Selection of External Attest Auditors 1998 - 2002
The Strategic Policies and Priorities Committee recommends adoption of the
recommendations in the following transmittal letter (July 21, 1998) from the Audit
Committee:
Recommendation:
That the recommendations in the joint report (July 20, 1998) from the Chief Financial
Officer and Treasurer and the City Auditor, be adopted.
Background:
On July 21, 1998,the Audit Committee had before it a joint report (July 20, 1998) from the
Chief Financial Officer and Treasurer and the City Auditor regarding the selection of
External Attest Auditors for the period 1998 - 2002.
The Audit Committee recommends adoption of the aforementioned joint report.
--------
(Joint report dated July 20, 1998, addressed
to the Audit Committee, from the Chief Financial
Officer and Treasurer and the City Auditor)
Purpose:
To recommend the appointment of external attest auditors for the years 1998 - 2002.
Funding Sources:
The 1998 costs of $979,700 for external audit fees are provided in the 1998 budget. Over the
five years of the proposed contract external audit fees will amount to $4,898,500 for the City
and its Agencies, Boards and Commissions.
Recommendations:
(1)That the firm of Ernst & Young, Chartered Accountants, be appointed auditors for the
City and its Agencies, Boards and Commissions for the years 1998-2002; and
(2)That the TTC be requested to amended the appointment of auditors for 1998 by
replacing the firm of Deloitte and Touche with the firm of Ernst & Young.
Background:
Council at its meeting of May 13 and 14 approved the engagement of external auditors to
perform the attest audit function for the City and its Agencies, Boards and Commissions.
An RFP for audit services was issued on May 15,1998. The RFP was advertised in the
Globe and Mail and interested proponents were directed to submit proposals by June 8,
1998. A proponent's meeting was held on May 29, 1998 to allow proponents to have any
questions addressed. As a result of this process, four proposals were received and
proponents were invited to make presentations to the Audit RFP Review Committee. These
presentations were held on Thursday June 18, 1998.
The Audit RFP Review Committee, comprised of staff from the City's Finance Department,
City Auditor's Office, TTC, Toronto Public Library and Toronto Hydro evaluated the
proposals on the basis of the written submissions and the presentations made by the
proponents.
The review process involved evaluating three main criteria as follows:
(1)Pricing
(2)Proposed Services and Alternatives
AuditAbility of the firm to perform the required audit services.
Tax AdviceExperts available to advise the City and its Agencies Boards and
Commissions on tax mattters , as required.
IT AdviceExperts available to advise the City and its Agencies Boards and Commissions
on Information Technology issues, as required.
(3)Proponents Qualifications, Performance, Capabilities and References
Clients ServedDoes the firm have experience with large Ontario municipal clients?
Appendix A provides a list provided by each of the Proponents.
ReferencesHave audits been completed on time and on budget ?
Audit ApproachDoes the firm's audit approach take advantage of the latest technology and
audit procedures ?
Proposed Staffing PlanIs the mix of audit staff adequate for the services required ?
Qualifications of Staff What is the experience level of staff proposed to work on the audit ?
The results of the review were as follows:
| Criteria |
Ernst &
Young |
Deloitte &
Touche |
KPMG |
John
Woods |
| Pricing 1998
Pricing
1998-2001 |
$ 979,700
$ 4,898,500 |
$ 1,007,940
$ 5,039,700 |
$ 1,353,242
$ 6,008,658 |
$ 1,836,000
$ 9,180,000 |
| Audit |
Yes |
Yes |
Yes |
No |
| Tax Advice |
Tax Advisors
on staff |
Tax Advisors
on staff |
Tax Advisors
on staff |
Tax Advisors
need to be
retained |
| IT Advice |
I T Advisors
on staff |
I T Advisors
on staff |
I T Advisors
on staff |
I T Advisors
need to be
retained |
| Clients Served |
See Appendix
A |
See Appendix
A |
See Appendix
A |
Former City of
Toronto
Auditor |
| References |
Good |
Good |
Good |
N/A |
| Audit Approach |
Rated in a tie
for first |
Rated slightly
behind leaders |
Rated in a tie
for first |
Rated fourth |
| Proposed
Staffing Plan |
Senior partner
based in
Ottawa |
Strongest
staffing plan.
Two
experienced
partners |
Depth not as
strong as
Deloitte &
Touche |
Proposal based
on future
availability of
audit staff |
| Qualifications of
Staff |
Rated slightly
behind leaders |
Rated in a tie
for first |
Rated in a tie
for first |
No staff
qualifications
provided |
To obtain additional comfort with the selection process supplemental questions were
submitted to the leading three proponents. These questions were designed to further clarify
the costing presented by the proponents and the firms' ability to complete the audit
requirements.
Additional information requested included a clarification of pricing components, comments
on possible adjustments to costs as a result of the amalgamation of entities and/or the use of
common systems by the City and the entities. Proponents were asked to show their
knowledge of the audit issues for the City by discussing the issues and the actions to be
undertaken by the firm during the first three months.
The firms were also requested to describe the staffing mixed proposed by the firm. A
clarification of the number of hours contained in the firms' submissions for IT and Tax
advice were also requested as was the assumed involvement of internal audit in the review
of conversion procedures to migrate to one FIS system.
Conclusion:
Having reviewed the responses to the Request for Proposal and the presentations made by
the proponents, it is recommended that the firm of Ernst & Young, Chartered Accountants,
be appointed as external auditors for the period 1998-2002.
Contact Names and Telephone Numbers:
A. C. Shultz-416 397 5240
G. Kippen-416 397 4617
W. K. Colley-416 395 6715
--------
Appendix A
Clients:
