Item - 2007.AU2.2

Tracking Status

This item was considered by Audit Committee on April 13, 2007 and was adopted with amendments. It will be considered by City Council on April 23, 2007.

AU2.2 - Annual Report on the Status of Fraud and Related Matters, Including Operation of the Fraud and Waste Hotline Program

Decision Type:: ACTION

Status:: Amended

Wards:: All

Committee Recommendations

The Audit Committee recommends that:

1. The City Manager give consideration to accelerating the introduction of a formal ongoing ethics education program to all City staff which emphasizes the following:

- the role of staff in the prevention and detection of fraud;

- the responsibilities of staff in reporting incidents of allegations of fraud or wrongdoing;

- the importance of protecting employees who report allegations of fraud or wrongdoing;

- the importance of recognizing, avoiding and communicating conflict of interest situations; and

- the consequences of reporting incidents of fraud or wrongdoing which are frivolous or vexatious.

In developing such a program, consideration should be given to delivering the program through the City’s intranet.

Decision Advice and Other Information

The Audit Committee requested the City Manager, in consultation with the Auditor General, to submit a report to the Audit Committee on the feasibility of allocating any funds recovered through the Auditor General’s investigations into a reserve account, accessible by the Auditor General for the investigation of further fraudulent activities.

Carmelina Di Mondo, Director, Auditor General's Office, made a presentation to the Audit Committee respecting the 2006 Annual Report on the Status of Fraud and Related Matters.

Origin

(March 8, 2007) Report from the Auditor General.

Summary

As the public sector comes under increased pressure to manage budgets more efficiently, the question of fraud prevention and detection have become increasingly important. The City, in addressing this issue, approved a Fraud and Waste Hotline Program as a six-month pilot project commencing in March 2002. In November 2002, at the conclusion of the pilot project, City Council approved it as a permanent program along with a requirement that the Auditor General report annually to Audit Committee on the operation and activities of the program. This report represents the Auditor General�s sixth annual report on the activities of the Fraud and Waste Hotline Program and represents activities from January 1, 2006 to December 31, 2006.

Statistical data concerning the activities of the Fraud and Waste Hotline are contained in the body of the report. In addition, and at the request of Audit Committee we have provided details of certain reviews completed in 2006. This information is provided in Appendix 1 of the report.

Management is in the process of finalizing an Ethics Awareness Initiative training program for approximately 250 members of the extended senior management team by June 2007. We are completely supportive of this initiative but are of the view that the training contemplated for all staff should be accelerated. A cost-effective way of conducting such a process would be through the City�s Intranet.

Financial Impact

The introduction of an ongoing training program through the City’s intranet may involve additional costs. It is not anticipated that these costs would be significant. Investigations or reviews conducted as a result of various communications to the Fraud and Waste Hotline have resulted, in certain cases, in the recovery of funds to the City. More importantly these investigations or reviews have resulted in improved internal controls which will likely mitigate the loss of future funds.

Background Information

(March 8, 2007) Report from the Auditor General - Annual Report on the Status of Fraud and Related Matters, Including Operation of the Fraud and Waste Hotline Program
https://www.toronto.ca/legdocs/mmis/2007/au/bgrd/backgroundfile-2634.pdf