Open Council

2nd Meeting of the Audit Committee

Open Council

2nd Meeting of the Audit Committee

June 19, 2024, at 12:00 PM

Original link

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   2023 Financial Audit

2024-06-19 Staff Report - 2023 Financial Report

Upon general consent with no objection being raised, pursuant to section 36.3 of the Council Procedure By-law, KPMG was permitted to speak an additional ten (10) minutes with respect to this matter.

Moved by P. Cuddy

Seconded by S. Stevenson

Upon general consent with no objection being raised, pursuant to section 36.3 of the Council Procedure By-law, KPMG was permitted to speak an additional ten (10) minutes with respect to this matter.

That, the following actions be taken with respect to the 2023 Financial Audit:

a) the 2023 Financial Report of The Corporation of the City of London BE RECEIVED; it being noted that the Audit Committee received a presentation from the Director, Financial Services with respect to this matter; and

b) the Audit Findings Report as prepared by KPMG for the year ending December 31, 2023, BE RECEIVED; it being noted that the Audit Committee received a presentation from KPMG with respect to this matter.

Motion Passed

4.1.a   Presentation - 2023 Consolidated Financial Report

2024-06-19 Presentation - 2023 Financial Statements Overview

4.1.b   Audit Findings Report for the Year Ended December 31, 2023 - KPMG

2024-06-19 Submission - Audit Findings-KPMG

4.2   Briefing Note from Internal Audit - MNP

2024-06-19 Submission - Briefing Note from Internal Audit

Moved by S. Stevenson

Seconded by P. Cuddy

That the communication from MNP, with respect to the briefing note from the internal auditor, BE RECEIVED.

Motion Passed

4.3   Emergency Management Program Review - MNP

2024-06-19 Submission - Emergency Management Review

Moved by S. Stevenson

Seconded by P. Cuddy

That the Internal Audit dated May 29, 2024 regarding the Emergency Management Program Review BE APPROVED.

Motion Passed

4.4   Internal Audit Follow Up Activities Dashboard - MNP

2024-06-19 Submission - Internal Audit Follow-Up Activities Dashboard

Moved by P. Cuddy

Seconded by S. Stevenson

That the communication from MNP, with respect to the internal audit follow up activities update dashboard, BE RECEIVED.

Motion Passed

5.   Deferred Matters/Additional Business

None.

6.   Adjournment

Moved by P. Cuddy

Seconded by S. Stevenson

That the meeting BE ADJOURNED.

Motion Passed

The meeting adjourned at 1:16 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, 38 minutes)

[23:10] Good morning, this is the second meeting of the audit committee. The city of London is situated on the traditional lands of the Nanashbek, Haudenosaunee, Linabwok, and Adewandran. We honor and respect the history, languages, and culture, the diverse indigenous people who call this territory home. The city of London is currently home to many First Nation, Métis, and Inuit today. As representatives of the people of the city of London, we are grateful to have the opportunity to work and live in this territory. For those joining us in chambers, I’m joined by Councillor Cuddy and Councillor Stevenson, which gives us quam, Councillor Pribble, and Chima, our absent today.

[23:49] The city of London is committed to making every effort to provide alternate formats and communication supports for meetings upon request. To make a request specific to this meeting, please contact accessibility@london.ca or 519-661-2489, extension 2425. I now turn to committee for disclosures of pecuniary interest. Seeing none, we have no consent, no scheduled items, but we do have four items for items for direction. The first one is 4.1, being the 2023 financial audit.

[24:25] We have a presentation. The presenters have joined us today asking for 15 minutes instead of the usual five. So just looking for general consent, okay? Seeing no objections, I will turn it over to Ms. Denmark from KPMG and her team. You have 15 minutes with some leeway in there for your presentation. And then after that, Q&A will start, which does not count towards your time. Welcome. - Okay, thank you very much for having us here. We’d like to walk you through the highlights of our audit findings report that has been provided to you. And I’m going to start on page four of that report, which is titled audit highlights.

[25:04] One thing I wanted to bring to your attention is that we have not made any changes since the audit planning report that we provided to you back in February. We do have some items to bring to your attention in terms of the new accounting standards that were required to be adopted this year, which we’ll go into a little bit more detail on. And no significant control deficiencies to know. So those are sort of the highlights of that slide. On the following slide, we’ve provided some information just on the use of technology within the audit. The reason we do that is just to inform you on how we currently use technology in the audit, expecting that that involvement may increase over the years to help us provide the most efficient and effective audit possible.

[25:51] On slide six is our status update. So as of the date that this report was prepared, we did have some items outstanding, but our audit is largely complete. There were some minor procedures outstanding in certain areas which we’ve listed here, as well as sort of the normal stuff that comes at the tail end of the audit. So those include our subsequent events procedures, finalizing the legal inquiry documentation that we received, tying out the final financial statements, having our conversations with you here today, obtaining evidence of the approval of the financial statements and the management representation letter that we have signed, and that gets signed at the date that we are ready to issue our auditor’s report.

[26:38] So if anything should change between now and that time that is significant in nature, we will circle back with this committee with that information. Moving on to page seven. This is where we talk about the risk of material misstatement due to fraud resulting from management override of controls. This was identified in our planning report, and this is a risk that we have to consider at all entities that we perform, at which we perform audits. There are certain procedures that we are required to perform as a result of this risk. We did perform those and we have no significant findings to note as a result of our testing.

[27:15] Moving on to the next page. One of the more significant areas was the implementation of the asset retirement obligation standard, which did result in a significant risk this year. The procedures were performed as indicated in our planning report and noted within this report. Some key areas to highlight are that the city has chosen not to discount the air reliability for asbestos and underground tank removals. This was due to the timeline for the retirement activities not being well defined, and just noting that we understand the city’s position, and this is also consistent with our understanding of what many other municipalities are doing as well.

[27:55] With respect to the landfill and these whole improvement liabilities, the city has chosen to discount these, and we’ve noted the discount rate used here, which is disclosed within the financial statements, and is consistent with the city’s other estimates that require discounting. For the landfill liability, prior to the implementation, this was calculated based on the usage percentage, for the actual waste that had been received. With the standard implementation, this resulted in a change where they were required to record the liability at 100% usage, which resulted in an increase of 4.2 million to the 2022 value that was reported in the prior year financial statements.

[28:35] With regards to the asbestos containing buildings, the city assessed these based on whether they were considered complex or non-complex. Through a testing of the complex buildings, KPG determined that the abatement costs for two of the five buildings, making up the average cost per square foot were incorrect. So as a result, the city’s aero was overstated by 1.8 million. Management has made the decision to correct this through fiscal 2022. So that has now been corrected within the financial statements. Noting that the city has appropriately reduced the air balances in the year by remediation that occurred during fiscal 2023, and no other issues being noted during the performance of the procedures noted.

[29:16] Also, just noting that in subsequent periods, it’s very important to have continued effective communication between facilities, management, and finance to ensure that this is being updated appropriately each year. Moving on to the implementation of financial instruments. This was an area that had an elevated risk, again, due to the implementation of the standard. The procedures performed were as indicated in our planning report, and again, as noted within our response, within our report. Some of the more significant areas have been noted within our significant findings, but just highlighting that the city elected to record investments, excluding JSCs at their value, and there were no other significant changes that were required for any of the remaining financial instruments identified.

[30:02] There was a new statement. The statement of every measurement gains and losses that has been included within the financial statements. The adoption of the standard was applied on a prospective basis, meaning that there was decreased the 2022 investment values of 38.4 million upon transition, which has been recorded through the statement of re-measurement gains or losses at the beginning of fiscal 2023. Noting that there were no issues identified during the performance of the procedures up to the date of this report, there are certain procedures relating to the valuation of investments that are still ongoing due to the more complex nature of auditing fair values.

[30:44] Okay, looking at pages 12 to 17, these pages go over the other areas where risks of material misstatement have been noted. I’m not gonna spend too much time on these pages. It’s there largely for your information. Essentially, each of these pages goes over the area that we’re looking at, whether or not we consider there to be an estimate associated with that area, and then our response, which outlines our procedures, similarly to what you would have seen in our audit planning presentation earlier this year. It just goes into a bit more detail. Based on the procedures that we performed, we did not have any findings with the exception of tangible capital assets or TCA.

[31:24] So I’m going to draw your attention to page 15. So similarly to the other areas, page 15 does go over our procedures, and it does note that through our testing, we did identify two misstatements within TCA. One of those is relating to an item classified as non-tangible capital assets for 1.7 million that should have been classified as tangible capital assets. And the second misstatement arose due to the procedures around ARO was noted that there was an asset that had not been recorded at the time of the TCA implementation back in 2008.

[32:03] So this was recorded during 2023. We did note that the accumulated amortization portion did not account for the fact that there are previous years of amortization to be accounted for, so that was corrected as a result of the audit in the current year. Again, both of these misstatements will be discussed further later in our presentation. Moving on to page 18. This slide goes over our standard communications regarding uncorrected misstatements and also provides you with a summary of the impact to the annual surplus relating to the uncorrected misstatement that was identified, and this can be seen on page 19.

[32:45] So this misstatement does relate to the last misstatement I just discussed, the asset that was recorded in 2023, but relates to a year prior that it was acquired. It’s essentially just the impact to income as a result of depreciation expense now being recorded in 2023 when it should have been recorded prior. Moving on to the next section. This is where we have some information on corrected misstatements. It does note that these are all included within the major representation letter in Appendix C.

[33:21] Just high level, there were the two TCA adjustments discussed by Emily that were corrected, and then there was also a reclassification from interest receivable to cash, as well as an adjustment to the restated 2022 balances relating to ARO. And just highlighting these were all corrected within the 2023 financial statements. Moving on to page 21. This provides some additional information relating to control deficiencies, and what would elevate a deficiency to a significant deficiency.

[33:54] As Katie noted, there were no significant deficiencies noted during the course of our audit. Page 22 provides information on some key areas relating to the accounting policies and practices. As previously discussed, there were new sampling accounting policies, mainly being the asset retirement obligation, as well as financial instruments and the additional standards that go along with that basically the suite of standards that go together. This resulted in some changes to certain disclosures within the financial statements, being note one, note two, which included additional information relating to the transitional adjustments, as well as note five, portfolio investments, and note 26 for additional disclosure relating to the financial instruments and risk management.

[34:39] So those have all been included and updated within the financial statements. Moving on to page 23. Just noting that there are no matters or concerns to report relating to the financial statement presentation or disclosure. And then on page 24, we’re confirming that we are independent of the city and its boards and commissions, which allows us to issue a cleaner and unmodified auditor’s report. And actually in appendix A, the next appendix, you can see a draft of the auditor’s report. I do wanna draw your attention to a couple of paragraphs which have been added there.

[35:15] So those would be the third, fourth, and fifth paragraphs, which are required simply because the financial statements were restated for the 2022 comparative information due to the adoption of the asset retirement obligation standard. So it just draws the reader to that information. The only other thing I would like to point out in the appendices is, forgive me while I find the right one, appendix D, which is the audit quality indicators. You may recall we brought this forward in our audit plan highlighting certain areas where we felt it was things that were critical to achieving audit quality.

[35:55] So just wanted to report back to the committee on those items and to let you know that we have no matters to report in that regard. The rest of the appendices are really for your information. And at this point, we are happy to take questions if anybody has them. Thank you. Thank you. That was 10 minutes and 47 seconds. Ish, let’s just call 11 for future reference. Thank you for your presentation.

[36:27] Looking to committee to see if there’s any questions. Once questions are concluded or at any time, you’re welcome to move in second emotion to receive 4.1 A and B for the 2023 financial audit. Councillor Cuddy. Well, before there’s any questions, Chair, I’d like to make a move that we received the information. Okay, so Councillor Cuddy will move it. Councillor Stevenson will second it. So it’s officially on the floor. Thank you and looking to see if there’s any further questions or comments. I will start with my speaker’s list with Councillor Stevenson. Thank you.

[37:01] I just have a couple of small questions. So on page 15, where it talks about the significant findings, there was the one asset that was classified as non-TCA for 1.7 million. So it was one particular asset item that made up that 1.7 million. I just wanted to confirm. To our presenters? Yes, that’s correct. Councillor? Yeah, just in a curiosity, can I ask what it was or where it was expensed to prior to being capitalized? Yep, Mr. Collins.

[37:35] Through the Chair to Committee, the 1.7 million relates to expropriated land. So it was through human error that it was coded to an expense and not capitalized the potential capital asset. As a result of this identification, we’re putting in more periodic controls to check and reconcile when those types of transactions occur to ensure that they will be accounted for correctly as part of our tangible capital assets related in Troy. Thank you.

[38:08] Councillor? Okay, thank you. Can I ask what expense account it ended up in? And 1.7 million, that’s a pretty big entry. Is there a review process? Like is there a second person required to sign off on those? You are correct. There is a second person that signs off on it. I think just given the nature of the transaction, it was unique. So based on the findings, we’ve implemented more periodic reviews more than just at your end, but throughout the year when those transactions do occur.

[38:44] Thanks, that’s great to hear. Can I ask what expense account it got misallocated to? All the further— - Mr. Collins, or? Oh, through the Chair, let me— Yeah, that could take a moment. Yeah, and it could be at a later time. I don’t need it on the spot if you don’t know. So thank you for that. And then the ARO process, which I’m not familiar with, but on page 22, it says that the adoption of the ARO standard required management to calculate the value.

[39:18] So I’m assuming that’s where the increase in the landfill came from. The 4 million was due, so we had an ARO before, but we just weren’t using the standard and the city chose to adopt the standard, is that correct? Sorry, and Councilor, did you, sorry, I missed your first part. Did you say you are familiar with ARO? Okay, so maybe if staff could take this opportunity, as I’m also a new Chair of this committee, just to describe what the asset retirement obligations are as an overview, and then, for we all come away with a nugget today, and then get into the Councilor’s question, please.

[39:52] Sure, so the, you are correct, the landfill obligation. There was always an obligation on the statement of financial positions for the city, but it previously fell under its own standard. So starting in 2023, the city was required to adopt PS3280, which is a separate standard relating to asset retirement obligations, and in doing that, the landfill standard in the public sector accounting standards got rolled into the asset retirement obligation standards. So it’s now included all as one liability. So the landfill piece of it was always there.

[40:28] What is new to the city is that they were, management was required to go through and identify any areas where there were additional legal obligations to remediate assets at the end of their useful life, and specifically scoped into this public sector standard is asbestos. So the biggest chunk of that liability relates to asbestos that management has identified in certain city-owned assets, and applied an estimated cost of remediation too. And so that’s why you’ll see the increase in that liability as well.

[41:04] Okay, would city staff like to comment anything on that as well? Yes, so through the chair to draw the committee’s attention to our financial statements, with the implementation of these five new standards, we took the opportunity to increase our note disclosure in our financial statement. So note two identifies all the changes in accounting policies. And to your question about PS3280, the asset retirement obligation, we walk through the pluses and minuses related to that 2022 or statement.

[41:36] And to your question about the landfill closure and post closure liability, you will see that last year it would have been identified on our financial statements as 54 million, 166,000. We’ve reduced it by 54 million, but now we’re recognizing it as part of the asset retirement obligation. So you can see the ins and the outs. And throughout our financial statements for 2023, a lot of the new standards we’ve disclosed what has occurred and the approach taken for that. Thank you.

[42:09] Thank you, Councillor. Thank you and through the chair. Thank you for that. I’m gonna look at that later. And so if I understand then that asbestos is new this year and there’s five buildings that we did that calculation and that was all done in the current year. To staff for confirmation? Yes, we reviewed all buildings under the city’s portfolio. And it also incorporated ‘cause it’s consolidated some of our boards and commissions. So there was a number of buildings that were assessed and we assigned what would have been the estimate to mediate that liability and that did make up part of that aerial obligation in our financial statements.

[42:57] And if you were to refer to note 13 in the notes of the financial statements, you’ll see the breakdown of that asset retirement obligation and we have a continuity schedule both for the year 2023 and for 2022 and that breaks down the landfill closure. The asbestos removal, the removal of underground fuel and storage tanks and any clauses that are in any of our lease buildings where there is a obligation to return that building to when it was received by the city.

[43:34] Thank you. If you could just clarify Mr. Collins, you’re mentioned the ARO and the asbestos mitigation, the five buildings were those the city, five city buildings and our ABC buildings that may or may not have asbestos part of that. Just looking for clarification. There’s more than five buildings. We looked at 240 buildings that are suspected to contain asbestos material of which 128 buildings at this time were not fully amortized. That disclosure is on note 13B under asbestos removal where there was a full review of buildings which included not just city proper, but as part of the ARO obligations reported through our boards and commissions.

[44:24] For example, London Middlesex Community Housing Corporation. Thank you. I’ll dig in more into that later. Councillor Stevenson. Thank you, just a couple more on this and then I’ll let my colleagues in here. So on this asbestos removal then, are we only looking at the retirement obligation if there is net book value? So if it’s already, ‘cause it refers to a hundred and you know, it looks like there was a 120-ish that were fully amortized if 128 were not. Stop.

[44:58] Yes, you are correct. But we did the analysis for all the buildings to ensure that those buildings were that no longer had a net book value in the county perspective. Councillor? So just curious like, so it’s an impairment of the building, I guess is the way we’re looking at it. But if we don’t have, if there’s no asset values, they’re not still a liability to potentially clean that up. I’m just wondering why we would only look at the ones that had a remaining net book value. We looked at it from the financial reporting end.

[45:32] And as we looked at all the buildings, we established that what the asset retirement obligation would be given that a lot of that net book value was already appreciated. There’d be nothing to go against. Would KPMG had anything to add of assistance or clarification for our knowledge? Yes, sorry. Yes, I can add on the liability side of things, the liability assessment was done, as Mr. Collins mentioned on all of the buildings.

[46:09] So the liability side is complete in terms of expected future payouts. On the way that the actual transaction works is it, the debit side of it is actually added to the cost of the building. So where there was no net book value to the building, then it has a different treatment. Thank you for that. Okay, thank you, that’s very helpful. And I wanted to confirm that the liability was fully noted there, so that’s good. So the only last thing is then, when it refers to two of five had the wrong calculation for square foot, did you test five then and two of them were incorrect?

[46:51] KPMG please. That’s correct. So we did a very full some analysis when it comes to the actual scoping of the assets and to ensure that the buildings that were being looked at was all of the buildings that should be within the scope. And then when it came to actually looking at the costing and testing the costing of the assets, we did look at the five largest. Sorry, the five largest liabilities on the buildings as that provided a significant amount of coverage over the entire balance.

[47:27] When the error was identified, it related to a number of buildings beyond just the ones that we tested. So looking at that correction, it was applied not just to the two, or it wasn’t just applied to the items that we selected for testing. It was applied to the entire population to fully quantify and correct them a statement. Thank you. Councilor Stevenson? Thank you, that’s good to hear too. So that’s, but all of these calculations were done in this year because of the standard. So would it not be the same amount per square foot for all the buildings that we did or were there different square footages depending on the building type?

[48:10] The appropriate respondent? It varied based on the building. We looked at each individual and the characteristics of that building to come up with the square footage and then applied based on whether it’s a complex building or non-complex building, what that square footage rate would be. And it was through the complex calculation that it was identified that our square footage was higher than it should have been. It was a calculating error, thank you. Could you clarify what complex means, Mr. Collins? I’ll see if I can love the two.

[48:49] Or to staff, are you doing like complexes in like multi-units, complexes? There’s a lot of stuff going on in that building. Just the complex buildings would be more industrial buildings in nature such as City Hall that might have a lot of things such as an HVAC unit that will have multiple useful lives that are all wrapped up in a single asset. The non-complex buildings are mostly derived from single family homes that will not have all of the different assets such as HVAC to have to deal with as well.

[49:39] Thank you, Councillor Stevenson. Okay, Councillor Stevenson’s questions have concluded at the moment. Councillor Cuddy, is there anything you have on your mind that hasn’t been answered? Okay, that took care of the rest of my questions. Is there anything that staff or KPMG would like to add as this before I call the question for our bond? I will just, through the chair, I’ll just acknowledge that Mr. Collins also included a presentation from the staff that we normally do. That was part of your 4.1.

[50:11] So I’m assuming there aren’t any other further questions. Those just kind of go supplement. That includes our annual reconciliation between the financial statements and the budget which is a really important part of the presentation that we do every year to be able to reconcile between the budgets and how the financial statements are different. So just wanted to draw attention to that. And if there were any further questions for the audience. Would you like to do a presentation on it? Not if, so certainly we’d be happy to do it. It is in your packages. If that’s something that everybody’s comfortable with, we don’t need to do so.

[50:45] Please proceed with your presentation. I’m not sure if you want us to follow up the slide deck or if you want to use the… It’s in your agenda. So if you’re all good to follow along, I’ll pass it over to Mr. Collins just to walk you through it very quickly in case you just have any questions. But I think it’s just a helpful compliment in terms of understanding the financial statement. So is this the 2023 Consolidated Financial Report that’s 15 pages? Yes. Okay, so that’s the one we’re looking for. It is in your binder, it’s the pretty colored one and it’s also attached to the slide deck in eScribe being 4.18.

[51:23] If you just want to follow along, floor is yours. Thank you, Chair. Just to walk you through the 15 pages and not spend too much time on each slide, just want to draw your attention to some key slides for your benefit. If you turn, the biggest slide that tries to encapsulate 539 pages that were provided to audit committee is found on page five of your agenda. And that really talks about the 2023 Financial Statements before you. The biggest thing as KPMG identified was for 2023, we had to incorporate five new accounting standards which provided for additional note disclosure as well as a restayment for 2022, which through those notes we’ve identified what accounts were restated, which was predominantly due to the asset retirement obligation as teased out earlier in our presentation or commentary from KPMG.

[52:21] The other item that we wanted to acknowledge was that there were adjustments that were required through the audit, which highlighted the classification of our high interest savings account, on our statement of financial position. We had it identified as a receivable. It was pointed out to us based on review of our agreement with Scotia that it’s better classified as cash. There was a little conversation going on about the holding provision of that revenue. So we settled on it being cash, so we had to make that restatement as KPMG acknowledged.

[52:59] The other item was the correct accounting for a parcel of land, the 1.7 million that was expropriated. And while we were filling the other questions, I was advised that we accounted for that land or expense to another purchase service account, attributed to roadways ‘cause that land was acquired for roadway, so it was expense to a roadway, expense operating expense. But it has been corrected as acknowledged by KPMG. And finally, what was identified was the recognition of a tangible capital asset, which was the South London Community Pool. It wasn’t recognized back in 2009 when the city was required to report on tangible capital assets.

[53:38] It was a little bit of a complex asset as it was a shared facility with the school board, where the school board owns 100% of the land, it owned 100% of the school building. So it was understandable why it was a little, it was an oversight back in 2009, but we have since corrected it and corrected the appropriate netbook value for it as KPMG alluded to. The following slides, page five just goes through the amount of changes that we’ve made to our notes and all the new accounting standards that we’ve implemented through our 2023 financial statements, just running through them, the financial statement presentation, as KPMG alluded, we have a new statement of re-measurement gains and losses included in our financials.

[54:27] So we’ve gone from four statements that have been historically reported to committee and to the community to now five, increasing transparency and what our holdings are and investments in terms of the fair value. The other items relate to financial instruments for concurrency translation and the big one being the asset retirement obligation. The endeavor to implement the standards started back in 2022. So there was a lot of effort undertaken by your finance team in concert with our peers within the province of Ontario, along with our boards and commissions to ensure that we are all able to meet the 2023 financial statement reporting timeframe.

[55:13] From there, I just wanna draw your attention to page nine, which is just an overview of our finances at the city, which would be the statement of financial position. Our financial assets overall increased $131.9 million over 2022, and that’s mainly due to our increased holdings and cash and accounts receivable. That was slightly offset by an increase in our financial liabilities. 52.6 million changed from 2022, and that relates to our deferred revenue and the development charges collected, which led for a net financial asset increase of 79.4 million in 2023.

[55:59] Further, overall, our non-financial assets or our tangible capital assets increased by $197 million in 2023. In totality, our accumulated surplus at the city of London consolidated for 2023 increased by 276.4 million. Page 10 highlights some of the notable capital projects that were capitalized in 2022. Draw your attention to the East London link, phase one, the downtown loop, 18.3 million.

[56:38] A lot of water main cleaning and relining occurred in 2023, as well as there was $44.1 million in assets contributed by developers. On that slide, you can see the amount of lane kilometers and water pipe and storm sewer pipe that we recognized in our financial statements that made up our tangible capital assets. Following that page, we do provide a five-year review of highlights of how things are looking.

[57:14] We highlight what our tax rears are looking like, what our total long-term debt is, and that principal repayments. So for tax rears, for 2023, our tax rears were up 4.7%, historically for the past five years, on average, it’s been 4.1%, while 4.7% seems high. Looking back at the period between 2011 and 2015, our tax rears on average were 5.5%. So it was below what we see in 2023, noting that in both the years 2013 and 2011, tax rears were 5.7%.

[57:54] So while it is higher than our current five-year average, it’s not the highest that it’s been over the past 10, 20 years. Our long-term debt is down, $200 million on average, it’s been $249 million. Our debt principal payments are down. The amount of debt issued is down. Tangible capital asset additions, recognizing council’s investment in our infrastructure is up 513 million, and our annual surplus is $279 million, which is consistent with our five-year average of $281 million.

[58:30] And finally, assessment growth, we can see that 0.23 was a significant year at 1.82% in comparison to our prior years on average of 1.64%. The next couple of slides in your agenda would just compare budgets to actuals and identify where some of the variances were found and identified. And these variances are consistent with what was reported to council back in April, as part of our operating budget monitoring status report, where we have seen an increase in investment income due to the increasing rates.

[59:12] Greater user-free revenue driven from water and wastewater charges based on consumption, not on the rate, but based on consumption. And we also noted that in transportation services through the Commission on London Transit, they had greater ridership than what was anticipated in 2020, which contributed to the favorable variance in revenues. On expenses, our expenses were lower than what was anticipated. And as identified back in April, there was some delays in various programs, green bins, as well as our annual expense for tax appeals was significantly lower in 2023 than in years past, mainly attributed to the delay in provincial reassessment.

[59:54] We’re going off of current value assessments that were done in 2016, but right now in 2023. So a lot of the appeals for those values have probably been done, so we didn’t see too many appeals come through and back. As moving to the next slide, Ms. Berbon spoke about, the budget and the budget reconciliation. So we just highlighted the differences between the modified cash basis budget that Council is familiar with when they approve the multi-year budget and what the adjustments that the city makes to get to the full accrual basis PSAP budget.

[1:00:34] For the benefit of the committee, the city uses the modified accrual basis budget for budgeting because it’s the most accurate way of determining how much taxation needs to be levied in any one year. It’s a cash requirement that determines what the tax rate is and what the tax rate increase may be required. The full accrual basis that you see in your financial statements of accounting is includes expenses that do not need to be financed or have a tax levy domino. So we’re talking about the amortization expense. We don’t budget for that, but it’s identified in our statement of operations.

[1:01:09] Debt principle repayments. It’s not expensed in our financial statements, as well as contributions to capital reserve funds. They’re not expense. They fall out through the accumulated surplus and the revenue recognition associated with tangible capital assets. So the big slide which we’ve shown historically is the reconciliation of what is reported through our 23 operating budget surplus report where in 2023 we reported 31 million and how we got to the 279.5 million surplus that’s reported in our consolidated financial statements where we show the ins and outs of the transfers to and from capital reserve funds, the amortization expense and principal repayments.

[1:01:58] So that as Ms. Barboon identified, we do that reconciliation. Further, that reconciliation is incorporated in your financial statements and in your financial report goes out. Moving forward, we look forward to implementing a couple of new standards for 2024, which would be revenue recognition, PS3, 400, as well as determining PS3,160 about any public-private partnerships that the city may have entered into.

[1:02:31] And finally, we’re monitoring the evolution on the reporting of sustainability within our financial statements. We have seen that the task force of climate-related financial disclosures have come up with some recommendations. Further, we also know that the international financial reporting standards have come out and we also know that within Canada, there’s the Canadian Sustainability Standards Board that is looking at identifying a couple of requirements for reporting within our financial statements where some attention may be required in the not too distant future.

[1:03:06] So we’d like to draw that attention to committee and to council that this could be coming. And finally, last but not least, we’re concluded with a big thanks as extended to all civic service areas. You contributed to the financial statements as well as our boards and commissions who there are about 20 entities that consolidate within the city’s financial report before you and they each have their financial statements and the requirements that they have to report through their boards as well as go through the audit with KPMG so it does take time.

[1:03:40] And we were all working through this journey on the inclusion of these five new standards together and we did it. So KPMG has already presented their audit finance report. So what’s left would be counsel to approve our Contality Financial Statements on June 25th and then the final version of our financial report will be made available to the public later on in July. Thank you. Thank you and apologies that we broke in KPMG first before your presentation, but I didn’t time you. So that was my apology.

[1:04:14] I do have one question from it, but going to committee first, I’ll start with Councillor Stevenson. Thanks, I have just two quick questions and a thank you too for all the work you guys do. Some are officially begins, right? For you guys, when this is approved and five new standards and then it sounds like nothing more exciting, right? Then upcoming changes that you don’t know about yet. So I just have two questions on that and thank you for the presentation and for mentioning that ‘cause it was really helpful. On page eight, it talks about the non-financial assets increased by 197 million and then the accumulated surplus increased and both of them say the majority of it was comprised of 190 million in net book value of tangible capital assets.

[1:05:06] And I’m just wondering if you can just explain how the other side of the increase in tangible assets is an increase in surplus or am I misunderstanding that? Mr. Collins. - Through the chair to committee, of the 197 million, as pointed out, 190 million relates to the net book value and tangible capital assets, but we also incorporate our inventories of supplies as well as any prepaid expenses goes into that. So you had seen, part of that 197 is an increase of just about a million dollars in our inventory for supplies that we recognize as a non-financial asset as well as on any prepaid expenses that we may have out there that increased by about six million dollars.

[1:05:50] Councilor? Thank you, I might be misunderstanding that. Was it maybe a, and it might not even matter, I’ll follow up later. So the other question is on page 13, that transfers to from capital and reserve and reserve funds is 302.6 million. That is, from my calculation here, about 23% of the revenue. And there’s a lot of talk these days about the amount that goes into reserve funds.

[1:06:23] And you know, when people see a surplus of 280 million. And I understand that we put it into the reserve funds so that when we show the reporting, that’s not what we tell the public. And then here we’ve got the reconciliation to financials. But is there anything that staff might wanna share in terms of why there’s such a large amount allocated to reserve funds? And I’m assuming that’s consistent across most municipalities. But if people were to say, hey, 23% is going off to reserves, we had a big property tax increase.

[1:06:58] Anything you’d wanna share to help explain that? So Mr. Collins or Ms. Barbong? Sorry, for the chair to committee, with respect to our contributions to reserve funds, they’re informed through various plans, such as the asset management plan or the corporate asset management plan. Further, at the past corporate services committee, civic administration presented the annual monitoring of capital reserve funds and housekeeping adjustments to identify what those funds, what we’ve contributed and what they’re going towards.

[1:07:36] So our contributions are informed by the capital plan that council approves through the multi-year budget, as well as our share of any commitments that we have on other infrastructure work too. So there are plans associated with those contributions and they’re drawn down throughout the year to provide for work such as capital infrastructure or buildings or whatnot that come through. Mr. Stevenson?

[1:08:09] Thanks and thank you all for the presentation today. Thank you. I just had one question in regards to slide 10. In regards to the tax arrears, realizing it is down from other levels that it was at being 4.7% currently. Do you know what the monetary value is that would be assigned to that? Through the chair to committee, for 2023, the monetary value for taxes receivable was 41,764,023.

[1:08:51] When you look at your financial report on page 42, those five year amounts are disclosed and identified along with the prior four years too. So you would have some continuity between 23 all the way through 2019 to see that dollar amount and what that change was. Thank you. If someone is an extreme arrears, is there ever a point or a threshold that set the city would expropriate the land or look at that process to regain money that was due?

[1:09:27] Realizing this isn’t just residential arrears. There is commercial and industrials as well out there. So just looking to see about the policy that would pertain to that. There is a mechanism where we would look towards a tax sale after a number of efforts to try to recoup those costs. And that’s followed up and prescribed through legislation. And unfortunately, there are instances where a tax sale may be acquired, but it’s after a number of conversations or communications with the property owner.

[1:10:07] And I assume staff follows that and something’s triggered like anything through by law. I would come to us, we don’t need to request it. But as you’re monitoring it, that you’d hit a threshold and then inform council. Thank you. The legislation on tax rears is what we would follow. And so our procedures tie specifically into the legislation. So certainly we go to the extreme efforts to try to collect prior to listing a property through the tax sale, but certainly as they’re there, we try and make every effort to work with the property owner to have collection so that we don’t need to take that next step.

[1:10:44] Thank you for that. Looking to committee, see if there’s any further questions. Seeing none, I will just make comment on one other item. It was mentioned about the finance team and looking forward to summer. I believe summer is an urban legend for the finance team as they spend our summer with me getting ready for the annual budget update and the new working group looking for efficiencies and savings. So I know it sounds good and they get their summer with me and we get to be together. So it’ll still be a good summer. So it has been moved and seconded for receipt of items A and B for 4.1, seeing no further questions and chambers with me.

[1:11:21] It’s gonna be a hand vote of all in favor of receipt of those two items in the presentations. Motion carries. Thank you. That concludes item 4.1. So to KPMG, thank you for being here with us today. Look forward to the next financial update and report of this committee or any of the ABCs we seem to see you at. So thank you and enjoy your day. That moves us on to 4.2. I will just note that MNP is with us virtually online today. They can give a brief overview as they will. I might suggest, okay, we can go through these one at a time.

[1:12:02] I will note that item 4.2 is gonna be for receipt. Item 4.3, the recommendations for approval. And item 4.4 will also be for receipt. So I will turn it over to our guests online. The floor is yours. Thank you. - Thank you. Chair, sorry, I froze there for a second. That’s okay, but we can hear you perfectly. Okay, wonderful. Thank you. Sorry, Zoom issues. So thank you for that introduction. I just wanna go over briefly the three items. 4.2, 4.3 and 4.4.

[1:12:38] 4.2 comprises a briefing note that highlights progress that is currently underway with regards to three audits that are part of the audit plan. We are in the reporting phase of two audits and in the initial planning and launch phase with regards to a third. Item 4.3 is the report, the output of an audit that was conducted on the emergency management program. And if there are any specific items that I would just put to the committee, if there are any specific items that you wanna delve into specifically with that, we would love to go over them with you.

[1:13:12] And then what 4.4 comprises is essentially an update on the audit activities, the follow-up activities after an audit is completed. So again, for the committee and you’d be familiar with this, but after something, after an audit is committee, there can be recommendations and management responses that are part of that. We look to track those and provide you with an update on how things are progressing. The main takeaway I would provide to the committee with regards to the dashboard is that most items are on track. However, you will note that there are items specifically related to a vendor management audit that was conducted that you will note have been delayed.

[1:13:48] They have essentially the targets have been revised with regards to certain actions. And that was due to some adjustments that needed to be made with regards to looking to update a process with regards to certain actions and tools that were looking to be developed. Management acknowledges that and some of those targets have been revised. So that essentially summarizes those three items. So I’ll just pass it back to you, Madam Chair, if there are any specific items or questions that you wanted to go through. Okay, well, I would suggest we start with 4.2 and knock them off individually as we go.

[1:14:23] So 4.2 was the briefing note for the internal audit for NMP and within the report, it recognizes that this audit report would be presented the next audit committee meeting when we’re back on September 18th. So looking for a mover and a seconder to put that on the floor for receipt, moved by Councillor Stevenson, seconded by Councillor Cuddy, looking to see if there’s any questions on regards to the one-page briefing note. Seeing none in chambers, calling the question a hand vote of all in favor. Motion, motion carries. Thank you, that would be 4.3 now the emergency management program review, which was the 15 page internal audit contained within it.

[1:15:01] Looking to see if you would prefer that MNP do a brief, a more in-depth overview than what they just said, or if you would like to get right into questions. So to MNP, looking for a brief overview of just item 4.3, being the 15 repaged report for the internal audit. Awesome, so with me is my colleague, Cliff Trollop. He’s a partner in our firm, the Specialized and Emergency Management, he led the audit. So I’d just like to introduce him and then pass him over to do a brief summary of the outcomes of that audit.

[1:15:38] Yes, thank you. The brief summary of the review of your emergency management program as stated in the report is overall, it’s a very strong program. When we look at the maturity of your emergency management program and the bits and pieces that are tying it together, it is very strong as any emergency management program goes and especially with a large municipality. So it is in good shape. The rankings in the report and with the review were by maturity, there’s only two areas that were rated as medium maturity.

[1:16:18] They’re not high risk. They’re work that was already underway by our emergency management leadership team. And they’re really just items to increase the maturity in those two areas. But overall, it’s a very strong program and the other sort of key kind of recommendation besides addressing the two medium ones and probably, if I were to rank them in terms of recommendations, the most important is to just keep the foot on the pedal and keep doing what the city does.

[1:16:51] It’s a good program. There’s a great culture. The investment is correct. The expectations of the emergency management partners throughout the city remains high because it’s a good program. You’re the focal point for emergency management in the city, which is what a municipality would like to see. And clarity surpassed the requirements dictated by the province of Ontario. You’re actually beyond that. And it’s a high functioning program. And I’ll take any questions if there are.

[1:17:25] Okay. I’ll also highlight for committee that Mr. Lode curve from our internal emergency management here is today. Did you wanna add anything to before we get into our questions? Sure, Madam Chair, I’d just like to thank M&P for the audit. A lot of the results of the audit confirmed the direction that we are already adding within the program. So it will certainly be our focal point as we move forward and keep on that same path. So I’d just like to reiterate, thank you to M&P for that.

[1:18:00] Thank you. I will make a comment at the end, but looking to committee for questions or comments in the interim, Councillor Stevenson. Just a congratulations to the team. That’s a great report to read. So thank you on behalf of the city. My comment would just be, thank you for the report. And thank you to the leadership in the city as they’re the ones who put in the work to generate such a report. When we’re looked at, I will just say that I did spend time last week at the EOCs, the Emergency Operation Center, and to take an IMS level 200 class.

[1:18:35] Sometimes people leave me in charge of the city when they leave. And it did have a really great representation across sectors. It was EMS, fire and police like you’d expect, but also the health unit school board and some other representatives within that space, just making sure we’re all on the same page for a community response. So excellent work in across partner leadership throughout the city. So for anyone who participates in emergency management and just thank you. Looking to see if there’s any other comments. Okay, so this one’s for approval.

[1:19:14] So moving in a second of item 4.3, moved by Councillor Stevenson, seconded by Councillor Cuddy, also a hand vote of all in favor of approval. That motion carries. Thank you, that brings us to item 4.4, being the internal audit follow-up activities dashboard, also by NMP. And this was the six page document within your agenda. Looking to see if MMP, you’d dimension some on track to later in critical status legends within your report, if you want just to give a moment or two overview of the key findings.

[1:19:53] And then I’ll open up for Q&A of committee members. Thank you, Ben Chair. So, and again, just for an overview of this one again, just as something is managed, we set a target as far as a management response and we look to track those. So the way things that are essentially looking as I was highlighting, most items are on track, but if you do refer down to the vendor risk management audit that was conducted, there were several items that were targeted for completion of Q3 2024.

[1:20:29] Those within this last update have been revised for a Q1 2025 completion. So again, just in recognition from management, as you can see within the quarterly update there on the last column, there was a business case that was put forward that was not included within the current multi-year budget. And therefore, the management is taking on that that action themselves. So there’s just a little bit more time that is required essentially to close off those items. So again, they have been retargeted in order to make sure that there’s the appropriate time in order to conclude those.

[1:21:10] And that would essentially be the only delta to the targets that were set up. They’re all actually tied together with regards to an overall project that was looking to be done in order to close off those management items. So with the delay in that, it’s impacting a few of the different items. Thank you for that. I will go to Mr. Collins or Ms. Barbona as it did tie into the MYB in business case P73. That was not funded. You know, there’s always another business update, budget update coming.

[1:21:41] But if you just want to give a brief comment on how that’s changed the work that you now need to do internally in the timeline. Through the chair and the committee, through our procurement area, we’ve been working with a third party consultant to help us update and revise our purchasing procurement and goods and services policy. Embedded in that would be the vendor management. Now, given the budget that did not go forward, we’re gonna look at scaling that vendor management program as recommended by M&P based on thresholds.

[1:22:20] So we now have to work with the third party consultant to kind of figure out, okay, what can be achievable within our existing resources given the circumstances to help move to that more centralized model from a very decentralized model. So we’re right now endeavoring to figure, okay, what this now means to the work going forward. Thank you. I would need a mover and a seconder for receipt of item 4.4, moved by Councillor Cudi, seconded by Councillor Stevenson, and looking for questions or comments from committee, I will start with Councillor Stevenson.

[1:22:55] Thank you. I was disappointed this did not get funded in the multi-year budget. And is there, is that possibly coming to us again on an annual update? Ms. Barboon. Thank you through the chair. Certainly is a civic administration put that forward for council’s consideration. It was not included in the mayor’s budget and then subsequently there was no amendment to include it. So because the first multi-year budget was created without it, civic administration would not be bringing that forward again, noting that the budget has passed and put forward.

[1:23:30] Certainly through the amendment process at any point, any item could be added to the budget, but given the pressures that are included and the desire I think for the council to see that number come down as opposed to added, certainly we’re not anticipating to put that forward. It was council’s decision, the budget has been approved and we will work within the existing resources and try to identify to the extent that we can, what is possible to try to move it forward. It will certainly not happen as quickly as we had envisioned but we will do our best within resources to at least create a model that will improve and with the goal of continuous improvement beyond what we have today.

[1:24:15] Thank you. I would always say that it’s also the mayor’s budget he’s tabling, you can champion directly with the mayor. You believe it should be in there to see if he’ll include it and throughout the annual update process that councilor could try and get it in at that point. I would also say that if this turned critical and staff identified a glaring exposure of the corporation that they would trigger something and bring it if it hit that tipping point, councilor. Thank you and yes, I’m not looking to increase the property tax rate either, but it gets to be, but this is a high, I mean, it’s identified as a high risk rating, there were several medium risk ratings on here.

[1:24:54] It was a great, it was a great internal audit report. Thank you very much, but it was also very, I’m not even sure what the word is, but there was feedback for us and in a growing city where we are spending a lot of money on various different things. There’s a lot of dollar exposure there in terms of ensuring that Londoners get vendor management. It’s pretty important and it was identified as a high risk item.

[1:25:28] So one of the questions too is at what point does it become an audit risk issue potentially? I’m looking for some rationale potentially to see like how big of a priority should this be for council from those who know best in terms of it being responsible for procurement and doing the audit. Is there any guidance for council in terms of how much we should be prioritizing this, what it could be costing us to not make that priority?

[1:26:04] I’d rather not wait until there’s like something comes in. Okay, I will start with our staff for reply and then can go to MNP. Thank you through chairs. So the way I would answer that is we have many controls in place and we place great emphasis on ensuring those controls are in place. Could a different model be put in place to create even a different environment that might mitigate risk?

[1:26:37] Yes, we believe that with the continuous improvement and creating some tools that will put a policy and procedure in place for a decentralized model to function and mitigate and ensure a very strong control environment. I think we are moving in that direction, irrespective of the fact the business case was not funded. Would greater resources help us get it done faster? Absolutely, but that’s ultimately through the budget adoption, what guides the resources and we recognize that council has many challenges and risks through the budget process that they’re trying to mitigate.

[1:27:21] So I think we have a very strong control environment. I think certainly through the external audit we had today, there were no control deficiencies identified. That is first and foremost, our single biggest concern to never create an environment where we would have a control deficiency. So as we move forward, we are going to continue to implement processes that will only strengthen our controls and mitigate that risk. It just may not happen as quickly as if we had resources to be able to implement that as sooner rather than later.

[1:28:03] Thank you. KPM, MNP, would you like to make comment? I would just slide through the chair. I would just like to echo Ms. Barbara Holmes’ comments. And the only other thing I would add into this vendor management or third party risk management is an area that I focus on. Having a decentralized or a centralized model, both are viable. It’s just to Ms. Barbara Holmes’ point there. It’s that sometimes we want to focus on and more move towards maybe a greater approach ‘cause it can allow for greater efficiencies or alignment of certain avenues.

[1:28:43] But at the end of the day, both are viable. So long as we move together and think about establishing a conscious control environment that operates within the risk appetite of the organization. So again, I think it’s something that it may just take a little bit longer to get to the point at which everyone wants to move. But again, it’s not something that I would view as an unviable option, just maybe not ideal. But again, there are many priorities for the city. Thank you, Councillor Stevenson. Thank you, that’s all very helpful.

[1:29:18] Maybe a question to MNP around, you know, when we get these reports, there’s a high risk on say something like neighborhood decision-making versus a high risk on something like vendor risk management. Is there a way to differentiate that for us here? Like in terms of highlighting and guiding council through these internal audit procedures? Oh, sorry, Madam Chair. Please go ahead. Oh, thank you. So through the chair, yes, the risk ranking is something that we use within each audit to just help us understand the priority of an item that obviously we’re highlighting there.

[1:29:58] And there are criteria within the audits themselves that look to essentially highlight what those items are and why they’re being prioritized in that manner. What I would generally say is that, you know, we only look to track with management high and medium items. And that’s the purpose of this dashboard, right? So we would want to look to view that these are all in one layer and other priority items, high risk items being potentially a little bit more of a priority.

[1:30:30] But we also have to work within the various priorities that the organization has and be reasonable with what is achievable within a reasonable amount of time. So that’s why we always establish those due dates and respect and understand that sometimes things have to be revised because our operating environment changes and sometimes we cannot control it. So to answer the question specifically, I would view any of the items within the dashboard ‘cause they’re all high or medium items as things that should be of note for council and work towards those and just keep that open dialogue with management to understand how they’re working towards things, how they’re potentially revising their targets and then ensuring that we’re closing those offs with it, closing those items off within a reasonable amount of time.

[1:31:19] Councillor Stevenson. Thank you and through the chair. That’s all really great, thank you and helpful. So my last question is to man a specific administration in terms of my understanding is currently we have a desegregated vendor management procurement system. And I’m just wondering if you could just briefly tell us how it is or how it was that when the high risk was identified, what we’ve done and what we’re planning to see in the next year, just say in terms of being able to minimize that risk.

[1:31:55] Mr. Collins or Ms. Burbo? So through the chair to committee, when a high risk has been identified, the specific administration does take action. So with respect to vendor management, one of the initiatives that is well underway and we’re executing on right now is looking at contractor safety. That was identified as a very high risk when it comes to vendor management. So within existing resources, we’ve allocated resources to work on contractor safety. So as things get flagged, we prioritize what needs to get done and re-prioritize our resources.

[1:32:37] So right now, given the adoption of the resources required to move to a more fulsome, robust vendor management process, we’re gonna look at ways how we can decentralize it and set the foundation through policy, through templates to address some of these high risk items. And as articulated within the vendor management report, you can see that our approach is gonna look at that high risk environment to put attention to. Councillor Stevenson.

[1:33:17] Thank you. I actually do have a couple other questions. So one of them is currently who is responsible for the procurement or the contracts. Is it under each deputy city manager? Does their own? Is that the wait currently happens? Yes, thank you through the chair. We, the procurement process, so procurement assists all of the service areas in following the procurement process, but the beginning, the initiation occurs with the service area and ends with the service area.

[1:33:51] So one of the things that we are ultimately trying to get to is a centralized contract. That’s part of the evolution of how we’re proceeding. So right now each service area has those, brings those forward. So moving towards a more centralized model creates greater control, although as M&P had also alluded to, the decentralized model also works, it’s just different. And you need to have the proper, the processes and policies that differentiate between the two. So right now the service of one contracts come forward, those are completed, they’re all done through the service areas.

[1:34:26] Where are there things that are more corporate in nature? I mean, what we’d like to do is try to create templates and have those as part of our procurement process to actually create efficiency as well as create some standardized templates as we go through to help the city mitigate some of that risk. So as Mr. Collins mentioned, like right now the contractor safety part is the component that we identified as a high risk area. So we have moved our resources to try to deal with that part of the vendor management risk upfront. So processes, templates to try to manage that, ensuring our procurement documents have very strong consistent language.

[1:35:08] Those are just some of the things that we’re working on right now to help mitigate the risk through the corporation. So procurement would be the centralized portion that would then support all of the service areas in achieving the procurement, ultimately, of the goods and services they need to deliver their services. Councilor? Okay, thank you, that too is very helpful. So my last question is, is there a, or what is the city policy in terms of providing contracts to council? Because I notice sometimes when we’re asked to approve an award, a contract, the contract comes with the agenda and then other times there isn’t one.

[1:35:50] So is there a standard policy across all areas? To staff, thank you through the chair. So it does vary on the type of the procurement. So depending on how things are done, things are usually centralized in our actual procurement process and through those final contract records form the actual basis for the procurement. Where there are specific contracts that are built in over and above, where there is risk and indemnifications, those are always brought forward to council for those approvals.

[1:36:28] So they do vary based on contract amounts and where those indemnity provisions are included that those would be coming forward to council. Councillor Stevenson. Thank you, just to follow up to that. So I’ve been trying to just watch what happens and see if there are patterns there. So I noticed that the clean slate contract came with the agenda, but we don’t usually see the shelter contracts or the encampment fundings. So I’m just wondering, even within that service area, I don’t see the consistency on whether we get contracts or not.

[1:37:06] So is there any clarity you can provide there? Ms. Barbara. Thank you through the chair. So at a general level, it depends on, so in a lot of cases, what we do is template agreements that are approved by council. So then the delegated authority has to be able to have those automatically executed by the Marin City Clerk. So they’re all quite different throughout the corporation and some of that hinges on some of the delegation of authority. So we have tried to make a concerted effort where there are specific contracts that a template is brought forward and be approved by council and then we would utilize that template just to fill in the blanks.

[1:37:43] We use that for a number of the items that Ms. Smith’s area uses to provide grants and those kinds of things where we have clear template agreements. So as a general rule, that’s where a lot of that moves forward but where there’s a procurement in place, typically that sets the contract in place automatically with the contract record because it is approved by council. Thank you. Okay, thank you for that. That does remind me I do recall seeing a standardized contract for the social service thing that did go through. So that might explain part of that.

[1:38:16] Thank you very much. Hey, looking to see if there’s any further questions or comments from committee saying that in chambers, it has been moved and seconded for receipt of item 4.4 internal audit follow-up activities dashed by MNP, call on the vote, all in favor by a show of hands. The motion carries. Thank you, deferred matters, additional business. I’m not aware of any and the agenda mentions none. That would bring us to item six, being a German. I would need a motion to adjourn moved by Councillor Stevenson, seconded by Councillor Caddia, hand vote of all in favor of adjournment.

[1:38:54] Motion carried. Thank you everyone. Have a wonderful day and thank you to MNP for joining us online today.