~Oshawa Report

To Item Date of ReportCouncil in Committee of the Whole

AG-13-12 August 27 2013 From File Date of Meeting Ron Foster

Aud itor General C-1 000 September 3 2013

Subject Duties Authority and Reporting Relationship of the Auditor General Public Meeting

10 PURPOSE

To clarify the dut ies and authority of the Auditor General and to recommend a revision to the functional reporting relationship of the Auditor General

20 RECOMMENDATION

It is recomme nded to City Co uncil

1 T hat the amended duties of the Aud itor General outli ned within Attachment 1 of Report AG-13-12 dated A ugust 27 2013 be endorsed

2 That the Auditor Generals authority to obta in peer consultants be affirmed so that if the Auditor General deems it to worthy of further investigation value engineering studies or other technical studies on faci lities and land that are subject to construction renovation or improvement may be undertaken to manage these cap ital costs more effectively and efficiently

3 T hat an Audit Committee consisting of the four Standing Committee Chai rs the Mayor and external representatives with expertise in internal audit and external audit be establ ished to oversee the work of t he Au ditor General and external auditor and

4 That the Aud itor Genera l report functionally to Aud it Comm ittee on a quarterly bas is

30 EXECUTIVE SUMMARY

This report recommends that the duties and authority of the Auditor General be clarified and that an Audit Committee be established to oversee the work of the Auditor General and external auditor No significant changes to middot the Auditor General s administrative reporting relationship to the City Manager are required

98011 -06 12

809

Report to Counci l in It em AG-13-12 Committee of t he Whole - 2 - Meet ing Dat e September 3 2013

40 INPUT FRO M OTHER SOURCES

)gt The City Manager Director of Human Resources and Acting Treasurer have been asked to provide input into this report They have deferred review of this report AG-13shy12 pending Councils consideration of in camera item CM-13-50 Communications Concerning the Requis itio n of Funds and of the Final Report of George Rust-DEye dated August 23 2013 Investigation of Report AG-13-09 - Independence of the Auditor General includ ing without limitation that reports recommendation respecting Councils consideration of the role of an Auditor General The City Solicitor recommends that Council similarly defer its consideration of this report AG -1 3-12

50 ANALYSIS

51 Duties of the Auditor General

)gt Section 22319(1) of the Municipal Act 2001 as amended in 2009 (the Act) indicates that once appointed the Auditor General is responsible for assisting the Council in holding itself and its administrators accountable for the quality of stewardsh ip over public funds and for the achievement of va lue for money in City operations

)gt The Act was amended to 2009 to stipulate that The Auditor Genera l shall perform his or her responsibilities under th is Part in an independent manner

)gt It is recommended that the amended duties of the Aud itor General outlined within Attachment 1 be endorsed to clarify that the Auditor General has the authority to conduct special reviews without the approval of Council

)gt For comparative purposes the duties of the Auditor General of the City of Toronto are also set out in Attachment 1

52 Authority of the Auditor General

)gt On July 3 2007 Council passed consent motion 480 which stated t hat The Auditor General be given the discretion to hire a peer cons ultant to review all capita l expenditure plans t hat the Auditor Genera l deems are worthy of f urther investig ation with costs to be accrued to the project account See Attachment 2

)gt A capital expenditu re is defined as any sign if ica nt expenditu re incurred to acquire or improve land bu ildi ngs engineering structu res mach inery and equipm ent that co nfers a benefit lasting more tha n one year and resu lts in the acquisition or extens ion of the life of a fixed asset

)gt Capital expenditure plans for facilities and land under subj ect to construction and improvement typica lly comme nce at the re quirements definition phase and include the concept ual desig n phase cost esti mation phase and detailed design ph ase

810

Report to Council in Item AG-13-12 Committee of the Whole - 3- Meeting Date September 3 2013

~ Peer con sultants might be eng aged during any of the above phases to identify assess or help to manage the costs of acqu isition constru ction or renovation of facilit ies

~ Following the app roval of the acquisition of a site or facility va lue eng ineering might be undertaken to reduce construction renovation or improvement costs

~ It is recommended that t he Aud itor General s authority to obta in peer consu ltants be affirmed so that if th e Aud ito r General deems it to worthy of further investigation value en gineering studies or other technical studies on faci lities and land th at are subject to const ruction renovation or improvement may be undertaken to manage these capital costs more effectively and efficiently

52 Reporting Relationshi p of the Auditor General s Office

~ Acco rdin g to the Institute of Internal A uditors Audit Comm ittees are a key element of pub lic sector governance because they improve accou ntabil ity and transparency ensure that aud it results are aired and t hat any recom mended improvements or correct ive actions are add ressed or resolved on a t imely basis

~ Aud it Comm ittees also bolster the independence integrity and effective ness of publ ic sector auditors by providing indepen dent overs ight of the internal and external audit work plans and resu lts assessing a udit resource need s and mediating the auditors relationship within public sector orga nization s

~ Be nchmarking indicates that 16 of the 32 municipa l auditors w it hin Ca nada report to A udit Committees The balance report to Council another Sub comm ittee of Council the City Man ager or Treasurer

~ The Aud itor General currently rep orts f unctiona lly to Comm ittee of t he Whole and administratively to t he City Manager

~ Estab lishing an Au dit Comm ittee wou ld provide the ideal fo rum to discu ss

o The an nual risk assessment of the Auditor General s Office o The multi-year aud it plan of the A uditor General s Office o Sta ffi ng requirements and budgets ofthe Aud itor Generals Office o Concerns identified by th e Aud itor General that require exam ination o Delays related to the im plementat ion of aud it recommendations o Weaknesses within risk ma nagement or governance processes o Concerns related to timely access to data or staff o A nnual accomplishments of the A uditor Genera ls Office and o The co ntract of the A uditor General

~ Attachment 3 prov ides a model Aud it Co mmittee Cha rter t hat sets out a number of best practi ces for Audit Committees including definition of its purpose authority and respons ibilities

811

Rep ort to Council in It em AG-13-12 Committee o f the Whole -4 - Meeting Date September 3 2013

)gt It is recom mended t hat an Audit Committee consisting of the fo ur Stand ing Co mmittee Chairs the Mayor and e xterna l representatives wit h e xpertise in internal audit and e xternal audit be established to oversee the wo rk of the Aud itor Ge neral and external auditor

)gt It is also recommended t hat the Audito r Ge neral report fu nct ional ly to Audit Committee on a qua rterly basis

)gt No changes to the Auditor Generals administrative reporting relationship to t he City Manager are requi red

60 FINANCIAL IMPLICATIONS

)gt C larifying th e duties and authority of the Auditormiddot General will help the middotc ity better manage costs f or the construct ion and renovation of fac ilities and improveme nt of land

)gt The only costs associated with revising the reporting relationship of the A udito r General wou ld be for per diems for external mem bers t hat mig ht be appointed to t he A udit Comm ittee

70 RESPONSE TO THE OSHAWA STRATEGIC PLAN

)gt C larifying the duties and powe rs of th e A uditor Ge neral wi ll allow th e Aud itor Gene ral to assist City Cou ncil in hold ing itself and its adm inistrators accountable for the achievement of value f or money in City operations

)gt Estab lish ing an Audit Comm ittee will demonst rate that Counci l is taking action to ens ure accountable lead ership whic h is one of th e goals set out within the Oshawa Strategic Plan

Ron Foster Au ditor General

Attach ments

812

AG-13-12 Attachment 1

Duties of the Auditor General of Oshawa

As approved by City Council the Auditor General is empowered

a To conduct or cause to be conducted audits on behalf of City Council in the areas of compliance financial (excluding attest) program or value-for-money information technology infrastructure environment and sustainability and other audits and reviews as appropriate to address matters of importance to the Corporation

b To undertake forensic investigations including suspected fraudule nt activities

c To liaise and consult with external auditor(s) if required performing financial statementattest audits

d To examine problems and carry out special assignments identified by the Auditor General or approved by 213 majority resolution ofCounciland

e To provide assurance that the information technology infrastructure contains adequate controls and security by ensuring the existence of such controls in existing systems assessing overall computer security including business continuity (emergency) planning

Duties of the Auditor General of City of Toronto

As approved by City Council the Auditor Genera l is empowered

a To conduct or cause to be conducted on behalf of City Council audit projects identified by the Auditor General in the areas of compliance financial (excluding attest) program or value-for-money info)111ation technology infrastructure environment and sustainability and other audits as appropriate

b To undertake forensic investigations including suspected fraudu lent activities c To oversee the work of external auditor(s) performing financial statementattest audits d To examine problems and carry out special assignments identified by the Auditor

General or approved by 23 majority resolution ofCouncil e To provide assurance that the information technology infrastructure contains adequate

controls a nd security by ensuring the existence of such controls in existing systems assessing overall computer security including business continuity (emergency) planning

f Fo coordinate audit activities with internal auditors and any contracted work to ensure efficient and effective use of audit resources

g To manage the Fraud and Waste Hotline Program refer issues to departmental management and the Internal Audit Division as appropriate

813

Report to Counci l in It em AG-13-12 Committee of t he Whole - 2 - Meet ing Dat e September 3 2013

40 INPUT FRO M OTHER SOURCES

)gt The City Manager Director of Human Resources and Acting Treasurer have been asked to provide input into this report They have deferred review of this report AG-13shy12 pending Councils consideration of in camera item CM-13-50 Communications Concerning the Requis itio n of Funds and of the Final Report of George Rust-DEye dated August 23 2013 Investigation of Report AG-13-09 - Independence of the Auditor General includ ing without limitation that reports recommendation respecting Councils consideration of the role of an Auditor General The City Solicitor recommends that Council similarly defer its consideration of this report AG -1 3-12

50 ANALYSIS

51 Duties of the Auditor General

)gt Section 22319(1) of the Municipal Act 2001 as amended in 2009 (the Act) indicates that once appointed the Auditor General is responsible for assisting the Council in holding itself and its administrators accountable for the quality of stewardsh ip over public funds and for the achievement of va lue for money in City operations

)gt The Act was amended to 2009 to stipulate that The Auditor Genera l shall perform his or her responsibilities under th is Part in an independent manner

)gt It is recommended that the amended duties of the Aud itor General outlined within Attachment 1 be endorsed to clarify that the Auditor General has the authority to conduct special reviews without the approval of Council

)gt For comparative purposes the duties of the Auditor General of the City of Toronto are also set out in Attachment 1

52 Authority of the Auditor General

)gt On July 3 2007 Council passed consent motion 480 which stated t hat The Auditor General be given the discretion to hire a peer cons ultant to review all capita l expenditure plans t hat the Auditor Genera l deems are worthy of f urther investig ation with costs to be accrued to the project account See Attachment 2

)gt A capital expenditu re is defined as any sign if ica nt expenditu re incurred to acquire or improve land bu ildi ngs engineering structu res mach inery and equipm ent that co nfers a benefit lasting more tha n one year and resu lts in the acquisition or extens ion of the life of a fixed asset

)gt Capital expenditure plans for facilities and land under subj ect to construction and improvement typica lly comme nce at the re quirements definition phase and include the concept ual desig n phase cost esti mation phase and detailed design ph ase

810

Report to Council in Item AG-13-12 Committee of the Whole - 3- Meeting Date September 3 2013

~ Peer con sultants might be eng aged during any of the above phases to identify assess or help to manage the costs of acqu isition constru ction or renovation of facilit ies

~ Following the app roval of the acquisition of a site or facility va lue eng ineering might be undertaken to reduce construction renovation or improvement costs

~ It is recommended that t he Aud itor General s authority to obta in peer consu ltants be affirmed so that if th e Aud ito r General deems it to worthy of further investigation value en gineering studies or other technical studies on faci lities and land th at are subject to const ruction renovation or improvement may be undertaken to manage these capital costs more effectively and efficiently

52 Reporting Relationshi p of the Auditor General s Office

~ Acco rdin g to the Institute of Internal A uditors Audit Comm ittees are a key element of pub lic sector governance because they improve accou ntabil ity and transparency ensure that aud it results are aired and t hat any recom mended improvements or correct ive actions are add ressed or resolved on a t imely basis

~ Aud it Comm ittees also bolster the independence integrity and effective ness of publ ic sector auditors by providing indepen dent overs ight of the internal and external audit work plans and resu lts assessing a udit resource need s and mediating the auditors relationship within public sector orga nization s

~ Be nchmarking indicates that 16 of the 32 municipa l auditors w it hin Ca nada report to A udit Committees The balance report to Council another Sub comm ittee of Council the City Man ager or Treasurer

~ The Aud itor General currently rep orts f unctiona lly to Comm ittee of t he Whole and administratively to t he City Manager

~ Estab lishing an Au dit Comm ittee wou ld provide the ideal fo rum to discu ss

o The an nual risk assessment of the Auditor General s Office o The multi-year aud it plan of the A uditor General s Office o Sta ffi ng requirements and budgets ofthe Aud itor Generals Office o Concerns identified by th e Aud itor General that require exam ination o Delays related to the im plementat ion of aud it recommendations o Weaknesses within risk ma nagement or governance processes o Concerns related to timely access to data or staff o A nnual accomplishments of the A uditor Genera ls Office and o The co ntract of the A uditor General

~ Attachment 3 prov ides a model Aud it Co mmittee Cha rter t hat sets out a number of best practi ces for Audit Committees including definition of its purpose authority and respons ibilities

811

Rep ort to Council in It em AG-13-12 Committee o f the Whole -4 - Meeting Date September 3 2013

)gt It is recom mended t hat an Audit Committee consisting of the fo ur Stand ing Co mmittee Chairs the Mayor and e xterna l representatives wit h e xpertise in internal audit and e xternal audit be established to oversee the wo rk of the Aud itor Ge neral and external auditor

)gt It is also recommended t hat the Audito r Ge neral report fu nct ional ly to Audit Committee on a qua rterly basis

)gt No changes to the Auditor Generals administrative reporting relationship to t he City Manager are requi red

60 FINANCIAL IMPLICATIONS

)gt C larifying th e duties and authority of the Auditormiddot General will help the middotc ity better manage costs f or the construct ion and renovation of fac ilities and improveme nt of land

)gt The only costs associated with revising the reporting relationship of the A udito r General wou ld be for per diems for external mem bers t hat mig ht be appointed to t he A udit Comm ittee

70 RESPONSE TO THE OSHAWA STRATEGIC PLAN

)gt C larifying the duties and powe rs of th e A uditor Ge neral wi ll allow th e Aud itor Gene ral to assist City Cou ncil in hold ing itself and its adm inistrators accountable for the achievement of value f or money in City operations

)gt Estab lish ing an Audit Comm ittee will demonst rate that Counci l is taking action to ens ure accountable lead ership whic h is one of th e goals set out within the Oshawa Strategic Plan

Ron Foster Au ditor General

Attach ments

812

AG-13-12 Attachment 1

Duties of the Auditor General of Oshawa

As approved by City Council the Auditor General is empowered

a To conduct or cause to be conducted audits on behalf of City Council in the areas of compliance financial (excluding attest) program or value-for-money information technology infrastructure environment and sustainability and other audits and reviews as appropriate to address matters of importance to the Corporation

b To undertake forensic investigations including suspected fraudule nt activities

c To liaise and consult with external auditor(s) if required performing financial statementattest audits

d To examine problems and carry out special assignments identified by the Auditor General or approved by 213 majority resolution ofCounciland

e To provide assurance that the information technology infrastructure contains adequate controls and security by ensuring the existence of such controls in existing systems assessing overall computer security including business continuity (emergency) planning

Duties of the Auditor General of City of Toronto

As approved by City Council the Auditor Genera l is empowered

a To conduct or cause to be conducted on behalf of City Council audit projects identified by the Auditor General in the areas of compliance financial (excluding attest) program or value-for-money info)111ation technology infrastructure environment and sustainability and other audits as appropriate

b To undertake forensic investigations including suspected fraudu lent activities c To oversee the work of external auditor(s) performing financial statementattest audits d To examine problems and carry out special assignments identified by the Auditor

General or approved by 23 majority resolution ofCouncil e To provide assurance that the information technology infrastructure contains adequate

controls a nd security by ensuring the existence of such controls in existing systems assessing overall computer security including business continuity (emergency) planning

f Fo coordinate audit activities with internal auditors and any contracted work to ensure efficient and effective use of audit resources

g To manage the Fraud and Waste Hotline Program refer issues to departmental management and the Internal Audit Division as appropriate

813

Report to Council in Item AG-13-12 Committee of the Whole - 3- Meeting Date September 3 2013

~ Peer con sultants might be eng aged during any of the above phases to identify assess or help to manage the costs of acqu isition constru ction or renovation of facilit ies

~ Following the app roval of the acquisition of a site or facility va lue eng ineering might be undertaken to reduce construction renovation or improvement costs

~ It is recommended that t he Aud itor General s authority to obta in peer consu ltants be affirmed so that if th e Aud ito r General deems it to worthy of further investigation value en gineering studies or other technical studies on faci lities and land th at are subject to const ruction renovation or improvement may be undertaken to manage these capital costs more effectively and efficiently

52 Reporting Relationshi p of the Auditor General s Office

~ Acco rdin g to the Institute of Internal A uditors Audit Comm ittees are a key element of pub lic sector governance because they improve accou ntabil ity and transparency ensure that aud it results are aired and t hat any recom mended improvements or correct ive actions are add ressed or resolved on a t imely basis

~ Aud it Comm ittees also bolster the independence integrity and effective ness of publ ic sector auditors by providing indepen dent overs ight of the internal and external audit work plans and resu lts assessing a udit resource need s and mediating the auditors relationship within public sector orga nization s

~ Be nchmarking indicates that 16 of the 32 municipa l auditors w it hin Ca nada report to A udit Committees The balance report to Council another Sub comm ittee of Council the City Man ager or Treasurer

~ The Aud itor General currently rep orts f unctiona lly to Comm ittee of t he Whole and administratively to t he City Manager

~ Estab lishing an Au dit Comm ittee wou ld provide the ideal fo rum to discu ss

o The an nual risk assessment of the Auditor General s Office o The multi-year aud it plan of the A uditor General s Office o Sta ffi ng requirements and budgets ofthe Aud itor Generals Office o Concerns identified by th e Aud itor General that require exam ination o Delays related to the im plementat ion of aud it recommendations o Weaknesses within risk ma nagement or governance processes o Concerns related to timely access to data or staff o A nnual accomplishments of the A uditor Genera ls Office and o The co ntract of the A uditor General

~ Attachment 3 prov ides a model Aud it Co mmittee Cha rter t hat sets out a number of best practi ces for Audit Committees including definition of its purpose authority and respons ibilities

811

Rep ort to Council in It em AG-13-12 Committee o f the Whole -4 - Meeting Date September 3 2013

)gt It is recom mended t hat an Audit Committee consisting of the fo ur Stand ing Co mmittee Chairs the Mayor and e xterna l representatives wit h e xpertise in internal audit and e xternal audit be established to oversee the wo rk of the Aud itor Ge neral and external auditor

)gt It is also recommended t hat the Audito r Ge neral report fu nct ional ly to Audit Committee on a qua rterly basis

)gt No changes to the Auditor Generals administrative reporting relationship to t he City Manager are requi red

60 FINANCIAL IMPLICATIONS

)gt C larifying th e duties and authority of the Auditormiddot General will help the middotc ity better manage costs f or the construct ion and renovation of fac ilities and improveme nt of land

)gt The only costs associated with revising the reporting relationship of the A udito r General wou ld be for per diems for external mem bers t hat mig ht be appointed to t he A udit Comm ittee

70 RESPONSE TO THE OSHAWA STRATEGIC PLAN

)gt C larifying the duties and powe rs of th e A uditor Ge neral wi ll allow th e Aud itor Gene ral to assist City Cou ncil in hold ing itself and its adm inistrators accountable for the achievement of value f or money in City operations

)gt Estab lish ing an Audit Comm ittee will demonst rate that Counci l is taking action to ens ure accountable lead ership whic h is one of th e goals set out within the Oshawa Strategic Plan

Ron Foster Au ditor General

Attach ments

812

AG-13-12 Attachment 1

Duties of the Auditor General of Oshawa

As approved by City Council the Auditor General is empowered

a To conduct or cause to be conducted audits on behalf of City Council in the areas of compliance financial (excluding attest) program or value-for-money information technology infrastructure environment and sustainability and other audits and reviews as appropriate to address matters of importance to the Corporation

b To undertake forensic investigations including suspected fraudule nt activities

c To liaise and consult with external auditor(s) if required performing financial statementattest audits

d To examine problems and carry out special assignments identified by the Auditor General or approved by 213 majority resolution ofCounciland

e To provide assurance that the information technology infrastructure contains adequate controls and security by ensuring the existence of such controls in existing systems assessing overall computer security including business continuity (emergency) planning

Duties of the Auditor General of City of Toronto

As approved by City Council the Auditor Genera l is empowered

a To conduct or cause to be conducted on behalf of City Council audit projects identified by the Auditor General in the areas of compliance financial (excluding attest) program or value-for-money info)111ation technology infrastructure environment and sustainability and other audits as appropriate

b To undertake forensic investigations including suspected fraudu lent activities c To oversee the work of external auditor(s) performing financial statementattest audits d To examine problems and carry out special assignments identified by the Auditor

General or approved by 23 majority resolution ofCouncil e To provide assurance that the information technology infrastructure contains adequate

controls a nd security by ensuring the existence of such controls in existing systems assessing overall computer security including business continuity (emergency) planning

f Fo coordinate audit activities with internal auditors and any contracted work to ensure efficient and effective use of audit resources

g To manage the Fraud and Waste Hotline Program refer issues to departmental management and the Internal Audit Division as appropriate

813

Rep ort to Council in It em AG-13-12 Committee o f the Whole -4 - Meeting Date September 3 2013

)gt It is recom mended t hat an Audit Committee consisting of the fo ur Stand ing Co mmittee Chairs the Mayor and e xterna l representatives wit h e xpertise in internal audit and e xternal audit be established to oversee the wo rk of the Aud itor Ge neral and external auditor

)gt It is also recommended t hat the Audito r Ge neral report fu nct ional ly to Audit Committee on a qua rterly basis

)gt No changes to the Auditor Generals administrative reporting relationship to t he City Manager are requi red

60 FINANCIAL IMPLICATIONS

)gt C larifying th e duties and authority of the Auditormiddot General will help the middotc ity better manage costs f or the construct ion and renovation of fac ilities and improveme nt of land

)gt The only costs associated with revising the reporting relationship of the A udito r General wou ld be for per diems for external mem bers t hat mig ht be appointed to t he A udit Comm ittee

70 RESPONSE TO THE OSHAWA STRATEGIC PLAN

)gt C larifying the duties and powe rs of th e A uditor Ge neral wi ll allow th e Aud itor Gene ral to assist City Cou ncil in hold ing itself and its adm inistrators accountable for the achievement of value f or money in City operations

)gt Estab lish ing an Audit Comm ittee will demonst rate that Counci l is taking action to ens ure accountable lead ership whic h is one of th e goals set out within the Oshawa Strategic Plan

Ron Foster Au ditor General

Attach ments

812

AG-13-12 Attachment 1

Duties of the Auditor General of Oshawa

As approved by City Council the Auditor General is empowered

a To conduct or cause to be conducted audits on behalf of City Council in the areas of compliance financial (excluding attest) program or value-for-money information technology infrastructure environment and sustainability and other audits and reviews as appropriate to address matters of importance to the Corporation

b To undertake forensic investigations including suspected fraudule nt activities

c To liaise and consult with external auditor(s) if required performing financial statementattest audits

d To examine problems and carry out special assignments identified by the Auditor General or approved by 213 majority resolution ofCounciland

e To provide assurance that the information technology infrastructure contains adequate controls and security by ensuring the existence of such controls in existing systems assessing overall computer security including business continuity (emergency) planning

Duties of the Auditor General of City of Toronto

As approved by City Council the Auditor Genera l is empowered

a To conduct or cause to be conducted on behalf of City Council audit projects identified by the Auditor General in the areas of compliance financial (excluding attest) program or value-for-money info)111ation technology infrastructure environment and sustainability and other audits as appropriate

b To undertake forensic investigations including suspected fraudu lent activities c To oversee the work of external auditor(s) performing financial statementattest audits d To examine problems and carry out special assignments identified by the Auditor

General or approved by 23 majority resolution ofCouncil e To provide assurance that the information technology infrastructure contains adequate

controls a nd security by ensuring the existence of such controls in existing systems assessing overall computer security including business continuity (emergency) planning

f Fo coordinate audit activities with internal auditors and any contracted work to ensure efficient and effective use of audit resources

g To manage the Fraud and Waste Hotline Program refer issues to departmental management and the Internal Audit Division as appropriate

813

AG-13-12 Attachment 1

Duties of the Auditor General of Oshawa

As approved by City Council the Auditor General is empowered

a To conduct or cause to be conducted audits on behalf of City Council in the areas of compliance financial (excluding attest) program or value-for-money information technology infrastructure environment and sustainability and other audits and reviews as appropriate to address matters of importance to the Corporation

b To undertake forensic investigations including suspected fraudule nt activities

c To liaise and consult with external auditor(s) if required performing financial statementattest audits

d To examine problems and carry out special assignments identified by the Auditor General or approved by 213 majority resolution ofCounciland

e To provide assurance that the information technology infrastructure contains adequate controls and security by ensuring the existence of such controls in existing systems assessing overall computer security including business continuity (emergency) planning

Duties of the Auditor General of City of Toronto

As approved by City Council the Auditor Genera l is empowered

a To conduct or cause to be conducted on behalf of City Council audit projects identified by the Auditor General in the areas of compliance financial (excluding attest) program or value-for-money info)111ation technology infrastructure environment and sustainability and other audits as appropriate

b To undertake forensic investigations including suspected fraudu lent activities c To oversee the work of external auditor(s) performing financial statementattest audits d To examine problems and carry out special assignments identified by the Auditor

General or approved by 23 majority resolution ofCouncil e To provide assurance that the information technology infrastructure contains adequate

controls a nd security by ensuring the existence of such controls in existing systems assessing overall computer security including business continuity (emergency) planning

f Fo coordinate audit activities with internal auditors and any contracted work to ensure efficient and effective use of audit resources

g To manage the Fraud and Waste Hotline Program refer issues to departmental management and the Internal Audit Division as appropriate

813

AG-13-12 Attachment 2

OSHAWA CITY COUNCIL MINUTES -JULY 3 2007

CONSENT MOTIONS

1 That seven business days shal l separate the receip t of a reportpresentation and the schedul ing of a meeting teach-in to rece ive direction or consider a capital expenditure exceeding $500000

2 The Auditor General be asked to attend all meetings pertaining to capital expenditures exceeding $500000 and

3 The Auditor General be given the discretion to hire a peer consultant to review all capital expenditure plans that the Auditor General deems are worthy of further investigation with costs to be accrued to the project account (CARRIED- See Page 350)

814

SUGGESTED AUDIT AG-13-12

COMMITTEE CHARTER Attachment 3

PURPOSE

To assist Council in fulfilling its oversight responsibilities for the financia l report ing process the system of interna l control the audit process and the Corporation s process f or mon itoring compl iance with laws and regulations and the code of ethics

AUTHORITY

Audit Committee has authority to conduct or aut horize invest igations into any matters with in its scope of responsibility It is empowered to

IJ Appoint compensate and oversee the work of any registered public accounting firm engaged by the organization

o Reso lve any disagreements between staff and the auditor regard ing financial reporting

o Pre-approve all auditing and non-audit services o Reta in accountants omiddotr others to advise the committee or assist in the co nduct of an

investigation c Seek any information it requ ires from employees - all of whom are directed to

cooperate with the committees requests - or external parties u Meet with staff externa l aud itors or counsel as necessary

MEETINGS

The committee will meet at least four times a year with authority to convene additional meetings as circumstances requ ire The comm ittee will invite members of staff aud itors or others to attend meetings and provide pertinent information as necessary It will ho ld private meetings with auditors (see below) and staff as required Meeting agendas will be prepa red and provided in advance to members along with appropriate briefing mate rials Minutes will be prepared Notwithstandin g anything in t his Charter all meetings wil l be conducted in accordance with applicable law including the Municipal Act 2001

RESPONSIBILITIES

Aud it Committee will carry out the following re sponsibilities

Reporting Responsibil ities

o Provide an open avenue of commun icatio n between the externa l auditors and the Auditor Generals Office

[ Review any other reports the corporation issues that relate to Audit Com mittee responsibilities

815

Internal Control

LJ Con sider the effective ness of the corporations internal control system including information technology security and cont rol

c Underst and t he scope of t he Aud itor Generals and external auditors reviews of internal controls over public assets and financia l reporting and obta in reports on signif icant f ind ings and recommendations togeth er with staffs responses

Compl iance

LJ Review the effectiveness of the system for mon itoring compliance with laws and regu lations and t he results of investigat ions and follow-up (incl uding discip linary action) of any instances of noncomp liance

u Review the findings of any examinations by regulatory agencies and any auditor observations

0 Review the process for commun icating th e code of ethics to staff and for monitoring compliance t herewit h

c Obtain regular updates fro m staff and legal counse l regarding comp liance matters

Auditor General s Office

c Review and approve the mandate risk assessment audit plan activities staffing and budget of the Audito r Generals Office annually

Lo Review the performa nce of t he Audito r General ann ually LJ Review the effect iveness of the Auditor Generals Offi ce includ ing comp liance with the

International Professional Practice Framework of the 1A every 5 years lJ Meet separately with th e Auditor General to discuss any matters that the com mittee or

t he Aud itor General believes should be discussed privately subject to applicable law incl uding the Municipal Act 2001

c Ensu re the re are no unj ustified rest rictions or limitations and o Approve t he appointment extension replacement or dismissal of the Aud itor General

External Audit

c Appoint co mpensate and oversee the work qf any reg istered public accou nting firm engage d by the organization

c Review the external aud itors proposed audit scope an d approach including coord ination of aud it effort with t he Aud itor Gene rals Office

o Review t he performance of the externa l auditors and exercise final approval on the appointment or discharge of the audito rs

o Review and confirm t he indepen dence of t he external auditors by obt aining statements from th e auditors on relat ionships between the auditors and t he corpo ration including non-audit services and discussi ng t he re lationshi ps with t he aud itors

L Review and pre-approve all non-aud it services provided by t he exte rnal audit f irm c Meet se parately wit h t he external auditors to discuss any matters that the committee

or audito rs believe should be discussed privately subject t o applicab le law includi ng the Municipal Act 2001

L Resolve any disagreements between staff and the auditor reg arding financia l reporting

816

Financial Statements

CJ Review significant accounting an d reporting issues incl uding complex or unusua l transactions and highly judgmenta l areas and recent professional and regulatory pronouncements and understand their impact on the financial statements

D Review with staff and the external aud itors the res ults of t he audit including any difficu lties encountered

D Review the annual financia l statements and consider whether they are complete consistent with information known to committee members and reflect appropriate accounting principles

D Review with staff and the external aud itors all matters required to be communicated to t he committee under generally accepted auditing Standards

D Understand how staff deve lops interim financial information and the nature and extent of the external auditors and Auditor Generals involvement

Other Responsibilities

u Institute and oversee special assignments as needed lJ Review and assess the adequacy of the committee charter annually and ensure

appropriate disclosure as may be required by law or regulat ion L Confirm annually that all responsibilities outlined in this charter have been carried out L Appoint external members to the committee as require d to ensure that the committee

collectively possesses sufficient financial expertise to effectively oversee the work of the external auditor and Auditor Generals Office

c Approve any compensation paid to external members appointed to the Committee C Evaluate the performance of any external members appointed to the Committee

817

SUGGESTED AUDIT AG-13-12

COMMITTEE CHARTER Attachment 3

PURPOSE

To assist Council in fulfilling its oversight responsibilities for the financia l report ing process the system of interna l control the audit process and the Corporation s process f or mon itoring compl iance with laws and regulations and the code of ethics

AUTHORITY

Audit Committee has authority to conduct or aut horize invest igations into any matters with in its scope of responsibility It is empowered to

IJ Appoint compensate and oversee the work of any registered public accounting firm engaged by the organization

o Reso lve any disagreements between staff and the auditor regard ing financial reporting

o Pre-approve all auditing and non-audit services o Reta in accountants omiddotr others to advise the committee or assist in the co nduct of an

investigation c Seek any information it requ ires from employees - all of whom are directed to

cooperate with the committees requests - or external parties u Meet with staff externa l aud itors or counsel as necessary

MEETINGS

The committee will meet at least four times a year with authority to convene additional meetings as circumstances requ ire The comm ittee will invite members of staff aud itors or others to attend meetings and provide pertinent information as necessary It will ho ld private meetings with auditors (see below) and staff as required Meeting agendas will be prepa red and provided in advance to members along with appropriate briefing mate rials Minutes will be prepared Notwithstandin g anything in t his Charter all meetings wil l be conducted in accordance with applicable law including the Municipal Act 2001

RESPONSIBILITIES

Aud it Committee will carry out the following re sponsibilities

Reporting Responsibil ities

o Provide an open avenue of commun icatio n between the externa l auditors and the Auditor Generals Office

[ Review any other reports the corporation issues that relate to Audit Com mittee responsibilities

815

Internal Control

LJ Con sider the effective ness of the corporations internal control system including information technology security and cont rol

c Underst and t he scope of t he Aud itor Generals and external auditors reviews of internal controls over public assets and financia l reporting and obta in reports on signif icant f ind ings and recommendations togeth er with staffs responses

Compl iance

LJ Review the effectiveness of the system for mon itoring compliance with laws and regu lations and t he results of investigat ions and follow-up (incl uding discip linary action) of any instances of noncomp liance

u Review the findings of any examinations by regulatory agencies and any auditor observations

0 Review the process for commun icating th e code of ethics to staff and for monitoring compliance t herewit h

c Obtain regular updates fro m staff and legal counse l regarding comp liance matters

Auditor General s Office

c Review and approve the mandate risk assessment audit plan activities staffing and budget of the Audito r Generals Office annually

Lo Review the performa nce of t he Audito r General ann ually LJ Review the effect iveness of the Auditor Generals Offi ce includ ing comp liance with the

International Professional Practice Framework of the 1A every 5 years lJ Meet separately with th e Auditor General to discuss any matters that the com mittee or

t he Aud itor General believes should be discussed privately subject to applicable law incl uding the Municipal Act 2001

c Ensu re the re are no unj ustified rest rictions or limitations and o Approve t he appointment extension replacement or dismissal of the Aud itor General

External Audit

c Appoint co mpensate and oversee the work qf any reg istered public accou nting firm engage d by the organization

c Review the external aud itors proposed audit scope an d approach including coord ination of aud it effort with t he Aud itor Gene rals Office

o Review t he performance of the externa l auditors and exercise final approval on the appointment or discharge of the audito rs

o Review and confirm t he indepen dence of t he external auditors by obt aining statements from th e auditors on relat ionships between the auditors and t he corpo ration including non-audit services and discussi ng t he re lationshi ps with t he aud itors

L Review and pre-approve all non-aud it services provided by t he exte rnal audit f irm c Meet se parately wit h t he external auditors to discuss any matters that the committee

or audito rs believe should be discussed privately subject t o applicab le law includi ng the Municipal Act 2001

L Resolve any disagreements between staff and the auditor reg arding financia l reporting

816

Financial Statements

CJ Review significant accounting an d reporting issues incl uding complex or unusua l transactions and highly judgmenta l areas and recent professional and regulatory pronouncements and understand their impact on the financial statements

D Review with staff and the external aud itors the res ults of t he audit including any difficu lties encountered

D Review the annual financia l statements and consider whether they are complete consistent with information known to committee members and reflect appropriate accounting principles

D Review with staff and the external aud itors all matters required to be communicated to t he committee under generally accepted auditing Standards

D Understand how staff deve lops interim financial information and the nature and extent of the external auditors and Auditor Generals involvement

Other Responsibilities

u Institute and oversee special assignments as needed lJ Review and assess the adequacy of the committee charter annually and ensure

appropriate disclosure as may be required by law or regulat ion L Confirm annually that all responsibilities outlined in this charter have been carried out L Appoint external members to the committee as require d to ensure that the committee

collectively possesses sufficient financial expertise to effectively oversee the work of the external auditor and Auditor Generals Office

c Approve any compensation paid to external members appointed to the Committee C Evaluate the performance of any external members appointed to the Committee

817

Internal Control

LJ Con sider the effective ness of the corporations internal control system including information technology security and cont rol

c Underst and t he scope of t he Aud itor Generals and external auditors reviews of internal controls over public assets and financia l reporting and obta in reports on signif icant f ind ings and recommendations togeth er with staffs responses

Compl iance

LJ Review the effectiveness of the system for mon itoring compliance with laws and regu lations and t he results of investigat ions and follow-up (incl uding discip linary action) of any instances of noncomp liance

u Review the findings of any examinations by regulatory agencies and any auditor observations

0 Review the process for commun icating th e code of ethics to staff and for monitoring compliance t herewit h

c Obtain regular updates fro m staff and legal counse l regarding comp liance matters

Auditor General s Office

c Review and approve the mandate risk assessment audit plan activities staffing and budget of the Audito r Generals Office annually

Lo Review the performa nce of t he Audito r General ann ually LJ Review the effect iveness of the Auditor Generals Offi ce includ ing comp liance with the

International Professional Practice Framework of the 1A every 5 years lJ Meet separately with th e Auditor General to discuss any matters that the com mittee or

t he Aud itor General believes should be discussed privately subject to applicable law incl uding the Municipal Act 2001

c Ensu re the re are no unj ustified rest rictions or limitations and o Approve t he appointment extension replacement or dismissal of the Aud itor General

External Audit

c Appoint co mpensate and oversee the work qf any reg istered public accou nting firm engage d by the organization

c Review the external aud itors proposed audit scope an d approach including coord ination of aud it effort with t he Aud itor Gene rals Office

o Review t he performance of the externa l auditors and exercise final approval on the appointment or discharge of the audito rs

o Review and confirm t he indepen dence of t he external auditors by obt aining statements from th e auditors on relat ionships between the auditors and t he corpo ration including non-audit services and discussi ng t he re lationshi ps with t he aud itors

L Review and pre-approve all non-aud it services provided by t he exte rnal audit f irm c Meet se parately wit h t he external auditors to discuss any matters that the committee

or audito rs believe should be discussed privately subject t o applicab le law includi ng the Municipal Act 2001

L Resolve any disagreements between staff and the auditor reg arding financia l reporting

816

Financial Statements

CJ Review significant accounting an d reporting issues incl uding complex or unusua l transactions and highly judgmenta l areas and recent professional and regulatory pronouncements and understand their impact on the financial statements

D Review with staff and the external aud itors the res ults of t he audit including any difficu lties encountered

D Review the annual financia l statements and consider whether they are complete consistent with information known to committee members and reflect appropriate accounting principles

D Review with staff and the external aud itors all matters required to be communicated to t he committee under generally accepted auditing Standards

D Understand how staff deve lops interim financial information and the nature and extent of the external auditors and Auditor Generals involvement

Other Responsibilities

u Institute and oversee special assignments as needed lJ Review and assess the adequacy of the committee charter annually and ensure

appropriate disclosure as may be required by law or regulat ion L Confirm annually that all responsibilities outlined in this charter have been carried out L Appoint external members to the committee as require d to ensure that the committee

collectively possesses sufficient financial expertise to effectively oversee the work of the external auditor and Auditor Generals Office

c Approve any compensation paid to external members appointed to the Committee C Evaluate the performance of any external members appointed to the Committee

817

Financial Statements

CJ Review significant accounting an d reporting issues incl uding complex or unusua l transactions and highly judgmenta l areas and recent professional and regulatory pronouncements and understand their impact on the financial statements

D Review with staff and the external aud itors the res ults of t he audit including any difficu lties encountered

D Review the annual financia l statements and consider whether they are complete consistent with information known to committee members and reflect appropriate accounting principles

D Review with staff and the external aud itors all matters required to be communicated to t he committee under generally accepted auditing Standards

D Understand how staff deve lops interim financial information and the nature and extent of the external auditors and Auditor Generals involvement

Other Responsibilities

u Institute and oversee special assignments as needed lJ Review and assess the adequacy of the committee charter annually and ensure

appropriate disclosure as may be required by law or regulat ion L Confirm annually that all responsibilities outlined in this charter have been carried out L Appoint external members to the committee as require d to ensure that the committee

collectively possesses sufficient financial expertise to effectively oversee the work of the external auditor and Auditor Generals Office

c Approve any compensation paid to external members appointed to the Committee C Evaluate the performance of any external members appointed to the Committee

817