C.A.O. BRIEFING NOTE FAIRNESS AND EQUITY Measurable Standards and Criteria for Consultants - Commissioners have taken the necessary steps to ensure that measurable standards and acceptance criteria are included in contracts executed with consultants and that properly documented meetings are held to ensure that the consultant is meeting contractual obligations. Reported to Audit Committee in June 2002 and Council at its meeting on June 18, 19, and 20, 2002. Consultant Contracts Adhere to Purchasing Policies - Development of a Sole Source template was reported to June 13/02 Audit Committee and Council at its meeting on June 18, 19 and 20, 2002. - Commissioners, in 2002, conducted a review of all existing consulting contracts to ensure they have purchase orders. - Purchasing is now subject of AG review and a report is going to April s Audit Committee. Policy Governing the Hiring of Former Employees - CAO advised Commissioners of the policy. Commissioners reviewed their operations and advised CAO by February 2002 of compliance with policy. This was reported to June 2002 Audit Committee and the Council meeting of June 18, 19 and 20, 2002. - Policy to be integrated into new corporate financial policy and procedure manual. Ethics Steering Committee - Council created this Committee when it adopted the Code of Conduct for Council Members. - The Ethics Committee is a special Committee of Council, not a sub-committee of a Standing Committee, and in this respect it has a dual reporting relationship to Council, mainly through the Administration Committee. Enhanced Justification Analysis and Business Cases for Consulting Contracts - Staff undertook justification analysis and business cases, including an explanation as to why the study cannot be conducted by internal staff. - The scale of analysis and business cases is based upon the dollar value of the project. - This was reported to the Audit Committee in June 2002. Improved Financial and Purchasing Controls - Implementation of consultants policy included business case, sole source templates etc. - Increased monitoring of single (sole) source purchases as of April 2003. - Internal controls and policies are reviewed on an ongoing basis as part of Commissioner s performance review. - Additional controls to be implemented as a result of the AG reviews of SAP and Purchasing. - A business case/authorization for the hiring of consulting services corporate template has been developed. This template must be completed and authorized prior to proceeding with the procurement process for hiring professional and consulting services. - The Conflict of Interest policy is integral to the Commissioner s performance review and the Commissioners have been directed by the CAO to have the policy reviewed and signed off by staff to the manager level on an annual basis.
-2- Improved Financial and Purchasing Controls (cont d) - Commissioners have reviewed all consulting contracts and have ensured that all existing contracts have the appropriate purchasing authority. - An annual report on consulting expenditures is provided to Council. It includes actual consulting expenses for the previous two years organized by department, a local board, and the five (5) consulting categories and by vendor. - At its meeting of January 22, 2003, EMT directed that monthly SAP reports be produced to identify contracts that are 80% spent. This will further increase management s ability to track contract expenditures. IMPROVED MANAGEMENT CONTROLS Review of Y2K and Non-Y2K contracts - Auditor s review found that some consulting contracts were awarded without the involvement of a purchasing agent. - The Auditor General, with the assistance of the Executive Director of I&T, is doing a review of selected Y2K and non-y2k contracts. Financial Policies and Procedures Manual - Draft manual, including best practices guidelines, has been created and should be posted by early 2003. Auditor General s Review of Purchasing - A review of the purchasing function was conducted and recommendations have been approved by City Council. Implementation Plan of the Auditor General s Review of Purchasing - Staff have brought forward a comprehensive implementation plan to address the Auditor General s recommendations. Increased staff knowledge of Tax and Water Billing - The transition and knowledge transfer began in 2001 and was completed in 2002 with a subsequent funding for consultants cut from 2003 budget. Re-engineering and streamling of Accounts Payable - In the fall of 2002, a roll-out of three-way matching began with a pilot project in Fleet Services. Three-way matching will be introduced in the Chief Administrator s Office, Corporate Services, Auditor General and Finance this spring. - In addition, FACT is reviewing accounts payable processes and will report back to EMT in the late spring with the recommendations on streamlining the AP process. - New performance targets have been established and implemented. For example, there has been a significant improvement over 2001 when upwards of 31% of the City s invoices were paid after 60 days. Today, the City s rate of payment to vendors are: Month 0 30 days 30 60 days 60 90 days 90+ days May 2003 60.3% 24.7% 6.9% 8.1%
-3- Contract Release Orders - Contract mechanisms to prevent contracts from being over-spent have been implemented. - When departments are processing their orders staff will now be warned if the contract is over 80% committed. Accounting has just implemented a second warning at 100% commitment. - Some departments have also decreased the threshold for processing CROs. Creation of Internal Audit Function - In August 2003, a Director of Internal Audit was hired. Currently, the process is underway for additional audit staff. Annual Report on Consulting Expenditures - City Council, at its meeting on October 1, 2 and 3, 2002, adopted a report regarding the 2001 Expenditures for Consulting Services. - The annual report on consulting expenditures provided to Council includes actual consulting expenses for the previous year (and the year prior) organized by: department or local board, by the five (5) consulting categories and by vendor. 2003 Budget Process - On an annual basis, City Council reviews consulting expenditures and proposed expenditures through the operating budget review process. - The 2003 operating budget was based upon all consulting budgets being zero based. Departments were required to prepare business cases to justify any consultant expenses. I&T Sub-committee - Council, at its meeting in November 2002, supported the establishment of an Information and Technology Subcommittee of six councillors. The new Subcommittee is intended to help Council make better informed decisions on information technology matters and to serve as the executive champion for IT initiatives such as ecity. Technology Acquisition and Asset Management Strategy - City Council, at its meeting in November 2002, adopted a new strategy that replaces a temporary emergency process approved by Council in late 2001 (after a freeze was placed on the technology leasing program, pending a review of the City s leasing contract). - This strategy sets out corporate-wide polices and processes to address the lifecycle of technology assets, from acquisition to disposal. - The strategy will ensure that the City is able to provide an accountable, effective and costeffective methodology for the planning, acquisition, replacement and disposal of technology assets. Information technology project ("ecity") - Council, in October 2002, authorized work on "ecity," a process to establish a foundation for using technology to improve local government by providing public access to information and services electronically. The next step involves creating a detailed work plan and establishing staff teams to undertake specific projects.
-4- Move to purchased computers instead of leased computers - Council, in February 2003, concurred with staff actions for the sole source purchase of Dell computer equipment and the purchasing process for computer equipment that allowed for maximum competition of the City s computer requirements. The process adopted by Council will allow the City to buy computer equipment at the most competitive price and stay abreast of market changes. It will also provide greater clarity and transparency for the vendor community on how the City buys computer equipment and allow a larger number of companies to bid on the City s computer requirements. Commissioners Review Contracts and Purchasing Authority - Commissioners, in 2002, conducted a review of all existing consulting contracts to ensure they have purchase orders. - This task forms part of a Commissioner s on-going review and performance strategy. Criteria for Contracting with Individuals - Review was undertaken and reported to Audit Cmte in 2002. - The review focused on individuals whose primary source of income is from one organization and may be deemed to be an employee of that organization by Revenue Canada. Variance Reports - The financial/variance reports provide an additional mechanism to support the financial monitoring and control framework in place to safeguard the city s financial assets and to provide Executive Management and Council with timely financial information for decision making purposes. All I&T Purchasing and Hiring Reviewed - All technology requests must be submitted to the Executive Director of I&T the appropriate review before processing - This was put into place as part of the 2002 budget process. Enhanced Management Controls as part of senior management performance review - A management (internal) control checklist forms part of the 2002 performance objectives signed off by the Commissioners and senior staff. The review of management controls is based upon a template adopted by Council (Audit Committee, Clause No. 5, Report No. 3, April 23, 24, 25, 26, 27, 30, and May 1 and 2, 2001). Inventory Control System - Addressed as part of next CAO report to Audit Cmte. - An inventory of all materials and supplies available through the Finance Department s stores/warehouses is maintained electronically. Physical inventory counts are also conducted. Asset Management Strategy - In the CAO s mid-year status report on the implementation plan of the consultants policy (adopted by Council, June 18-20, 2002), it was reported that staff would report out on the roll out of a corporate asset management strategy in a year-end report. - The Facilities and Real Estate Division of the Corporate Services Department has a current inventory of all city owned buildings including details on construction, occupancy, protection and adjacent exposure information on all assets required to be insured for direct physical loss on damage.
-5- Asset Management Strategy (cont d) - A plan has been developed to inventory and control all assets in Corporate Services facilities. This will involve setting up a bar coding system and a database for significant furniture items such as desks, credenzas, bookcases, etc. This inventory will be completed in 2004. Project Management Centre - A project management centre has been created and over 500 staff have been trained. - Training of staff continues, targeting skills development at all levels of the organization including project sponsors, project managers and project teams. Policy for the Selection and Hiring of Consultants - The CAO s report was adopted by Council at its meeting on December 4, 5 & 6, 2001. ACCOUNTABILITY Fraud/Waste Hotlines - At its November 2002 meeting, Council adopted a permanent fraud and waste hotline. - A pilot project involving a telephone hotline for receiving tips about fraud or waste in Toronto's local government is now a permanent program. Council supported the Auditor General's continued use of the voicemail line (416-392-3712) and publicity about it. The anonymous hotline is one of the tools the City is using to detect and deter fraudulent or wasteful activity. Enhanced Employee Training - Ongoing commitment to training and the development of a Toronto Public Service. - Skills shortages or insufficient staffing have been under review. - A specialized recruitment strategy for specific functions is being developed. (2002-2004). Senior Staff Team on Accountability - The CAO s workplan regarding corporate accountability is overseen by the Corporate Accountability Steering Committee. The Committee s mandate is to focus on strategic accountability issues. Membership includes the Chief Administrative Officer (Chair), Chief Financial Officer and Treasurer, Commissioner of Corporate Services, Executive Director of Information and Technology, and the Executive Director of Human Resources. - In addition to this team, there is a senior staff team (Accountability Working Group) consisting of staff from the CAO, Finance and WES departments that develops, implements and tracks corporate-wide standards and policies. Creation of Auditor General - Council approved a new Auditor General position in May 2002. - Council agreed to establish the position of Auditor General for the City of Toronto, appointing former City Auditor Jeffrey Griffiths to the new position. The Auditor General will report to Council through the Audit Committee rather than through the City administration. The Office of the Auditor General will carry out financial and performance audits of City programs. Council also approved the position and office of Internal Auditor, reporting to the Chief Administrative Officer. Conflict of Interest Policy for Staff - City Council (Clause 20, Report No. 16 Administration Committee) approved this policy in August 2000.
-6- Conflict of Interest Policy forms part of senior management performance - This policy is integral to the 2002 performance objectives signed off by the Commissioners and senior staff. - Policy continues to be part of performance process. Code of Conduct for Members of Council - Adopted by Council in 1999. INCREASED TRANSPARENCY Voluntary Lobbyist Registration - Council at its meeting in February 2003, endorsed plans for a registry that will identify lobbyists (as defined in the Code of Conduct for Council Members) who meet with individual members of City Council. The system will operate on an informal, voluntary basis while the City seeks enabling legislation from the Province of Ontario for a permanent registry program. Request to the Province for the creation of a Lobbyist Registry and Appointment of an Integrity Commissioner (2003) - City staff has drafted special legislation to establish a permanent City lobbyist registration system in conjunction with the application for special legislation for a City Integrity Commissioner office, as previously authorized by Council. - The Ethics Steering Committee has requested staff to report on the merits of including restrictions on former members of Council after they have left office in the future City by-law for a lobbyist registry system. Interim Complaints Protocol Governing Councillors - Council at its meeting in November 2002 approved a protocol, recommended by the Ethics Steering Committee, for handling complaints made about members of Council under the Code of Conduct governing Council. The complaint protocol includes provisions for informal and formal procedures, including the use of employing external legal counsel to carry out investigations. Bidders notified of City s Conflict of Interest policy - The City s Conflict of Interest policy was sent to all bidders on the City s bidders list and a copy is provided to all new bidders along with the bidders application form. Lobbyist Disclosure Policy for Staff - City Council adopted this policy (Clause 20, Report No. 16 Administration Committee) in August 2000. Conflict of Interest appended to RFPs - Made changes to the RFP and RFQ process to include notification on the City s Conflict of Interest policy. Fraud Policy - Approved by City Council at its meeting on April 23, 2001.
-7- Other related issue: Toronto computer leasing inquiry - Council at its meeting in October 2002 decided to expand the scope of the public inquiry into City computer leases. The inquiry is now examining consulting contracts with three other companies in addition to MFP Financial Services Ltd. Contact Information: Ms Judith Pfeifer Manager, Corporate Issues and Council Liason City of Toronto Tel. (416) 397-9916 Fax (416) 392-1827 Email: jpfeife@toronto.ca