February 15, 2023, at 12:00 PM
Present:
Deputy S. Lewis, P. Cuddy, J. Pribil, I. Cheema
Absent:
S. Stevenson
Also Present:
L. Livingstone, A. Barbon, I. Collins, A. Job, M. Schulthess, S. Swance.
Remote Attendance:
Remote Staff Attendance: K. Barton, B. Card, S. Corman, K. den Bok (KPMG), L. Hancock, D. Jaswal (MNP), P. Ladouceur, O. Qureshi (MNP), M. Redden (KPMG), G. Rodrigues (MNP)
The meeting is called to order at 12:01 PM;
1. Call to Order
1.1 Disclosures of Pecuniary Interest
That it BE NOTED that no pecuniary interests were disclosed.
1.2 Election of Vice Chair for the term ending November 30, 2023
That Councillor S. Stevenson BE APPOINTED as Vice Chair for the term ending November 30, 2023.
Motion Passed
2. Consent
None.
3. Scheduled Items
None.
4. Items for Direction
4.1 Audit Committee High Level Overview
2023-02-15 Presentation - Orientation to Audit
That it BE NOTED the Audit Committee received a verbal presentation from the Deputy City Manager, Finance Supports with respect to the high level overview of the Audit Committee.
Motion Passed
4.2 Audit Planning Report for the Year Ending December 31, 2022
2023-02-15 Submission - KPMG Audit Planning Report
That the KPMG LLP Audit Planning Report, for the year ending December 31, 2022, BE APPROVED.
Motion Passed
4.3 London Downtown Closed Circuit Television Program for the Year Ending December 31, 2022
2023-02-15 Submission - KPMG Closed Circuit Television
That the KPMG Report on Specified Auditing Procedures for the London Downtown Closed Circuit Television Program, for the year ending December 31, 2022, BE RECEIVED.
Motion Passed
4.4 Internal Audit Follow Up Activities Dashboard
2023-02-15 Submission - Internal Audit Follow-Up Activities Dashboard
That the communication from MNP, with respect to the internal audit follow up activities update dashboard, BE RECEIVED.
Motion Passed
4.5 Briefing Note from Internal Auditor
2023-02-15 Submission - Briefing Note from Internal Auditor
That the communication from MNP, with respect to the briefing note from the internal auditor, BE RECEIVED.
Motion Passed
4.6 Neighbourhood Decision Making Program Value for Money (VfM) Audit
2023-02-15 Submission - Neighbourhood Decision Making
That the final report dated February 6, 2023 from MNP regarding the Neighbourhood Decision Making Program Value for Money (VfM) Audit, BE APPROVED.
Motion Passed
5. Deferred Matters/Additional Business
None.
6. Adjournment
That the meeting BE ADJOURNED.
Motion Passed
The meeting adjourned at 12:45 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, 2 minutes)
[0:50] Sarah, can you just check the online streams? We should have both YouTube and the E-Scribe stream up now. Michael, both are up and running.
[1:41] The YouTube is on the screen saver. The stream is looking at the council chamber screen. That’s perfect, thank you. Good afternoon colleagues, it is 12.01 and we have quorum.
[17:54] So I am going to call the first meeting of the audit committee to order. I will start by recognizing that the city of London is situated on the traditional lands of the Anishinaabek, the Haudenosaunee, and the Lene Pei-Wauken Adirondor and peoples. We honor and respect the history, languages, and culture of the diverse indigenous peoples who call this territory home. The city of London is currently home to many First Nations, Métis, and Inuit people. And as representatives of the people of the city of London, we are grateful to have the opportunity to live and work in this territory.
[18:28] I will also add that the city of London is committed to making every effort, provide alternate formats and communication supports for meetings upon request. To make a request specific to this meeting, please contact accessibility@london.ca or phone 519-661-2489 extension 2425. And to begin the meeting, we will start with item number one in the call to order. It’s looking for any disclosures of pecuniary interest. And I see none.
[19:04] So our first item of business is the election of a vice chair for this committee for the term ending November 30th of this year. So I’m looking to see if we have any nominations for vice chair. You can self-nominate if you wish to do so. We’d like to nominate Susan Stevenson.
[19:43] And we have Councillor Stevenson nominated and Councillor Cuddy. Thank you and through you chair. I’ll second the nomination. Okay, we have a vice chair that has been moved and seconded. Councillor Stevenson is not actually with us today. So I’m going to check with the Councillor to see if there has been a discussion with Councillor Stevenson to indicate that she’d be willing to stand. They give her a heads up to let her know.
[20:16] And I did not receive a confirmation that she would accept. Well, we have a nomination on the floor. So I’m going to look to see if there are any further nominations for the position. Seeing none, then we will call the question. And we are voting by hand. So all those in favor? Motion carries. Thank you, everyone. And we will make sure that Councillor Stevenson who’s at a police services board meeting today gets the good news that she has been elected the vice chair.
[20:55] Moving on, we have no consent items or scheduled items. We do have six items for direction. So we will start with item 4.1, the audit committee high level overview. Thank you through the chair. So I’m just going to walk you through very, very quickly a bit of an orientation since this is the first meeting since the new committee since the election in the fall. So I won’t put it up on the screen. I know you have it in your documents in front of you. So if you turn to page three, which is the slide that gives you a bit of essentially the relationship of what the internal and external auditors and how their relationship works with the audit committee.
[21:41] So it’s essentially just a bit of a functional representation of how that works. So the internal auditors as well as the external auditors both maintain their independence from civic administration. And they report directly into the audit committee, but functionally they will work administratively with the civic administration as we prepare the financial statements and assist them in completing the risk-based internal audits as well. So typically for the internal audit, they work through the city manager and is Livingston and myself, but they will work directly with all of SLT to coordinate all the audits that are done and where they complete the follow-up so we can guide them effectively and efficiently through the completion of those audits.
[22:26] The external audit primarily falls under the true financial supports areas. So Mr. Ian Collins through the Director of Financial Services and Ms. Sharon Swanson, who’s with us today. Do all of the heavy lifting and liaison with the external auditors to provide the financial statement information as well as coordinate with all of the boards and commissions moving forward. So, and then ultimately they report directly into council and should there be any concerns? Both of them would go directly to the chair of the audit committee, which the deputy mayor would be the ones that they would feel free to connect with directly should there be ever any concerns.
[23:06] So just moving along to the audit committee in terms of what the role. So generally this committee meets quarterly. Those meetings are set up in advance or at the request of the chair, we would schedule additional meetings if they are needed for any reason to complete the work that needs to be done on as part of the approved audit plans for the year. So generally the external auditor provides the audit planning report in Q1, which is what you’re going to receive at today’s meeting. And the audited consolidated statements are typically received in June.
[23:38] So that is typically quite a big meeting where we have the financial statements of the city of London and the boards and commissions are all included in there ‘cause they are consolidated. Also, I would note that there is an internal audit charter that was approved by the previous council through our external internal auditors. So that was last June, 2022 where that was approved and essentially again, just outlines their work in relationship between the audit committee and the functional work that they do each and every day. So they also provide a status as required at each audit committee meeting of any findings that they may have.
[24:17] So I did put a link there to the terms of reference that is available on the city’s website also. So moving along to slide five, so just a bit of an overview for external audits. So the municipal act under section 296 requires that municipalities audited statements are provided and approved by the municipality. So we have our current external auditors who are KPMG which were just recently appointed for the next five year term and are going to be beginning their work. So all of that work is presented to the audit committee. So today you will review all the work that comes forward in terms of their planning that they will then engage and continue to deliver upon for the financial statements and then when they provide their report in June, if there are any findings or any additional items to be brought to the committee’s attention, that will be done so at that time.
[25:07] So essentially items that might be providing risk or things like that the audit committee would wish to consider. So in terms of the external audits role for through the audit committee on page six, so really today you’ll review the scope, the principles, the key materiality that they will set out for their planning to ensure that the committee is satisfied that work will be undertaken in a manner that will be approved to provide an express opinion on the audited, consolidated statements. So and then ultimately those recommendations that come through here will be forwarded to the municipal council that ultimately oversees it.
[25:45] So just moving on to the internal auditor, page slide seven. So this function was outsourced in 2010. So since that time we have engaged in external auditor that provides a risk-based internal audit plan through the audit committee. So that three year risk-based audit plan was presented and approved last year at the beginning of their term. So that sets out the work that they will do over the next three years. And then if there are changes to that they would bring it forward to this committee to guide that work in terms of bringing that forward.
[26:22] So the contract provides for quite a range of different kinds of work. So right from compliance all the way through to value for money and we try to look for a bit of a blend in terms of the kinds of audits that are there to ensure that we’re taking a very broad-based approach and looking at where there’s risk as well as opportunities to provide recommendations to the council ultimately, but also to assist civic administration in developing even more robust procedures and risk-based programs going forward.
[26:55] So in terms of the role of the audit committee, so they will report into this. They have recommendations that from the previous internal auditor, they are following up on and providing those status reports that each of your quarterly meetings. And they provide a bit of a summary. So you’ll see a number of things on the agenda today and would provide the final report after a management has had an opportunity to comment on their recommendations through to the audit committee to review and then ultimately all of the recommendations will go forward to municipal council.
[27:27] So that’s just a very brief overview to give you a bit of a context in terms of setting the stage for the work ahead and I’m happy to answer any questions if you have any. Thank you, Ms. Barbara. And so I’ll go to committee now for any questions or comments. Okay, seeing none, then I’ll need a motion to receive this report. Moved by Councilor Cuddy, seconder by Councilor Pribble and by hand, all those in favor?
[28:01] Motion carries. Okay, moving on, 4.2 is the audit planning report for the year ending December 31st, 2022. Just a moment here, colleagues, ‘cause I had to go to paper copy rather than the electronic copy. All these will bear with me.
[29:05] Since we can’t get into E-Scribe, I’m just loading this up on my personal laptop so that I can access the electronic records rather than trying to flip through the agenda. Bear with me for just one moment. Peter, can we put it up on the screen?
[29:51] Unfortunately, Councilor Cuddy, it’s not quite that easy. Knowledgey standpoint. Thank you. Okay, the good news is I have my electronic PDF up and running so now we can more easily move through the rest of this.
[30:27] So 4.2 is our submission from the firm of KPMG, the auditing planning report. And I know that we have Ms. Denbach and Ms. Redman with us. So did one of you want to start off and give us an overview of your report? Yes, that would be wonderful. Thank you very much. First of all, good afternoon, everyone. And thanks for having us here today. It’s a pleasure for us to be with a new audit committee and see that work get underway once again.
[31:01] By way of introduction, my name is Katie Denbach. I’m the audit partner, the external audit partner for the city of London and its boards and commissions. And I’ve been in this role as audit partner for the past seven years. I have with me today, Melissa Redden, who is the audit senior manager responsible for the audit. And she’s also been involved for many, many years herself. Today, what we would like to do is walk the committee through the highlights of our audit plan for the fiscal 2022 audit, which we’ve provided to you through our audit planning report.
[31:33] That’s part of your agenda package. Just for some context, we put this report together really to help you and your governance role over the external audit process. And in this report, we would put anything we’re required to communicate to you under Canadian auditing standards, as well as additional information that we feel you would or want to know or should know in your oversight roles. So we’ll hop into the highlights of the report and certainly we’ll be happy to answer any questions that the committee members have.
[32:06] I’m gonna start on page five of our audit planning report, which is the slide that says audit quality indicators at the top of it, for those of you who are following along. The only comment I wanted to make on this slide is really, we’ve listed some items here that we feel are important factors in driving a high quality audit. So these include things like the experience level of your audit team, the way that we use technology within the audit, as well as the timeliness of information were provided by city management, among other things. So at this point, we’ve just shared this with you for your information, but when we come back to this committee with our audit findings report, we’ll update you on these specific metrics and whether the quality indicators have been met or whether we have any concerns.
[32:55] On slide six, we’ve included some information for you. There are some links contained within the slides just for information really on our use of technology tools within the audit. I won’t spend too much time there. On slide seven, we talk about the scope of the work that we’ve been engaged to perform. It remains consistent with the prior year, which really is the audit of the consolidated financial statements of the city itself, as well as its boards and commissions. On pages eight and nine, we go into our materiality discussion. And so materiality is an important metric when it comes to our audit as it drives the level of audit work that we do.
[33:37] So we set materiality each year based on total expenses for the year. And then the percentage that we apply to that benchmark is based really on professional judgment and on the needs of the users of the financial statements. But it does have to fall within a specified range as dictated by Canadian auditing standards. So the preliminary materiality level that we’ve set for 2022 is $20 million. This will be revised throughout the course of our audit if considered necessary. The number that I think is more important to you as a committee is what we refer to as our audit misstatement posting threshold.
[34:17] So that’s the $1 million number there. And that’s the level at which if we came across any differences throughout the course of our audit, whether they were corrected by management or remained uncorrected, we would communicate those to you through our audit findings report. And I’m gonna hand it off to Melissa at this point to go through some of the rest of the details. Thanks, Katie. So on page 10, we have some information on the involvement of others.
[34:49] Mercer is engaged by the city to provide the actuarial valuation for the employee future benefits obligation as well as the WSIB accrual. So this is just indicating the reliance that we will place on them during the course of the audit. The next slide provides some information on scoping. So the city is a consolidated entity. So we consider it to be a group audit. This main significant component is the city itself. So we’ve indicated here the percentage that that makes up of the consolidated entity.
[35:26] And although the individual boards and commissions are not considered to be financially significant, as it relates to the group audit, they do still have their own statutory audit requirements and are audited at their own individual materiality levels. On page 12, we have a summary of our risk assessment. So two areas where we have presumed risks of material misstatement and then a few other areas of focus. So we’ll do go into some additional information on that in the coming pages.
[36:01] For the, so we flipped to page 14. This is some information on the risk of material misstatement due to fraud. This is a presumed risk that we have to consider however we are able to rebut the presumption of fraud. And we do so for the city as we do not believe that it is applicable to them. I guess just to note that this is more applicable for those entities that have performance that is measured based on earnings. But since that is not the case here and a significant portion of the revenue is derived from the lobbying of taxation dollars and user charges, there is little judgment over the timing of revenue recognition.
[36:42] So we have rebutted that risk. On the next page, we have another significant risk that is also presumed. And this is the management override of controls. This is a risk that we have to consider for all organizations. And there are certain procedures that we are required to perform that are listed on this slide. So we will plan to perform those procedures during the course of the audit and report back on findings, if any, in our audit findings report. The next few pages are some other areas of focus. These are areas where these are more significant accounts in terms of dollar value.
[37:22] So there is a risk of material misstatement there, although it is considered to be a base level of risk and not elevated or significant. So we have indicated our audit approach over those areas. Since you have all had access to this report in advance, I will assume that these have all been read and I’m not going to go through them in detail at this time. So if we skip to page 23, this is where we’ve included some key milestones and deliverables.
[37:55] So during the course of December and January, we did go through some risk assessment and planning procedures. Our field work and reporting occur between April and June. And then we do a debrief of the audit in July once all of the audit work and reporting is done. So that brings us to our appendices, which I’ll flip over to Katie to go through. Thank you. So we’ve included several additional pieces of information for you in the appendix of our report. Some of it relates to required communication. So the engagement letter will be provided to management.
[38:31] There are some links for you to information regarding quality control within KPMG. On slide 27, we’ve included a document here that several pages long, that goes over a newly effective auditing standard that has come into effect for this year. So it’s called Canadian Auditing Standard 315 and it’s around risk assessment. So there will be some changes to the way that we conduct our audit. You likely won’t see much impact to what the reporting that you get, because it doesn’t impact the financial statements themselves, more the level of documentation and risk assessment procedures that we have to go through in order to meet the auditing standard.
[39:20] So that’s really just for your information. And then starting on slide 32, we’ve provided some information on upcoming changes in accounting standards. So the city’s required to follow public sector accounting standards and there are actually a couple of big changes coming down the pipeline, which will be effective for the city for fiscal 2023. So we’ve already had many conversations with management around the implementation of those standards and work as well underway to prepare for that. The biggest one being asset retirement obligations.
[39:53] So that’s included on page 32 for you to review sort of the implications of the adoptions of the new standard. And the second largest one in my view is financial instruments. So another center that will be required to be adopted by the city for the next year. And we’ll continue to provide you information and have conversations with management as that implementation date draws closer. The last appendix that we’ve put in here is called indicators of financial performance and it starts on slide 37.
[40:27] The reason I wanted to touch on this, so we put this in our audit plan each year. We prepare it for the audit committee really just for your information. It’s based on publicly available FIR data, but we feel it provides some valuable information to you and especially as new audit committee members should give you some good insight into the city’s performance relative to some of its peers. So I won’t go through the appendix in details other than to say that it does show the results of some of the key indicators of financial condition that the Public Sector Accounting Standards Board recommends looking at.
[41:06] So there are metrics here to help assess indicators around the city’s vulnerability, sustainability and flexibility when it comes to their financial position. And we’ve shown five years worth of data in this report so that you can see the historical movement and trending of those indicators. The, sorry, the last remaining appendix is around just some additional information for the committee members with some live links there around audit and assurance insights and ESG and sustainability reporting. So just some hot topics that we’re hearing discussed around audit committee and board tables.
[41:45] So we wanted to bring that to you just so that you could start those conversations if you haven’t already. So that wraps up the highlights of our audit plan. Happy to answer any questions that the committee may have. Thank you for walking us through that and we will look to the committee now to see if there are any questions for you, Mr. Chima. Thank you, Mr. Chair. And thank you, Mr. Enbach and Ms. Ritten for that detailed explanation. I just have a question over the weekend, I read some news that came out of the city of Toronto audit and your colleagues in KPMG Toronto had indicated that there were some control deficiencies experience in that audit relating to some of the technical expertise that were missing for our city staff.
[42:34] So is that something that you’re gonna keep in the back of your minds as you carry this audit, particularly with the CAS 315 requirements around that? Thank you. Yes, absolutely. It’s something that we will always keep in the back of our mind as we, there are certain areas within our audit where we do rely on the controls in place over the financial reporting processes. And you’re exactly correct that that CAS 315 adoption does sort of change the way we do our risk assessment and requires to consider those things more broadly as well.
[43:14] Thank you, Ms. Denbach, Mr. Chima, any other follow up to that? No, those are, thank you. Any other questions or comments? Councillor Pribble. I just have a question and I don’t know, I’m looking at both in the online as well as the printed and there are some, I was able to follow through other things but for example, the 37, the key indicators of the financial performance, I don’t have them neither printed nor online. So if I could somehow get them later or, I just don’t have them.
[43:50] I don’t know if you have it or if I’m, the IT helped me kind of to get on where I’m supposed to be but still got missing there. Well, I see some nodding of heads from our staff, Councillor Pribble and they are there. So I think Ms. Pribble is already indicating that she can make sure that you have those. So if that’s satisfactory, she’ll follow up with you directly. Perfect, thank you very much. Any other questions or comments on 4.2? Seeing none, then I’m going to look for a motion to receive the report and approve, moved by Councillor Cuddy, seconded by Councillor Pribble and by hand, all those in favor?
[44:33] No motion carries. Thank you colleagues. Moving on to the next item, the 4.3. This is the London Downtown closed circuit television program for the year ending December 31st, 2022. And again, this was a KPMG. So I don’t know if we have got a member of the auditing team that wants to give us a brief overview of this. Ms. Denbach, is this back to you for this one? Sure, absolutely, I can speak to this. So this report is in its final version.
[45:06] So it’s coming to the committee for information, but just by way of background with respect to this, KPMG was engaged to perform specific agreed upon procedures relating to the downtown closed circuit television program each year. And so rather than provide an audit opinion, if you will, what are the scope of work that we’ve been asked to perform is to perform the procedures that are outlined there within the report and report back any findings through this report that we provide to you.
[45:44] So you can see our procedures and findings listed there. Great, thank you very much for that. Just as the new committee comes together, I wouldn’t typically ask everybody to give a brief overview of the items on the agenda. But as this is our first meeting, just wanted to touch base with you on that. And we’ll look to the committee to see if there’s any questions or comments. Seeing none, then we will look for a motion to receive this report. Moved by Councillor Cuddy.
[46:18] And we need a seconder, Councillor Pribble by hand. All those in favor? My motion carries. Great, thank you everyone. Moving along to item 4.4. This is the internal audit follow-up and activities dashboard. And I see that we’ve got our folks from MNP coming on the Zoom call for us. So I’m not sure, gentlemen, which of you wants to give us a very quick overview of this report?
[46:50] But I’ll look to see who wants to lead this one. Thank you, Mr. Chair. I will pick it off and then turn to the team at their respective pieces. Great, thank you, Mr. Rodriguez. Go ahead. Thank you. So good afternoon, everybody. It’s great to meet with the committee and happy to present to you today on the results of our audit activities. My way of introduction, my name is Jeff Rodriguez. I am the internal audit engagement partner for the City of London. I am also the partner within MNP that leads internal audits for Eastern Canada as well as leading the public sector assurance practice around internal audit.
[47:27] So happy to be with you today. And along with me is Deepak Jazwell, who is the senior manager in within our public sector internal audit assurance practice and Osman Kureshi, who is one of our talented auditors that’s just with a number of the audits that we conduct on behalf of the State London. So with that and in terms of the agenda for today, there’s three items that we’re gonna be going over. First of them being the status of the follow-up audit activities over the last quarter. And we’ll speak to that in a moment. And then there’s the update on any work, either being planned or underway for the coming quarter.
[48:02] We’ll talk about that. And then finally, we’ll be talking about the results of any audits completed within the last quarter. So to kick it off, I’ll turn over to Deepak, who will give the community the status of where we are with follow-up audit to, sorry, activities. Thanks, Jeff, and good afternoon all. Pleasure to meet you members today. So as Jeff alluded to, I’m Deepak Jazwell, a senior manager with M&P as support and manage the city of London account. Through the chair, we’re on page 73 of the package. So on a quarterly basis, M&P will follow up with management to ensure previous high or medium rated and internal audit findings are being adequately remediated through the implementation of related management action items.
[48:43] There are eight recommendations from issued order reports that were followed up during this quarter. And our remediation legend outlines three different statuses. So one, being on track for completion, two, being delayed, and three, being critical delay on deviation. Now, we generally look for untrack for completion, but we do understand the various different business reasons for delays. And what we really like to highlight to the committee is any critical delay or deviation, which usually results in the business deviating away from committing or finalizing an actual action. Thankfully, there were no critical delays or deviations from the action items we looked at.
[49:19] We’re pleased to state that two management action items will close this quarter, pertaining to the Dennis Hope Process Assessment Audit. Five management action items will retargeted across three different audits due to different business reasons, ranging from project delays with partner stakeholders to some system integration challenges. And one action item was untracked to be completed by its respective original due date. I will take the actual package as read. Are there any questions at this time on the validation activities? Well, let’s go to our committee members and see if there are any questions on that.
[49:56] I’m seeing a lot of shaking of heads and no hands up. So we have no questions for you on that piece. Fantastic. And then for the internet audit brief update now, I’ll throw it back to Mr. Rodriguez and he can walk you through that component then. Okay, so we will come back to you, Mr. Rodriguez in just a second, but the internal briefing note is actually a separate item on our agenda. So we’re just going to deal with the report that you just walked us through on 4.4 and then we follow up with the briefing note. So I’m looking for a motion to receive, moved by Councillor Cuddy.
[50:33] We have a seconder in Councillor, Mr. Chima, we’ll call the vote, all those in favor? Motion carries. Okay, and now we will come to Mr. Rodriguez for the internal briefing note, which is 4.5 on our agenda. Thank you, Mr. Chair. In terms of the briefing note, there’s three items to go over today with respect to audits that are either already underway or are planned for the next quarter. The first one being a talent management audit that was being conducted over the last quarter.
[51:08] It’s recently undergone what I would call a somewhat of a rescoping as we were going through the audit and conducting the work based on the originally defined scope and in collaboration with city management, we have done somewhat of a rescoping exercise to focus our efforts in a more targeted fashion around three key areas being sourcing, recruitment and retention of staff. And really it’s with the objective of ensuring that the city is positioned for effective long-term succession planning. This was coming out of some conversations we were having with the city staff and management around the post-COVID environment and what organizations are facing today.
[51:42] And we felt like a more targeted scope and around these particular areas would deliver more value for the city and the committee. So that’s why that one is, I would say, still underway as we’re looking to refine and then redefine the scope further on that. The next one being an audit around the city’s asset retirement obligations. This is a requirement under section 3280 of the public sector handbook. So this audit is currently being planned. We’ll be looking to evaluate the process and controls that city staff have around this retirement obligation with expectations completed over the next quarter to be reported in June of 2023.
[52:19] And finally, it’s an audit around the city’s program and approach to vendor risk management. That one is currently also being planned and will be completed over the next quarter to be reported on in June. And this one is really looking at the city’s practices around third party risk management to ensure effective management and monitoring of the federal vendors to the city to ensure effective delivery of services in accordance with any defined SLAs which are service level agreements and contract terms. What we’re finding just throughout the ecosystem is that third party risk is something that’s relatively new and emerging.
[52:52] And it just really speaks to the environment that organizations including the city are facing where there’s a heavy reliance placed on third party providers and vendors and how that might impact the control environment that the city has within itself. So these are two, I would say, or three key audits that I think are gonna deliver some very pragmatic and I would say highly valuable recommendations for the city staff as they move forward in their stage of evolution and maturity. Those are the three items we’ll want to report on in terms of briefing summary.
[53:24] Happy to take any questions through you Mr. Chair. Thank you, Mr. Rodriguez. And we’ll look to see if there’s any questions from committee on this one. Councilor Pribble. Actually, no questions actually on this one, but there’s one thing I don’t know procedure-wise. I did the previous one, which we have already accepted. We skipped from the dashboard, but we never, I thought the next one is gonna be open management action plans. And I know we already passed it, but I don’t know if there is a way to come back to it if I have a question to it. Sorry, Councilor Pribble, if we can just hear from Ms. Livingston briefly.
[54:05] Mr. Chair, if we need to go back, that’s fine. The staff that were here for that item have now left. If I need to call them back, I just need to know what areas we’re looking at and bring staff back. So to check to the staff, it was just really just the clarification of the KPI, the 0.1 key performance indicators. And if it is, I can fill up later, but as I said, I thought that the gentleman talked about dashboard and I thought the next one is gonna be action plans and we skipped into the 4.5. So hearing already, Councilor Pribble, that you can follow up individually and as we do have those contacts and because this has already been approved by committee, I would suggest that we do that follow up offline through the appropriate contacts and get the answers for you there.
[54:55] That’s perfectly fine, thank you. Okay, thank you. So any questions on 4.5 as Mr. Rodriguez just walked us through? Seeing none, then I’m gonna look for a motion to receive. Move by Councilor Pribble, seconded by Councilor Cuddy. All those in favor? That motion carries. Thank you, colleagues. We have one item left on our agenda. 4.6 is the submission and we will be going to Mr. Rodriguez. Again, this is the value for money audit of the neighborhood decision-making program. And Mr. Rodriguez, did you wanna give us a quick overview of this one as well?
[55:31] Yes, thank you, Mr. Chair. I will actually ask Deepak at this point to give the high-level overview and then obviously they’ll have any questions or comments that the committee might have. Thank you, Mr. Chair, and thank you, Jeff. Just to provide a quick overview of the program itself. The NDM program offers community members the opportunity to decide how to allocate a portion of the municipal budget in their respective neighborhoods and enables residents to work with the local government to make key decisions around strengthening their neighborhoods. The annual pre-approved budget for the program is 250,000 with 50,000 allocated to five specific geographic regions across the city.
[56:10] And any one project has a maximum spend of up to 30,000. The audio objective of this review was to look at the design and operating effectiveness of key controls pertaining to the program, including submission, evaluation, and approval of projects, as well as return on investment, measuring outputs and outcomes, and to identify opportunities to optimize and expand the scope of the program where practical. In terms of the audit scope, we looked at existing government structures and roles and responsibilities of stakeholders within the program. We looked at existing policies, process documentations and procedures that was supporting the administration of the program.
[56:47] We looked to evaluate key controls around ideas, submission, evaluation, and approval. And we looked to assess the effectiveness and completeness of any evaluations performed on the feasibility of ideas submitted by residents and obviously to identify opportunities for improvement at a very high level based on a review. It’s clear that the city recognizes the importance of performing its duty in continuing to develop and improve the program and supporting residents to live in a better place. The program adhered to the key established tasks and procedures from idea receipt to implementation. And we did understand and confirmed that there are established processes in place to support the effective administration of the program.
[57:27] One of the key takeaways was that the parties involved in the administration of the program have strongly experienced expertise and institutional knowledge, as they’ve been involved in the administration of the program for the last few years. In terms of some of the key opportunities for improvement, there were opportunities to update some of the guiding principles which underpin the program, also referred to as the FAQs. Tracking the effectiveness of implemented ideas was another component, as well as documenting key idea feasibility approvals and considering potential lifetime maintenance costs when determining feasibility.
[58:01] Across the audit, we noted 11 observations that could enhance the program. Nine of these were deemed to be medium rated observations. And two, we classified as low, which really means leading practice and the opportunity for management to consider these to enhance the program. Now, I appreciate this was quite a long report. So we’d like to take the report as read, and we’re happy to take any questions that may arise from the report itself. Well, thank you for that. And I will say, while it might have been a long report, I certainly appreciated it. This has personally been a program that I’ve taken some interest in.
[58:35] And I’ve seen a couple of the things highlighted in the report that were areas of interest for me personally. So I’m glad to see that somebody else is thinking along the same lines as me in this vein, but I’m going to look to committee to see if there’s any questions or comments on this report. Councilor Pribble, and colleagues, I will share that Ms. Smith is on the call from city staff as well. So if we have questions for our staff, they are here as well. So the chair, I just have a question.
[59:08] When I look at this, how these, in terms of today, better decision-making programs, the value, how they may fit with the sequences for the Parks and Recreation Master Plan. If this was valued and looking for the value for the dollar, thank you. Well, I think that is one that Ms. Smith may or Ms. Pollock may want to comment on in terms of how this fits with the Parks and Recreation Master Plan. So we’ll look to Ms. Smith first. Thank you, enter the chair. So as part of the feasibility for each of the ideas, so when a resident generates an idea and submits it as part of consideration for neighbor decision-making, we go to key expert in all of our service areas.
[59:51] And in one of those areas is our Parks and Forestry and Parks and Planning Department. And at that time, they look at how the project aligns with, for example, the Parks and Recreation Master Plan or any other strategic plans they have. No different than any other service area. We would see how the lines with, are we going to be going into that park and doing major enhancements in the coming years? Can we leverage those enhancements with this idea? So it’s all taken into account as part of the feasibility process for each idea. Thank you, Ms. Smith.
[1:00:22] Councilor Preble, you’re good. Any other questions or comments from committee members? I’m seeing none. Since our Vice Chair is not with us, if committee will just indulge a comment from the chair and certainly Councilor Preble, I’d invite you to come out toward too, anytime you would like. The process that Ms. Smith was just outlining was one that was actually undertaken in a neighborhood decision-making project in Kiwanis Park where a winning idea actually did align with something that we were already going to be looking into in our Parks and Rec Master Plan.
[1:00:58] And so those two were merged into a greater enhancement in the naturalized playground area in Kiwanis Park. And that was a great idea submitted by a resident that aligned with the Parks and Rec Master Plan as well. So we were able to bring those together. So I can certainly speak from experience to share that there is an example of that out in the East End. And it’s a great play opportunity. The Mayor came and pushed me on the swing when we opened the playground. And I’m happy to push you on the swing if you want to come for a ride too. So I’m not seeing any other questions or comments on this item.
[1:01:36] So this is one that we need to both receive and approve. So I’ll look for a motion to receive and approve. It’s moved by Councilor Cuddy and seconded by Councilor Preble. And we’ll call the vote, all those in favor. I’m actually curious. Thank you colleagues. And thank you to our auditors both from MNP and from KPMG for helping us get through our first audit committee meeting, as well as of course our city staff who are here to support us as well. So thank you everyone. All we have left to do now is get a motion to adjourn.
[1:02:12] Councilor Cuddy and I’ll second that myself ‘cause I’m looking forward to adjourning as well. And all those in favor? Motion carries. Thank you everyone. And we’ll see you next quarter. Thank you everyone. Thank you.