REPORT NUMBER 149 OF THE AUDIT COMMITTEE
September 21, 2022
To the Business Board,
University of Toronto
Your Committee reports that it held a meeting in the Boardroom, Simcoe Hall, on Wednesday, September 21, 2022, at 4:00 p.m. with the following:
Joanne McNamara (Chair), Teodora Dechev (Vice-Chair)*, David Bowden, Rajiv Mathur, Paul Huyer, Rima Ramchandani, Lara Zink*
Trevor Rodgers, Chief Financial Officer
Sheree Drummond, Secretary of the Governing Council
Scott Mabury, Vice President, Operations and Real Estate Partnerships
Alex Matos, Director, Internal Audit
Timothy Harlick, Secretary
Helen Bao, Executive Financial Officer, Operations and Real Estate Partnerships
Sanish Samuel, Controller and Director of Financial Services
John Kerr, Director, Risk Management & Insurance
Daniel Ottini, Deputy Director, Internal Audit
Vandana Bhamidi, Senior Internal Auditor
Diana Brouwer, Ernst & Young
Joyce Yu, Ernst & Young
Audit Committee met in Closed Session.
Pursuant to section 6.1 of the Audit Committee terms of reference, consideration of items 9 and 10 took place in camera.
- Chair’s Welcome
The Chair welcomed new and returning members, and guests to the first Audit Committee meeting for the 2022-2023 governance year.
- Report of the Previous Meeting: Report 148, June 20, 2022
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.
- Audit Committee
- Terms of Reference (for information)
- 2022-2023 Calendar of Business (for information)
The Chair referred members to the Committee’s terms of reference and calendar of business located on the Office of the Governing Council’s website and advised that the calendar of business would be updated by the Secretariat regularly as business came forward. She encouraged members to review the calendar on a regular basis.
It was noted that language in the Terms of Reference included the recently dissolved Pension Committee and that it would be amended to remove those references.
- Risk Management and Insurance Annual Report, 2021-2022
Following a brief introduction by Mr. Trevor Rodgers, Chief Financial Officer, Mr. John Kerr, Director, Risk Management & Insurance, provided comments on the annual report, highlighting the following main points:
Insurance Program Renewal Update
- Between 2020/21 and 2021/22 the University experienced an overall premium increase of 16.88% which was lower than the 20.16% increase from the prior year.
- The main property insurance rate had increased by 17.33% along with a 2% increase in insured values.
- The cost of the primary commercial general liability policy increased by 17.06% due to the combined effect of hardening market conditions and the University’s deteriorating loss experience.
- The cost of the automobile liability policy increased by 12.28% due to the increased number of insured vehicles and an increase in underlying rates per vehicle.
- The cost of the University’s three layers of excess liability insurance increased by 28.33% due to a sharp increase in the cost of placing the University’s first Excess D&O / Fiduciary liability policy.
- At the time of the report, the University’s portfolio loss ratio was 58%, up from 54% for the prior year.
- Three new claims had been reported to the University’s property insurer which had not yet been reflected in the loss ratio.
- The liability loss ratio had deteriorated from 122% to 130% primarily due to reserve adjustments.
- Regarding self insured claims, the University opened 45 property claims, up from 18 in the previous year.
- 11 new general liability claims had been opened, which was down from 14 from the prior year.
Canadian Universities Reciprocal Insurance Exchange (CURIE)
- The University had previously been a part of CURIE but had severed its relationship fifteen years ago.
- There had been an external review of the Finance division in 2022 that recommended application for CURIE membership in advance of its next 5-year underwriting period scheduled to commence in January 2023.
- While the initial cost to re-enter CURIE would be higher than current costs, the increases were justified by higher insurance limits, lower liability deductibles, and a suite of bundled services which if fully utilized would operate to improve the University’s risk profile, stabilize premiums, and manage down loss costs over time.
- CURIE had a much stronger balance sheet than at the time of the University’s previous departure and CURIE had resumed a regular pattern of surplus distributions, of which the University would benefit.
Mr. Rodgers and Mr. Kerr responded to members’ questions as follows:
- CURIE had indicated its interest in having the University as a member and that CURIE was looking for a relationship that extended beyond the initial 5 years.
- That at a time when commercial providers were pulling back on coverage; CURIE continued to design services that addressed the unique needs of the university sector.
- An overview of the past relationship between the University and CURIE and an explanation that, as the single largest subscriber at the time, the University had experienced a significant negative impact due to retro assessments that CURIE had been applying.
- Regarding the initial re-entry cost into CURIE, the premium would be approximately 11% more than current costs and that there were also transitional costs for purchasing stand alone coverage that CURIE does not provide.
- Reports of the Administrative Assessors
Professor Scott Mabury, Vice-President, Operations and Real Estate Partnerships provided an update on several significant matters.
Information Security Dashboard
- The dashboard was presented at the first meeting of each month of the tri-campus Vice-Presidents’ and would be made available to members of the Audit Committee.
- Its monthly presentation ensured leadership was aware of risks associated with information security.
- Multi-factor-authentication had been an example of a positive outcome of the dashboard.
- An update was provided on the current landscape for international students and the delays in student visas.
- The Office of the Vice-President, International, as well as Government Relations, had been active in addressing the issue with the Federal government.
- Visa applications were starting to be processed more efficiently and that there were currently roughly 600 students remaining without a visa, and 233 of those students were already in residences at the University.
- Recent legislative changes in the United States had led to a necessary inventory of IT hardware across the tri-campus.
- It had been an ongoing challenge to ensure all hardware was accurately accounted as the Office of the Chief Information Security Officer (OCISO) did not actively monitor the hardware infrastructure of every division.
- OCISO was actively engaged with divisions across the University offering support to update hardware to acceptable standards.
In response to members’ questions about barriers in integrating divisions into an institutional network, Professor Mabury provided further insights into the IT networking infrastructure across the tri-campus. The Committee requested progress reporting on this topic.
Mr. Rodgers provided an update on succession planning within Financial Services given recent and upcoming changes in personnel. In anticipation of retirements, his office had been engaged with the Office of the Vice-President, People Strategy, Equity and Culture, on transition planning where, prior to their retirements, senior administrators would step down from their roles and act as special advisors to onboard and train their successors.
In response to a member’s question, Mr. Rodgers indicated that both internal and external candidates would be considered, and successful candidates would require training given the specialization of areas within Financial Services.
- Date of Next Meeting: November 30, 2022 at 4:00 p.m.
The Chair confirmed that the next meeting of the Committee would be held on November 30, 2022.
- Other Business
The Chair recognized Mr. Bob Boeckner, who had served on the Committee since 2014 and that his contributions over the years had been thought provoking and greatly appreciated. Mr. Boeckner’s term had ended on June 30, 2022.
The Committee moved in camera.
- Internal Auditor: Private meeting
Members of the administration absented themselves and the Committee met privately with Mr. Alex Matos, Director Internal Audit, and Mr. Daniel Ottini, Deputy Director, Internal Audit.
- Committee Members Alone
Committee members discussed topics of interest.
The Committee returned to Closed Session.
The meeting adjourned at 5:37 p.m.
September 22, 2022