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Via Virtual Meeting
REPORT NUMBER 139 OF THE AUDIT COMMITTEE
September 16, 2020
To the Business Board,
University of Toronto
Your Committee reports that it held a virtual meeting on Wednesday, September 16, 2020, at 4:00 p.m. with the following members present:
PRESENT: Janet Ecker (Chair); Joanne McNamara (Vice-Chair); Teodora Dechev; Robert Boeckner; Sue Graham-Nutter; Rajiv Mathur; Andrew Szende; Lara Zink
REGRETS:Kathryn Jenkins
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: Anwar Kazimi, Deputy Secretary of the Office of the Governing Council; David Walders, Assistant Secretary, Office of the Governing Council
IN ATTENDANCE: Diana Brouwer, Ernst & Young; Elizabeth Church, Director, Stakeholder Relations; John Kerr, Director, Risk Management & Insurance; Daniel Ottini, Deputy Director, Internal Audit; Pierre Piché, Controller and Director of Financial Services
Audit Committee met in Closed Session.
ITEM 5 WAS APPROVED. ALL OTHER ITEMS ARE REPORTED TO THE
BUSINESS BOARD FOR INFORMATION.
Pursuant to section 6.1 of the audit committee terms of reference, consideration of items 10 and 11 took place in camera.
- Chair’s Welcome
The Chair welcomed members and guests to the first Audit Committee meeting for the 2020-2021 governance year.
- Discussion: Orientation and Calendar of Business
The Chair referred to the orientation videos that had been provided to members in advance of the meeting. She noted that one of the videos explained the unicameral structure of the University and the other explained the structure and mandate of the Committee, as well as how the Committee fitted within the overall governance structure of the University.
There were no questions from members on the orientation materials.
- Update and Discussion: COVID-19
The Chair invited Professor Vivek Goel, Special Advisor to the President and Provost and formed Co-Chair of the Incident Leadership Team, to provide a COVID-19 update.
Professor Goel organized his remarks around the following three key topics: the preparedness of the University for COVID 19; risk assessment relating to the decision to gradually reopen the University; and risk management/mitigation strategies that were in place to address a possible second wave of COVID-19.
Beginning with University preparedness, Professor Goel noted that throughout the past fifteen years, the University had prepared comprehensive crisis response plans, which included detailed business and continuity planning. Included in these plans were strategies to manage possible disease outbreaks, which were enhanced following the H1N1 outbreak in 2009. Planning to address COVID-19 began in earnest in January, 2020 and was focussed mainly on addressing students abroad and those who had travelled outside of Canada where the risk of exposure was high. An Incident Leadership Team and various crisis response groups were formed to address academic and business continuity. In very short order, all University courses were transitioned to an online format. In-person research, particularly field-based research, was suspended and all non-essential research activities moved to remote platforms. As of June, the University transitioned from incident response to response and adaptation, led by the tri-campus Response and Adaptation Committee.
Turning to risk assessment regarding gradual University reopening, Professor Goel noted that the University was, and would continue to be, guided by the advice of government and public health authorities. Detailed guidance had been provided for the reopening of the various aspects of the University and additional investment had been made in environmental health and safety teams to support reopening plans. Finally, turning to planning for subsequent outbreaks, Professor Goel noted that risk management and risk mitigation strategies were in place to protect the University community. Most students continued to utilize online-only learning and most staff and faculty continued to work from home. A limited number of students were living in student residences and measures had been put in place to create a safe environment. The UCheck self-assessment web portal had been launched earlier in the month to allow faculty members, librarians, staff, and students to generate a COVID-19 risk status before visiting campus. Campuses were operating at low density with many enhanced safety protocols, all of which meant that the University was well prepared to handle subsequent outbreaks.
Professor Scott Mabury provided additional details regarding the specific operational measures that had been taken to mitigate and manage risk. These included new cleaning protocols that had been put in place with expanded use of ventilation and HVAC systems, as well as the distribution of non-medical masks to members of the University community. In addition, the University had worked over the summer to reconfigure spaces, and on determining appropriate occupancy levels and use of University facilities. The University had also signed an agreement to secure hotel room space to address student need. Supports were also being provided for students entering Canada who were required to self-quarantine for 14 days, including the provision of transportation from the airport, accommodations, meals, daily wellness check-ins, and virtual programming. Significant IT work had been undertaken to support faculty, staff and students working and learning remotely. This included making the Office 365 platform available to employees working remotely, as well as partnerships to facilitate virtual student learning abroad.
Professor Mabury noted that although there had been an initial three-week pause in construction, once it resumed, projects that typically would have been impacted by increased vehicular and pedestrian traffic on campus were able to be expedited given the significantly reduced presence of members on campus. Finally, regarding enrolment, while final enrolment numbers could not be confirmed until later in the fall, there was cautious optimism. Based on registrations to date, overall enrolments were roughly in line with that of last year.
In response to a question from the Chair regarding managing possible second outbreaks, Professor Goel noted that given the measures that had been implemented over the last several months, the University was well positioned to address these risks. Detailed plans were in place to pivot to online-only learning, and to further restrict access to University facilities should the need arise. In response to another question about case tracking, Professor Goel confirmed that the University was tracking cases within the University community. To date, there had been a small number of cases within the community and no known outbreaks on campus.
The Chair thanked Professor Goel and Professor Mabury for their report.
- Risk Management and Insurance Annual Report, 2019-2020
Following a brief introduction by Sheila Brown, Chief Financial Officer, John Kerr, Director, Risk Management & Insurance provided comments on the annual report, highlighting the following main points:- There had been a hardening of the insurance market, with eleven consecutive quarters of price increases.
- Between 2018/19 and 2019/20 the University experienced an overall premium increase of 13.49% up from 4.82% the prior year.
- The main area of increase was property insurance, but the cost of the commercial crime policy had also increased.
- The University’s portfolio loss ratio was currently 58%, up from 52% the prior year, with individual policy loss ratios near or above 40% on five of nine lines of insurance purchased.
- As the University’s loss ratio increased, the less profitable it became to insurers.
- Course of construction insurance had also become quite significant in the past several years due to the volume of construction activity across all three campuses. It was expected that this activity would increase with the number of significant projects in the planning and development stages.
- Regarding claims for COVID-19 related loses, at present, the outbreak of COVID-19 did not trigger coverage under the business interruption section of the University’s property insurance coverage as these types of losses must be initiated by direct physical damage to the University’s insured property.
In reply to a member’s question about directors and officer’s liability insurance, Mr. Kerr noted that the market for this type of coverage had been challenging for some time. Responding to another question regarding loss prevention strategies to reduce claims, Mr. Kerr noted that the University periodically works with current and prospective insurers to carry out loss control engineering assessments and implements findings and recommendations where feasible.
- Report of the Previous Meeting: Report 138, June 17, 2020
The report of the previous meeting was approved.
- Business Arising from the Report of the Previous Meeting
There was no business arising from the report of the previous meeting
- Reports of the Administrative Assessors
Mark Britt, Director, Internal Audit, provided an update on the Audit Plan, the audit of tri-campus projects, as well as the fraud risk assessment project.
The Committee moved in Camera and Mr. Britt provided an update on an ongoing fraud investigation.
The Committee moved back into closed session.
In reply to member’s questions, Mr. Britt noted that the University was implementing various strategies in response to COVID-19 to accommodate employees working remotely while ensuring enhanced security measures were in place. Mr. Daniel Ottini, Deputy Director, Internal Audit, further noted that mitigation measures were in place to protect against cyber threats.
- Date of Next Meeting: December 1, 2020 at 4:00 p.m.
The Chair confirmed that the next meeting of the Committee would be held on December 1, 2020.
- Other Business
There were no items of other business
The Committee moved in camera
- Internal Auditor: Private meeting
Members of the administration absented themselves and the Committee met privately with the Director of Internal Audit
- Committee Members Alone
The Committee members met alone.
The meeting adjourned at 5:40 p.m.