracts under its current Negotiated Request for Proposal, expected to be during October 2021. 5. City Council authorize the public release of the confidential presentation (July 7, 2021) from the Auditor General following the Transportation Services Division's recommendation of the award for winter maintenance service contracts under its current Negotiated Request for Proposal, expected to be during October 2021. 6. City Council direct that Confidential Attachment 1 to the report (June 22, 2021) from the Auditor General, headed "Auditor General's Comments - Division's Winter Road Maintenance Program Update", remain confidential in its entirety, as it relates to litigation or potential litigation that affects the City of Toronto. 7. City Council direct that Confidential Attachment 1 to the report (June 22, 2021) from the General Manager, Transportation Services and the City Solicitor remain confidential in its entirety, as it contains advice which is subject to solicitor-client privilege.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council adopt the recommendations contained in Confidential Attachment 1 to the report (June 22, 2021) from the Auditor General. 2. City Council authorize the public release of Confidential Attachment 1 following the Division's recommendation of the award for Winter Maintenance Service contracts under its current Negotiated Request for Proposal, expected to be during October, 2021. 3. City Council request the General Manager, Transportation Services Division, to: a. identify and remediate data entry errors and omissions in the TMMS Database for its winter maintenance program as part of an ongoing quality control process; and b. implement system-based controls such as data edit controls to validate data entry and protect key fields in the TMMS Database. 4. City Council request the General Manager, Transportation Services Division, to use the data from its TMMS Database to measure and monitor contractor performance, analyze operational trends, and inform decision-making.
AU9.12adopted
Toronto Police Service Information Technology (IT) Infrastructure: Cyber Security Assessment Phase 1
In a December 12, 2019 letter to the Auditor General, the Toronto Police Services Board requested the Auditor General to conduct a cybersecurity audit. Given the size and importance of Toronto Police Service (TPS) and the sensitivity of the information it retains, the Auditor General prioritized the allocation of resources on the request and agreed to perform a vulnerability assessment and penetration testing of the TPS IT network, systems and applications. We have completed Phase 1 of this review. The purpose of Phase 1 was to assess TPS's ability, as a critical City agency, to effectively manage external and internal cybersecurity threats. A Phase 2 review will be conducted in the future to review systems that were excluded from this current review. The public report with a confidential attachment is tabled at the June 24, 2021 TPS Board meeting. The agenda for the meeting and the report are available at: https://www.tpsb.ca/meetings/meetings-current-and-past https://tpsb.ca/component/jdownloads/send/32-agendas/694-2021-06-24-agenda The Auditor General has made a recommendation to the Board to forward the report to Council through the Audit Committee. A decision document will be forwarded to the Audit Committee by the TPS Board.
The Audit Committee recommends that: 1. City Council receive the report (June 23, 2021) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU9.13amended
City Needs to Improve Software License Subscription Tracking, Utilization and Compliance
This report summarizes the Auditor General's review of an allegation of waste and its settlement regarding the City's non-compliance with a software end user agreement which resulted in the City making an advanced purchase for new software licenses that continue to remain underutilized. The City purchases various proprietary software to meet its operational needs. Proprietary software is a software which is subject to copyright laws and restrictions on its use and distribution. Licensees (users) of the software are required to comply with the terms and conditions agreed by them in the end user license agreement. Non-compliance could lead to unexpected fees or litigation. Software purchases are a significant expenditure for the City. In 2020, the City spent approximately $11.2 million on software acquisitions and $25.2 million on maintenance and support. Over the last five years, the City's total expenditures for software acquisition, maintenance and support was approximately $183.3 million. The City has over 3,300 licensed software titles. In March 2021, a complaint came to the Auditor General's office alleging "the City was fined for using a vendor's proprietary software without a license". The complainant claimed the City settled with the vendor by purchasing additional software, and that "licenses were purchased in September last year and have been sitting on the shelf since". The Auditor General started her review of this matter after being informed of the allegation. The City has been using this vendor's proprietary software for over 10 years to manage some information technology services on its servers. A key requirement of the end user agreement was for the City to install and properly configure the vendor's license reporting tool to track and report application usage on City servers. In this case we confirmed that the City incurred significant costs by not complying with the software licensing agreement that required the City to install the vendor's reporting tool to track software usage. Management advised that instead of paying additional fees for non-compliance, for which the City would not realize any benefit, they settled by purchasing new software licenses earlier than planned. We confirmed that the 12-month subscription period for most of the pre-purchased licenses will expire before the subscriptions are used. As of May 1, 2021, almost one year after the settlement, an aggregate of only 17 percent of all acquired licenses are being used. The cost of the unused license subscriptions (prorated to May 1) appears to be approximately $775,000, which includes a one-time set-up fee, annual subscription and maintenance and support costs that expire between June and August 31, 2021. If all subscriptions are renewed in June and August 2021 for another year without being needed, the costs for the unused subscriptions will continue to rise if there are further delays in the deployment of these licenses. Management provided an estimated timeline to use all subscriptions by the end of 2022. The Auditor General has made three recommendations in this report to improve the City's compliance with software license agreements and exercising due diligence before signing these agreements. This public report also contains two administrative recommendations.
The Audit Committee recommends that: 1. City Council request the Chief Technology Officer to: a. identify agreements that require license tracking and reporting; and b. implement procedures to monitor compliance and address any issues identified in a timely manner. 2. City Council request the Chief Technology Officer to improve the existing software procurement process to ensure: a. software subscriptions are thoroughly evaluated before purchasing; and b. all software subscriptions are deployed in a timely manner so there are no excessive software subscriptions. 3. City Council request the Chief Technology Officer to consult with the City Solicitor to help ensure adequate clauses are included in all future software agreements to reduce potential liability in situations where the City of Toronto is not able to comply with the agreement. 4. City Council request the Auditor General to forward the report (June 23, 2021) from the Auditor General, except for Confidential Attachment 1 to the report (June 23, 2021) from the Auditor General, to City division heads and Chief Executive Officers of major City Agencies and Corporations to review and implement the recommendations that may be relevant to their respective operations. 5. City Council direct that Confidential Attachment 1 to the report (June 23, 2021) from the Auditor General remain confidential in its entirety, as it contains commercial information supplied in confidence to the City of Toronto, which, if disclosed, could reasonably be expected to prejudice the competitive position or interfere with the contractual or other negotiations of a person, group of persons or organization.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council request the Chief Technology Officer to: a. identify agreements that require license tracking and reporting; and b. implement procedures to monitor compliance, and address any issues identified in a timely manner. 2. City Council request the Chief Technology Officer to improve the existing software procurement process to ensure: a. software subscriptions are thoroughly evaluated before purchasing; and b. all software subscriptions are deployed in a timely manner, so there are no excessive software subscriptions. 3. City Council request the Chief Technology Officer to consult with the City Solicitor to help ensure adequate clauses are included in all future software agreements to reduce potential liability in situations where the City is not able to comply with the agreement. 4. City Council request the Auditor General to forward this report for action (except for Confidential Attachment 1) to City Division Heads and Chief Executive Officers of major City agencies and corporations to review and implement the recommendations that may be relevant to their respective operations. 5. City Council direct that Confidential Attachment 1 remain confidential in its entirety, as it contains commercial information, supplied in confidence to the City of Toronto, which, if disclosed, could reasonably be expected to prejudice the competitive position or interfere with the contractual or other negotiations of a person, group of persons, or organization.
AU9.14amended
We received an allegation that the Corporate Real Estate Management (CREM) Division (formerly Facilities Management) was paying inaccurate or inflated invoices. We conducted a review of billing accuracy and contract management processes. While we did find some billing errors and invoice processing issues, intentional overbilling was not noted. We also identified areas of procurement and contract management processes for CREM to improve. We note that CREM is transforming how it is managing vendors and is already moving forward on some invoice processing improvements. Our findings and recommendations will help CREM as it continues to improve how it procures services, manages contracts, and pays invoices going forward. The work performed in relation to this review does not constitute an audit conducted in accordance with Generally Accepted Government Auditing Standards (GAGAS). However, we believe we have performed sufficient work and gathered sufficient appropriate evidence to provide a reasonable basis for our findings, conclusions and concerns.
The Audit Committee recommends that: 1. City Council request the Executive Director, Corporate Real Estate Management, in consultation with the City Solicitor, to identify and assess the recoverability of the Corporate Real Estate Management Division's current vendor billing of journeyman's rates for apprentice work for the City's maintenance contracts where apprentice work is involved. 2. City Council request the Director, Internal Audit, in consultation with the City Manager, to report back to the Auditor General by mid-2022 on the degree of potential exposure across the City of Toronto on the apprentice billing rate issue discussed in Section A.1. in Attachment 1 to the report (June 22, 2021) from the Auditor General and to include proposed recommendations to address the exposure noted and the estimated financial impact. 3. City Council request the Chief Procurement Officer to ensure that, in procurements where hourly rates for apprentices are being sought as part of the procurement, the rates being requested from the suppliers are reflective of the different skill levels of apprentices that are applicable to that type of work and that suppliers are required to provide a list of journeymen and apprentices semi-annually to City divisions. 4. City Council request the Executive Director, Corporate Real Estate Management to ensure the following for procurements involving apprentice rates: a. vendor invoices or their supporting documentation clarify the following information relating to vendor technician(s) dispatched to repair or maintain City equipment, including: 1. full name(s); 2. certificate(s) of qualification; and 3. registration number(s) with the Ontario College of Trades; and b. the City is invoiced at the proper rates. 5. City Council request the Executive Director, Corporate Real Estate Management to ensure that all future procurement calls and solicitations include a requirement on the appropriate process for contract amendments, including proper authorization, documentation and ensuring amended contracts are centrally stored. 6. City Council request the Executive Director, Corporate Real Estate Management to ensure vendors obtain pre-approvals for using subcontractors, bill accurately and declare such usage on the invoices and service reports. 7. City Council request the Executive Director, Corporate Real Estate Management to direct staff to verify that payment for services is consistent with the express terms of contracts. 8. City Council request the Executive Director, Corporate Real Estate Management to ensure that, where applicable, vendors include full equipment details, such as capacity information, on the invoices and ensure supervisors verify the rates and the number of equipment serviced before approving the invoices. 9. City Council request the Executive Director, Corporate Real Estate Management to ensure that procurement documents include clear and detailed scope of work and performance expectations for flat rate items, including checklists to perform the work, makes and models of fixtures to be installed, minimum maintenance standards that the work must meet and/or any other relevant requirement, wherever applicable, to avoid invoice disputes. 10. City Council request the Executive Director, Corporate Real Estate Management to consider adding billing accuracy to the vendor performance evaluation criteria and charging administrative fees to the vendor where there are billing errors. 11. City Council request the Executive Director, Corporate Real Estate Management to consider utilizing a statistical sampling method to systematically validate vendor billings, and where appropriate, to extrapolate to pursue a recovery for the City of Toronto. 12. City Council request the Executive Director, Corporate Real Estate Management to ensure that supervisors request vendors to substantiate invoiced amounts that reach a certain threshold with supporting documentation before providing approval, with such supporting documentation to include and not be limited to: a. service reports; b. material receipts; c. equipment rental receipts; and d. subcontractor receipts. 13. City Council request the Chief Procurement Officer, in consultation with the City Solicitor and the Director, Internal Audit, when developing the Centre of Excellence in Contract Management, to provide guidance to City divisions on what due diligence should be considered before approving time and materials invoices where costs appear to be high, with such due diligence to consider, where appropriate, the relationship between a contractor and a supplier. 14. City Council request the Executive Director, Corporate Real Estate Management to ensure that technology is used to validate service time billed by vendors. 15. City Council request the Executive Director, Corporate Real Estate Management to formalize the invoice dispute resolution process and ensure that both billing disputes and resolutions are documented. 16. City Council request the Executive Director, Corporate Real Estate Management to develop and maintain a comprehensive and up-to-date equipment inventory list, including but not limited to, where applicable: a. capacity; b. make; c. model; and d. serial number of the equipment. 17. City Council request the Executive Director, Corporate Real Estate Management to develop a Preventive Maintenance Plan for equipment that require regular maintenance and to ensure such work is being completed and tracked in a timely manner. 18. City Council request the Executive Director, Corporate Real Estate Management to ensure after-hours work is approved and justified and the rationale for overtime work documented. 19. City Council request the Executive Director, Corporate Real Estate Management to ensure that estimates and quotes include detailed breakdowns such as the number of technicians, labour hours, equipment, materials list and costs and, in the event that an estimate is provided, the final invoice should be substantiated by a service report and other supporting documentation. 20. City Council receive the report (June 30, 2021) from the Executive Director, Corporate Real Estate Management for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council request the Executive Director, Corporate Real Estate Management, in consultation with the City Solicitor, to identify and assess the recoverability of the Corporate Real Estate Management Division's current vendor billing of journeyman's rates for apprentice work for the City's maintenance contracts where apprentice work is involved. 2. City Council request the Director, Internal Audit, in consultation with the City Manager, to report back to the Auditor General by mid-2022 on the degree of potential exposure across the City on the apprentice billing rate issue discussed in Section A.1. in Attachment 1 to this report and include proposed recommendations to address the exposure noted and the estimated financial impact. 3. City Council request the Chief Procurement Officer, to ensure that, in procurements where hourly rates for apprentices are being sought as part of the procurement, the rates being requested from the suppliers are reflective of the different skill levels of apprentices that are applicable to that type of work and that suppliers are required to provide a list of journeymen and apprentices semi-annually to City divisions. 4. City Council request the Executive Director, Corporate Real Estate Management, to ensure the following for procurements involving apprentice rates: a. vendor invoices or their supporting documentation clarify the following information relating to vendor technician(s) dispatched to repair or maintain City equipment, including: 1. full name(s); 2. certificate(s) of qualification; and 3. registration number(s) with the Ontario College of Trades; and b. the City is invoiced at the proper rates. 5. City Council request the Executive Director, Corporate Real Estate Management, to ensure that all future procurement calls/solicitations include a requirement on the appropriate process for contract amendments, including proper authorization, documentation, and ensuring amended contracts are centrally stored. 6. City Council request the Executive Director, Corporate Real Estate Management, to ensure vendors obtain pre-approvals for using subcontractors, bill accurately, and declare such usage on the invoices/service reports. 7. City Council request the Executive Director, Corporate Real Estate Management, to direct staff to verify that payment for services is consistent with the express terms of contracts. 8. City Council request the Executive Director, Corporate Real Estate Management, to ensure that, where applicable, vendors include full equipment details such as capacity information on the invoices and ensure supervisors verify the rates and the number of equipment serviced before approving the invoices. 9. City Council request the Executive Director, Corporate Real Estate Management, to ensure that procurement documents include clear and detailed scope of work and performance expectations for flat rate items, including checklists to perform the work, makes/models of fixtures to be installed, minimum maintenance standards that the work must meet, and/or any other relevant requirement, wherever applicable, to avoid invoice disputes. 10. City Council request the Executive Director, Corporate Real Estate Management, to consider adding billing accuracy to the vendor performance evaluation criteria and charging administrative fees to the vendor where there are billing errors. 11. City Council request the Executive Director, Corporate Real Estate Management, to consider utilizing a statistical sampling method to systematically validate vendor billings, and where appropriate, extrapolate to pursue a recovery for the City. 12. City Council request the Executive Director, Corporate Real Estate Management, to ensure that supervisors request vendors to substantiate invoiced amounts that reach a certain threshold with supporting documentation before providing approval, with such supporting documentation to include and not be limited to: a. service reports; b. material receipts; c. equipment rental receipts; and d. subcontractor receipts. 13. City Council request the Chief Procurement Officer, in consultation with the City Solicitor and the Director, Internal Audit, when developing the Centre of Excellence in Contract Management, to provide guidance to City divisions on what due diligence should be considered before approving time and materials invoices where costs appear to be high, with such due diligence to consider, where appropriate, the relationship between a contractor and a supplier. 14. City Council request the Executive Director, Corporate Real Estate Management, to ensure that technology is used to validate service time billed by vendors. 15. City Council request the Executive Director, Corporate Real Estate Management, to formalize the invoice dispute resolution process and ensure that both billing disputes and resolution are documented. 16. City Council request the Executive Director, Corporate Real Estate Management, to develop and maintain a comprehensive and up-to-date equipment inventory list, including but not limited to, where applicable: a. capacity; b. make; c. model; and d. serial number of the equipment. 17. City Council request the Executive Director, Corporate Real Estate Management, to develop a Preventive Maintenance plan for equipment that require regular maintenance, and to ensure such work is being completed and tracked in a timely manner. 18. City Council request the Executive Director, Corporate Real Estate Management, to ensure after-hours work is approved and justified, and the rationale for overtime work documented. 19. City Council request the Executive Director, Corporate Real Estate Management, to ensure that estimates and quotes include detailed breakdowns such as the number of technicians, labour hours, equipment, materials list and costs and, in the event that an estimate is provided, the final invoice should be substantiated by a service report and other supporting documentation.
AU9.15adopted
Investigation into Allegations of Reprisal: Insufficient Evidence to Support Reprisal
This report provides the results of an investigation into an allegation of reprisal from a former City of Toronto employee whose position was terminated. The former employee claimed the termination of their employment was reprisal by management for disclosing billing concerns and potential conflicts of interest between a Director and vendors. In accordance with the Toronto Public Service Bylaw, Chapter 192, the Auditor General's Office (AGO) has the responsibility to investigate reprisal, in consultation with the City Manager or designate. Reprisal investigations are complex. Termination is one of the most severe types of reprisal, and therefore the Auditor General initiated an investigation into the allegations. Under the City of Toronto Act, the Auditor General is also responsible for assisting city council in holding itself and city administrators accountable for the quality of stewardship over public funds and for achievement of value for money in city operations. Ensuring that employees can come forward in a safe environment to report potential wrongdoing is a key internal control that helps to safeguard City assets and ensure value for money. The Auditor General has concluded that there is insufficient evidence found to substantiate that the former employee was the subject of reprisal for reporting concerns of potential wrongdoing during the course of their employment or for raising questions about potential conflicts of interest. Therefore no further action is recommended with respect to the alleged reprisal.
The Audit Committee recommends that: 1. City Council receive the report (June 30, 2021) from the Auditor General for information.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive this report for information.
AU9.16adopted
Response to City Council's Request for an Audit of Affordable Replacement Rental Units
In December 2020, City Council adopted a motion requesting the Auditor General to consider adding to the Auditor General's 2021 Work Plan an audit of previous replacement rental units to assess whether the CreateTO incident was an isolated issue and whether units were allocated in accordance with City policy. This report provides a response to City Council's request. It is the Auditor General's view that the City already has the roadmap it needs to strengthen how it administers new and replacement affordable rental units. Specifically, 1. The Auditor General has already completed several audits along the housing continuum and made recommendations to support the City in how it provides access to affordable and deeply affordable housing so that the City can prioritize households who need assistance the most. Implementation of these audit recommendations will help strengthen how the City administers and oversees financial assistance for housing to ensure households are eligible and meet the spirit of the City's housing programs. The City should consider the findings and recommendations from these audits and apply them more broadly to affordable rental housing. 2. City Planning has committed to reviewing compliance of existing agreements that secure replacement rental units in the third quarter of 2021 to verify that owners are advertising and filling units on a fair and open basis. The Auditor General's Office will consider the outcomes of City Planning's review. 3. The Auditor General's 2021 Work Plan already includes operational reviews of City Planning and affordable rental housing in the project horizon for 2021-2022, contingent upon the availability of resources. For these reasons, the Auditor General will not be updating her 2021 Work Plan to include a separate audit of replacement rental units. At this time, the Auditor General recommends that as Shelter, Support and Housing Administration, City Planning, and the Housing Secretariat consider integrating and harmonizing processes and requirements for access to affordable rental housing and/or financial assistance for eligible households, they: - consider recommendations raised in previous Auditor General audit reports regarding the centralized social housing waiting list, rent-geared-to-income eligibility, and the affordable home ownership program; and - implement any relevant recommendations in the broader context of affordable rental housing (e.g., income and asset limits, eligibility assessments, income verification, etc.). Attachment 1 includes a summary of recommendations made in those reports that may be of greater relevance. The Auditor General will assess whether further work is needed in this area after the City has implemented the above referenced recommendations.
The Audit Committee recommends that: 1. City Council request the General Manager, Shelter, Support and Housing Administration, the Chief Planner and Executive Director, City Planning and the Executive Director, Housing Secretariat to consider the audit recommendations from past Auditor General reports included in Attachment 1 to the report (June 8, 2021) from the Auditor General and to implement any recommendations that are relevant to the broader context of affordable rental housing. 2. City Council request the General Manager, Shelter, Support and Housing Administration, the Chief Planner and Executive Director, City Planning and the Executive Director, Housing Secretariat to consider how access plans, tenant selection, eligibility verification requirements and compliance monitoring can be incorporated and standardized in all agreements for affordable rental housing units. 3. City Council request the General Manager, Shelter, Support and Housing Administration, the Chief Planner and Executive Director, City Planning and the Executive Director, Housing Secretariat, in consultation with the City Solicitor, to review template agreements for rental replacement and affordable housing developments to determine whether additional provisions are needed in any of these agreements to ensure appropriate tenant access, selection and eligibility for replacement rental housing and affordable rental housing units and to ensure compliance with such provisions.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council request the General Manager, Shelter, Support and Housing Administration; Chief Planner and Executive Director, City Planning; and Executive Director, Housing Secretariat to consider the audit recommendations from past Auditor General reports included in Attachment 1 and implement any recommendations that are relevant to the broader context of affordable rental housing. 2. City Council request the General Manager, Shelter, Support and Housing Administration; Chief Planner and Executive Director, City Planning; and Executive Director, Housing Secretariat to consider how access plans, tenant selection, eligibility verification requirements, and compliance monitoring can be incorporated and standardized in all agreements for affordable rental housing units. 3. City Council request the General Manager, Shelter, Support and Housing Administration; Chief Planner and Executive Director, City Planning; and Executive Director, Housing Secretariat in consultation with the City Solicitor, to review template agreements for rental replacement and affordable housing developments to determine whether additional provisions are needed in any of these agreements to ensure appropriate tenant access, selection, and eligibility for replacement rental housing and affordable rental housing units, and to ensure compliance with such provisions.
AU9.17adopted
Results of Agreed-Upon Procedures to Assess Controls over Pay and Display Credit Card Revenues
At its meeting on May 12, 2021, the Board of Directors of Toronto Parking Authority considered Item PA23.1, Results of Agreed-Upon Procedures to Assess Controls over Pay and Display Credit Card Revenues.
The Audit Committee recommends that: 1. City Council receive the letter (May 12, 2021) from the Board of Directors of Toronto Parking Authority for information.
Staff recommendation as filed
The Board of Directors of Toronto Parking Authority recommends that: 1. City Council receive this item for information.
AU9.18adopted
Timing of External Peer Review of the Auditor General's Office
Chapter 3 of the Toronto Municipal Code requires that the "Auditor General shall undergo an external peer review once every three years to ensure compliance with government auditing standards" and that "the results of the external peer review shall be reported to Council through the Audit Committee". In March 2020, the Association of Local Government Auditors (ALGA) temporarily suspended all in-person peer reviews due to travel restrictions and health and safety. To date, ALGA has not yet resumed its peer review program. By suspending its in-person peer program, ALGA recognizes there will be some audit organizations, like our Office, that will not meet expected period review timelines. ALGA has been granted the authority in accordance with government auditing standards to extend the time frame for peer reviews for any audit organization participating in its peer review program whose peer review is affected by the COVID-19. The purpose of this report is to request City Council to allow the Auditor General to defer the external peer review of the Auditor General's Office to 2022 due to challenges and delays caused by the COVID-19 global pandemic. Our request to defer the external peer review of the Auditor General's Office to 2022 is consistent with other audit organizations who participate in the peer review program administered by ALGA. The external peer review in 2022 will be conducted in accordance with the ALGA policy for COVID-19 delayed peer reviews. The Auditor General has received the highest rating, an unqualified opinion, in the last review. Council's authorization of the one-time exemption from the Municipal Code requirement in order to defer the external peer review to 2022 will require a two-thirds vote of all Members of Council, in accordance with Section 3-1.11 of City of Toronto Municipal Code Chapter 3 .
The Audit Committee recommends that: 1. City Council authorize a one-time exemption from the requirement in City of Toronto Municipal Code Chapter 3, Accountability Officers, that the Auditor General undergo an external peer review once every three years, so that the external peer review of the Auditor General's Office originally due in 2021 will be completed by the end of 2022.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council authorize a one-time exemption from the requirement in City of Toronto Municipal Code Chapter 3, Accountability Officers, that the Auditor General undergo an external peer review once every three years, so that the external peer review of the Auditor General's Office originally due in 2021 will be completed by the end of 2022.
AU9.19adopted
Community Centres - 2020 Audited Financial Statements
The purpose of this report is to provide the Audit Committee and City Council with the 2020 audited financial statements of Community Centres. The 2020 audited financial statements for the 10 Community Centres are presented to Audit Committee after approval by their respective Boards of Management. At this time, the audits of eight community centres have been completed, one audit is in progress and one has not yet started. Depending on when the remaining two audits are completed, the Independent Auditor's Reports, accompanying financial statements and management control letters (if applicable) will be presented at a subsequent meeting of the Audit Committee. For the eight completed Community Centres, each Community Centre's Independent Auditor's Report and accompanying financial statements is attached to this report.
The Audit Committee recommends that: 1. City Council receive the 2020 Audited Financial Statements for the Community Centres in Attachments 1 to 8 to the report (June 22, 2021) from the Auditor General.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive the 2020 audited financial statements of Community Centres attached to this report.
AU9.20adopted
The purpose of this report is to provide the Audit Committee and City Council with the status of the 2020 audited financial statements of Arenas as well as those outstanding for 2019 and present the audited financial statements where available. The 2020 audited financial statements for the eight City Arenas are presented to the Audit Committee after approval by their respective Boards or Committees of Management. At the time of preparation of this report, there were no 2020 audited financial statements available for arenas. This is because the audits of five entities were in progress and the audits of the three remaining entities had not yet started. Depending on when the audits are completed, the Independent Auditor's Reports, accompanying financial statements and management control letters (if applicable) will be presented at a subsequent meeting of the Audit Committee. In addition, the 2019 audited financial statements for six arenas were previously presented at the October 2020 and February 2021 Audit Committee meetings. This report presents the Independent Auditor's Report and accompanying financial statements for one additional City Arena. The audit of the other remaining one Arena was still in progress at the time of preparation of this report.
The Audit Committee recommends that: 1. City Council receive the 2019 Audited Financial Statements for the North Toronto Memorial Arena in Attachment 1 to the report (June 22, 2021) from the Auditor General.
Staff recommendation as filed
The Auditor General recommends that: 1. City Council receive the 2019 audited financial statements for the North Toronto Memorial Arena in Attachment 1 to this report.
AU9.21adopted
Business Improvement Areas (BIAs) - 2019 and 2020 Audited Financial Statements
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. This report contains the 2019 audited financial statements and management letters for 16 entities and the 2020 audited financial statements and management letters for 2 entities. All 2019 audited financial statements have now been presented for approval, with the exception of Historic Queen BIA, which does not have any revenues or expenses to report. All of the in-scope BIAs have received an unqualified audit opinion for their financial statements. Several BIAs received audit recommendations for minor internal control and process improvements that have been accepted by the respective BIA Boards of Management - these audit recommendations can be found in the attached management letters.
The Audit Committee recommends that: 1. City Council approve the 2019 Audited Financial Statements and Management Letters for the 16 Business Improvement Areas and the 2020 Audited Financial Statements and Management Letters for the 2 Business Improvement Areas in Appendices A to S to the report (June 21, 2021) from the Controller and the Interim General Manager, Economic Development and Culture.
Staff recommendation as filed
The Controller and the Interim General Manager, Economic Development and Culture recommend that: 1. City Council approve the 2019 audited financial statements and management letters of the 16 Business Improvement Areas and the 2020 audited financial statements and management letters of the 2 Business Improvement Areas as attached in Appendices A to S to this report.