City of London Audit Committee Reviews 2025 Financial Audit and Approves New Internal Auditor

The City of London Audit Committee reviewed the 2025 financial audit and consolidated financial statements, received updates on the internal audit plan, discussed audits of the subdivision review process and the Climate Emergency Action Plan, and referred a request for a housing co-operative audit to the 2027 audit planning process. The committee also approved appointing MNP LLP as the city's outsourced internal auditor beginning in 2027.

Topics Discussed

1. 2025 FINANCIAL AUDIT AND CONSOLIDATED STATEMENTS

The committee reviewed the city's 2025 financial results and KPMG's audit work. Financial assets increased by $281.2 million, financial liabilities increased by $47.3 million, and net financial assets increased by $233.9 million. The city reported $252.6 million in capitalized tangible capital assets in 2025, including $25.9 million for East London Link and Highbury Avenue improvements (Phase 3C), $22.8 million for the Greenway incinerator rebuild, $11.4 million for Colonel Talbot Road and East London Link Phase 3A West Dundas Street, and $7.5 million for Oxford Street West/Gideon Drive intersection improvements. The city also assumed $61.9 million in developer-contributed infrastructure through subdivision agreements.

Municipal taxation increased 8.5%, including a 7.3% rate increase. Total revenues increased by $185 million over 2024, the city recorded a $45.7 million accounting surplus for 2025, and ended the year with an accumulated surplus of $486.6 million.

KPMG told the committee the audit was "substantively complete" and expected to issue a clean, unmodified auditor's report once final procedures were finished.

2. AUDIT FINDINGS, ACCOUNTING ERRORS, AND TRAINING

The committee discussed several audit findings, including an approximately $2 million overstatement of prepaid expenses and accounts payable. Auditor Emily said, "we did note that a payment for one of the items picked up for testing did not occur until January 2026 and did not relate to 2025." City staff added: "It should have been recognized in 2026, not as a prepaid expense in 2025."

Staff said the issue arose from a payment processed on December 24 for an amount that was actually due in January 2026, and said the city is updating training materials, "particularly with payroll," to address year-end cutoff issues.

The committee also discussed a prior-year $1.5 million correction tied to a consolidation entry for a board or commission. Staff said the adjustment was made because "one of the eliminating entries was not was incorrect by 1.5 million."

3. INTERNAL AUDIT PLAN AND ACCESS TO INFORMATION

MNP, the city's internal audit firm, updated the committee on the audit plan, including a privacy audit scheduled for October 2026. During that discussion, Councillor Stevenson said councillors have had to file MFIPPA requests to review homeless service provider contracts and that "various levels of the budgets from complete to partial have the budgets redacted."

A committee member raised the broader concern this way: "how will this audit ensure that in trying to vigorously protect privacy rights, which is important, they're not overprotected such as to inhibit access to information." MNP responded that the audit would need to consider the balance between privacy protection and access.

The committee also reviewed follow-up work related to prior audits, including London Middlesex Community Housing matters.

4. SUBDIVISION REVIEW PROCESS AUDIT

The committee received the subdivision review process audit and heard from development industry representatives and staff. A citizen delegation said the report still referred to "mandatory pre-consultation," adding: "There is no such thing as mandatory pre-consultation."

Staff said the city has been working on process improvements since 2023. Mr. Mathers told the committee, "we've made a lot of improvements since that 2023 and and before time frame," while also noting more work remains. Staff said the Customer Service and Process Improvement Group has met 31 times since May 2023, completed 39 improvements, and has 18 more items on its working list.

Councillor Stevenson pressed staff on timing, asking, "Can I just ask why it's going to take so long on something that's so urgent and especially subdivisions when we're talking about a lot of units?"

5. CLIMATE AUDIT AND HOUSING CO-OPERATIVE AUDIT REFERRAL

The committee received the Climate Emergency Action Plan audit. Councillor Stevenson said "external legislative changes have eliminated key regulatory delivery pathways. Bill 17, Bill 98, and the federal carbon price removal require a fundamental rethink of several SEAP actions." Mr. Raco added that "much has changed since the… plan itself was originally established," including the operating environment, regulatory environment, and public expectations.

The committee also discussed whether the city is measuring environmental outcomes effectively. Councillor McAlister asked, "how is civic administration and ultimately this council or the next council going to take the learning from your report here... How are we going to implement this so we could be making better environmental decisions given the broad general nature of our jurisdiction over environmental matters?" Delegate Paul Van Meerbergen said, "The problem is not only that progress is overstated, but that the measurement framework may not be capable of detecting whether real-world outcomes are being achieved at all."

Under a separate item, the committee considered a request for an audit of housing co-operative service providers. Councillor Stevenson said, "We as council I as a councillor would like to know what we're doing… We're funding it. So, we want to know that it's safe out there." She also said, "We've got co-ops out there run by members who are doing the best that they can… but this has been a cry for help."

MNP and staff said there was no room to add the work to the current audit plan. Ms. Barbon said the matter could instead be considered during development of the 2027 audit plan.

Motions

Passed: - Motion to remove the LMCH Property Assessment / Monitoring List item from the monitoring list - Motion to receive the Subdivision Review Process Audit - Motion to receive the Climate Emergency Action Plan Audit - Motion to refer the housing co-operative audit request to the Audit Committee's 2027 risk assessment and audit plan development process - Motion approving RFP 2026-062, appointing MNP LLP as outsourced internal auditor for a four-year term beginning January 1, 2027, with a one-year renewal option

Attendees

Committee members and councillors identified in the discussion: - Councillor Stevenson - Councillor McAlister - Councillor Franke - Paul Van Meerbergen

Staff and external participants identified in the discussion: - Mr. Raco - Mr. Mathers - Ms. Barbon - Emily - KPMG representatives - MNP representatives