1997 Management Letter - The Parking Authority of Toronto

 The Strategic Policies and Priorities Committee submits, for the information of Council, the following transmittal letter (July 8, 1998) from the Audit Committee and reports having received same:

 Recommendation:

 That the report (June 24, 1998) from the City Auditor attaching the management letter of The Parking Authority of Toronto, be received and forwarded to Council for information.

 Background:

 On July 7, 1998, the Audit Committee had before it a report (June 24, 1998) from the City Auditor attaching the management letter of the Parking Authority of Toronto.

 The Audit Committee advises that it received the aforementioned report and directed that a copy be forwarded to your Committee and City Council for information.

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 (Report dated June 24, 1998, addressed to

the Audit Committee, from the City Auditor)

 Recommendation:

 It is recommended that the management letter of the Parking Authority of Toronto dated March 9, 1998, be received for information.

 Comments:

 The Auditor of the former City of Toronto has completed his audit of the financial statements of the Parking Authority of Toronto, for the year ended December 31, 1997. As a bi-product of his audit, the attached management letter was issued to the President of the Authority. In normal circumstances, a response by management is usually requested. Both issues raised in the letter are general observations as opposed to recommendations, and accordingly, a response is not required. However, I have requested that the Executive Director of Information Technology, contact the President of the Parking Authority of Toronto, to review Year 2000 issues.

 Contact Name and Telephone No.:

 John Woods, 392-7172.

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  (Communication dated March 9, 1998, addressed to

Mr. Maurice Anderson, President, The Toronto Parking Authority,

from the former City of Toronto City Auditor)

 I have completed my examination of the financial statements of the Parking Authority of Toronto for the year ended December 31, 1997. During the course of my examination I determined that the system of internal controls was reliable and no areas of significant weakness were noted. My observations outline below deal specifically with matters of future concern.

 These observations have been discussed with Mr. G. Daigle, Director of Finance and Administration.

 Year 2000 Computer Issue:

 The CICA recently published a guide to provide information to entities about the potential problems that financial and operational systems may incur when dates after December 31, 1999 are processed.

 The problem applies to all sizes of businesses including networked microcomputers and related application and system software and potentially to standalone microcomputers and related software. The CICA states that: "Management is responsible for assessing and addressing the effects of the year 2000 issue on the organization...Managements responsibility also includes addressing the effect that other organizations' non-compliant or non-compatible systems may have on the organization." Even if the Authority has achieved internal Year 2000 compliance, could it still suffer losses because of supplier inability to achieve compliance?

 While the financial information system of the Authority appears to be compliant, based on a recent application software and hardware upgrade, there is still a need to develop a formal plan and timetable to fully explore the issue as it relates to other internal microprocessors and those external issues that may arise from key suppliers.

 The seriousness of this problem and the need to address it cannot be overemphasized. I appreciate that staff have been involved in amalgamation-related issues, however, this too is a matter of urgency.

 It is also interesting that the TSE is requiring all publicly listed companies to disclose their plans for dealing with the Year 2000 problems. The TSE has instructed all companies listed on the exchange to include information on how they are addressing the Year 2000 problem in annual reports mailed to shareholders between April 1, 1998 and December 31, 1999.

 There is the possibility that the province may require disclosure of similar information in municipal financial statements. In this context it is important to have a formalized plan to deal with the Year 2000 problem.

 Please give this matter the serious attention it deserves.

 City Auditor:

 Pursuant to the reorganization of the new City of Toronto, the December 1997 report of the Toronto Transition Team recommended that:

 (1)the annual attest audit should be done by an external auditor hired by an Audit Committee of Council;

 (2)the City should have an internal audit function to provide ongoing services to the Corporation.

 As anticipated that the time frame from issue of an RFP to the selection of an external attest auditor will be completed as early as June 3, 1998. This will provide sufficient lead time for the new external auditor to appropriately plan an audit strategy acceptable to the requirements of the City including the Toronto Parking Authority.

 In the meantime, Mr. J. Griffiths, the present City Auditor, will continue the restructuring of the existing complement of audit staff to provide the new City of Toronto with an effective internal audit function which includes an ongoing evaluative audit process including cooperation and coordination with the external auditor.

 It has been my personal pleasure to have served the Authority as City Auditor for the past three years. I wish to thank you and the Board for the careful consideration of my reports. If there is further information or assistance either I or the present City Auditor, Mr. J. Griffiths CA, can provide, pending the appointment of the external auditor, we would be pleased to do so.