Item - 2020.AU7.4

The Audit Committee recommends that:

1.  City Council approve the 2019 Audited Financial Statements for the City of Toronto Sinking Funds in Appendix A to the report (November 2, 2020) from the Controller.

The City of Toronto (City) maintains portfolios of sinking funds in order to build up funds used to repay City debt when it matures. Sinking fund contributions are invested; the investment earnings help reduce the amount of City own-source cash used to repay amounts borrowed. Sinking funds form part of the City's consolidated cash balances.

This report presents the City's Sinking Funds Audited Financial Statements for the year ended December 31, 2019 and provides highlights of the Sinking Funds' 2019 financial performance as of December 31, 2019.

The Sinking Funds Audited Financial Statements have been prepared by management who is responsible for ensuring that proper internal controls have been applied to the presentations in each statement. The City's 2019 auditors, PricewaterhouseCoopers LLP (PwC), are responsible for providing an opinion on the fair presentation of the financial statements in accordance with Public Sector Accounting Standards (PSAS). The Audit Committee is responsible for approving the statements prior to City Council approval. The 2019 Sinking Funds Financial Statements received an unqualified audit opinion from PwC. In addition, there are no internal control recommendations related to the 2019 Sinking Funds Audited Financial Statements.

Financial statements and auditor's reports are typically reported to the Audit Committee and Council in June, when external audit work is substantially complete. During the external auditor's normal engagement period, management's focus was on the COVID-19 response and meeting operational requirements. Additionally, public health restrictions put in place because of the pandemic required that the audit process be conducted in an extended fashion over a longer period of time. As a result, the completion of the 2019 financial statements and external audit was delayed.