Item - 2025.AU8.6

The Audit Committee recommend that:

1. City Council receive the report (January 29, 2025) from the Executive Director, Housing Secretariat, and the Executive Director, Corporate Real Estate Management, for information.  

On June 21, 2023, the Office of Auditor General issued an audit report titled “City of Toronto’s Modular Housing Initiative: The Need to Balance Fast Delivery with Stronger Management of Contracts and Costs” in relation to City's Modular Housing Initiative.

As a result of this audit, the Office of Auditor General provided twenty (20) recommendations to enhance the efficiency and effectiveness of the Modular Housing Initiative projects. In response to these recommendations, Housing Secretariat, in collaboration with Corporate Real Estate Management and CreateTO, formally committed to strategizing and developing a comprehensive implementation plan. The Housing Secretariat and Corporate Real Estate Management divisions have been engaged in a series of coordinated efforts to establish a more robust framework of policies, processes, programs and tools targeted at Modular Housing Initiative projects. These measures ensure alignment with the recommendations and effectively address the key areas identified for improvement. Housing Secretariat and Corporate Real Estate Management remain focused on promoting sustainable improvements and are actively working to ensure that all the actions taken are in full compliance with the audit recommendations.

Council requested staff to provide a status update on the implementation of the recommendations to Audit Committee by the end of 2024. In response to that direction, this report presents a comprehensive overview of the implementation plan, providing a detailed account of the status of the recommendations. It outlines the progress made to date, categorizing the recommendations as fully implemented or partially implemented. The report further highlights the key milestones achieved, as well as ongoing efforts aimed at ensuring the full realization of the remaining recommendations, in alignment with the audit's objective.

Out of the twenty (20) recommendations, the divisions have self-assessed fifteen (15) recommendations as fully implemented. Work completed to implement recommendations includes establishing improved financial and project controls and enhanced due diligence measures to ensure projects are executed more efficiently and meet quality standards, while minimizing risk and enhancing accountability through the clear articulation of roles and responsibilities. Five (5) recommendations are partially completed and are on track for completion before the end of 2025. These recommendations relate to tracking expenditures, ensuring the use of shared financial data, standard file documentation and retention, and a consideration of lessons learned from past modular housing projects.

Notably, these status updates have not yet been verified by the Office of Auditor General. The Office of Auditor General has a separate process to follow up on audit recommendations.