The Audit Committee authorized the City Clerk to accept regular business Items for the July 5, 2010 meeting of the Audit Committee in addition to the Financial Statements from the City's agencies, boards, commissions.

In July 2008, the Audit Committee adopted a motion which directed that in future years, the annual schedule of meetings for the Audit Committee include:

-           one meeting to review the City’s audited consolidated financial statements; and

-           a separate meeting to review the financial statements of agencies, boards and commissions (ABCs) including business improvement areas (BIAs), arenas and community centres.

Accordingly, the meeting of the Audit Committee scheduled for June 30, 2010 is to consider the City's financial statements, and the meeting on July 5, 2010 is to consider financial statements of the City's ABCs, BIAs, Arenas and Community Centres.

Due to the upcoming election, these are the last meetings scheduled for this year.  The Auditor General has advised that there will be several other matters that will require consideration by the Audit Committee.  I am recommending that the Audit Committee permit other Items at the July 5, 2010 meeting, in addition to the financial statements.

The Audit Committee recommends that:

1.         City Council request the Deputy City Manager and Chief Financial Officer to review the draft Risk Management Policies and Procedures Manual and ensure that it is current, revised to take into account emerging or changed circumstances, reviewed by all stakeholder groups, finalized and widely circulated to all relevant staff.

2.         City Council request the Director, Corporate Finance, in consultation with the City’s insurance advisors, to evaluate the risks and benefits of increasing the City’s level of self insurance.  The results of the evaluation be reported to City Council.

3.         City Council request the Director, Corporate Finance, to review the possibilities of changing the current insurance fronting arrangement.  Such a review include consultation with staff of the Toronto Transit Commission.  The Director, Corporate Finance also be requested to communicate the results of this review with the City's agencies, boards and commissions.

4.         City Council request the Deputy City Manager and Chief Financial Officer to review and, if appropriate, recommend to Council revisions to the delegated financial authority limits for the settlement of insurance claims.

5.         City Council request the Director, Corporate Finance, to establish a process to monitor City divisional response time to insurance adjuster requests for information and report results to Divisions where significant delays occur.  The City Manager take appropriate action if response times are not appropriately addressed.

6.         City Council request the Director, Corporate Finance, to perform regular reviews of the time spent on adjusting services for the same category of claims.  Any files which result in an inordinate amount of time and as a result incur excessive costs be discussed with the third party adjuster.

7.         City Council request the Director, Corporate Finance, to review the financial thresholds for reporting insurance claims to the Claims Review Group.

8.         City Council request the Director, Corporate Finance, to review the Loss Control Notice process to ensure all Notices are issued when required, divisional responses are received and progress on corrective action is monitored by Insurance and Risk Management staff.

9.         City Council request the Director, Corporate Finance, to ensure appropriate action is taken on loss prevention recommendations identified by the insurer.  For recommendations not addressed, specific reasons for not doing so be documented and approved in writing.

10.       City Council request the City Solicitor, in consultation with the Director, Corporate Finance, to prepare a cost-benefit analysis to determine if it would be advantageous to transfer a certain level of legal services currently provided by external private sector legal firms to internal solicitors.  Such an exercise be conducted prior to the next City budget cycle.

11.       City Council request the Director, Corporate Finance, to consider the development of a process whereby all legal bills are analyzed and scrutinized on a performance review basis.  Such a process include evaluations of time spent on specific legal files, the level of lawyer expertise assigned to each file along with review of hourly rates.  The review process be documented along with evidence of any follow up on apparent irregularities.

12.       City Council request the Director, Corporate Finance, to review the current fee structure arrangement with the adjuster in order to determine whether or not there would be cost savings in minimizing flat fee charges.

13.       City Council request the Director, Corporate Finance, to complete the implementation of the Insurance and Risk Management staffing changes approved in the 2009 City budget.

14.       City Council request the Director, Corporate Finance, in consultation with the Chief Information Officer, to interface the Risk Management Information System operated by the City with the claims database managed by the adjuster.

15.       City Council request the Director, Corporate Finance, to complete the implementation of an automated process to update the Risk Management Information System quarterly for the cost of all legal services.

16.       City Council request the Director, Corporate Finance, to consider the need to record, in the claim files, costs related to adjusting services provided by City staff.

17.       City Council request the Director, Corporate Finance, to ensure that user division staff are included in at least an advisory role with the Claims Working Group.

18.       City Council request the Director, Corporate Finance, to complete a comprehensive listing of properties and insured values for the 2011 insurance renewal process.

19.       City Council request the Deputy City Manager and Chief Financial Officer to report at least once each term of Council on appropriate relevant information relating to significant uninsured risks.

20.       City Council request the Director, Corporate Finance, in consultation with appropriate senior management, to consider the cost-effectiveness of consolidating the current City of Toronto insurance program to include certain other City agencies, boards, commissions and corporations.

21.       City Council request the Deputy City Manager and Chief Financial Officer to review the handling of claims arising from private property damage caused by fallen trees and branches involving City-owned trees. The scope of such review to be limited to the number of claims that move on to court after initially being denied, and the amount of funds the City spends to defend against these claims.  The Auditor General to be advised of the findings in this regard.

The Audit Committee recommends that:

1.         City Council request the General Manager, Parks, Forestry and Recreation, in consultation with the Chief Information Officer, to evaluate options for alternative payment methods including the use of debit and credit cards at sales counters and vending machines, as well as Web-based sales.

2.         City Council request the General Manager, Parks, Forestry and Recreation, to develop an automated cash reconciliation process.  The process should include daily variance tracking of cash shortages and overages, and should report accumulated variances by month, year and cashier.  The process should also provide for investigation and reconciliation of unusual variances.  Mandatory supervisory review should include sign-off on all reconciliations and variances.  Variance reports should be retained in accordance with required record retention time frames.

3.         City Council request the General Manager, Parks, Forestry and Recreation, in consultation with the Chief Information Officer, to conduct a business process review of the Ferry Service/Marine Operations and evaluate options to upgrade or replace the existing information technology system for submission to the 2011 information technology capital process.  The review should include:

a.         integration of the point of sale system with other related City systems, such as the debit and credit card system and the SAP financial system; and

b.         an evaluation of the CLASS management information system as it relates to meeting the needs of Marine Operations.

4.         City Council request the General Manager, Parks, Forestry and Recreation, to implement an interim process to independently reconcile point of sale revenues with bank deposits.

5.         City Council request the General Manager, Parks, Forestry and Recreation, to ensure staff are appropriately trained on computer systems routinely used and user manuals are available to staff for training and ready reference.  Further, the General Manager, Parks, Forestry and Recreation, in consultation with the Chief Information Officer, determine corporate requirements for future computer system support and maintenance in the event of system failure.

6.         City Council request the General Manager, Parks, Forestry and Recreation, in consultation with the Chief Information Officer, to evaluate options for automating the ferry service ticket inventory.

7.         City Council request the General Manager, Parks, Forestry and Recreation, in consultation with the Chief Information Officer, to evaluate options for:

a.         automating ticket cancellation and refund processes; and

b.         implementing a process to analytically review cancelled tickets and refunds.

Further, the General Manager, Parks, Forestry and Recreation, to implement a process to ensure reasons for ticket and ferry pass cancellations and refunds are appropriately documented and are subject to supervisory approval.

8.         City Council request the General Manager, Parks, Forestry and Recreation, to review current ticket and dock procedures.  Periodic comparisons between tickets sold and the number of patrons recorded as ferry passengers should be conducted, and unusual deviations investigated.

9.         City Council request the General Manager, Parks, Forestry and Recreation, to develop a process to review and monitor vendor contracts and ensure contracts are renewed on a timely basis.  In addition, the General Manager, Parks, Forestry and Recreation, to develop a process to periodically bill and follow-up on outstanding revenues on a timely basis.

10.       City Council request the General Manager, Parks, Forestry and Recreation, in consultation with the Chief Information Officer, to evaluate controls on system data and change management processes, and ensure corporate requirements are followed for current and future computer systems.

The Audit Committee recommends that:

1.         City Council request the Chief Information Officer to ensure current and future wireless projects undertaken by City divisions are administered under the Information Technology Governance Framework.

2.        City Council request the Chief Information Officer to ensure measures to provide a consultative and collaborative role on wireless projects undertaken by City agencies, boards and commissions are implemented.

3.         City Council request the Chief Information Officer to prepare a comprehensive City-wide IT Wireless Plan and periodically review the plan to ensure that it is current and relevant.

4.         City Council request the Chief Information Officer to complete a review of City-wide information technology policies to ensure policies are prepared, approved and reviewed on a regular basis.

5.         City Council request the Chief Information Officer to implement City-wide wireless standards and develop procedures to provide for periodic review to ensure the accuracy and relevancy of wireless standards.

6.         City Council request the Chief Information Officer to develop a comprehensive IT Security Manual as a ready reference for City staff.

7.         City Council request the Chief Information Officer to implement additional measures to further reduce the risk of unauthorized access to City wireless technology.

8.         City Council request the Chief Information Officer to ensure information technology inventory records are complete and controls are working as intended.

9.         City Council request that a copy of this Item be forwarded to the City’s agencies, boards and commissions for information.

The Audit Committee:

1.         received for information, the report (January 26, 2010) from the Deputy City Manager and Chief Financial Officer; and

2.         requested the Auditor General to direct the external auditors of the City's agencies, boards and commissions to expand their mandate to include investment compliance audits, the timeframe as agreed with the Auditor General.