May 10, 1999
To:Audit Committee
From:Chief Administrative Officer
Subject:Consolidation of City Audit Activities - Update
Recommendations:
It is recommended that this report be received for information.
Background:
At its meeting of March 1, 1999, the Audit Committee approved the recommendations of the
City Auditor in connection with the potential for the consolidation of City Audit activities.
The City Auditor recommendations included the following:
1.The Chief Administrative Officer request the firm of Ernst & Young, the City's External
Auditors to evaluate the efficiency and effectiveness of the City Auditor's Office, the Internal
Audit and Program Review Unit of the Police Services Board, and the Internal Audit Unit of
the Toronto Transit Commission and report to the Audit Committee by May 31, 1999. This
evaluation should be done as part of the 1998 financial audit. Such evaluation to include, but
not be limited to:
- Potential for Consolidation and Streamlining
- Reporting Relationships
- Staff Requirements
- Staff Qualifications
- Audit Workload
- Efficiency and Effectiveness Measures
- Potential Cost Savings
2.Additional external audit costs, if any, in relation to this review be shared equally by the
City Auditor's Department, the Police Services and the Toronto Transit Commission;
3.The Chief Administrative Officer request the firm of Ernst & Young to evaluate the merits
of establishing a separate internal audit unit at the Toronto Housing Company. Additional
external audit costs, if any, be borne by the Toronto Housing Company;
4.The City Auditor be requested to follow up his review of the efficiency and effectiveness
of the Quality Control and Assurance Group of the Social Services Division; and
5.The hiring of audit staff by any of these units be discontinued until such study is complete.
Comments:
The preparation of the consolidation report is required to be conducted in conjunction with
and at the conclusion of the 1998 financial audit. The May 31, 1999 deadline for the
finalization of the report was predicated on the basis that the 1998 financial audit would be
completed by April 30, 1999. I am advised that the 1998 financial statements will not be
completed until the end of May 1999. Consequently, Ernst & Young are not in a position to
prepare the consolidation report until that time.
Conclusion:
Ernst & Young were previously committed to finalize the report on the consolidation of City
Audit activities by May 31, 1999. However, this is not currently possible due to the delay in
the finalization of the 1998 financial statements. Once the 1998 financial audit is complete,
resources will be directed to this particular project.
Contact Name and Telephone Number:
Jeff Griffiths, 392-8461
Michael Garrett
Chief Administrative Officer
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