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City of Windsor

1. Preamble to the Main Report

The intent of this preamble is to clarify the final scope of the review and to summarize the
history of updates of this report that have resulted from new information provided to the Auditor
between January and December of 2008.

1.1 History of the 400 CHS Report:

This document updates the audit work and analysis completed on the draft audit report prepared
by the City Auditor in April of 2007 entitled, “The Post-Construction Audit of the 400 City Hall
Square building” for our review of the substantial volume of new information provided by
Administration to the Auditor throughout 2008.

The 400 CHS audit review leading to the April 2007 audit draft report was subject to a
significant scope limitation. A scope limitation is a restriction placed upon the internal Auditing
department that precludes the department from accomplishing its objectives and plans. The
scope limitation of the 400 CHS review of 2007 was defined by the Auditor as the restricted
access to records, personnel, and physical properties relevant to the performance of the
engagement objectives and the performance of necessary engagement procedures.

The City Auditor completed a draft report in April 2007, noting the following scope limitations
in the draft document:

- The Auditor did not have access to all in-camera Council documentation
- The project financial closeout was not completed, so the Auditor could not perform a
financial analysis of total project expenditures
- The Auditor had limited access to the project records and project staff to provide
clarification and answers to questions.

Throughout 2008, Audit had been provided with access to new information and persons to
answer questions necessary to address the scope limitations of the April 2007 draft. Through an
analysis of the new information, Audit has identified areas of the April 2007 draft that required
updating. This issue was addressed through changes to the report objectives, a refinement of
audit objectives and corrections or amendments to certain draft findings and recommendations.

A significant volume of work was required to bring this report up to date with the new
information. The report has been updated to reflect the new information provided by
Administration and the information gathered throughout 2008 in the interviews held by Audit
with the project Staff and Consultants who worked on the 400 CHS project.

1.1.1 New Information and Audit Report Revisions

Report History: 2006 – 2007

In 2006, the Office of the City Auditor undertook a post-construction audit of the processes
approving the project and managing the construction of the building. The file was completed
with the City Auditor as the lead with Audit staff assisting.

Noted within the 400 CHS draft (April 2007) audit report, was that the report had been
completed under a significant scope limitation, where the Auditor had limited access to
documentation and project staff required to provide answers to the Auditor’s questions.

“The post-construction audit of the 400 City Hall Square building involved discussions
with various responsible City Staff and Management, interviewing consultants, the
gathering and examination of City documents from Council reports to Committee
meeting minutes to e-mails and memos regarding the project, as well as reviewing the
City’s financial records. There are, however, areas of the audit where sufficient
documentation could not be found to be able to answer questions regarding matters such
as the alterations in the procurement process, the lack of implementation of a project
management methodology or the apparent cost overrun for which a final financial
analysis and closeout has not been performed.”

Main Report: History of the 400 CHS Report Page 34

City of Windsor

Also noted in the 400 CHS draft (April 2007) audit report, were three specific scope
limitations that impacted the scope of the review.

a. “We question the necessity and the degree to which Council meetings relevant
to this project were held in-camera. The lack of public transparency on a
taxpayer funded project created challenges throughout the audit review. An
extensive level of fieldwork was performed to gain assurance that we acquired
adequate documentation to support the findings in the review.”

b. “We requested but did not receive the following project documentation that
we anticipated would have been available for review as per best practices. We
were advised by Management, that such documentation may be obtained by
reviewing the minutes of the various committees of the project (supplied by
Management), the project Council reports and from the project Consultant
contracted by the City. We were unable to identify where a project charter
identifying the project team, schedule and deliverables was created and
approved. Due to this limitation, we relied on measurable deliverables of the
project (found to exist at a very basic descriptive level) within the project
Council reports, RFP(s) documents, project contracts/agreements and
committee minutes.”

c. “To date, the project financials have not been finalised and therefore, we are
unable to perform a final analysis or issue a final report on total project
expenditures. Any financial reported findings are based on project
expenditures recorded in the PeopleSoft Financial System as of December 6,

The draft audit report entitled, Post Construction Audit Report, 400 City Hall Square East,
Draft For Audit Committee Discussion (April 2007) was completed based on the review and
analysis of the limited documentation and project staff that were available to the Auditor.

In December of 2007, the Post Construction Audit Report, 400 City Hall Square East, Draft
For Audit Committee Discussion (April 2007) was discussed at the Audit Committee with
City Auditor and Administration in attendance. On December 31, 2007, the City Auditor
retired. At the December meeting, the Audit Committee assigned Angela Berry, the Lead
Auditor, to update and complete the 400 CHS file.

Report Updating History: 2007 - 2008

1. April 2007 – City Auditor’s Office Completes Draft Audit Report

In April of 2007, the City Auditor’s Office prepared its draft 400 CHS review report,
but without a complete financial analysis of the 400 CHS project. The financial
details were not yet available to audit, as the Project Management Team had not
completed the final analysis or financial closeout of the 400 CHS project. Delays in
the Corporate Projects financial closeout can be attributed to the gaps in project
management staffing noted throughout this report.

The preliminary financial findings of the April 2007 draft were based on project
expenditures recorded in the PeopleSoft financial system as at December 6, 2006.
Due to the scope limitations identified above, it was necessary to present the City
Auditor’s Office financial findings in the report without clarification or comments
from the City’s Corporate Projects Group.

To complete audit reports in compliance with our Audit Charter (2004), the audit
process requires that Management ensure that a written response to the
recommendations in the Internal Audit report is submitted to the City Auditor, and
that the Auditor include Management’s written response in the report. A disclosure of
non-compliance is required in the instances where full compliance with this written
response requirement could not be obtained.

Main Report: History of the 400 CHS Report Page 35

City of Windsor

2. July 2007 Financial Update:

Because of the lapse in time since the April 2007 draft audit report was prepared, the
City Auditor prepared a new financial update report reflecting project expenditures
recorded in the PeopleSoft financial system as at June 29, 2007. Due to the scope
limitations identified above, it was necessary to present the financial findings of the
City Auditor in the report update with limited clarification / comments from
Corporate Projects.

3. November 2007 Audit Committee Meeting:

As recorded in the official Audit Committee minutes of November 2007, the City
Auditor tabled (in camera), the original audit report with the July financial update and
received the following committee direction:

“Moved by B. Carter, seconded by Councillor Halberstadt,

That the confidential report relating to the Audit of 400 City Hall Square East BE
DEFERRED to the special meeting of the Audit Committee to be held December
14, 2007.”

4. December 2007 Financial Update:

Due to the lapse in time it was again necessary for the City Auditor to complete a new
financial update report reflecting project expenditures recorded in the PeopleSoft
financial system as at November 21, 2007 with limited comments from Corporate

The audit at this point has resulted in three separate reports consisting of the original
draft document and two additional draft financial update reports.

5. December 2007: Audit Committee Meeting and New Information:

At the December 2007 Audit Committee meeting, the committee asked the City
Auditor to consolidate the Post Construction Audit Report (including all financial
updates of the City Auditor’s Office, and upon its completion, the Project
Management Team report) into one final report. The Audit Committee also
requested, pending the advice of City Legal, that either (i) a Public report be sent to
Council or (ii) that an In Camera report be sent to Council accompanied by a
summary report for the public session that includes the financial issues, project
management issues and the request for proposals process. By taking this direction,
the City Auditor’s Office would prepare the final report with the current financial
project values in a format that would be clear to the reader.

Also, at the December 2007 meeting of the Audit Committee, Administration

requested permission to revise the management comments to the audit draft to reflect
any changes made to the audit report. These efforts are intended to make certain the
views of City Management & Administration are adequately and appropriately
represented within the final audit report.

In December of 2007, the Project Management Team informed the Auditor’s Office
that it was nearing completion of the final analysis and financial closeout of the 400
CHS project. The importance of this communication was that the Project Team’s
report would provide final financial figures as well as a detailed analysis of project

It was anticipated that the analysis part of that report would satisfy draft audit
recommendation # 23 of the City Auditor’s Office 400 CHS Review (April 2007)
which states, “that upon completion of the financial records of the project, that
Administration present a full financial accounting of the project budget versus actual
financial details to Council.”

Main Report: History of the 400 CHS Report Page 36

City of Windsor

6. April 2008: Revised Management Comments / New Information from


Audit received revised management comments to the 400 CHS draft (April 2007)
addressing the findings, comments and recommendations of the draft audit report. In
addition, Administration provided 2 large binders documenting in-camera and open-
session council reports and meeting minutes covering the entire timeline of the
project. Administration identified and made accessible individuals not previously
interviewed by Audit.

7. April 2008: In-Camera – Update Audit Committee on Exit Conference & Impact of
New Information Provided by Administration:

On April 23, 2008, the Lead Auditor updated the Audit Committee on the progress of
the 400 CHS review.

The Lead Auditor reported that to comply with Audit Standards, the 400 CHS draft
report was required to be sent back to the fieldwork stage. The Audit team needed to
conduct the necessary work to determine the impact of the new information on the
draft audit findings through the completion of interviews and through seeking further
new and relevant information from interview sources.

8. The Audit Committee, at its meeting held April 23, 2008, adopted the following

Moved by B. Carter, seconded by Councillor Marra,

“That the Lead Internal Auditor BE REQUESTED to consider the comments and
information received from Administration to determine the effects that the
findings and recommendations will have on the 400 City Hall Square review and
further, that the review BE DEFERRED until the Lead Internal Auditor is
satisfied that the findings and recommendations are supported by proper

9. 14 May 2008: In-Camera – Lead Auditor Update to the Audit Committee on

Assessment of New Information Provided by Administration

“We are conducting the work to determine the extent to which two (2) binders of
information provided by Administration to Internal Audit on April 18, 2008 can be
considered as new evidence.”

10. 16 Jun. 2008: New Information – Council Report, 400 CHS Project Completion

- On June 16, 2008, Administration submitted a report to council entitled, 400 CHS
Project Completion Report.

- One of the major scope limitations identified in the April 2007 400 CHS audit
draft was that as of the conclusion date of audit fieldwork, Corporate Projects had
not yet completed the closeout of the project financials. Therefore, the final
financial details required to perform an analysis were not available for review.

- The project completion report of the 400 City Hall Square (CHS) Project was a
new source of information. This document is a source of clarification to many of
the outstanding questions raised by the former City Auditor within the 400 CHS
draft (April 2007) audit report.

Main Report: History of the 400 CHS Report Page 37

City of Windsor

11. 12 Sept 2008: New Information – Update Audit Committee: 11 Boxes of Project
Information Received From Corporate Projects

- On August 21, 2008, while interviewing project staff, Audit was informed of the
existence and location of a large number of 400 CHS project files.

- Audit requested Administration to grant it access to these files. Administration

was helpful in locating the files, retrieving them from storage and granting access
to the files, thereby ensuring timely availability to Audit.

- On September 9, 2008 Audit obtained 11 boxes of project paper files and a

computer disc containing 74 electronic files.

12. Interviews – Project Staff, Administration and Consultants

- New information gained through conducting interviews in 2008.

Main Report: History of the 400 CHS Report Page 38

City of Windsor

1.1.2 Impact of New Information on the Final 400 CHS Review 2008
(Part I and II)

The goal for the completion of the 400 CHS draft (April 2007) report was to strengthen the
audit findings by gathering sufficient and appropriate audit support, with the ultimate goal of
updating the draft report with the new and current information. The impact of the new
information received from Administration has been significant. Addressing the new
information that materially or moderately impacted the 400 CHS draft (April 2007) report
required significant audit work and revisions, to bring the report to completion. To avoid
further delay in completing our reporting, it was decided to separate the report into two parts,
to be released on different dates.

Part I: The first Part will cover:

- Our analysis of the legal agreement with the Contractor (as amended) and
whether the City received what it bargained for;

- Whether the project was delivered on schedule (as amended), and within
budget (as amended); and

- Whether an appropriate project management methodology was established

and followed throughout the design-build approval and construction process
for the project (including whether change orders were appropriately approved
and monitored and whether the project costs were effectively monitored and
reported during the process).

Part II: The second Part will cover:

- A review of how the project approval process was conducted in compliance

with the City’s Purchasing By-Law, the Municipal Act, 2001 and the
Common Law governing procurement by public authorities, with respect to
the award of the contracts for the building construction and for the building

- This will include a review of the selection of proponent and the information
reported to Council for decision-making purposes (including a determination
as to whether the costs, benefits and risks of the project were appropriately
and clearly presented).

Main Report: History of the 400 CHS Report Page 39