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 2014 annual report relating to activities of fraud and wrongdoing at the City. It highlights only those issues that have been communicated to the Auditor General during that past year. It does not represent an overall picture of fraud or other wrongdoing across the City.
In 2002, the Fraud and Waste Hotline Program was established 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, without fear of retribution. Since 2002, the activities of the Fraud and Waste Hotline Program have been included in the annual fraud report.
In 2014, 687 complaints were received by the Auditor General’s Office. A significant number of complaints included at least two or more allegations. We estimate the actual number of allegations is in the range of 1,300.
A separate Forensic Unit was established in the Auditor General’s Office in 2005 dedicated to the operation of the Hotline Program and the investigation of complaints received. The increase in workloads and ongoing resource constraints have impacted the work of the Auditor General’s Office Forensic Unit. The Office does not have sufficient resources to lead all investigations. Complaints are referred to City Divisions to be investigated. The Auditor General’s Office oversees the Divisions approach to the investigations and the results.
The level of independent oversight the Auditor General’s Office can provide has been reduced due to the volume of allegations and resource constraints. The need for sufficient oversight is critical. There were instances where management has led an investigation and concluded that the complaint was unsubstantiated. Upon further independent review by the Auditor General’s Forensic Unit, it was determined that allegations were in fact substantiated. Additional resources are needed to ensure the Auditor General can lead key investigations and provide an increased level of independent oversight.
Additional resources for the Forensic Unit will be pursued as part of the 2016 budget process.
The Auditor General’s responsibility to operate the Hotline Program, conduct investigations and provide oversight was reinforced by Council through its adoption of a Toronto Public Service By-law, at its meeting of June 10-11, 2014. The by-law introduced a new Disclosure of Wrongdoing framework.
In the 2013 annual report on fraud and hotline activities, the Auditor General recommended that management report to Council on details of the proposed Disclosure of Wrongdoing framework, including how management will track, address and publicly report out on employee “misconduct”.
The City Manager’s Office has advised it will work with the Auditor General’s Office to establish and implement a working protocol that supports the Disclosure of Wrongdoing and Reprisal Protection Policy that will come into effect December 2015.