Item - 2020.AU7.5

The Audit Committee recommends that:

1.  City Council receive the Auditor General's 2021 Work Plan as outlined in the report (November 5, 2020) from the Auditor General.

The Audit Committee considered Items AU7.5 and AU7.6 together.

The Auditor General gave a presentation on Auditor General's 2021 Work Plan and 2021 Operating Budget.

The Auditor General's audits and investigations provide independent information for City Council to hold City administrators accountable for providing stewardship over public funds. The Auditor General's work helps to identify and mitigate risks the City faces, improve accountability, strengthen management controls, and enhance the efficiency and effectiveness of City operations.

The purpose of this report is to provide City Council with an overview of the work the Auditor General plans to conduct in 2021. Audit projects included in the Annual Work Plan are identified through a risk assessment process conducted periodically, a review of emerging issues, and an analysis of trends in allegations made to the Fraud and Waste Hotline. The Auditor General also considers the views and experience of City Councillors and City management. The Auditor General may amend the Annual Work Plan if new priorities arise.

Flexibility within the Auditor General's Work Plan is needed to address high-risk complaints to the Fraud and Waste Hotline, emerging risk areas, and unanticipated requirements for immediate audits or investigations. For example, in July 2020 City Council requested the Auditor General to report further on staff's report on "Ensuring Value for Money for Tree Maintenance Services - Update and Legal Advice". The work associated with this report was not anticipated in our 2020 Annual Plan and resulted in re-prioritization of projects and re-allocation of staff resources.

The Auditor General's 2020 Work Plan was impacted by the COVID-19 pandemic. Some of the audit projects that were in progress were delayed or put on hold to enable divisions, agencies and corporations to focus on the delivery of essential services. The deferred audit projects from the 2020 audit Work Plan are listed in Attachment 4. During this time, the Auditor General commenced work on the City-wide risk and opportunities assessment.

The City-wide risk and opportunities assessment is a major undertaking and was part of the Auditor General's 2020 Annual Work Plan. The assessment is performed every five years. The Office conducts a survey of over 50 City divisions and its major agencies and corporations. The purpose of the Auditor General's City-wide risk and opportunities assessment is to inform the development of her risk-based Audit Work Plan. It ensures that all significant areas of the City are evaluated from an audit risk perspective by using uniform criteria to identify areas that may warrant audit attention. Determining which areas to audit and the appropriate allocation of audit resources is essential in maximizing the value of an effective audit process. The risk factors criteria are included in Attachment 2.

The Work Plan includes projects that have been identified through the risk and opportunities assessment. Some of these projects are expected to be initiated in 2021 (refer to Table 1), while others are expected to commence shortly thereafter in 2022 (refer to Table 2). The list of projects to be completed over the longer term is included in Attachment 3. Our work on the City-wide risk and opportunities assessment is expected to continue into Q1 of 2021 and any additional potential audit projects will be incorporated into future Work Plans.

At the invitation of their respective Boards, the Auditor General has completed a risk and opportunities assessment for the Toronto Public Library and Toronto Police Service to inform the Auditor General's proposed risk-based audit plans for these entities. At their October 2020 Board meetings, the audit plan was adopted by the Toronto Public Library Board, and an emerging audit area was adopted by the Toronto Police Services Board. The proposed risk-based audit plan for the Toronto Police Service will be presented to its Board at their November 24, 2020 meeting. Potential audit projects requested by these two Boards have been included in this Work Plan, and the Work Plan will be updated following the consideration and adoption of the audit plan by the Toronto Police Services Board.

In light of the fiscal constraints faced by the City, the Auditor General has not included a budget enhancement request in her 2021 Operating Budget to address the requests for audits by these two Boards. Instead, the Auditor General's ability to include these projects in her Work Plan, while keeping budget and staffing levels in line with her 2020 base budget, means that the Office will conduct fewer audits of City divisions, agencies, and corporations within her mandate.