Report: Audit Committee - June 16, 2025

REPORT NUMBER 164 OF THE AUDIT COMMITTEE

MONDAY, JUNE 16, 2025

CLOSED SESSION

1. Chair’s Remarks
   
   
   The Chair welcomed members and guests to the final meeting of the governance year. She reminded those in attendance that the Committee met in closed session and that the materials were confidential.
   
   The Committee recognized and thanked Ms Joanne McNamara for her dedicated service as Chair of the Audit Committee from 2021 to 2025. During her tenure, she also contributed significantly through her work on several other committees of Governing Council, providing strong leadership and commitment to university governance. A token of appreciation was presented in recognition of her service.

CONSENT AGENDA

On motion duly moved, seconded, and carried

YOUR COMMITTEE APPROVED

THAT the consent agenda be adopted and that Item 2, the Report of the Previous Meeting, be approved.

2. Report of the Previous Meeting – Report Number 163 (April 30, 2025)
   
   The Report of the Previous Meeting, 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. Date of the Next Meeting: September 17, 2025, 4:00 p.m. – 6:00 p.m.
   
   The Committee was made aware that the next meeting of the Committee would be held on September 17, 2025.

5. Report of the Administrative Assessors
   
   The Committee moved in camera.
   
   The Committee received an update on a confidential matter from Mr. Trevor Rodgers, Chief Financial Officer.
   
   The Committee returned to closed session.
6. Audited Financial Statements for the Year Ended April 30, 2025

   1. Financial Report Presentation
      
      The Committee received a presentation of the Audited Financial Statements from Mr. Trevor Rodgers, Chief Financial Officer, and Mr. Sanish Samuel, Controller and Director of Financial Services. The efforts of the Financial Services team were recognized, as well as the contributions of the Internal Audit Department and the External Auditors to complete the audit successfully.
      
      The presentation of the Financial Report for the year ended April 30, 2025, highlighted the following:

   • The University remained in a strong financial position, with net assets increasing by $706 million to $10.6 billion in 2025. The increase was primarily due to net income of $519 million, endowed donations and grants of $95 million, and gains on externally restricted endowments of $161 million, offset by $69 million in remeasurements on employee future benefit obligations. Net income represented 10.6% of revenues and was largely driven by strong returns on working capital investments and funds set aside for future priorities.

   • In 2025, the University incurred $2.6 billion for salaries and employee benefits, comprising 59.7% of the University’s $4.4 billion in expenses. The University remained a member of the University Pension Plan Ontario (UPP) and had set aside $250 million in a pension special payments reserve to fund future obligations. During the year, $30 million of the reserve was transferred to the UPP as a prepayment against potential future special payment obligations.

   • Additional expenses included $408 million for scholarships, fellowships, and bursaries, $293 million for materials, supplies and services, $262 million for amortization of capital assets, and $152 million for inter-institutional contributions.

   • The University continued to invest in vital capital infrastructure, spending $630 million on capital asset additions in 2025.

   • During the year, the University raised a total of $361 million from philanthropy, including $316 million in pledges and gifts (donations) and $45 million in philanthropic research grants from non-government sources. Endowments increased to $3.9 billion, benefiting from an 8.9% return in the Long-term Capital Appreciation Pool and $95 million in endowed donations.

   • Government and other grants received in 2025 for restricted purposes totaled $693 million, including $641 million for research and $52 million for capital infrastructure and other purposes.

   • Despite slowing revenue growth due to tuition caps and the government’s shifting immigration policy, the University continued to show financial resilience. Ancillary operations have posted positive net income for three consecutive years, although challenges persist from flexible work arrangements and inflationary cost pressures.

   2. External Auditors’ Report on Audit Results
      
      Ms Kathi Aspros Ernst & Young presented an 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. 
      
      The external auditors highlighted the audit strategy remained consistent with the 2025 Audit Plan presented in November 2024, with materiality set at $109 million (2.5% of total expenses); areas of audit emphasis included revenue recognition (including commercial activities), investments, investment income allocation, pensions and post-retirement benefits, significant contracts and agreements, legal matters, and the risk of management override of controls; and there were no issues noted as a result of the audit procedures performed, other than one immaterial reclassification misstatement, which management chose to leave unadjusted.
      
      The Committee noted that no significant matters arose from the audit, and no corrected or uncorrected errors of concern were identified. Inquiries were made with respect to the risk of material misstatements due to fraud or suspected fraud; the auditors confirmed that no such issues were identified. The Committee was also informed that the auditors received full cooperation from management and that all required audit communications were provided.
      
      The audited financial statements for the year ended April 30, 2025, were examined in detail by the Committee. The audit results indicated there were no issues requiring the Committee’s attention.
       

   3. Legal Claims
      
      The Committee received the 2024-2025 summary of legal actions against the University exceeding $500,000 prepared by the administration.
       

   4. External Auditors: Private Meeting
      
      The Committee moved in camera.
      
      The Committee met privately with the external auditors with no University staff, other than Mr. Alex Matos, Director, Internal Audit, present.  No issues were identified for the Business Board’s attention.
      
      Ms Aspros 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.
      
      The Committee returned to closed session.
      
      The Chair reported that there had been no matters arising from the Committee’s in camera session with the external auditors that would require action.
       

   5. ​​​​​​​Discussion and Recommendation
      
      The Chair thanked Mr. Rodgers and commended the Financial Services team for their work in preparing the financial statements.

On motion duly moved, seconded and carried

YOUR COMMITTEE RECOMMENDED

THAT the University of Toronto audited financial statements for the fiscal year ended April 30, 2025, be approved.

7. Appointment of the External Auditors for 2025-2026
   
   Mr. Rodgers reported that the university issued a Request for Proposals for external audit services in November 2023, which had been ten years since its last formal tender process. Following that process, the Audit Committee recommended the appointment of Ernst & Young LLP (EY), and the Governing Council approved the appointment on June 27, 2024. The administration subsequently entered into a five-year Master Services Agreement with EY, subject to their annual appointment by the Governing Council.
   
   He further commented that this year marks the first year of the five-year agreement with EY as the University’s external auditor. Recognizing EY’s longstanding relationship with the University, Ms. Kathi Aspros has taken over as the new Audit Engagement Partner, with Ms. Diana Brouwer continuing to provide support in the role of Transition Partner to ensure knowledge transfer and process continuity.

On motion duly moved, seconded and carried

YOUR COMMITTEE RECOMMENDED

THAT Ernst & Young LLP be appointed as external auditors of the University of Toronto for the fiscal year ending April 30, 2026.

8. Internal Audit Annual Report (to April 30, 2025)
   
   Mr. Alex Matos, Executive Director, Internal Audit, highlighted the following key points from the Internal Audit Annual Report for the year ended April 30, 2025:

• The Annual Internal Audit Plan 2024–2025 progressed mostly as planned, with most projects either completed or in later stages of reporting.
• Recurring themes, challenges, and opportunities for improvement were noted in resource effectiveness, information and access management, and oversight and accountability. These pointed to the broader need to modernize administrative functions and improve resource allocation across the tri-campus.
• Internal Audit broadened its community engagement by actively participating in numerous institutional working groups (finance, procurement, IT, research, and data governance) and by increasing external collaboration with peers across the sector.
• The continuous audit program and the Tri-Agency Expenditure Compliance Assessment program were advanced, with a sharper focus on proactive education and awareness.
• Internal Audit assisted EY in the 2025 financial statement audit, enrolment audit, and program audits, as well as reviewing the financial records of student organizations under the Compulsory Non-Academic Incidental Fees policy.
• There was a marked increase in additional requests from across the University, many proactive and forward-looking, including policy refreshes, root cause analyses, and accountability framework reviews.
• Looking forward, Internal Audit’s Vision 2030 strategic plan emphasizes alignment with University risks and priorities, expanded use of data intelligence, and continued adaptation to emerging risks such as AI guardrails, cybersecurity, and geopolitical challenges.

9. Other Business
   
   The Chair thanked members, assessors, the internal and external auditors, and the Secretariat for their time and efforts devoted to the Committees throughout the year.
   
   She thanked Sue Graham-Nutter for her dedicated service to the Audit Committee, noting this was her final year of membership.
   
   The Committee in camera.​​​​
10. Risk Dashboards
    
    The Committee received an update on risk reporting from Ms Elizabeth Cragg, Director, Office of the Vice-President, Operations & Real Estate Partnerships.
11. Internal Auditor – Private Meeting
    
    Members of the administration absented themselves and the Committee met privately with Mr. Matos.
12. Committee Members Alone
    
    Committee members discussed topics of interest and concern.
    
    The Committee returned to Closed Session.

The meeting adjourned at 6:03 p.m.
 

June 18, 2025