Report: Audit Committee - June 16, 2021

Via Virtual Meeting Room


June 16, 2021


To the Business Board,
University of Toronto

Your Committee reports that it held a virtual meeting on Wednesday, June 16, 2021, at 4:00 p.m. with the following members present:
 PRESENT: Janet Ecker (Chair), Joanne McNamara (Vice-Chair), Claire Kennedy (Chair, Governing Council) Teodora Dechev, Robert Boeckner, Kathryn Jenkins, Sue Graham-Nutter, Rajiv Mathur, Andrew Szende,

REGRETS: Lara Zink 

NON-VOTING ASSESSORS: Mark L. Britt (Director, Internal Audit), Sheila Brown (Chief Financial Officer), Sheree Drummond (Secretary, Governing Council), Scott Mabury (Vice-President, Operations and Real Estate Partnerships)

SECRETARIAT: Tracey Gameiro, Secretary, Audit Committee

IN ATTENDANCE: Lusine Amirkhanyan (Senior Auditor, Internal Audit), Diana Brouwer (Ernst & Young), Audelyn Budihardjo (Supervisor, Internal Audit), Alanna Charles (Ernst & Young), Helen Choy (Manager, Trust Accounting and Treasury, Financial Services), Anoop Kaur (Senior Auditor, Internal Audit), Annie Mao (Business Manager, Office of the Governing Council), Jeff McIlravey (Manager, Internal Audit), Wendy Ng (Senior Auditor, Internal Audit), Daniel Ottini (Deputy Director, Internal Audit), Linda Ye (Senior Auditor, Internal Audit)

Audit Committee met in Closed Session

Pursuant to section 6.1 of the Audit Committee terms of reference, consideration of items 11 and 12 took place in camera.


  1. Chair’s Remarks

    The Chair welcomed members and guests to the final meeting of the governance year and reminded them that the Committee met in closed session and that the materials were confidential. 

    Recognition of the Audit Committee Chair

    Ms Tracey Gameiro, Audit Committee Secretary, noted that Ms Ecker’s term as Chair was ending on June 30, and that she was taking on the role of Vice-Chair of the Governing Council in 2021-22. On behalf of the Audit Committee, Ms Gameiro thanked her for all her contributions as Chair. 

    Ms Claire Kennedy, Chair of the Governing Council, recognized the outgoing Chair, Janet Ecker, and formally thanked her for her contributions to governance as a member of the Business Board and Audit Committee since 2014, becoming Vice-Chair of the Committee in 2015, and serving as Chair from 2019-2021.  She stated that Ms. Ecker had been a highly engaged Chair, leading thoughtful discussions of the full range of items brought before the Committee, and encouraging members to ask questions and share their views at meetings. 

    As a token of appreciation, Ms Kennedy presented Ms Ecker with an engraved crystal clock in recognition of exemplary service and leadership.  Members of the Committee applauded Ms. Ecker’s recognition. 

    Mr. Mark Britt, Director of Internal Audit, and Ms Sheila Brown, Chief Financial Officer, as retiring members, were also recognized for their contributions to the University and the Audit Committee
  2. Report of the Previous Meeting

    Report Number 142, from the meeting of April 26, 2021, was approved.
  3. Business Arising from the Report of the Previous Meeting

    There was no business arising from the report of the previous meeting. 
  4. Audited Financial Statements for the Year Ended April 30, 2021
    1. Financial Report Presentation

      The Committee received a presentation of the Financial Report from Ms. Sheila Brown, Chief Financial Officer. She recognized the tireless efforts of the Financial Services team, as well as the contributions of the Internal Audit Department, UTAM, and the External Auditors in completing the audit successfully completely remotely. Ms. Brown also thanked Ms Helen Choy, who in addition to her role as Manager, Trust Accounting and Treasury, Financial Services, had taken on the role of Acting Controller in the absence of Dr. Pierre Piché.  Ms. Brown noted that the key themes of the statements were the higher than forecasted investment return (24.2%), the strong and ongoing focus on capital infrastructure, and the impact of COVID-19. 

      Ms. Brown’s presentation of the Financial Report for the year ended April 30, 2021, highlighted the following: 
  • Revenues for the year ended April 30, 2021 were $4.0 billion and expenses were $3.3 billion, for a net income of $726 million; of which $314 million resulted from capital infrastructure costs that were capitalized and not expensed in the year.  
  • In 2021, $2.7 billion (68%) of revenues were from student fees and government grants.
  • The number of students at the University had grown by 8.3%, over the past 5 years.
  • Net assets increased by $1.6 billion to $8.1 billion, mainly as the result of net income of $726 million, endowed donations of $124 million, $445 million in investment gains on externally restricted endowments, and $348 million in re-measurements due to higher-than-than-expected investment returns on pension plan assets.. 
  • The University received a $250 million gift from the Temerty Foundation, (the largest gift in Canadian history), to support research and innovation, as well as equity and student-wellbeing at the University’s Faculty of Medicine. 
  • The deficit of $144 million was largely due to internal financing of capital construction in accordance with the University’s debt strategy.

    Financial Impact of COVID-19
  • The University received $101 million under the Canada Research Continuity Emergency Fund, of which $90 million was transferred to affiliated hospitals.
  • A reduction of on-campus activity negatively affected campus services such as residence, food, and parking.  
  • In 2021, residence, parking, and food services operations incurred combined net losses of $48 million.
  • The University would allow ancillary operations to incur deficits totalling up to $50 million over the next five years. 
  • Markets recovered losses incurred as a result of the significant volatility caused by the pandemic towards the end of fiscal 2020, and continued to generate strong returns for the remainder of fiscal 2021, resulting in strong returns for the University’s investments. 

    Responsible Investing
  • This year, the University along with more than a dozen other Canadian universities signed a landmark charter (Investing to Address Climate Change) that aimed to tackle climate change through a commitment to responsible investing practices.
  • In early 2020, the University of Toronto Management Corporation (“UTAM”), committed to reducing the carbon footprint of the pension and endowment portfolios by 40% by 2030.


As part of the ensuing discussion, the Chief Financial Officer clarified that salary expenditures remained fairly consistent with that of the previous year despite COVID related layoffs, because most of these salaries, which are related to ancillary operations, were historically captured as cost of goods sold.  

With regard to the potential impact of inflation on future revenues and expenses, the Chief Financial Officer stated that because both domestic tuition and salaries are regulated, this was difficult to predict with any certainty. 

The external auditor confirmed that there were no significant shifts in internal controls as a result of the pandemic.  

Members thanked Ms. Brown and commended the Financial Services team for their work in preparing the Financial Statements. 

  1. External Auditor’s Report on Audit Results

    Ms. Diana Brouwer and Ms. Alanna Charles of Ernst & Young presented a high-level overview of the External Auditors’ Report of Audit Results which provided the Committee with a summary of the audit procedures and the discussion with management that supported their unqualified audit opinion.  In the course of the presentation, the following was highlighted: 
  • the changes in the audit strategy were consistent with the audit plan; 
  • areas of audit emphasis included how the University recorded its revenues and accounts for its investments, employee future benefits and capital projects;
  • there were no major deviations from the audit plan and scope during the execution of the audit, and no exceptions noted;
  • the auditors performed additional procedures to satisfy themselves of the authenticity of the documentation provided given this year’s audit was performed remotely; 
  • procedures were conducted to ensure that the disclosure impact of COVID-19 was appropriate; and 
  • there were no uncorrected or corrected misstatements as a result of the audit.  

    In response to a member’s question with regards to anticipated Personal Protective Equipment (“PPE”) costs associate with re-opening the campus, Ms Brown indicated that while she did not have exact information, the items were not considered material. 

    Speaking to the financial impacts of COVID to ancillary operations, Ms Brown noted that while losses to ancillaries were significant, they were not material to the University as a whole.  She reported that each ancillary had developed individualized assumptions and plans for recovery based on their specific facilities, and that assistance would be provided through a funding program out of the Provost’s office for those who were not able to recover on their own. 

    The Committee agreed with the views expressed by the auditors. Inquiries were also made with respect to the risk of material misstatements due to fraud and suspected fraud.  There were no significant matters that arose from the audit and no corrected or uncorrected errors noted. The Committee was also informed by the auditors that they received excellent and on-going cooperation from management.  All required audit communications were provided to the Committee by the auditors. The Chair confirmed that the Committee was not aware of any concerns of fraud or non-compliance.

    The audited financial statements were examined in detail by the Committee, and the audit results indicated that there were no issues to bring to the Committee’s attention.
  1. Legal Claims

    The Committee received the 2020-2021 summary of legal actions against the University exceeding $500,000 prepared by the administration.  
  2. External Auditors: Private Meeting

    The Committee met privately with the external with no University staff present.  No issues were identified for the Business Board’s attention. 


Members of the administration absented themselves.  Ms. Brouwer was invited to advise of “any problems encountered by the auditors, any restrictions on their work, the co-operation received in the performance of their duties by the administration and the Internal Audit Department, and any matters requiring discussion arising from the auditors’ findings.” (Audit Committee Terms of Reference, Section 5.1.2)

The Committee returned to closed session.

The Chair reported that there had been no matters arising from the Committee’s in camera meeting with the external auditors that would require action.

  1. Discussion and Recommendation

    The Chair thanked Ms. Brown and commended the Financial Services team for their work in preparing the financial statements.

    On a motion duly moved, seconded and carried


    THAT the University of Toronto audited financial statements for the fiscal year ended April 30, 2021 be approved.
  1. Appointment of the External Auditors for 2021-2022

    Ms. Brown informed the Committee of the process followed in gathering and compiling feedback about the external auditors. She indicated that those surveyed included members of the Financial Services Team, senior management at U of T Press, and U of T Asset Management Corporation.  Ms. Brown reviewed the Auditor Assessment Template and highlighted the following areas of the evaluation: 
    1. Professional Skepticism and Objectivity
    2. Quality of Engagement Team
    3. Quality of Communications
    4. Quality of Service 

Following these introductory remarks regarding the review process, Ernst & Young excused themselves and discussions of the appointment of the external auditor for the 2021-2022 year continued in their absence. 

Ms. Brown reported that the administration was very pleased with the work of Ernst & Young. She commented on their excellent knowledge of the university sector, their responsiveness, proactive approach, and their high levels of technical abilities.   Ms. Brown noted that unlike prior years there would be no recommendation with regards to the appointment of an external auditor of the pension plan as the University was moving to a jointly sponsored pension plan model. 

On motion duly moved, seconded and carried


THAT Ernst & Young LLP be re-appointed as external auditors of the University of
Toronto for the fiscal year ending April 30, 2022.

  1. Internal Audit Annual Report (to April 30, 2021)
    1. Annual Report, 2020-2021

Mr. Mark Britt, Director, Internal Audit, highlighted the following key points from the Internal Audit Annual Report Summary for the year ended April 30, 2021:  

  • allocation of audit work comprised Departmental Audits 41%, Follow-up Reviews 3% Research Expenditure Compliance 10%, Continuous Audit 8%, Investigations 7%, Advisory and Other 10%, External Audit Assistance 5%, and IT Reviews 16%; 
  • risks assessed were categorized in three main areas: financial risks, operational risks and compliance risks;
  • 123 recommendations were issued dealing with either operational compliance or financial risk, 112 were adopted, and 11 remained outstanding, as at April 30th; 
  • overall audit results indicated that the work of the internal auditors was taken seriously, their recommendations were seen to add value, and management readily adopted the recommendations made to improve their risk management, internal control issues and non-compliance issues;

    In response to a member’s question regarding specific areas of control where there were outstanding recommendations, Mr. Britt indicated that there were no outright rejection of audit recommendations and that the outstanding actions to be taken would be reviewed again in the course of follow-up audits, which were conducted 10-18 months after an audit report is finalized.

    Mr. Britt indicated that implementation of recommendations was managed in two ways.  Firstly, with the transition to electronic audit management system, the client was engaged as recommendations were developed making it a live, iterative process. Secondly, if there was any rejection or refusal to address the recommendations the Dean and Provost were engaged.  Mr. Britt reported that over the course of his 30 years involvement with internal audit, this had been required less than a handful of times.  He stressed that the University management was very receptive to the work of the internal auditors.  
    1. Audit Plan, 2021-2022

Mr. Britt reviewed the Audit Plan for 2021-2022 with the Committee, highlighting the following:

  • There would be 12,500 direct audit hours from a staff complement of 10.5 FTE.
  • The focus would be on enterprise, divisional and departmental risks, and would include academic, administrative and student services functions on the three campuses; Department audits, Continuous Audit, Restricted Funds Compliance Audit, Information Systems reviews, Follow-up reviews, and Investigations and Advisory Services. 
  • Assistance would also be provided to Ernst & Young as they conducted their external audit.
  • Audits would be selected with reference to the 2020 Risk Report, consultations, senior and operational management requests and internal audit risk assessments. 

    Members had no questions regarding the 2021-2022 Audit Plan. 
  1. Reports of the Administrative Assessors

    There were no additional reports from the Committee’s Administrative Assessors.

Recognition of Retiring Assessors – Mark Britt (Director, Internal Audit), Sheila Brown (Chief Financial Advisor)

The Chair acknowledged the contributions Mark Britt, Director of Internal Audit, and Sheila Brown, Chief Financial Advisor, who would each be retiring from their respective roles.

The Chair formally thanked Mr. Britt and Ms Brown for their lengthy and dedicated service to the University, and for their expertise in supporting the work of the Audit Committee. 

  1. IT Risk Management Update

    Professor Scott Mabury, Vice-President, Operations and Real Estate Partnerships provided an update on the following two cyber security initiatives at the University.


    Professor Mabury began by speaking to the coordinated and community focused approaches to security threats which were being developed in partnerships with schools in Canada and around the world.  In particular, the Canadian Shared Security Operations Centre (CanSSOC), for which UofT served as an administrative lead, had piloted a threat feed that sent members immediate information on suspicious activity and potential breaches, all while protecting the anonymity of the affected institutions. Professor Mabury reported that CanSOCC would be partnering with organization in the United States, Australia and the United Kingdom to extend this intelligence-sharing beyond Canadian borders.

    Data Centres

    The University continued to address the challenge of a plethora of data centres spread across the University. Data centres were being consolidated, for increased efficiency and to reduce concerns. A recent significant step was an agreement between the Faculty of Arts & Science, and the Department of Astronomy & Astrophysics to work together to house data.  
  2. Date of the Next Meeting

    Members were reminded that the next meeting was scheduled October 4, 2021, 4:00 – 6:00 p.m.
  3. Other Business

    There was no other business.

    The Chair thanked, members, assessors, the internal auditors, and the Secretariat for their time and efforts devoted to the Committees throughout the year. 


  1. Internal Auditor – Private Meeting

    Members of the administration as well as the Committee Secretary absented themselves and the Committee met privately with the Director of Internal Audit.  There were no issues to be brought to the Business Board’s attention from this meeting. 
  2. Committee Members Alone

    Committee members discussed topics of interest and concern.

    The Committee returned to Closed Session.

The meeting adjourned at 5:49 p.m.

June 17, 2021