CITY CLERK Clause embodied in Report No. 10 of the Audit Committee, as adopted by the Council of the City of Toronto at its meeting held on December 4, 5 and 6, 2001. 1 2002 Audit Work Plan (City Council on December 4, 5 and 6, 2001, adopted this Clause, without amendment.) The Audit Committee recommends the adoption of the following report (November 1, 2001) from the City Auditor: Purpose: To provide a work plan for the utilization of Audit Services resources in 2002. Financial Implications and Impact Statement: There are no financial implications resulting from receipt of this report. Recommendations: It is recommended that the Audit work plan, as set out in Appendix 1, be approved. Background: Each year the City Auditor provides the Audit Committee with a recommended Audit work plan for the coming year. This report provides the audit projects being recommended for completion in 2002. Comments: Appendix 1 (attached) is a summary of audit projects to be undertaken during 2002. A brief description of each project is included in Appendix 5 (attached). Detailed terms of reference in relation to these projects will be determined during the initial planning stages of each audit. In addition to the projects listed in the work plan, allowance has been made for ad hoc audit requests received during the year from Council, its Committees or directly from City staff. Potential audit projects for 2002 were identified through a review of departmental budgets and operations, non-program revenue and expenditures as well as an assessment of significant items in the City’s annual financial statements. The identification exercise also considered specific requests the City Auditor has received from staff and Council. Toronto City Council 2 Audit Committee December 4, 5 and 6, 2001 Report No. 10, Clause No. 1 In addition, input from members of the Audit Committee and the City’s external auditor was taken into account. To 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 the “audit universe” was complete. The listing of potential projects generated from the identification exercise was then evaluated using a number of risk factors. These included: - magnitude of revenues, expenditures, assets and liabilities; - liquidity of assets; - the audit history of the area; - strength of management; - quality of internal controls; - political/public sensitivity; and - financial risk to the City. Time estimates were developed for each project and the projects were prioritized and mapped against available resources to derive a preliminary Audit work plan. The preliminary work plan was presented to the Chief Administrative Officer and department heads for comments. This process allowed for input from senior operational staff in the City and ensured that the Audit work plan considered areas of concern to management in addition to those projects identified by Audit staff. As in prior years, a significant amount of staff resources will be used for financial statement audits. During 2002, it is expected that approximately 18 percent of available staff time will be devoted to these financial statement audits. This work includes assistance to the external auditors as agreed in their contract with the City, audits of the City’s 18 community centres and arenas, 42 Business Improvement Areas, 10 Homes for the Aged, and other sundry financial statements as outlined in Appendix 4 (attached). In total, the City Auditor is required to provide audit opinions on 88 separate sets of financial statements. The time required to complete this financial statement audit work has been accounted for in developing the 2002 audit work plan. In addition to the financial statement audits referred to above, our experience has been that unanticipated requests for Audit services will arise from meetings of Council, its Committees or directly from City staff. Based on the level of requests for unanticipated projects in the past three years, the 2002 audit work plan provides for approximately 16 percent of available Audit staff time to meet ad hoc and urgent requests from Council and senior City staff. Allowing time for special projects affects the number of projects specifically included in our 2002 work plan. Should the actual number of ad hoc requests fall below this level, potential projects that were not included in the work plan, due to time constraints, will be undertaken. Conversely, should special requests exceed this level, it will be necessary to defer certain projects identified in the 2002 work plan to 2003. Toronto City Council 3 Audit Committee December 4, 5 and 6, 2001 Report No. 10, Clause No. 1 In 2000, the City Auditor’s Office was transferred $321,000 from the Toronto Police Service’s budget, reflecting a transfer of audit responsibilities to the City Auditor from the former Policing Standards Review Unit of the Toronto Police Service. As a result of this transfer, the City Auditor provides internal audit services to the Toronto Police Services Board and responds to audit requests from the Chief of Police. My office is in the process of developing an audit work plan for the Toronto Police Services Board. This work plan will be submitted to the Board for approval in early 2002. Conclusions: The audit projects being recommended for completion in 2002 are summarized in Appendix 1 of this report. The work plan allows the City Auditor the flexibility to undertake ad hoc requests from staff and Council, as well as the need for unscheduled audit work pertaining to special investigations. Projects included in this work plan were identified using a risk based approach conducted by the City Auditor, and include requests from senior management staff and Council. These projects will be completed in priority sequence taking into account the relative risks in the areas to be reviewed and Audit staff availability. Projects in the Finance area will be a major priority in 2002. The follow-up of past reports issued by the City Auditor will also be a priority. The City Auditor also provides internal audit services to the Toronto Police Services Board. A separate work plan is being developed for the approval of the Toronto Police Services Board in early 2002. Contact: Jeffrey Griffiths, City Auditor Tel: (416) 392-8461, Fax: (416) 392-3754 E-Mail: [email protected] _________ Appendix 1 Summary of 2002 Audit Projects Financial Audits Financial Audits of Community Centres and Arenas (Appendix 2) Financial Audits of Business Improvement Areas (Appendix 3) Other Statutory Audits (Appendix 4) External Audit Assistance Investments - Annual Compliance Review Information and Technology Audits Corporate Services - Oracle Database Environment Transportation Division – Selected Application System Reviews Business Continuity Plan Toronto City Council 4 Audit Committee December 4, 5 and 6, 2001 Report No. 10, Clause No. 1 Operational and Other Audits Finance – SAP Post-implementation Review Finance – Payroll Function Finance – Water Billings Finance – Tax Appeals Assessment and Refunds Finance – Purchasing Function Corporate Services – Management of Mainframe Operations Corporate Services – Fleet Function Parks and Recreation – Cash Controls – North and South Districts Parks and Recreation – Golf Course Operations Parks and Recreation – Class Registration and Permitting System Works Best Practices Program – On-going Involvement and Quality Assurance Review Public Health – Food Safety Disclosure Program – Post Implementation Review Community and Neighbourhood Services – Children Services Community and Neighbourhood Services – Hostel Services Environmental – Corporate Risk Assessment, Organizational Framework and Selected Audits Urban Development Services – Ambassador Taxi Program CNEA Audit Function Toronto Parking Authority Library Board – Selected Areas Corporate – Review of Major Capital Projects and Contracts Corporate – Review of Inventories (Parts, Equipment and Supplies) Corporate – Review of Petty Cash Procedures Follow-up Reviews of Audits Previously Conducted Follow-up Review of the Investigation of Sexual Assaults – Toronto Police Service _________ Appendix 2 Financial Audits of Community Centres and Arenas Presently the City Auditor is responsible for the following financial and statutory audits: Community Centres 1. 519 Church Street Community Centre 2. Applegrove Community Complex 3. Cecil Street Community Centre 4. Central Eglinton Community Centre 5. Community Centre 55 6. Eastview Neighbourhood Community Centre 7. Harbourfront Community Centre 8. Ralph Thornton Community Centre 9. Scadding Court Community Centre 10. Swansea Town Hall Community Centre Toronto City Council 5 Audit Committee December 4, 5 and 6, 2001 Report No. 10, Clause No. 1 Arenas 1. McCormick Playground Arena. 2. Forest Hill Memorial Arena. 3. George Bell Arena. 4. Leaside Memorial Arena. 5. Moss Park Arena. 6. North Toronto Memorial Arena. 7. Ted Reeve Community Arena. 8. William H. Bolton Arena. _________ Appendix 3 Financial Audits of Business Improvement Areas 1. Bloor Bathurst Madison 2. Bloor by the Park 3. Bloor West Village 4. Bloor Yorkville 5. Bloorcourt Village 6. Bloordale Village 7. Corso Italia 8. Danforth by the Valley 9. Downtown Yonge Street 10. Dovercourt Village 11. Eglinton Way 12. Forest Hill Village 13. Gerrard India Bazaar 14. Greektown on the Danforth 15. Harbord Street 16. Hillcrest Village 17. Junction Gardens 18. Keele-Eglinton 19. Kennedy Road