Corporate Affairs and Audit Committee (CAAC) Meeting - July 26, 2013

Closed Meeting Agenda

A. Approval of Agenda and Review of Agenda Order

Action: Approval

Pre-read: Agenda

Presenter: All

B. Confirmation of Closed Joint BIC & CAAC Meeting Minutes of May 30, 2013

Action: Approval

Pre-read: Minutes

Presenter: All

C. Confirmation of Closed CAAC Meeting Minutes of June 7, 2013

Action: Approval

Pre-read: Minutes

Presenter: All

D. Business Arising from the Minutes and Committee Action Items Update

Action: Discussion

Pre-read: Action Item List

Presenter: All

Reports from Management

E. Confidential item respecting matters that are or may be the subject of litigation or potential litigation, and recommendations of proposed policy or process

Action: Information

CAAC Terms of Reference: Financial Reporting and Financial Statements

Pre-read: CAAC:C2013-39

Presenter: Chief Financial Officer and Corporate Controller

F. Confidential item respecting matters that are or may be the subject of litigation or potential litigation, and recommendations of proposed policy or process

Action: Information

CAAC Terms of Reference: Financial Reporting and Financial Statements

Pre-read: CAAC:C2013-40

Presenter: Chief Financial Officer and Senior Director, Finance

G. Confidential item respecting recommendations of proposed policy or processes

Action: Information

CAAC Terms of Reference: Other

Pre-read: CAAC:C2013-41

Presenter: Chief Financial Officer

H. Confidential item respecting personal matters about identifiable individuals, a proposed or pending transaction with a third party, and recommendations of proposed policy or processes

Action: Information

CAAC Terms of Reference: Information Technology

Pre-read: CAAC:C2013-42

Presenter: VP, Information & Technology 

I. Confidential item respecting contracts and contract values

Action: Approval

CAAC Terms of Reference: Information Technology

Pre-read: CAAC:C2013-43

Presenter: Chief Financial Officer and VP, Information & Technology Services

J. Confidential item respecting recommendations of proposed policy or processes

Action: Information

CAAC Terms of Reference: Other

Pre-read: CAAC:C2013-44

Presenter: Chief Financial Officer and Manager, Special Projects

Public Agenda

1. Approval of Agenda and Review of Agenda Order

Action: Approval

Pre-read: Agenda

Presenter: All

2. Confirmation of Public CAAC Minutes of June 7, 2013

Action: Approval

Pre-read: Minutes

Presenter: All

3. Business Arising from the Minutes and Committee Action Items Update

Action: Discussion

Pre-read: Action Item List

Presenter: All

Reports from Management

4. Implementation of Auditor General’s 2010 and 2011 Audit Recommendations: Status Report

Action: Information

CAAC Terms of Reference: Internal Audit, Accounting System and Controls

Pre-read: CAAC:2013-35

Presenter: Chief Financial Officer and Manager, Special Projects

5. Review of Board, President and CEO and Senior Management Expenses Q1 2013

Action: Information

CAAC Terms of Reference: Financial Compliance

Pre-read: CAAC:2013-36

Presenter: Legal Counsel and Assistant Corporate Secretary

6. Internal Audit Report: Timely Recording of Supplier Invoices

Action: Information

CAAC Terms of Reference: Internal Audit, Accounting System and Controls

Pre-read: CAAC:2013-37

Presenter: Chief Internal Auditor

7. Internal Audit Report: Review of Employee Expense Claims

Action: Information

CAAC Terms of Reference: Internal Audit, Accounting System and Controls

Pre-read: CAAC:2013-38

Presenter: Chief Internal Auditor

TERMINATION

Public Meeting Minutes

The Corporate Affairs and Audit Committee of Toronto Community Housing Corporation held a public meeting on July 26, 2013, in the Main Floor Conference Room, 931 Yonge Street, Toronto, commencing at 1:20 p.m.

Committee Directors present:

Zahir Bhaidani, Chair

Christian Buhagiar

Brian Kwan 

Councillor Frances Nunziata

Regrets:

Karen Newman

Also present:

Jason Gorel, Chief Financial Officer

Michael Vear, Chief Internal Auditor

Liz Reid, Vice President, Information and Technology Services

A quorum being present, the Chair called the meeting to order and Ms. Mirela Bolentiru served as recording secretary.

Item 1 - Approval of Agenda

Motion carried

ON MOTION DULY MADE by Mr. Christian Buhagiar, seconded by Mr. Brian Kwan, the Corporate Affairs and Audit Committee approved the agenda as presented. 

Declaration of Conflict of Interest

The Chair requested members of the Corporate Affairs and Audit Committee to indicate any item on the public agenda in which they had a conflict of interest, together with the nature of the interest. None were declared.

Item 2 - Confirmation of Public Minutes of June 7, 2013

Motion carried

ON MOTION DULY MADE by Mr. Christian Buhagiar, seconded by Mr. Brian Kwan, the Corporate Affairs and Audit Committee confirmed the minutes of June 7, 2013.

Item 3 - Business Arising from the Minutes and Committee Action Items Update

The Committee discussed the report, including the following matters:

• Item 6 “Chief Internal Auditor’s 2012 Annual Report” – Page 1 – the Committee received an update from management on the status of the collection of the balance of the retro payments.
• Item 5 “Internal Audit – Complaints Received in Q2 2012 (April 1, 2012 to June 30, 2012)” – Page 2 – the Committee requested more information with respect to the status of Whistle Blower Policy. Management advised the Committee that the City Manager is in the process of developing a revised Whistle Blower Policy that will be submitted for approval at the September 2013 City Executive Committee meeting. Once the City’s revised Whistle Blower Policy is approved, TCHC will review and consider it when developing its own similar policy.

Motion carried

ON MOTION DULY MADE by Mr. Christian Buhagiar, seconded by Mr. Brian Kwan, the Corporate Affairs and Audit Committee received the report for information.

Item 4 - Implementation of Auditor General’s 2010 and 2011 Audit Recommendations: Status Report, CAAC:2013-35

The Corporate Affairs and Audit Committee had before it the above-captioned report (CAAC:2013-35) from the President and Chief Executive Officer.

A discussion ensued, including the following highlights:

• The Committee noted that the status of the implementation of the Auditor General’s recommendations evolved from Q2 to Q4 and inquired as to whether there are any specific issues that management has yet to overcome or time constraints related to the implementation process.
  • Management is still awaiting the final, revised Shareholder Direction from the City Manager, which has implications addressing the recommendations related to the subsidiaries.
  • Finance is managing the dynamics of the process while working jointly with the Internal Audit team.
  • Some recommendations require more time for their implementation and therefore, they have been allocated a target date for completion in Q4 2013.

Motion carried

ON MOTION DULY MADE by Mr. Christian Buhagiar, seconded by Mr. Brian Kwan, the Corporate Affairs and Audit Committee received the report for information.

Item 5 - Review of Board, President and CEO and Senior Management Expenses Q1 2013, CAAC:2013-36

The Corporate Affairs and Audit Committee had before it the above-captioned report (CAAC:2013-36) from the President and Chief Executive Officer.

A discussion ensued. The Committee discussed the membership fees of a departed employee. The Committee also inquired about the Institute of Corporate Directors (ICD) memberships, which will be reported in the Q2 2013 report as the expense was paid in May 2013. The CFO also advised his expenditure was a one-time educational expense consistent with his employment agreement.

Motion carried

ON MOTION DULY MADE by Mr. Christian Buhagiar, seconded by Mr. Brian Kwan, the Corporate Affairs and Audit Committee received the report for information.

Item 6 - Internal Audit Report: Timely Recording of Supplier Invoices, CAAC:2013-37

The Corporate Affairs and Audit Committee had before it the above-captioned report (CAAC:2013-37) from the Chief Internal Auditor.

A discussion ensued, addressing the following matters:

• The Committee noted that for the period of January 1, 2012 to October 31, 2012, there were 147 invoices recorded in the financial information system that had an invoice date of greater than two years prior to the date they were recorded and requested the rationale for such a delay.
  • Management explained the process of recording invoices:
    • Matched each invoice with its pre-authorization form.
    • Received delayed invoices, e.g., six months later than the date when services were rendered.  The invoices are then submitted to the Chief Financial Officer for final approval.
    • While staff may ensure that the invoices from all suppliers are recorded in compliance with TCHC’s internal timelines in effect, they do not have control over the timing when the suppliers provide their invoices to TCHC.   The Auditor General was concerned with respect to the timelines when supplier invoices were recorded in the TCHC’s financial information system.
• The Committee raised the issue of late fees charged to TCHC for late invoices and cash management.
  • Management explained that:
    • TCHC did not pay any late fees.
    • The delayed invoices were submitted to the Finance Division and were not paid until the work for the services rendered was proved as completed.  Some suppliers submit late invoices (in some cases 1 to 2 years old).
    • Cash management is provided by the Treasury Unit.
    • At the end of each month, all the purchase orders are matched with the invoices received.
    • Insufficient supporting documentation that the work has been completed and properly approved, which is a recurring issue with some suppliers.

Motion carried

ON MOTION DULY MADE by Mr. Christian Buhagiar, seconded by Mr. Brian Kwan, the Corporate Affairs and Audit Committee received the report for information.

Item 7 - Internal Audit Report: Review of Employee Expense Claims, CAAC:2013-38

The Corporate Affairs and Audit Committee had before it the above-captioned report (CAAC:2013-38) from the Chief Internal Auditor.

A discussion ensued, including the following highlights:

• The Committee inquired with respect to whether the employees’ expenses are matched with their invoices. Management confirmed.
• Employee Expense Policy – reimbursement and tipping – management explained that an employee may offer tips up to 10% of the value of the meal, according to the policy.
• Management explained the approval process for the employees’ expenses and reimbursement:
  • Collaborative inter-departmental effort.
  • Submission of the employee’s invoice to his/her direct supervisor for approval.  Documents are then prepared, subsequent to direct supervisor’s approval.
  • Process to review the supporting documentation, which is then submitted to the Internal Audit team for review.
  • In addition to the sunshine list, working towards posting the expenses of all employees on the external website for transparency purposes and to rebuild the credibility of the Corporation. 

Motion carried

ON MOTION DULY MADE by Mr. Christian Buhagiar, seconded by Mr. Brian Kwan, the Corporate Affairs and Audit Committee received the report for information.

TERMINATION

The meeting of the Corporate Affairs and Audit Committee terminated at 1:45 p.m.