Other Items Considered by the Audit Committee

(a)Chemical Procurement.

The Audit Committee reports having received the following report for information:

(February 15, 1999) from the City Auditor respecting Chemical Procurement, and recommending that the report be received for information.

(b)Audit Projects Update.

The Audit Committee reports having received the following report for information:

(February 9, 1999) from the City Auditor respecting Audit Projects Update, and recommending that the report be received for information.

(c)Audit Services 1999 Operating Plan and Budget.

The Audit Committee reports having approved the Audit Services 1999 Operating Plan and Budget and forwarded same to the Budget Committee:

(February 12, 1999) from the City Auditor respecting Audit Services 1999 Operating Plan and Budget and recommending that the 1999 Operating Plan and Budget be approved by the Audit Committee and forwarded to the Budget Committee.

(d)Toronto Civic Employee's Pension Fund and Toronto Fire Department Superannuation and Benefit Fund Review of Data Conversion.

The Audit Committee reports having received the report entitled, "Toronto Civic Employee's Pension Fund and Toronto Fire Department Superannuation and Benefit Fund Review of Data Conversion", dated February 4, 1999, for information:

(February 19, 1999) from the City Auditor respecting Toronto Civic Employee's Pension Fund and Toronto Fire Department Superannuation and Benefit Fund Review of Data Conversion and recommending that the report entitled, "Toronto Civic Employee's Pension Fund and Toronto Fire Department Superannuation and Benefit Fund Review of Data Conversion, dated February 4, 1999, be received for information.

(e)Update on the 1998 External Audit.

The Audit Committee reports having received the following communication (February22, 1999) from Ernst & Young as an update on the progress of the audit of the 1998 financial statements:

(February 22, 1999) from Ernst & Young respecting Update on the 1998 External Audit, and recommending that the Audit Committee receive the memo (February 22, 1999) from Ernst & Young as an update on the progress of the audit of the 1998 financial statements.

(f)Review of Parking Tag Operations.

The Audit Committee reports having recommended to the Corporate Services Committee the adoption of the following report (December 23, 1998) from the City Auditor:

(December 23, 1998) from the City Auditor respecting Review of Parking Tag Operations, and recommending that:

(1)in preparing the 1998 financial statements, management should provide an additional allowance for doubtful accounts of $6.4 million relating to parking tag receivables. In addition, a projected final collection rate of 78 percent should be used for accrual purposes at 1998 year end;

(2)Parking Tag Operations (PTO) staff review its current arrangement with the Ministry of Transportation (TO) relating to the administration of plate denial and enter into a formal agreement with TO which outlines the administrative responsibilities of the respective parties regarding the collection of parking fines at plate denial;

(3)priority be given to the reconciliation of PTO records with TO records to ensure that all tags filed for plate denial are in fact awaiting collection at plate denial. This reconciliation should be done at least annually;

(4)PTO staff perform an analysis of the tags outstanding at plate denial, investigate the reasons for the delay of their collection and assess their current collectability. In addition, management should evaluate TO's collection procedures and take appropriate action to ensure that reliance can be placed on the Ministry's processes for the collection of outstanding fines at plate denial;

(5)the Chief Financial Officer and Treasurer and the City Solicitor report to the Corporate Services Committee on the changes required to the current provincial legislation and regulations, to enable the City to collect outstanding fines at any stage, as well as to use private collection agencies in this regard;

(6)PTO staff work with the Ministry to actively pursue collection of the old outstanding fines at plate denial, specifically those individuals or companies identified as owing more than $5,000;

(7)the Chief Financial Officer and Treasurer meet with the appropriate senior Ministry officials to expedite the resolution of the issues relating to the plate denial process in order to improve the collection of outstanding fines at plate denial;

(8)in view of the loss of revenue from parking tags issued to out-of-province vehicles, management pursue with the Province of Ontario the extension of reciprocal agreements with other Canadian provinces and United States cities, to parking violations. Consideration should also be given to assigning the outstanding fines relating to out-of-province vehicles to a private collection agency;

(9)in consultation with the City Solicitor, management request an appropriate change in legislation to provide an alternative means of serving parking tags to drove-away vehicles, which could include mailing the notice of infraction;

(10)the Parking Enforcement Unit of the Toronto Police Services report to the Corporate Services Committee on the reasons for the increase in the number of spoiled tags and the action that will be taken to keep this number to a minimum;

(11)the current report from the Chief Financial Officer and Treasurer relating to parking tags be modified to include additional management information such as the total number of tags written, spoiled, available for collection, withdrawn, status of outstanding fines, including those that are issued to out-of-province vehicles, as well as an analysis of any significant trends or problem areas; and that this report be submitted to the Corporate Services Committee on a quarterly basis, rather than monthly;

(12)PTO management establish key indicators to monitor the activity with respect to the issuance and processing of parking tags. This should include monitoring the number of spoiled tags, withdrawn tags, illegible tags, etc. In this regard, management should designate an individual the responsibility for this function as well as for the analysis of trends and the provision of relevant reports to management;

(13)PTO management utilize other available tools and resources within the City to generate customized reports to facilitate the review and monitoring of activity within PTO and discontinue the need to manually re-input data;

(14)the monthly reconciliation of the Parking Tag Management System (PTMS) to the general ledger be reviewed and approved by the Manager of PTO;

(15)PTO management make arrangements for the First Appearance Facilities to deposit all monies directly to the nearest financial institution, having a banking arrangement with the City;

(16)a transaction report showing the details of all tags withdrawn be provided to all First Appearance Facilities locations. To help ensure compliance with the guidelines, the respective supervisors should scan the transaction report and, on a test basis, examine the supporting documentation of tag withdrawals. Evidence of such review should be documented in writing;

(17)priority be given to acquiring the required computer server for the Parking Tag Management System and making the necessary arrangements with the appropriate provincial ministries and financial institutions to ensure that all computer systems related to parking tag operations are Year 2000 compliant by September 1999, as planned;

(18)PTO management develop an action plan with specific time lines to implement the recommendations contained in this report; and

(19)that this report be forwarded to the Corporate Services Committee for consideration.

(g)Investment Policy Compliance.

The Audit Committee reports having deferred consideration of the following report until its meeting to be held on April 7, 1999 and having requested the Chief Financial Officer and Treasurer to respond to the issues raised by the City Auditor:

(February 1, 1999) from the City Auditor respecting Investment Policy Compliance, and recommending that:

(1)monthly reporting procedures be put in place by City Finance staff relating to the investing of City Funds. Such reporting procedures to include details of all investments held and maturity dates of such investments. The review of monthly reports be conducted by staff independent of the investment function and include an analysis as to whether or not the City's investment policies and procedures are complied with. Evidence of the review be documented in writing. Immediate and appropriate action be taken for all instances of non compliance;

(2)City Finance staff seek legal advice and clarification relating to the scope of the Council approved policy entitled "Investment Policy and Procedures" and determine whether or not such policy applies to Agencies, Boards and Commissions. If it is determined that the policy does apply to these entities, management of the City Finance Department forward the policy to staff of all Agencies, Boards and Commissions for which the policy is deemed to be applicable. All applicable Agencies, Boards and Commissions be advised that they are required to comply with such policy;

(3)where practical, consideration be given to the consolidation of Agencies, Boards and Commissions investing activities by the City Finance staff. In addition, the decision on whether to consolidate should consider whether or not the services of outside professional investment managers are utilized, the practicality based on dollar amounts and the average length of terms investments are held, the types of investments allowed under legislation and the degree of control exercised by the City over the Agencies, Boards and Commissions;

(4)a reporting procedure be put in place by City Finance staff relating to the investing activities of those Agencies, Boards and Commissions for which the policy is deemed applicable. The reporting procedure be consistent with those recommendations as outlined under Recommendation 1;

(5)consolidated financial reporting of all City investments be reported to Council on a more regular basis than once a year;

(6)Management take immediate action to ensure compliance with policy limits on maximum amounts and durations of specific investments;

(7)the document approved by Council entitled "Investment Policy and Procedures" be finalized, particularly in terms of addressing key management administrative procedures;

(8)performance benchmarks for investment returns be set for those funds administered by the City without an established performance benchmark;

(9)the investment policy and procedures manual be amended and updated to include the York Employees' Pension and Benefit Fund. Clarification be sought in regards to the responsibility for the investment of the assets of this fund; and

(10)appropriate staff be requested to provide a complete and updated reconciliation of all investment balances at the City. This information be submitted to senior staff for their review and approval. Evidence of approval be documented in writing. Specific deadlines be set for the preparation of such reconciliations. Reconciliation of the investment portfolio to the general ledger be performed on a monthly basis for all investment funds.

(h) External Firms Retained For Insurance Claim Defence.

The Audit Committee reports having deferred consideration of the following communication until its meeting to be held on April 7, 1999:

(February 17, 1999) from the City Clerk, Corporate Services Committee respecting External Firms Retained for Insurance Claim Defence and referring the following motions to the Audit Committee for report thereon to the Corporate Services Committee:

Moved by Councillor Lindsay-Luby:

(1)That any future reports regarding the outsourcing of legal work, determine the cost effectiveness of work undertaken inside vis-a-vis outside and particularly when specific expertise is needed; and that this cost-benefit analysis be undertaken by the City's External Auditor.

Moved by Councillor Rae:

(2)That the foregoing motion by Councillor Lindsay Luby be referred to the Chief Financial Officer and Treasurer for report thereon to the next meeting of the Corporate Services Committee respecting the cost of the City employing an External Auditor.

Respectfully submitted,

COUNCILLOR DOUG MAHOOD,

Chair

Toronto, March 1, 1999

Frances M. Pritchard

Tel. (416) 392-7033