March 10, 1999
CITY AUDITOR:
I am enclosing for your information and any attention deemed necessary, Clause No.1
contained in Report No.2 of The Audit Committee, headed "1999 Audit Workplan", which
was adopted, as amended, by the Council of the City of Toronto at its meeting held on March
2, 3 and 4, 1999.
May I draw your attention to the amendment by Council found at the beginning of the Clause.
for City Clerk
J. A. Abrams/gc
Encl.
c.Committee Administrator, Board of Health
Committee Administrator, Audit Committee
1999 Audit Workplan
(City Council on March 2, 3 and 4, 1999, amended this Clause by amending Appendix 2 to the
report dated February 8, 1999, from the City Auditor, entitled "Details for Project List
Submitted to November 3, 1998 Audit Committee Meeting", by:
(1)deleting from Project No. (18) the word "Limousines" and inserting in lieu thereof the
word "Cars", so that such project shall now read as follows:
"18.Use of Corporate Cars:
We will review the policies, practices and procedures in relation to the use of the corporate
cars. We will also determine the relative costs of alternative service delivery models."; and
(2)referring Project No. (46) back to the Audit Committee, with a request that the City
Auditor submit a report to the Board of Health, through the Audit Committee, providing more
details on the intention of this project, viz.:
"46.Public Health:
A review will be undertaken of all Public Health programs in terms of defining the extent of
mandatory/discretionary programs.".)
The Audit Committee recommends the adoption of the following report (February 8,
1999) from the City Auditor:
Recommendations:
It is recommended that the audit workplan set out below be approved.
Background:
At its meeting of November 3, 1998, the Audit Committee approved the workplan of the City
Auditor for the period ending April 30, 1999 and requested the City Auditor to report back to
the Audit Committee with his workplan for the balance of 1999 at the first meeting of the
Audit Committee in 1999.
Comments:
The projects listed in Appendix 1 are either in progress or planned during the period from
March1,1999 to December 31, 1999. A brief description of each project is included in
Appendix 2.
The project selection process was based on an updating of the procedures undertaken in 1998.
In that process various factors were considered in the identification and prioritization of
specific audit projects. In terms of the identification of audit projects, a detailed analysis of the
City's 1998 budget document, as well as the 1997 financial statements of each of the
amalgamated municipalities was conducted in order to ensure that all significant revenue,
expenditure and balance sheet items were listed as potential audit projects. Senior Audit staff
met on a number of occasions to review and discuss potential audit projects. Further, input has
been received from the City's executive management staff to ensure that all significant risk
items have been identified. To even further broaden the perspective, data bases containing
information relating to audit projects conducted in both Canadian and United States cities
were reviewed in order to ensure that the "audit universe" was as complete as possible. This
process resulted in the preliminary identification of some 350 audit projects.
Subsequent to the identification of the projects, a risk ranking exercise was conducted in order
to prioritize the 350 projects. Various factors were considered during this evaluation process
and included the following:
(i)Total Expenditure;
(ii)Total Revenues;
(iii)Value of Assets;
(iv)Extent of Liabilities;
(v)Complexity of Operations;
(vi)Management and Internal Controls;
(vii)Legislative Requirements;
(viii)Previous Audit History;
(ix)Extent and Complexity of Computerization;
(x)Changes to Operations and Organizational Structure;
(xi)Political Sensitivity; and
(xii)Public Sensitivity.
The use of the above factors to prioritize audit projects was validated with other internal audit
organizations, both public and private.
Certain projects ranked as high priority were eliminated from the preliminary listing of
projects due to the fact that they are being addressed elsewhere in the Corporation. Those
projects include a fleet management review, various site location studies (e.g. Fire
Department), property inventories, property lease inventories, etc.
Included in the listing of the audit projects identified by the Department are additional projects
relating to requests made by City Council or the Audit Committee. In addition, the City
Auditor is committed to providing audit assistance to the Corporation's External Auditor in
connection with their audit of the 1998 financial statements. In fact, this assistance and other
financial audit commitments of the City Auditor will consume approximately ninety percent
of the Department's resources during the months of March and April.
It should be noted that the workplan is still dominated by audits dictated by the current status
of the City's operations. That is, many departments are still undergoing significant change and
the audits will ensure that appropriate controls are in place to safeguard the assets and
resources of the City. As such, most of the projects will not serve as complete operational
reviews of the activities identified. It is hoped that by the year 2000 the City will have reached
a more stable state to allow for more detailed operational reviews of key functions/services
within the City.
The Departments proposed workplan from March 1, 1999 to December 31, 1999 is attached
as Appendix 1.
Appendix 3 presents the workplan in chart format showing the elapsed time for each project.
Conclusion:
Given the significant change the City is still experiencing, it is suggested that the City Auditor
report back to the Audit Committee in November of 1999 with his workplan for the year
2000. Ultimately, it is proposed that the City Auditor operate on the basis of a three year
workplan which would be reviewed and updated annually. In view of the significant and
ongoing changes taking place at the new City it is suggested that the compilation of a three
year workplan may, at the present time, be premature.
The audit projects planned and currently underway represent a mix of departmental requests,
political requests, and projects identified as high risk through the risk ranking process
conducted by the City Auditor. The completion of these projects by December 31, 1999 is
contingent upon minimal additional, higher priority requests for audits.
Contact Name and Telephone No.:
Jerry Shaubel, Director of Audit 392-8462
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Appendix 1
No.ProjectDepartment
1Financial Information System (FIS)Finance
2Property Tax ReviewFinance
3External Audit Assistance - 1998 AuditsFinance
4Financial Audits of BIA's (37)Finance
5Financial Audits of Community Centres/Arenas (17)Finance
6Children's Services ProjectCommunity Services
7HFA / Health SubsidyCommunity Services
8York University Track and FieldEconomic Development
9Year 2000 Review (Y2K)Corporate Services
10Client Identification and Benefits System (CIBS)Community Services
11Sheppard SubwayWorks & Emergency Services
12Parking EnforcementWorks & Emergency Services
13Parks & Recreation - Selected Recreation Centre AuditsEconomic Development
14Toronto Hydro - Control Over BillingsFinance
15Municipal GrantsAll
16Real Estate FunctionCorporate Services
17Service Review Team Reports - Savings EvaluationAll
18Use of Corporate LimousinesWorks & Emergency Services
19Review of Budget Process Finance
20Toronto Fashion IncubatorEconomic Development
21BIA - Operational ReviewEconomic Development
22Permit / Lottery Licences ControlsCorporate Services
23Vehicle Safety ComplianceCorporate Services
24Collision Reporting Centres Works & Emergency Services
25Toronto Housing Company - Capital ReportsCommunity Services
26Toronto New Business CentreEconomic Development
27AbsenteeismAll
28By-Law EnforcementUrban Planning
29Quality Assurance FunctionCommunity Services
30Contract ComplianceAll
31Children's Services - Intake EligibilityCommunity Services
32Purchasing Division - Operational ReviewFinance
33Business Continuity PlanCorporate Services
34Reserves and Reserve FundsFinance
35"Squeegee Kids" ProjectCommunity Services
36Water Supply - Controls over BillingsFinance
37Toronto Parking AuthorityWorks & Emergency Services
38Computer Security FrameworkCorporate Services
39Economic DevelopmentEconomic Development
40Libraries - Operational ReviewCommunity Services
41Major Capital ProjectsWorks & Emergency Services
42Shelter, Housing CompanyCommunity Services
43Taxi Industry ReviewUrban Planning
44Fire / Ambulance TrainingWorks & Emergency Services
45External Audit Assistance - 1999 Audits *Finance
46Public HealthCommunity Services
47InvestmentsFinance
* The Request for Proposal for the City's external audit considered that these audits would
be performed by staff of the City Auditor's office.
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Appendix 2
Details for Project List Submitted
To November 3, 1998 Audit Committee Meeting
RefProject
1.Financial Information System (FIS):
City Council has approved the purchase of SAP as a new system for financial and human
resource information processing. The Audit Department has requested to be included on the
design/implementation team both to gain knowledge of the system and to ensure that adequate
controls are designed into the system. In addition, Audit would review testing procedures and
results prior to implementation and would subsequently review the adequacy of the
conversion to the new system.
2.Property Tax Review:
Revenue from property taxes is the City's major source of income. The implementation of an
actual value assessment base along with the restructuring of the new City of Toronto has
resulted in significant changes in systems, procedures and controls in the Property Tax
functions. Audit resources will be used to verify the accuracy of the assessment base as
received from the Province, review the property tax collection operations, the magnitude of
assessment deficiencies and controls over them and the value of, and controls over, tax
collection write-offs.
3.External Audit Assistance:
The request for proposal for the external audit of the City proposed that the City Auditor
would provide 1,000 staff hours in assistance to the successful proponent. The details of the
assistance to be provided is by agreement between the External Auditor and the City Auditor.
4.Financial Audits of BIA's (37):
The request for proposal for the external financial audit of the City proposed that the City
Auditor would perform the detailed audit work required for the audit of the 37 Business
Improvement Areas operating within the City.
5.Financial Audits of Community Centres/Arenas (17):
The request for proposal for the external audit of the City proposed that the City Auditor
would perform the detailed audit work required for the audit of the 17 Community Centres
and Arenas operating within the City.
6.Children Services Project:
As a result of provincial downloading of responsibilities, over 300 new programs will have
contractual and financial agreements with the City of Toronto. The Audit Department will
assist in establishing controls over these programs by undertaking to describe the financial and
cost elements of each downloaded service, outline agency requirements and accountability
processes and develop criteria for funding allocation. Financial accountability and fee
assessment practices differ in many of the programs and will need to be harmonized to ensure
public funds are expended in a manner consistent with approved program guidelines.
7.Homes for the Aged and Public Health Unit Subsidies:
The Homes for the Aged and the Public Health Divisions of the Community and
Neighbourhood Services are required to provide annual audited subsidy claims to the
Province. Separate claims are required for each Home for the Aged and for certain specific
health programs subsidized by the Province. Once the required claim forms are completed by
the Divisions an audit will be performed.
8.York University Track and Field Centre:
By agreement, the City shares the costs of operating the York University Track and Field
Centre with York University. As part of the agreement an audit is required of the expenses
incurred in the operation of the Centre.
9.Year 2000 Review (Y2K):
The Year 2000 problem may be the most significant business issue facing the City at this
time. A Y2K Program Office has been established to co-ordinate activity to remedy the
problem. In addition to our consulting role as a member of the Y2K project teams, we will
monitor the project against pre-defined criteria designed to measure the progress and success
of the project.
10.Client Identification and Benefits System (CIBS):
CIBS is an automated system which offers enhanced access to benefits for general welfare
assistance clients. The system also improves client identification through the use of
biometrics. The Audit Department is a member of the CIBS Security Team which is tasked
with ensuring the assets of the City and the information assets acquired and/or maintained in
the CIBS environment are properly and adequately safeguarded.
11.Sheppard Subway:
The Audit Committee requested the City Auditor to review the management process relating
to the Sheppard Subway and report in particular on the agreement with Cadillac Fairview, the
land acquisition process, the building approval process and the status of development levies.
12.Parking Enforcement Review:
This review will assess the operations of the Parking Enforcement Operation of Toronto
Police Services. The review will examine the mandate of this Unit and determine how
effective this mandate is being carried out. The reasonableness of performance indicators
being used (if any) will be assessed and compared, if possible, to other comparable
jurisdictions. The adequacy of policies, procedures and systems will be evaluated and any
applicable budgetary and organizational issues addressed.
13.Parks and Recreation - Selected Recreation Centre Audits:
An assessment of the current policies, procedures and practices that exist within recreation
centres with respect to: effective control over the generation of revenue, the control of and
timely processing of cash receipts, the appropriateness and controls over banking
arrangements, the appropriateness of procedures for requisition of materials and supplies, and
the adequacy of management and control over payroll administration.
14.Toronto Hydro - Control Over Billings:
This review will examine the effectiveness of controls over the billing and collection
processes at Toronto Hydro, including the rationalization of systems and processes from the
former municipalities.
15.Municipal Grants:
All seven of the amalgamated municipalities provide a variety of grants to community,
cultural and multicultural agencies and organizations for a variety of different purposes. A
review is to be conducted to assess whether grants are properly approved and processed, that
grants are spent by the recipients for the purposes for which they were provided and that a
satisfactory process is in place to measure and report on the effectiveness of the grants in
meeting their objectives. The review will also consider whether adequate policies and
procedures are established to monitor the use of grants by agencies and organizations and
whether existing criteria for grant funding are appropriate.
16.Real Estate Functions:
The City is contemplating significant changes to its real estate holdings. In advance of these
changes it is important to ensure that the Real Estate Services Unit's policies, procedures, and
practices are appropriate to optimize the benefits the City can realize from the changes which
are underway.
17.Service Review Team Reports - Savings Evaluations:
As part of the amalgamation process, the Toronto Transition Team received reports on the
anticipated changes in all areas of the City's operations. Our review will consist of
determining the progress which has been made on implementing the identified changes and
realization of related cost savings.
18.Use of Corporate Limousines:
We will review the policies, practices and procedures in relation to the use of the corporate
limousines. We will also determine the relative costs of alternative service delivery models.
19.Review of Budget Process:
The City's budget is generally approved in April of the year being budgeted. Ideally, the
budget should be finalized by January 1 of each year. While a completion of January 1 may
not be possible, there may be an opportunity to advance the budget completion date. This
review will look for methods of streamlining the budget process to allow for a more timely
completion of each years budget.
20.Toronto Fashion Incubator:
The organization is a small business incubator project to promote new fashion entrepreneurs
for which funding is provided through the Toronto Economic Development Corporation. The
organization is not consolidated with the City and the annual financial audit is to be performed
by staff of the City Auditors office in accordance with the request for proposal for external
audit services.
21.Business Improvement Area (BIA) - Operational Review:
The amalgamated City includes the operations of some 37 BIA's. Most of these organizations
are managed by volunteers with varying degrees of experience. Accordingly, the management
practices, policies and procedures and financial administration of many of these organizations
are inconsistent and/or below acceptable good business practices. This audit will examine the
operations of these BIA's and make appropriate recommendations with respect to their
managerial and financial practices. This will include the reporting relationship and
responsibilities with the City and appropriateness of expenditures under existing operating
guidelines for BIA Boards of Management, in accordance with by laws under Chapter 20 of
the Municipal Act and provincial enabling legislation.
22.Permit /Lottery License Review:
This review focuses on an assessment of the policies and procedures over the issuance and
control of all permits and lottery licences within the domain of the City Clerks Department.
The review will include an assessment of adherence to legislative requirements and test the
effectiveness of internal controls and management reporting mechanisms.
23.Vehicle Safety Compliance:
The objective of this review is to ensure that applicable staff are aware of the requirements
under the Highway Traffic Act with respect to commercial vehicles, and that procedures are in
place in all City Departments and local Boards to ensure compliance with legislation. This
review will focus on the City's commercial vehicle fleet and will evaluate procedures with
respect to registration of vehicles, maintenance, inspection, training, transportation of
dangerous goods and other related issues and requirements. Compliance with applicable
legislation and effective training, maintenance and inspection procedures are important in
ensuring the safety of our drivers and the public at large.
24.Collision Reporting Centres:
Pursuant to a special request from the Emergency and Protective Services Committee, Audit
will undertake an independent customer survey to corroborate previously reported levels of
customer satisfaction and acceptance of the Collision Reporting Centre program.
25.Toronto Housing Company - Capital Reports:
Pursuant to the completion of two capital development projects, the Housing Company is
required to submit an audited "Statement of Capital Costs" to satisfy Provincial requirements.
26.Toronto New Business Centre:
The organization is a small business incubator project to promote new business ventures for
which funding is provided through the Toronto Economic Development Corporation. The
organization is not consolidated with the City and the annual financial audit is to be performed
by staff of the City Auditors office in accordance with the request for proposal for external
audit services.
27.Absenteeism Review:
This review will examine absenteeism in the Corporation. The review will determine the
existence and effectiveness of programs to manage absenteeism. In addition, it will address
the availability of appropriate systems and information to assist management in effectively
carrying out their responsibilities in this regard.
28.By -Law Enforcement:
The amalgamation of by-law enforcement functions requires review to ensure the combination
of staff and office locations has or is being accomplished with: harmonization of appropriate
policies and procedures; efficient deployment of inspectors and by-law officers; full adherence
to legislative requirements with due regard to management and internal controls, and in a
second phase with consideration to the development and implementation of appropriate
program performance metrics for evaluation of efficiency and effectiveness.
29.Review of Quality Assurance Functions:
The Social Services Division of Community and Neighbourhood Services includes a Quality
Review and Improvement Unit. The responsibilities of this Unit include conducting audits to
ensure the effective administration of client accounts, compliance with policies and
procedures and the identification and investigation of client or caseworker fraud. Due to the
amount of expenditure passing through the Social Services Division and the many changes
accompanying the provincial downloading of social programs, an efficient and effective
Quality Review and Improvement Unit is important to the operations of the Division. Audit
Services will review current policies, procedures, work load, audit approach and training
programs and make recommendations where appropriate.
30.Contract Compliance:
The various departments of the City are executing and monitoring numerous contracts
throughout the year. A sample of corporate contracts will be selected to ensure compliance
with Corporate policies and the terms and conditions of the contracts.
31.Children's Services - Intake Eligibility:
The Children's Services Division of Community and Neighbourhood Services provides day
care services through 34 directly operated and numerous purchase of service agreements
throughout the City. Our review will assess whether adequate internal controls are in place to
ensure that only eligible children are allowed subsidies, whether monitoring of subsidy
requirements is ongoing and that applications are processed efficiently and in compliance with
corporate policies. We will also review the compliance with the contract provisions
established for the purchase of services by the Division and the cost of providing services
through directly operated versus purchase of service agreements.
32.Review of Purchasing and Materials Management Division:
This review will examine the operations of the City's Purchasing Division. The review will
assess how well the Division is carrying out its mandate, including reviewing the adequacy of
policies and procedures and determining the extent of compliance with these policies. It will
assess how effective the procurement process is in ensuring fair market competition and in
obtaining quality goods and services for City departments at the best price. The
reasonableness of performance indicators will also be evaluated and compared, if possible, to
other comparable organizations.
33.Business Continuity Plan:
This project will review the plans which exist to ensure the continuous operation of the City's
computing centre. Among other things, we will examine the systems in place to ensure
continuous power supply, systems and data backup routines and procedures, and results of any
tests of the continuity plan.
34.Reserves and Reserve Fund:
The City has in the range of two hundred separate Reserves and Reserve Funds. Staff of the
Finance Department, with Council's approval, are in the process of consolidating these
Reserves and Reserve Funds with the expectation that the final number of individual Funds
will be about sixty. The total value of these Funds, as reported to Council in April of 1998,
was $915 million. The purpose of an Audit review of these Funds at this time is to ensure that
the expenditures being made from each significant Fund are appropriate, consistent with the
Fund's stated purpose, and consistent with Councils approval.
35.Squeegee Diversion Strategy for Street-Involved Homeless Youth:
In November 1998, Council approved funds to develop and support an integrated service
model for a subgroup of homeless youth who are not currently served by the existing service
system. This service model will provide a single point of access for homeless street-involved
youth and create a new employment training program specifically targeted to this group to
divert them from squeegeeing and panhandling. All existing and new programs such as
pre-employment training and specialized employment training initiatives will be combined
into one overall program. Council asked the City Auditor to audit this model and assess its
value after twelve months.
36.Water Supply:
This review will examine the effectiveness of controls over the billing and collection
processes for water and hydro in the City, including the rationalization of systems and
processes from the former municipalities.
37.Toronto Parking Authority:
In 1998 the former municipal parking operations were amalgamated into the Toronto Parking
Authority. We have collected some baseline information on the pre-amalgamation operating
results. Once the amalgamated entity has had a sufficient period of operations, a comparison
will be made to determine if the amalgamation of the operations is proving to be a net benefit
for the City.
38.Computer Security Framework:
Adequate computer security for the City requires the establishment, communication, and
enforcement of precise security policies and procedures. The audit will review the City's
policies and procedures compared with current industry best practices. We will also review
how the security statements have been communicated to City staff and what
monitoring/enforcement mechanisms are in place.
39.Economic Development - Best Practices Review:
This review will focus on the organizational and operational practices established within the
various business segments of Economic Development. The review will draw on comparisons
with other large municipal organizations and report on best practices and benchmarking which
will assist management in developing the most effective economic strategies for the City of
Toronto.
40.Toronto Public Library Board:
The Toronto Public Library Board consists of 97 branches and two Research and Reference
Libraries. The total operating expenditure is approximately $122 million. A review is to be
undertaken to assess the adequacy of the Board's accounting records and related procedures
including whether a fully integrated library information system has been implemented. This
review will assess the adequacy of controls over operating expenditures and payroll
transactions and determine whether such expenditures are being made in accordance with the
policies and procedures of the Board. The review will also assess the system of controls over
physical and other assets, and determine the effectiveness of controls over revenues.
41.Major Capital Projects - Works and Emergency Services:
This review will examine the effectiveness of control and monitoring procedures with respect
to major capital projects in the Works and Emergency Services Department. The review will
assess the adequacy and effectiveness of processes to ensure projects are completed on time
and on budget and meet the pre-determined project deliverables. The review will also examine
the administration of these projects/contracts to ensure the necessary procedures exist to
protect the City's interest.
42.Toronto Housing Company:
The Toronto Housing Company provides subsidized housing to senior citizens and non-profit
family housing in the Toronto area. The Company is operating over 190 buildings located
throughout the City. In addition, the Central Maintenance Unit of the Company provides
ongoing repairs and maintenance and 24 hour emergency maintenance services to the
Company and to other divisions of the Community and Neighbourhood Services. This review
will determine whether an adequate system of controls exist over the processing of
applications for housing, waiting lists, physical assets, operating expenditures, revenue and
payroll transactions. The review will also assess whether the best practices are applied at all
decentralized locations, that preventative maintenance programs are in place and that the
Central Maintenance Division is providing services efficiently and effectively at a reasonable
cost.
43.Review of Taxi Industry:
The Report of the Task Force to Review the Taxi Industry contained numerous
recommendations adopted by Council including the issuance of 100 new Ambassador Taxicab
licenses commencing in 1999. Council recommended an annual review of this issue be
conducted by appropriate City staff and the City Auditor prior to any further issuance or
"second allotment" of Ambassador licences. This review will report on the status of the
recommendations as approved by Council including the implementation of these licences.
44.Fire and Ambulance Services - Training:
This review will focus on the adequacy of training programs in both Fire and Ambulance
Services to ensure the training provided to staff is effective in assisting these emergency
program areas to carry out their respective mandates, and is in compliance with all relevant
legislative requirements.
45.External Audit Assistance:
In accordance with the agreement with the external auditor, the City Auditor will be providing
1,000 hours of audit resources to the External Auditor in connection with the City's 1999
audit. It is anticipated that some of this assistance will be provided in late 1999.
46.Public Health:
A review will be undertaken of all Public Health programs in terms of defining the extent of
mandatory/discretionary programs.
47.Investments - Annual Compliance Review:
The Investment Policy and Procedures manual approved by Council in January 1998 requires
that the "Treasurer of the City shall establish an annual process of independent review by the
City's Auditor." This review provides assurance of compliance with governing legislation and
investment policies and procedures established by the Treasurer of the City.
