September 22, 2021, at 12:00 PM

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1.   Disclosures of Pecuniary Interest

That it BE NOTED that no pecuniary interests were disclosed.

2.   Consent

None.

3.   Scheduled Items

None.

4.   Items for Direction

4.1   2020 Hamilton Road Business Improvement Area Board of Management Audited Financial Statements

2021-09-22 Staff Report - Hamilton Road BIA

That, on the recommendation of the Deputy City Manager, Finance Supports, the staff report dated September 22, 2021 along with Appendix ‘A’ Financial Statements of Hamilton Road Business Improvement Area Board of Management for the year ending December 31, 2020 BE RECEIVED for information.

Motion Passed

4.2   Observation Summary as at September 10, 2021

2021-09-22 Submission - Observation Summary

That the communication from Deloitte, regarding the Observation Summary as at September 10, 2021, BE RECEIVED.

Motion Passed

4.3   Internal Audit Dashboard as at September 10, 2021

2021-09-22 Submission - Dashboard

That the communication from Deloitte, regarding the internal audit dashboard as at September 10, 2021, BE RECEIVED.

Motion Passed

4.4   Internal Audit Summary Update

2021-09-22 Submission - Internal Summary Update

That the communication dated September 22, 2021, from Deloitte, with respect to the internal audit summary update, BE RECEIVED.

Motion Passed

5.   Deferred Matters/Additional Business

None.

6.   Confidential (Enclosed for Members only.)

That the Audit Committee convene, In Closed Session, for the purpose of considering the following:

6.1.    Confidential Trade Secret or Scientific, Technical, Commercial, Financial or Labour Relations Information, Supplied to the City / Personal Matters/Identifiable Individual

A matter pertaining to the security of the property of the Corporation as it contains commercial and financial information supplied in confidence to the Corporation, the disclosure of which could be reasonably expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons or organization, result in similar information no longer being supplied to the Corporation where it in the public interest that similar information continue to be so supplied and result in undue loss or gain to any person, group, committee or financial institution or agency and matters related to the personal information about identifiable individuals, including municipal or local board employees related to the potential provision of internal audit services for the City of London, by an external organization.

Motion Passed

The Commiittee convened in closed session from 12:18 PM to 3:13 PM; it being noted that the Committee recessed, from public session, from 12:35 PM to 12:55 PM and from 2:06 PM to 2:25 PM.

7.   Adjournment

That the meeting be adjourned.

Motion Passed

The meeting adjourned at 3:14 PM.

Full Transcript

Transcript provided by Lillian Skinner’s London Council Archive. Note: This is an automated speech-to-text transcript and may contain errors. Speaker names are not identified.

View full transcript (1 hour, 17 minutes)

Okay, I’m gonna call this meeting of the audit committee to order, this is the third meeting for us in 2021. I’m chairing just physically here in the chambers as our usual chair is working remotely right now. So we have a number of items on the public agenda. My intention is to go through them just one by one.

Colleagues, let me know if you want anything else done, but then we’ll be moving into closed session. As you see, we have a reason listed on the public agenda to deal with that. Then we’ll come back into public session. So once we’re finished with the closed session, any disclosures of pecuniary interest?

Raise your hand if you’re on the Zoom, so I know. One of our members, Ms. Higgs, is gonna be joining probably around one o’clock, she’s a bit delayed. And thank you, the clerk has also mentioned, I should be mentioning that the City of London is committed to making every effort to provide alternate formats and communication supports for council, standing, or advisory committee meetings and information upon request.

To make a request for any city service, please contact accessibility@london.ca or 519-661-2489 extension 2425. You can also call 311 if you’re in the City of London and just enter that extension. Okay, moving on to item 4.1. This is the financial statements, the audit of the financial statements for the Hamilton Road BIA.

The report explains why they were a bit delayed and are coming to us separately from the consolidated financial statements we received before. I did see Mr. Brewstad was on the Zoom. I imagine if you have any questions about the audit of the financial statements, either city staff or the auditors or Mr.

Brewstad would be able to answer them. So first, I’ll just see if there’s a mover for the recommendation. Councillor Turner, seconded by Councillor van Holst, discussion about the other financial statements for the Hamilton Road BIA, Councillor Van Holst. Thank you, Mr.

Chair. Perhaps I could ask the auditors to provide a little more detail on the amount due from Hyde Park BIA, it’s in note 4, but I understand that’s the nature, that’s money that’s not actually owing, but has to do with a program that’s being delivered. And I wonder if some clarification could be provided on that. Go to Ms.

Denbach. I see that she’s maybe not in the Zoom. So why don’t we wait for her to rejoin in the meantime? Perhaps we can go to the finance staff to see if you’d like to answer the question.

The chair, it’s Ms. Berbon. I’m looking, I don’t have that level of detail as to what that is. Normally those kind of things are typical for our process.

Our auditors may, once Ms. Denbach returns, may have that information. That is very, very typical where money flows back and forth between our boards and commissions and having due to and from on the consolidated statements are eliminated between the entities just because they’re interrelated transactions. So Ms.

Denbach, I believe is back and perhaps may have the information that details exactly what those are. Go to Ms. Denbach. I’m just gonna say that Councilor Van Holst asked about note four in the audit of financial statements about related party transactions.

I wanted to understand more what that note is intended to indicate. Everyone, my apologies, my audio was not working. So I had to log back in. So thank you for repeating the question.

So any, I didn’t hear Ms. Barbone’s response to the question but I will say in the standalone financial statements for Hamilton Road BIA, any transactions with related parties are required to be disclosed. And so that’s what this note is meant to show any amounts that are owing due to or due from the city of London and/or another BIA. Thank you, Councilor Reynolds.

Okay, thank you. In discussion with the board and our treasurer, we were, it was described that this wasn’t money that’s actually owing because somebody asked when are they gonna pay us but actually had to do, I think with the digital Main Street program and how that was being administered. So that was the clarification I was looking for. I can comment on that if you like.

So the amount due from Hyde Park BIA that’s correct is related to the digital Main Street grant that Hyde Park BIA is administering on behalf of all of the BIA’s. And so it represents a pool of funds or an asset that Hamilton Road BIA is entitled to. So it won’t flow to Hamilton Road in the form of cash I don’t believe but rather expenditures being paid by Hyde Park BIA on behalf of Hamilton Road BIA, if that helps clarify. Thank you.

Any further questions about the financial statements? Councillor Turner. Thank you, Mr. Chair.

Perhaps through you to staff, I’m curious, I’ll learn a little bit every year, a bit more about our relationships with the BIA’s and the flow throughs and how they all work. Recognizing that the statement of cash flow is to identify some concerns with the operation of the Hamilton Road BIA. That of course there was a surplus, or sorry, deficit identified for 2020. And if that surplus deficit were matched in 2021, that would eliminate any cash on hand.

What are the liabilities to the city? What are the liabilities associated with the BIA for themselves as well? How does that relationship work? And how is that monitored?

And what’s our responsibilities with respect to those circumstances as they proceed? There are quite a few questions in there. I’m gonna go to the auditor first to see which of them you’d like to answer, and then perhaps we’ll go to city staff for some of the answer. Go ahead.

So I believe the majority of the questions will be best answered by city staff, just in terms of city’s responsibility for managing the deficits amongst the BIA or any responsibility that the city may have, unless there’s a specific question within there that you felt I was best to answer. No, I think that’s a good idea. Let’s go to Ms. Barboon.

Yes, thank you through the chair. So I think in a nutshell, just to give you a sense from a financial perspective. So the city of London Municipal Council has through the BIA bylaws that come through, approved the budgets for the upcoming years. Typically in December, we’ve moved that and worked with all of our BIA’s to have those approved before the end of the year.

So through that budget, it was identified and was approved by council when that was brought forward, that there was going to be because of COVID specifically, a draw and a shortfall for some of the costs that they might incur during the current year. And it was planned through the budget that they would have a draw from their operating reserve fund. So some of that difference that you see with the deficit is obviously a difference between the budgets and the form that they’re presented versus the PSAB accounting standards showing as a deficit. So this is actually the draw at the end of the day.

It was actually less than they had anticipated. So there is not a shortfall that wasn’t ultimately planned for and projected as part of their budget. So when we see the city budgets that will come, or the budgets presented to municipal council from the BIA’s, you will see those coming forward later on this year for the 2022 year. And you’ll be able to see how that budget, ‘cause they do on a cash flow basis, ensure that they aren’t spending cash that they haven’t obviously planned for.

So if there were concerns from their budget, that would be the time through those budget approvals that city council would identify those problems. Certainly, one of the requirements would be to ensure that they have a balanced budget. And if there was a shortfall, it would then need to plan for that accordingly in the following year. So this one was planned for from a liability perspective.

Obviously, they would then recoup that through the additional, potentially an additional increase in their budget that they might require from their members if there was a problem and a concern going forward. Mr. Chairman, Mr. Chair, thanks Ms.

Berbone. That’s helpful. I think that’s what I’m looking for here. So these statements are the actuals and the budget is the budget kind of the perspective and what may happen and reconciling between the two of these to make sure that the budget and the actuals ended up aligning themselves and that this wasn’t something that was a surprise to us.

And yeah, further, the question was what, what our responsibility in this is? I have full faith in the auditors that as presented that they’re accurate. It’s just a question of if there’s any obligations on us in terms of monitoring these through the statements as they’re presented to us. So I think that’s quite helpful.

Thank you, Ms. Berbone. Okay, I see Councilor Van Halst. Yes, thank you.

So our ability to cover the deficit partly came from having some finances remaining on hand from a previous year that there were some projects that we didn’t, we had the money for, but weren’t able to complete. And so that assisted us. However, I see there’s a concern here with the Hamilton Road BIA and it’s like similar to all these village BIA, it’s a small one. We don’t have the big box stores like you would see in a couple of other BIA’s where they can draw a lot of funds through it.

I don’t know that we can take much more from our members. And I think what I’ll be looking for come budget time is something along the lines. Okay, Councilor Van Halst, I’m just going to intervene because this is the audit committee. And I entertained the questions from Councilor Turner, which were quite, they were emerging in corporate services territory about the operating budget monitoring, which are perfectly fine questions.

But we’re really talking about the financial statements for the BIA, I feel kind of bad for the BIA. You know, if we did this to every organization during the consolidated financial statements, we’d have a 10-hour audit committee meeting where we scrutinized every little bit in all the different parts of the consolidated financial statements. This is really a discussion about the financial statements only. And so I know we have to answer some of these questions because they’re related to the financial statements, but I don’t want to have a little mini budget discussion at the audit committee and we can just have that discussion at the budget meetings.

Okay, well, that’s fine, Mr. Chair. I was just gonna ask what that discussion is gonna come up, how we prepare for something like that. So it’s, I guess we could ask that offline, but I see that our administration and business development are still gonna be crucial.

However, our levy from the city won’t match that and like the other, the BIA, I think we’ll need to shore them up a bit. So that will be, I get, that will be coming forward. I was just gonna ask a little bit about how to, how we should go about that. But again, we can discuss that offline.

If that’s your preference, thank you. Just not an audit committee. Any other audit related questions? Okay, so we’ve had a move and seconded.

All those in favor of receiving the financial statements for the Hyde Park, sorry, the Hamilton Road BIA. Okay, that’s carried. Thank you very much. I think we’ve seen an example of why it’s important to as much as we can keep them on time so that they’re all dealt with at once in the consolidated financial statements.

I appreciate that there is a bit of a delay, but sometimes it comes around to bite you. A lot of scrutiny. Okay, 42434, all internal audit related. So I wonder if we could deal with them altogether and just ask questions of Mr.

Price across all three reports. I think that’s fair way to handle it. Maybe I’ll just open it up to hear a brief intro from Mr. Price and then we’ll get into questions from committee members about the internal audit reports.

Mr. Price. Hi there, thanks, thank you. I’ll start on slide 17 with the report on the findings and the tracking of the findings.

This is where we spent most of our effort over the summer was really working with the teams to understand the status of the current findings and we’re able to complete two of the reviews with management. They put a lot of effort in there and so you’ll note that the parking revenue generation assessment, that one is now closed. The findings are close to our satisfaction and they’re working to put some additional automation in there to make it more efficient. And then the construction procurement process assessment, the findings have been addressed as well.

And of note as well is that the timing, I think in past meetings, we’ve seen some of the timing slide. In this case, the timing has actually been accelerated in some of the cases for some of the other reviews as we updated those. So positive from that perspective. And then the next slide is the number 18 is the dashboard.

And what you’ll note here is there are a few projects that are delayed over the summer. What we’ve noted is that probably both in the city as well as Deloitte from a resourcing perspective, it’s been challenging to get those projects going. I think we’ll still be quite a bit in track and we did have a plan that was back and loaded in the sense that it was more in the second, third, fourth quarter rather than before the June meeting. And we expect that we’ll get back on track with all of those given that the SaaS application review is with management now for response.

And the other projects, we’re all working to kick those off in the next few weeks and to complete them in the next couple months. So then the next meeting, we should have more to report from those projects. So that’s really the high level there. And the last document is really just a written summary of what I just described.

So nothing additional report there. Okay, thank you, Mr. Price. Let’s go to questions discussion about the information from the internal auditor.

Raise your hand on the Zoom if you wanna weigh in. Okay, thanks very much. I’m certainly happy to see some of those observations closed out. I think it makes sense that there’s a little bit of scheduling delay as people are taking what I would consider to be very well-deserved vacations.

We’ve been going through a very difficult time and people need to take time off, get some rest. And if it’s gonna lead to some delays, I think that’s manageable in the overall envelope of the work and we can catch up later on. So I appreciate you being candid about that and just explaining what’s going on on that front. And I think it’s very reasonable.

I’m glad to see the parking revenue pieces closed out. No, I know that was a very useful internal audit. And I think it’s good that we’re closing out those observations. So maybe I can have a motion to just receive these reports from the internal auditor.

Thank you, Councillor Turner, seconded by Deputy Mayor Morgan. One last call for any discussion. Okay, all those in favor? Okay, that carries.

Thanks very much, Mr. Price. At this point, we’re gonna go into closed session. The reason is listed on the public agenda.

It’s item 6.1. You see, it’s a confidential trade secret or scientific technical, commercial, financial, or labor relations information supplied to the city. Our personal matters about an identifiable individual. The full reason is written out on the agenda, which I will not read.

I have a motion to go into closed session. Councillor Turner, seconded by Councillor Venholst. All those in favor? Okay, that’s carried.

I give us a moment. We’re gonna turn off the live streaming and move into closed session. And once we’re finished in closed session, we’ll come back out into public session. Okay, thanks to the very quick work of Mr.

Chiltes. We’re now back in public session. And I’ll just look for a motion to recess the meeting until 1255. Deputy Mayor Morgan, seconder.

Councillor Turner, thank you. All those in favor of a recess till 1255. Okay, that is carried. Thank you very much.

You’re welcome to stay on the Zoom, but obviously mute and turn off your video. And we’ll reconvene at 1255. Okay, I’d like to call this meeting of the audit committee back to order. We had to recess until 1255 and it’s 1256.

So let’s call the meeting back to order. We are here in public session. So I would like a motion to go back into closed session for the same reason when in closed session originally. Councillor Turner, Councillor and Holst, thank you very much.

All in favor of going into closed session? Thank you very much. Thanks for joining us, Ms. Higgs.

Okay, we’re headed into closed session. We’re just going to have to change over. Okay, we’re back in public session. I’d entertain a motion to recess until 225.

Moved by Councillor Turner, seconded by Councillor Van Holst. Any discussion? All those in favor? Okay, we’re recessed until 225.

See you then. Okay, I’m going to call the meeting to 225 and that’s when we recess until. And once again, we will move into closed session for the same reason that is listed on the public agenda. I have a motion to go into closed session.

Councillor Turner, thank you. Seconded by Deputy Mayor Morgan, thank you. All those in favor? Moving into closed session.

See if we have Councillor Van Holst. So we’re going to go into closed session. That’ll just take a little moment as we transition. Okay, in public session.

And I would just call on Chair Morgan to report progress. I am happy to report progress for the matter that we went in camera for. Thank you very much. Any additional business deferred matters?

Seeing none, is there a motion to adjourn? Councillor Van Holst, seconded by Councillor Turner. All those in favor of adjourning? Okay, we’re adjourned.

Thank you very much, everyone, for your time. I really appreciate it.