In June 2000, Audit Committee requested that the Auditor General submit an annual report on the status of fraud and related matters. This report represents the 2013 annual report relating to fraud activities at the City. This report only includes those activities reported to the Auditor General. It does not represent an overall picture of fraud or other wrongdoing at the City as fraud, by its very nature, is concealed and often difficult to detect.
In 2002, the City established a Fraud and Waste Hotline Program with Council’s approval to be operated by the Auditor General’s Office. One of the benefits of the Hotline Program is that it provides an independent resource for employees or members of the public to report wrongdoing involving City resources, anonymously if preferred. Since that time the activities of the Fraud and Waste Hotline Program have been included in the annual report.
In 2013, 643 complaints were received by the Auditor General’s Office. It should be noted however, that a significant number of complaints received included at least two or more allegations. As such, we estimate the actual number of complaints is in the range of 1,000.
Fraud awareness training for all employees is critical to ensure that staff can identify suspected incidents of fraud or wrongdoing by employees or the public that should be reported.
In response to recommendations made by the Auditor General in the 2006, 2009 and 2010 annual reports, the City Manager launched mandatory e-learning courses for all employees. All City employees were required to complete the training by December 31, 2013.
However, this training has not been made available to the City’s Agencies and Corporations. It is important that this training be made available to those entities as a priority.
The City of Toronto’s Fraud Prevention Policy formalized the duty of employees to report allegations of fraud and wrongdoing involving City resources and sets out reporting protocols and procedures. The Policy also includes a provision on whistle blower protection. A separate Whistle Blower Protection Policy was also adopted by City Council effective June 2011.
There has since been an initiative to consolidate the City’s Fraud Prevention and Whistle Blower policies, as part of the development of a proposed public service by-law.
At its meeting of November 27, 2012, City Council adopted recommendations made by the City Manager in a report entitled “Developing a Public Service By-law for Toronto” that included authorizing the City Manager to bring forward recommendations on the content of a public service by-law.
Following the adoption of the report by Council, the Auditor General’s Office was consulted on a key element of the proposed public service by-law which was to establish a new framework for the disclosure and investigation of wrongdoing. The proposed framework initially restricted the Auditor General’s authority to investigate a broad range of allegations including conflicts of interest, with the introduction of a new definition of wrongdoing. The new framework proposed that allegations of misconduct that did not meet the proposed new definition of wrongdoing would be handled by management.
Currently, the Auditor General’s Office has authority to investigate and coordinate with management the resolution of a broad range of allegations received through the City’s Fraud and Waste Hotline Program which is consistent with other U.S. and Canadian municipalities.
As a result of ongoing discussions with the City Manager’s Office and concerns expressed by the Auditor General, a revised framework is being developed to ensure that the Auditor General’s concerns with the effectiveness of the proposed disclosure of wrongdoing framework, including a restricted definition of wrongdoing, are addressed.