Report to: General Committee Date Report Authored: April 20, 2010

SUBJECT: Framework for the Establishment of an Election Compliance Audit Committee

PREPARED BY: Andrew Brouwer, Ext. 8220

RECOMMENDATION:

1) That the Report entitled “Framework for the Establishment of an Election Compliance Audit Committee” be received; and,

2) That Council adopt the Terms of Reference for an Election Compliance Audit Committee outlined in Appendix “A”; and,

3) That, following the recruitment process, the Clerk report to Council in advance of the October 1, 2010 deadline to present a short list of candidates for Council’s consideration; and further,

4) That Staff be authorized and directed to do all things necessary to give effect to this resolution.1. Purpose 2. Background 3. Discussion 4. Financial

5. Others (HR, Strategic, Affected Units) 6. Attachment(s)

PURPOSE:

The purpose of this Report is to seek Council’s approval of a framework for the establishment of an Election Compliance Audit Committee (“Committee”) required under the Municipal Elections Act, 1996, as amended.

BACKGROUND:

Bill 212 (Good Government Act) amendments to the Municipal Elections Act, 1996 (“Act”) require that all municipal councils and school boards establish Compliance Audit Committees prior to October 1 in an election year. Prior to the Bill 212 amendments, the appointment of a Committee was discretionary and only a handful of Ontario municipalities chose to create a Committee.

A survey of Greater Toronto Area (GTA) municipalities indicated that there were a only a small handful of compliance audit applications made to councils following the 2006 Municipal Election with the majority of the applications dismissed. The Town of Markham has never received a request for a compliance audit.

In the Greater Toronto Area, staff are aware that election compliance audit committees have been established by the municipalities of Vaughan, Newmarket, Toronto and Ajax. Members for a joint election compliance audit committee established by the municipalities of Aurora, East Gwillimbury, Georgina, Richmond Hill and Whitchurch-Stouffville are currently being recruited.

ANALYSIS & OPTIONS:

Election Compliance Audit Committee Composition

In accordance with the Act, the Committee is required to be comprised of 3 to 7 members and cannot include any employees or Officers of the Town of Markham or any Members of Council, or any candidate in the upcoming 2010 Municipal Election. The Committee’s term is the same as the term of Council. The Clerk is required to support the Committee with administrative practices and procedures (e.g., terms of reference) and with implementing the decisions of the Committee.

Committee Mandate

As prescribed by the Act, the Committee’s mandate includes four components:

1. Decide whether an application for a compliance audit should be granted or rejected; and,
2. If granted, appoint an auditor; and,
3. Based on the auditor’s report, determine whether legal proceedings should be commenced; and,
4. If there was no apparent contravention, or no reasonable grounds for the application, advise Council.

Election Compliance Audit Process

Any eligible Markham voter who believes (on reasonable grounds) that a candidate has contravened the Act’s provisions related to election campaign finances may apply for the Committee’s consideration of an election compliance audit of the candidate’s election finances. The voter is required to complete a written application and file it with the Clerk within 90 days of the financial statement filing deadline (June 23, 2011 for the 2010 Municipal Election).

Following receipt of an application, the Clerk has 10 days to forward the written request to the Election Compliance Audit Committee, with a copy sent to all members of Council. Within 30 days of receiving the request, the Committee must consider the compliance audit request and decide whether it should be granted or rejected. The decision of the Election Compliance Audit Committee may be appealed to the Ontario Court of Justice within 15 days of the Committee’s decision.

If the Committee decides to grant the request for a compliance audit, it appoints an auditor to conduct the audit. The auditor then prepares a report which is submitted to the candidate, Council, the Clerk and the applicant. The Clerk is required to provide a copy of the audit report to the Committee within 10 days of receipt. Within 30 days of receiving the auditor’s report from the Clerk, the Election Compliance Audit Committee must consider it. If the report concludes that the candidate appears to have contravened a provision of the Act related to election campaign finances, the Committee must determine whether to commence legal proceedings against the candidate. If the report concludes that the candidate did not contravene the Act, the Committee must make a finding as to whether there were reasonable grounds for the request for the audit. If the Committee determines that there were no reasonable grounds, then Council is entitled to recover the auditor’s costs from the applicant.

Other Recourse

The election compliance audit process is prescribed by the Act and does not limit other forms of legal action related to election finances.

Election Compliance Audit-Related Fees

Markham is responsible for paying the auditor’s costs of performing the audit and all costs related to the Committee’s operation and activities.

Most municipalities currently operating an Election Compliance Audit Committee pay an annual retainer fee to its members, a per diem fee for each meeting and mileage. The retainer fee is intended to retain high caliber candidates and to cover any costs associated with members’ time reviewing other municipalities’ Election Compliance Audit Committee decisions and other relevant information, some of which may be provided by the Clerk.

To ensure Markham remains competitive with Greater Toronto Area municipalities, staff recommends the implementation of similar fees – namely a $400 annual retainer fee and a $350 per diem fee for each meeting, plus mileage.

Committee Member Attributes & Experience

Municipalities that established an Election Compliance Audit Committee prior to the Bill 212 amendments suggest that Committee Members should demonstrate the following attributes and experience:

• Knowledge and understanding of municipal election campaign financing rules;
• Professional accounting and/or auditing experience represented on the Committee;
• Proven analytical and decision-making skills;
• Experience working on committees, task forces or similar settings;
• Demonstrated knowledge of quasi-judicial proceedings;
• Availability and willingness to attend meetings; and
• Excellent oral and written communication skills.

In addition to the above, it is important that professional accountants and/or auditors appointed to an Election Compliance Audit Committee agree in writing to not offer advice or prepare financial statements for municipal election candidates to ensure their impartiality. While the Town’s committee appointment guidelines generally require residency in the Town of Markham, staff suggest that applicants from outside Markham be considered should their attributes and experience be desirable.

Staff recommends that the attributes and experiences outlined above form the basis of the recruitment and selection criteria for a Markham Committee.

Recruitment & Committee Model

Recruitment would occur through advertisements in local and GTA newspapers, professional associations such as the Institute of Chartered Accountants of Ontario and academic institutions including York University, University of Toronto and Ryerson University. If the initial recruitment process is not successful, a search firm could be contracted to provide further assistance.

It is recommended that senior staff (e.g., Clerk, Deputy Clerk, Human Resources Department representation) review applications and conduct interviews as required based on the recruitment and selection criteria. Following this process, Council would consider a short list of prospective members for appointment. Prior to appointment, each member will be required to agree in writing not to offer advice or prepare financial statements for municipal election candidates to ensure their impartiality.

The Costs associated with the annual retainer, per diem and related expenses would be assumed by Markham.

Appendix “A” outlines draft terms of reference for a Markham Election Compliance Audit Committee.

FINANCIAL CONSIDERATIONS AND TEMPLATE:

Funding for the Committee’s operation (annual retainer and per diem fees, mileage expenses, etc.) and any auditor fees would be funded from the Election Reserve account.

HUMAN RESOURCES CONSIDERATIONS

Additional responsibilities associated with the Clerk’s support of the Election Compliance Audit Committee may be accommodated within the existing Clerk’s Department staff complement.

ALIGNMENT WITH STRATEGIC PRIORITIES:

Not applicable.

BUSINESS UNITS CONSULTED AND AFFECTED:

Legal, Finance and Human Resources departments were consulted in the development of this report. In addition, the report was reviewed with the Auditor General for feedback.

Appendix “A” – Terms of Reference for an Election Compliance Audit Committee

RECOMMENDED

Appendix “A”

TERMS OF REFERENCE

Town of Markham

Election Compliance Audit Committee

Mandate

The mandate of Committee is set out in Section 81 of the Municipal Elections Act, 1996, as amended.

1. Within 30 days of receipt of an application requesting a compliance audit, the Committee shall consider the compliance audit application and decide whether it should be granted or rejected;

2. If the application is granted, the Committee shall appoint an auditor to conduct a compliance audit of the candidate’s election campaign finances;

3. The Committee will review the auditor’s report within 10 days of receipt and decide whether legal proceedings should be commenced; and

4. If the auditor’s report indicates that there were no apparent contraventions and if there appears there were no reasonable grounds for the application, the Committee shall advise Council accordingly.

Members of Council, staff or candidates running for office in the year of the election are not eligible to be appointed to the Committee. Should an appointed Member accept employment with any of the member municipalities or register as a candidate with any of the member municipalities, their appointment will be terminated.

All Committee Members must agree in writing that they will not work for or provide advice to any candidate running for municipal office. To avoid any potential conflict of interest, applicants with accounting or auditing backgrounds must agree in writing that they will not offer their services to any municipal election candidates.

Anyone who has participated as candidates or who have conducted audits or provided financial advice in respect of such campaigns, would be disqualified from participation on the Committee.

Composition

The Committee shall be composed of a minimum of 3 Members in accordance with the Act. Up to 5 Members shall be appointed to ensure availability of Members to hold a meeting.

Term

The term of the Committee is the same as the term of Council.

Chair

The three-Member Committee called to hear a request for compliance audit shall select one of its Members to act as a Chair at the first meeting.

Proposed Meeting Schedule

The Committee shall meet as needed with meetings to be scheduled by the Clerk, in consultation with the Chair, when a compliance audit application is received.

Staff Support

The Clerk’s staff shall provide administrative support to the Committee.

Meetings

Meetings of the Committee shall be conducted in accordance with the open meeting requirements of the provisions in the Municipal Act, 2001 and Markham’s notice policy provided for in the Procedure By-law. Notices and agendas will normally be published on Markham’s website and made available in hard copy include alternate formats through the Clerk’s Department.

Remuneration

$400 – Annual retainer fee.

$350 – Per Diem rate, plus mileage.

Membership Selection

All applicants will be required to complete an application form outlining their qualifications and experience for submission to the Clerk.

The Clerk, in addition to other senior staff shall meet to review all applications based upon the recruitment and selection criteria and prepare a short list for consideration by Council. Appointments are confirmed by Council by resolution or by-law.

Recruitment & Selection Criteria

1. Demonstrated knowledge and understanding of municipal election campaign financing rules;
2. Professional accounting and/or auditing experience represented on the Committee;
3. Proven analytical and decision-making skills;
4. Experience working on committees, task forces or similar settings;
5. Demonstrated knowledge of quasi-judicial proceedings;
6. Availability and willingness to attend meetings; and
7. Excellent oral and written communication skills.

COMMITTEE/COUNCIL ITEM TRACKING FORM

Revised: September 2009

COUNCIL	DEVELOPMENT SERVICES Planning Economic Dev. Transportation	GENERAL Community Services Environment & Sustainability Finance & Administrative X Lands, Building & Parks Construction
TARGET MEETING DATE May 10, 2010	DATE REPORT AUTHORED April 20, 2010	ITEM TITLE Framework for the Establishment of a Election Compliance Audit Committee
AGENDA SECTION			TIME TO BE ALLOCATED
Presentation/Deputation Consent Regular X			25 minutes
CONFIDENTIAL REPORTS For in camera reports, please indicate appropriate subsection of s239(2) Municipal Act (√ all applicable): (a) Security of Property (e) Litigation or potential litigation (b) Personal matters about individual (f) Solicitor-client privilege (c) Acquisition/disposition of land (g) Legislated authority to be in camera (d) Labour relations/Employee negotiations
ORIGINATOR A. Brouwer Ext. 8220		CONTACT A. Brouwer Ext. 8220

DOES THE REPORT, PRESENTATION, BY-LAW AFFECT OTHER DEPTS:

Yes X No (List all departments impacted and being consulted on this report.)

Electronic Approval Required by:

Department	Individual	Obtained
Legal	Catherine Conrad
Human Resources	Sharon Laing
Finance	Veronica Siu
Finance	Joel Lustig
Commissioner, Corporate Services	Andy Taylor
CAO	John Livey

Attachments:

Comments & Questions:

Andrew’s Comments:

Incorporates earlier feedback from Legal, HR and Finance.

A very brief presentation will be prepared (5 slides) should Council require a summary of the report.