Item - 2026.TTA5.1

It is recommended that the Audit & Risk Management Committee:

1. Approve the inclusion of the proposed Overtime Review to the 2026 Audit Plan.

2. Receive the Confidential Attachment and authorize that the information remain confidential as it relates to the security of the property of the municipality or local board.

Proposed Addition to the 2026 Audit Plan
We propose conducting a targeted audit of areas exhibiting significant growth in overtime expenditures, with particular attention to functions showing high variances or unbudgeted overtime. This review aims to reinforce governance and support more effective oversight and optimization of overtime practices.

Audit Plan Status Update
The Audit, Risk, and Compliance Department (ARC) 2025 Audit Plan was presented to and approved by the Audit & Risk Management Committee (ARMC) on March 24, 2025. The ARC 2026 Audit Plan was also presented and approved on December 1, 2025. As of this update, final reports have been issued for the two remaining 2025 projects. For the 2026 Audit Plan, fieldwork is currently underway for one project, and planning activities are in progress for three others. This report provides an update on ARC’s progress against the 2025 and 2026 Audit Plans and includes details on the two final reports issued since ARC’s last update.

ARC Follow-Up Activities Status Update
ARC continues to support Management in validating the completion of Management Action Plans addressing recommendations issued by the City of Toronto Auditor General (AG) and third-party consultants involved in the work car hydraulic leak investigation. ARC also independently validates the completion of Action Plans arising from ARC’s Internal Audit Findings. In addition, ARC provides advisory support to Management, including the Revenue Protection Team, across several initiatives aimed at improving fare compliance and operational performance throughout 2025 and beyond.

The implementation of the 2026 ARC Audit Plan does not require any additional funding beyond the proposed 2026 Operating Budget for the ARC Department, which remains substantially consistent with the approved 2025 Operating Budget. ARC will advise this committee if any budgetary adjustments impact the delivery of the 2026 Audit Plan.

The Interim Chief Financial Officer has reviewed this report and agrees with the financial impact information.