Corporate Affairs and Audit Committee (CAAC) Meeting - March 8, 2013

Public Agenda

1. Approval of Agenda and Review of Agenda Order

Action: Approval

Pre-read: Agenda

Presenter: All

2. Confirmation of Public Meeting Minutes of January 28, 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 the Corporate Affairs and Audit Committee Chair

4. Chair's Report and Remarks

Action: Information

Pre-read: -

Presenter: Chair

Reports from Management

5. Financial Performance Report Q4 2012

Action: Information

Pre-read: CAAC:2013-08

Presenter: Chief Financial Officer

6. Q4 2012 Quarterly Performance Report

Action: Information

Pre-read: CAAC:2013-09

Presenter: Director - Strategic Planning & Stakeholder Relations

7. Review of Board, President and CEO and Senior Management Expenses Q4 2012

Action: Information

Pre-read: CAAC:2013-10

Presenter: Legal Counsel and Assistant Corporate Secretary

8. Amendments to the CAAC Terms of Reference

Action: Approval

Pre-read: CAAC:2013-11

Presenter: Legal Counsel and Assistant Corporate Secretary

9. Internal Audit: 2013 Work Plan

Action: Approval

Pre-read: CAAC:2013-12

Presenter: Chief Internal Auditor

10. Internal Audit: 2013 Budget

Action: Approval

Pre-read: CAAC:2013-13

Presenter: Chief Internal Auditor

Closed Meeting Agenda

A. Approval of Agenda and Review of Agenda Order

Action: Approval

Pre-read: Agenda

Presenter: All

B. Confirmation of Closed Meeting Minutes of January 28, 2013

Action: Approval

Pre-read: Minutes

Presenter: All

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

Action: Discussion

Pre-read: Action Item List

Presenter: All

Reports from the Corporate Affairs and Audit Committee Chair

D. Chair's Report and Remarks

Action: Information

Pre-read: -

Presenter: Chair

Reports from Management

E. Confidential item respecting recommendations of proposed policy or processes

Action: Information

Pre-read: CAAC:C2013-20

Presenter: Chief Financial Officer

F. Confidential item respecting litigation matters, and may be subject to solicitor-client privilege    

Action: Information

Pre-read: CAAC:C2013-14

Presenter: Chief Financial Officer

G. Confidential item respecting contracts and contract values

Action: Information

Pre-read: CAAC:C2013-15

Presenter: Senior Director of Strategic Procurement

H. Confidential item respecting a proposed process

Action: Information

Pre-read: CAAC:C2013-16

Presenter: General Counsel and Corporate Secretary and Chief Financial Officer

I. Confidential item respecting legal advice that may be subject to solicitor-client privilege

Action: Information

Pre-read: CAAC:C2013-17

Presenter: General Counsel and Corporate Secretary and Chief Financial Officer

J. Confidential item respecting a proposed, revised process, subject to another Committee and the Board’s decision

Action: Information

Pre-read: CAAC:C2013-18

Presenter: Director - Strategic Planning & Stakeholder Relations

K. Confidential item respecting an identifiable individual

Action: Approval

Pre-read: CAAC:C2013-19 (Report to be distributed by CIA directly to CAAC)

Presenter: Chief Internal Auditor

In Camera Agenda Items

Committee Only

Articles

Standard & Poor’s December 2012 Rating of TCHC

TERMINATION

Public Meeting Minutes

The Corporate Affairs and Audit Committee of Toronto Community Housing Corporation met in public session on March 8, 2013, in the Main Floor Conference Room, 931 Yonge Street, commencing at 12:14 p.m.

Committee Directors present:

Christian Buhagiar

Brian Kwan

Regrets:

N/A

Additional Directors present

Zahir Bhaidani

Also present:

Marta Asturi, Assistant Corporate Secretary and Legal Counsel 

Paul Chisholm, General Manager, Access Housing Connections Inc.

Jason Gorel, Chief Financial Officer

Hugh Lawson, Director - Strategic Planning & Stakeholder Relations

Janice Lewkoski, Board Secretary

Liz Reid, Senior Director, ITS

Michael Vear, Chief Internal Auditor

Bora Zekavica, Senior Director, Finance

The Committee, the Chief Financial Officer and the Chief Internal Auditor met in camera at 12:03 p.m.

At 12:14 p.m., Mr. Christian Buhagiar, the Chair, called the meeting to order and Ms. Mirela Bolentiru served as recording secretary.

Item 1 - Confirmation of Agenda

The Corporate Affairs and Audit Committee unanimously 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 Corporate Affairs and Audit Committee Minutes - January 28, 2013

The Committee had before it the draft Corporate Affairs and Audit Committee minutes for the January 28, 2013 public meeting.

Motion carried

ON MOTION DULY MADE by Mr. Christian Buhagiar, seconded by Mr. Brian Kwan, the Corporate Affairs and Audit Committee confirmed the above-captioned minutes.

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

A discussion ensued with respect to page 3: Item 12 from the March 30, 2012 meeting: Implementation of Auditor General’s HSI Procurement Recommendations: Status Report. The Committee noted that the item is included in the Internal Audit 2013 Work Plan, but requested more detail respecting the status of the implementation process. Management explained that the Internal Audit department is monitoring the process at this time.

Item 4 - Chair's Report and Remarks, Verbal

The Committee noted that the next meeting, scheduled on April 19, 2013, is a key meeting as the consolidated audited financial statements and the Annual Report will be presented for adoption to the Committee with the recommendation of being forwarded to the Board of Directors for final approval at its April 29, 2013 meeting.

Item 5 - Financial Performance Report Q4 2012, CAAC:2013-08

The Corporate Affairs and Audit Committee had before it the above-captioned report (CAAC:2013-08) from the President and Chief Executive Officer.  

A discussion ensued including the following highlights:

• Revised format of reporting will be applicable to Q1 2013.
• Tenancy management:  Over budget by 2.1% ($573K) due to higher contract management costs relative to the budget.  Management is exploring ways to improve the contract management model and to rectify the budget issues.
• Bad Debt Allowance and Rent Arrears:  The actual amount of $3.5 million of Bad Debt Allowance versus $2.8 million budgeted, which means 24.2% ($667K) higher than budget, due to increased tenant rent arrears and additional commercial bad debt allowance.  Management is evaluating collection practices and other operational practices, taking into consideration the LeSage report, to address the growing trends.

Motion Carried

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

Item 6 - Q4 2012 Quarterly Performance Report, CAAC:2013-09

The Corporate Affairs and Audit Committee had before it the above-captioned report (CAAC:2013-09) from the President and Chief Executive Officer.  

A discussion ensued including the following highlights:

• Going forward, the Committee requested that management’s report be in a different format, including an introduction on the status of the current CMP, compared to the CMPs from the last three years.
• Vacancy loss:
  • TCHC’s vacancy level went up to 2.5% versus 1% in the market.  TCHC’s vacancy loss is higher than the market vacancy loss due to increased time line over the portfolio with respect to repairing the TCHC units, combined with the application of the Internal Transfer Policy, which does not exist in the market.
• Hard to rent units and the issue at Church Grandby (143 vacant units with 53% vacancy rate).
  • The vacancy level at Church Grandby is very high for many years due to construction issues such as: 7” ceilings, old electrical wiring, etc.The ceiling height cannot be adjusted due to the sprinkle system installed in the building.
  • Combining units is not an alternative as replacement units have to be provided somewhere else.
  • Management, in co-operation with the Development division, are looking for alternative uses of the hard to rent units as potential sites for revitalization.

Motion carried

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

Item 7 - Review of Board, President and CEO and Senior Management Expenses Q4 2012, CAAC:2013-10

The Corporate Affairs and Audit Committee had before it the above-captioned report (CAAC:2013-10) from the President and Chief Executive Officer.  

The Committee discussed with management the following:

• Expenses related to the President and CEO, Chief Development Officer, Chief Financial Officer and BIC Chair.
• President and CEO’s attendance at conferences:
  • The Committee noted that the Board of Directors would benefit receiving an update from the President and CEO on his attendance at different conferences, seminars and other events, including an explanation with respect to the value of the outcomes of those events.
• Level of expenses incurred by TCHC legal staff:
  • The Committee requested a review  of the expenses incurred by TCHC legal staff benchmarked against the expenses incurred by the City legal staff.
• To maintain the business transparency, management is working towards providing expense information for all staff on the website in future.

Motion carried

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

Item 8 - Amendments to the CAAC Terms of Reference, CAAC:2013-11

The Corporate Affairs and Audit Committee (“CAAC”) had before it the above-captioned report (CAAC:2013-11) from the President and Chief Executive Officer.  

A discussion ensued on the following:

• Consolidation of all financial information (statements and budgets), which means the Capital Budget (currently under BIC) and Operating Budget, as well as the Annual Report, falls under CAAC’s mandate.
• The Committee agreed that CAAC oversees the operational and capital budgets, while the BIC oversees the individual capital budget for revitalization or development related projects.
• State of Good Repair Fund:
  • The Committee noted that the State of Good Repair Fund is not mentioned in the Terms of Reference of any committee, and requested that it be included in the CAAC Terms of Reference to oversee the financial reporting of all elements in connection with the State of Good Repair Fund, while BIC will oversee the disposition of assets in connection with the State of Good Repair Fund and/or any other capital reserve funds.

The Committee requested that management provide one report to GRHRC on the amendments to the Terms of Reference for all CAAC and BIC committees for review and further submission to the Board of Directors for approval.

Motion carried

ON MOTION DULY MADE by Mr. Brian Kwan, seconded by Mr. Christian Buhagiar, the Corporate Affairs and Audit Committee unanimously adopted the report and recommended that the report be forwarded to the Governance, Risk and Human Resources Committee for review and approval.

Item 9 - Internal Audit: 2013 Work Plan, CAAC:2013-12

The Corporate Affairs and Audit Committee had before it the above-captioned report (CAAC:2013-12) from the Chief Internal Auditor.  

The Chief Internal Auditor presented the report and a discussion ensued on the following:

• Risk assessment and how to decide on what item should be included in the work plan.
  • Page 2, attachment 1, B-10: management is developing a risk control checklist according to the Auditor General’s recommendation.
• Lack of timelines – management will have a better idea about the timelines at the May Committee meeting.

Motion carried

ON MOTION DULY MADE by Mr. Brian Kwan, seconded by Mr. Christian Buhagiar, the Corporate Affairs and Audit Committee unanimously adopted the report and recommended that the report be forwarded to the Board of Directors for approval.

Item 10 - Internal Audit: 2013 Budget, CAAC:2013-13

The Corporate Affairs and Audit Committee had before it the above-captioned report (CAAC:2013-13) from the Chief Internal Auditor.  

The Chief Internal Auditor presented the report and a discussion ensued, including the following highlights:

• Review of the investigation model:
  • Adjusting the investigation model in accordance with the Auditor General’s model.
  • Staffing requests to address increased workload.
    • Commencing with contract positions to determine if there will be a change in the workload.
• The President and CEO and the CFO are working together with the Chief Internal Auditor on the Internal Audit department budget. The Chief Internal Auditor discussed with senior management with respect to the 20-25% budget increase requested.
• Focus is on processes and internal controls
• Page 6 of the report – correct the typo in the variance analysis: “2012” be replaced with “2013” in the report forwarded to the Board of Directors.

Motion carried

The Corporate Affairs and Audit Committee unanimously resolved to adopt the report and recommended that the report be forwarded to the Board of Directors for approval.

PUBLIC MEETING PROCEEDINGS

The Corporate Affairs and Audit Committee adjourned the public meeting at 1:37 p.m.

CLOSED MEETING PROCEEDINGS 

The Corporate Affairs and Audit Committee resolved to meet in closed meeting at 1:37 p.m. to consider items A to J.

The Corporate Affairs and Audit Committee resolved to meet in camera with the Chief Internal Auditor at 2:12 p.m. to consider item K.

TERMINATION

The meeting of the Corporate Affairs and Audit Committee terminated at 2:35 p.m.