Item - 2017.AU10.2

City Council considered Items AU10.2, AU10.3 and AU10.4 together.

The Audit Committee recommends that:

1. City Council request the Executive Director, Municipal Licensing and Standards Division, in consultation with the City Solicitor, to review the by-law provisions related enforcement framework, and the Division's Standard Operating Procedures pertaining to unlicensed businesses, with a view to strengthening the City's efforts to ensure compliance with licensing requirements.

2. City Council request the Executive Director, Municipal Licensing and Standards Division, to review and improve the effectiveness and efficiency of the existing proactive inspection process. Steps to be considered should include:

a. Develop and implement proactive inspection frequency by the type of business licences based on risks and enforcement history.

b. Ensure adequate supporting documentation on proactive inspections is retained to ensure the inspections are conducted in a consistent and equitable manner to all licensees and for quality assurance monitoring purposes.

3. City Council request the Executive Director, Municipal Licensing and Standards Division, to review and enhance the timeliness and efficiency of the complaint investigation process. Steps to be considered should include but not be limited to:

a. Capture the necessary milestone dates in the licensing database to enable monitoring of performance measures.

b. Establish performance measures to track and monitor the efficiency of complaints handling and investigation processes.

c. Develop internal processes to periodically review staff time spent by type of investigation to ensure efficient use of staff resources.

4. City Council request the Executive Director, Municipal Licensing and Standards Division, to review the number of business licence investigations and charges among the three District Offices and among officers to identify ways to improve efficiency.

5. City Council request the Executive Director, Municipal Licensing and Standards Division, in developing system requirements for a new case management system for business licences, to consider and incorporate the need for providing efficient and user-friendly mobile devices to officers to improve the efficiency of recording inspection and investigation results while on site.

6. City Council request the Executive Director, Municipal Licensing and Standards Division, to expedite the licence fee review process to ensure compliance with the City's User Fee Policy.

7. City Council request the Chief Transformation Officer to consider including in his 2018 work plan a comprehensive review of Municipal Licensing and Standards Division's business license program, as part of an overall review of the City's inspections and enforcement activities.

The Audit Committee considered the following Items together:

- AU10.2, headed "A Review of Municipal Licensing and Standards Division's Management of Business Licences - Part One: Licence Issuance, Inspection and Complaint Investigation Functions"

- AU10.3, headed "A Review of Municipal Licensing and Standards Division's Management of Business Licences - Part Two: Licensed Holistic Centres"

- AU10.4, headed "A Review of Municipal Licensing and Standards Division's Management of Business Licences - Part Three: Eating Establishments and Nightclubs".

Beverly Romeo-Beehler, Auditor General, and Jane Ying, Assistant Auditor General, gave a presentation to the Audit Committee on this Item.

The City of Toronto, through the Municipal Licensing and Standards Division (MLS), is responsible for regulating a myriad of businesses operating within its jurisdiction. The objective of this audit was to assess the effectiveness and efficiency of business licensing and By-law enforcement operations.

This audit covered the period from January 1, 2015, to December 31, 2016.

Our audit results are provided in three audit reports:

Part One – the subject of this report, provides an overview of MLS's licensing and enforcement functions.

Part Two – focuses on MLS's licensing and enforcement activities regarding holistic centres.

Part Three – focuses on licensed eating establishments potentially operating as unlicensed nightclubs.

In this audit report, we have made seven recommendations pertaining to the key licensing functions – licence issuance, inspections of licensed businesses, complaint investigations, and licence fees. The implementation of these recommendations will help the Division to more effectively and efficiently manage business licences and ensure compliance with the By-law requirements.