STAFF REPORT ACTION REQUIRED - Toronto · Decision History . The . City of Toronto Act . requires the city auditor (PwC) to annually audit the accounts and transactions of the City

STAFF REPORT ACTION REQUIRED

PricewaterhouseCoopers LLP Audit Results Report on the Toronto Transit Commission Consolidated Financial Statements for the Year Ended December 31 2016

Date June 15 2017

To TTC Board

From Chief Executive Officer

Summary

This report from the TTCrsquos external auditors PricewaterhouseCoopers LLP (PwC) outlines the findings from the audit of the TTCrsquos consolidated financial statements for the year ended December 31 2016

Recommendations

It is recommended that the Board

1 Receive the report and

2 Approve forwarding a copy of the report to the City Clerk for appropriate handling

Implementation Points The Boardrsquos Audit amp Risk Management Committee has received PwCrsquos Audit Results Report on the audit of TTC Consolidated Financial Statements for the year ended December 31 2016 at its meeting on May 29 2017

This report must be received at the June 15 2017 Board Meeting to ensure timely submission to the June 27 2017 Audit Committee Meeting of the City of Toronto

Financial Summary There are no financial implications resulting from the adoption of this report

AccessibilityEquity Matters This report and its recommendations have no accessibility or equity issues or impacts

PwC Audit Results Report on the TTC Consolidated Financial Statements for the Year-Ended December 31 2016 1

Decision History The City of Toronto Act requires the city auditor (PwC) to annually audit the accounts and transactions of the City and its local boards and to express an opinion on their financial statements

Comments The consolidated financial statements of the TTC for the year ended December 31 2016 were prepared by management They were audited by PwC in accordance with the plan approved by the Audit amp Risk Management Committee at its October 19 2016 meeting as set out in item 1 at httpwwwttccaAbout_the_TTCCommission_reports_and_informationCommittee_mee tingsAudit_Risk_Management2016October19Agendaindexjsp

The attached report was prepared by PwC and it includes their comments on the significant accounting auditing and reporting matters which are summarized on pages 1-4

PwC proposes to issue an unqualified Independent Auditorrsquos Report (or ldquoclean opinionrdquo) on the 2016 consolidated financial statements (see Appendix A) once the outstanding items noted on page 1 have been completed

Both staff and PwC would be pleased to answer any questions that you may have about the report or audit in general

Contact Michael Roche Head of Finance Tel (416) 393-3654 E-mail MichaelRochettcca

Attachments Audit Results Report from PwC LLP ndash Year-Ended December 31 2016

Toronto Transit Commission

2016 yoor~nd reporl to lheAudit and Risk 1-f(ltlU[ltJtter1l Committee

Prepartdot of ilfay 14 2017

)ay24 2017

)embers ofthe Audit and Ritk Ma~nt CommitteeofmeToroninTraNk Commlssloo 1900 ooge Strttt Toronto OS ~145 tZ2

Dear Membersotthe Auclll and 1Uak Managaxnt Committee

We ~-esubstanhalty lt0mpltttd our audit ofthe consolidated finandal stattmtntSo(the Toronto Transit Commisskgtn (TTC) for- the yur tndtd Oectmt-er3l 2016 pttpred in accordance with Canadian gmeraJJy accepted attotintln1 principles (Caiudlao GAAP) established by the Publtc Stctor AccoUnting Board (PSAO) ofTbe Charttrcd Profe113ional Accountants of Canada (erAOinact) (~krrcd to u the financial statements) We propose to i$ue an anquaJified report on those financial 1t1temnta ptndlng resolution o( outitt1nding Item uul1ined on page 1 Our draft auditors report l1l11cluded 1bull~ Ap1iendUc A

We plaquopared the llltOObullllplnylng rcport to asslJt you lit your review of the financial bulltlllenicnls lt includes an update on the stan1s orour work as wclJ asa discussion on the slgnlficnnt 11crounlinamp and financial reporting matters dealt w101 during the nudit process~

We -JI review the key clementI orthis J-epo1t at the upcoming meeting s od dlampcuss our findings with you

We would like to tltprtSIour lincNC thanks tc the management and staffwho ha~ alsttd us in carrying out our ~Ork and we look fOlind to OW mcdDgon May 29 2017 lryou ha 1nyque$tlonsorconcems prior to the Audit and Rilt )t1nageruent Couuiitttt meeting p1ea$e do not bHltbull~ to tontect ~ in advance

Cathy RU$$ell Partner J$Surtmce

ec Mr V Rocio Chier Mn11ncinl nnd Administration Officer Mr11 Roche Htd of pjnnnco and Trcntirer

Com m unications Lo the Audit and Risk M anagem ent Co mmittee

Key mailersfarbull diNCUNHion Cvnuucuta

Status ofthe audit lricewaterbOuseCOltgtpers WlW( or we htiC 111l)Mantampally completed CUr audit ofthe consolidaled financl11I suuments (the finandal stnltmenls)

Slgn16campnt outstanding items bullt time ofmaiUna includo the following

Rtttipc ofsigned managemeot ttprescntbulltJon lttttr Rccdpto( response to ltgal confirmation ltttm from txtcmal and uihmol legal COWgtSltI BoeJd IPIJlOll) ofthe financial sta-temmtr and Subscqent eents procedutts to the leoi our auditorbull rtpcgtrt

Signillcant aceountiug a udldng and reporting mntterS diJcussed with management

Significant aCCOlUlting e8tin1Rle8 Jn preparing the financial Stltements thllt bullwtre a num~ror ampignificant tcoounting estimates that required m11nagement Judgment

Post-employment and post-retitbullemenl bcnefltt (penslogt anltI other)

Diseount mtes and othttmiddot 3(l1ftrial aMumptlons such as mortality rates and retirement age are lnoorpon1ted in lhe vallation ofthe$e obligarioru

Contlnlt lialgtilities (unsenllaquol aocidont clai) - Thlt musurtmeot otthe tied -ltlltn1 cklms liability

tuft a numberofcstunrtes and adUarlal anumptkms

Other tdgnjficant JXOisions - TMfinancial statcmmts mdudevarious other l(pticant

pro1sions hicb based on I Judgltmmt alld hi5torieal experiientt

PoC Otk ~rfonned lostmiddotemployrnent and postmiddotretirement bcnefits

Ve examined the third party act1t1rfal vt1h1t1tlons of the TIC Pension f und and tmpampoyee runu-e benefit obligations at Yfa-end with the assistance or our pc 11ct11t1rlal soecialists to lfiSeSS the apprltlprialeness of ll1e 1188lll111)rions and methodology used to record the pension und cm1)loyce future be~tit liabilities 11urt were no lssuts Idemiffed 11s bullresult o(wr testing

Contingmt liabilities (unseuled accident claims) te lltitized our PwC actuarial s1gttdaHu tn onkrto uampcs1

TQIOlllO TnndConJniiHloft

Key tnatLerafor discultiislu11 Co1nu1t11U

the reasonableness ofthe aliSumr-gttions nnd 111tll1odology used by the TfC in rceordJng the lllleU1ed uccidenl clnimamp UabDJty We further tested the nccurncy and complele11ess of the data used in the calculation ti nd our 111Cdnlbt11 independently projlaquoceti a reserve estimate which was corrcgtared to the estimate reoorded by the TTC No significant differences re noted

Other qnificant pJOisions We eamped signlficant pro-lsloiu bf Inquiring willgt maragcmcnt regarding estimates and mcthOch wed feiewingsopporting doaunentadon and wbtte bullpJiicalie ttiewingse cdemenu afttt)Hf-Cnd e also enaqod our Pnlt internal spcdalists as ttqUirtd to MSffS the reascoability ortheassumptions and -igtodolov used bf the1iCin recording certajn othtt provsionl Tert were no bsues identifiedasa ttSUl o(our ttlllng

Conclwion Oued 01 our audit work performed we hnve concluded lhal the significtnt accounting estimates lncludcd in the fiJlinclaJ slatei11tllts are consistently conservative end supp()rtuble within an ampeeeptablc range

llanagenient Oerrlde of controls Catmdian Auditing Standard reqi1lre amphnl the risk of material misstAtemen1 due to management override orcontrolt blt CCgtnsldered a significant Uk on CCr) audit engagemeit~

1U11llgemett bas implemented internt1l control8 IQ eusure that apptOprlatcM-gregatlon ofduties have been eMAbllJlhod ot themiddotrrc in order 10 mitigate the riskof management override orcontrols

Tile TTC ha5 policies in pJace lO pTtven1 and dctet1 (mud indutllrlg 81 oode4-conduct an intunal audJt dtpartmtnt an Integrity hotline forempkgtyees and a process to review and 1pprOe manual joumal entries

c--oritpcrfonned Jn compktllg our audit e ue responsible for naamtaiDhlg

prv(j~middot~middot--middot-middotmiddotconsickrUJamptbepotential for management OCfTide otoootTOb

e moilt~ the quarterly fraud Inves1iption rrportt and thetall logo( 11lt City Whistle-blower hotline Md 1TC inlcpity hoilugtt Further le held discussions with 1nan1gtment1 internal legal counsel and the Staff Sergeant o(Spedal lnvtSllgntkgtns No algnificant items ftre noted in this review other than previously oommletkated We pcrbrmedaudit work on a sample o( 1Jgnlfltttnl nonmiddot standard journal entries We obuincd documentation to t upport the entries scleclcd l)nd ensured that a[I were appropriately approved We inocrporated unprlaquoLictab)e procedures Into our audit Bpp1ltoach

Conchl5ion Based on ou work perlonned wt lound no clt=nstanlaquo1 llgtal

Key rnattenfr discussiou

eYidenced inappropriat~ management override or controls

Risk of (raud ln revenue recognition Cilnadian Auditing Stendards flliiume fl rcbuttable presumption 1hat there i1 a significant risk of fraud in revtnue recognition in all busineSstamp

Rn1 enue recognition fron1 PRFSlO

Fraud and illegal acts

Any matte rs involving known egtr s uspected nonco111pliincc Ith ltS QI regulations

lbc ITC bat protcsses lton trols and other proltcduros 111 plaoe Lo ensure thnt revenue is apprlt1priitely mfgt1uuNd and recogniied

PwC work performed Updated our understan ding ofmanageme1umiddot1 plC)COllOl and intunAI controls $U110Unding lCcnue recognition To obUb confirmations froDl the Ciiy of1-n10 f0lt capital and operatirgsubsidies received dwmg t~yur 1lt1fonned audit war1towrsignlllltant non-ndanl taCtlUC jowna1 entries and did not idtntify any tnlrlet for telling Ttottd sgnilkant ra-eoue subounliYlt onalytical proadlm 00 tosts ofconlJOlsand detail

Condwlon 8ucd on the rtsults ofour testing to date we noted no Issues itb rqard to ~ue reoognition

M rc-venue derived from PrustO devices has InertMed bulllgnlftcantly in 20L6 andis expttted to repfoce ritkcts token end pastet in the coming)enrs ~ plaquoformeltI the followins prooltlurts

Performed an independent assessment or cc11nln ~uslncsamp controls al TCC related to revenue generMcd through PRJSlO sy51em Qbuinal lhc service Allditors report for Metrollrui o nd Acocnture comiddoteringcontrol$ Ofel revenue rt1evant (or the TlC -od ObtainaJ confinnation from Metrolirur for PRBSTO lCCtlUtS

Conclusion 8Med on the results ofour testing no issues loCfI noted tn the reporting ofmCOues ampom PRpoundSlO in the draft ftnandampJ bullattments

No Craud intohing senior managtmen1 or tmpaoyea with bull Qpifitampnl rQo1ein intemal control or1hl1 woukl auae bull matttlal m16Stalemc1l ofthe consolidated Gnandal llatemtma and no Ultpl act came tc our attentionas a ruuJt o(our audh proceduru

Wci wi1h to reconfirm that th~Audit and Risk ManAgtm~nt Committee Is not aware or any known susplaquoted or alleged incidents or fraud or lllqal ads not previousty discusstd with us

No Instances o(kno11 orSlSptet~d nonmiddoteomplit1ncc with law or regulations lme to our attention AS 11 resuh ofour 1udIL procedures

Y( wish to reoonfirm whet her the Audit tind lliak ~111nnaewent Commit lee s awareofany known or suspected lncldenla ofnonmiddot comp1ianoewilh laws or regulations

TcronIO fqi11e1t~

Key nurttenafor ditc11Hsion Cou1u1cntJ

Our final 1nJltriaUty was $36o million which b lower lhan our plttnnlng miterialityof $366 million tgtrtvlously communicated in the AuelII nnd Risk J1aoagement Committee

S umnulry oftmadjusted ltt ll8

As a rtsult ltbullfouraudits we identified unadjusted ilems with nn effect ori $29 mOllolt understatement uf iurplubull ur 1~veuui u~ C4VCJbull~ for the Toronto Transit Com1nJssJon

lbe above tnadjusted items are immaterial to tht contoUda1ed fina ocial 5Ulcmcnts taktn u a whote

PICase see ppeodiJt B for deWls ofthe unadjusted miss1atvncnts

Ye hat nosipificant internal control df~det to rCport e haenoted O intemalcontrol ~datlonl M ttpcned ia

lutemaJ control reeomrnend11tonJ

ApptndixC

We confinn our independenceith mptct to the company iA our annual independence Jetter 1bleh ls att~hecl bullbull Apprnclix Eto tlW report

Independence

Once rt ts ocmpletM we will read the 1TC Annual Report and contairling audited financial Other information in doeurnenls

consider wlethcr the tontent or manner or pmcntalion is mMeriaUy information consistent with the financial lnJormatlon covered by our auditors

report

fe h1we not been made aware of any subsequent evtots wbich would lmpact the linancial s ta tements Olher than ~hose dLraquoclosed Ve will complete our subsequent cents procedures 10 the date or ouraudit oplnioo

Subsequent event

fe vish to confirm whethtt the Audit and lUampk Management Committtt is aware ofany subsequent ~Cntlwhich iOUkt imp11rt the financblststeomcntsotherlhan thotc ddiclotcd

Tiie elaJff$- inhis and lllfWftlllON wI _ hd h awe orly th0amp4I ht Ne OM11t our tllllr9 hm_ io eut MltctllillCwe~~ IObi llf9UON bull )ICtlf dlelllol_ ~ n not a on~ reowd of al N mtltn 11111 o irI p~iW we ceMO( obull 11d spo19t11e b IWIOltllfil 1111 rW 1n JOWI _e915 0t all lrtemalconlfOI wHlktwMK COlllmlt1ll andGO~ tbotld only be Wlktn 1n wi1e111 oftne llnenalll ~I bullaWfdeM 00 notmNn ID expr-esa an OOlln OM tfY flCIMdUll- Ot

aooolltlllIO e60nate n report flraquo tfffl pr9Pllld 8dtfY 10t ycut UM Itwsa nol pre~ for and It oot kl~ lot bull11 oflcr pupOete No utflet l)ftSOll deg et111tysna1 pl~ f dancll uPQn lllt fccwacy or0011pllltllle-ss ofampatementJ m41de lle1ein PwC cto- not tMtnie ~SpotISibikY IO any 1h~ PY lllld IAdeg M anI PwC Nlw 1riy labia) f()( damt99$ cots orklHn bullu-MO byof8ny911nce ut)Oll lfle oontenla Of 1nis ropOt by any pcitlQfl or tnlll) ot flollnyou

Appendix A Draft a11dito1s rep01middott

Independent Auditormiddot~ Report

To the Itifemhen oflhe l~rd ortheTo~n10Transit Commlssion

Te haYeaodited 1M accompanying C(lllWOlidated Cinancial stattmerus of1M Toronto Tnnst Commission which tomprise tbt comolkla1cd mtemeot oflinandal position as at Dectmbt-r31 2016 and the ronsoticLttcd statemtnt1 oroptr1tiona and aerumuJated surplus remaruttmmt plnst_nd loses rm debt and cash ftows for the year then tDltltd and th related notes which comprise a summary ofstpIJieant actOWlting polidu and other opl11n1tory infcrmation

7ifanagcmcnt1 respon41h1Hty for the coasoUdated finnllcial s latcrnenlt ~fanagement is rnpOnslble ror the preparation and fair pre~tation o( thcae consolidated fhmndal st~tements in aecordance wllh Canldian publk sector accountingstfl9darcU and for 1uch internal oontro1 as mlnAgement determines 11 ncctSscuy tltgt enable the preparation of consolidated flnandal iitlllements that a~ free from mMerid mlbull11l11lcmcnt whethel due to fraud or error

Auditors resigtonslbllhy Our responsibility ts to upr~11 An opinion on hC$C consolidated financial sle1emenu blsed on ouraudit We conducted our audit In 1crordance vilh Cmadian genera Uy accepted auditing amptnndards Those $landards require that we comply whb ethicalftquirtments and plan and pcronn the 1udi1 1ooblajn reasonable ll$$urance about wbc1berthe ltonstlidated finandal statements arc frtt from material misstattn)tnL

An audit involIM perfofftlllI ~to o-tbullin bullnttit ahnur thf am1nhl and dudolutts ia thbull consolidated fiMndal 11a1cmmu TheprooeduteS-d dqgtmd on thbull auditors 1udpgtcut indudiftgthe -mtntofu ridaormatttml missUtemern oftMcoMOibdattd fhlndal ltalemaats iletber~ to fraud or trTQf Jn making thOM risk assessmentt tht auditorconslden Internal control JdeoIAt to the mt1ty1 prcpartlion and 6ur prscntation o( thetoA501idatM financial bullbulllemtnU in order to design cmdit proccduru that are appropriatie in the cirtumscances but not for the purposeor expre5inamp an opinion on the tffttrllttnrM oftht entity$ internal control An audit also includts ~lu1Ung the appropriattness oC accountins polldcs used ud the reasonableness ofaccounting atlm1tc1 made by management fti well at cva1uatlng the O~rallpte$entation ofthe (()nsectOlidllted fln11ncl1l 1tntCmCt1t$

e believe that the audit evidence we ha-cobuiined ln our audit is suficienl and 11gtJ)t0prlate to provide a basis rorolr aud it opinion

~WPwCTciwn- JS lortSbwr SUiitbullHoo fbronto ltmtorio CanadaJJsJo8t T bull1 bull16~ unP i141d6S81JS ~~

Optn1on In our opinion the consolidated financial statgtments present fairly in aJl material respectS the financial position ofthe Toronto Trtu1sit Commis5ion as at December 31 20t6 and the results of its operations remeasurement gains and losses net debt and cash flows poundor the year then cndlaquol ln aceordanoe witb Canadkm public sector accounting standards

Other nuttter The accompan)ing consolidated financlaJ statements schedule as at and for the year ended December 31 2016 is presented as suppJemectruy lnfonnation only and is not a required pru1 of the OOsic consolidated financial statements The information in lhis schedule has been $Ubject to audit procedures only to the extent necessary to express an opirtion on the consolidated 6nanclaJ statements of the Toronto Transit Commission

d1artered Profess JonaJ Accountants Licensed lgtubHeAeco w1taJ)tS

Appendix B Summary ofunadjusted item~

a Uncuiusted i tems

Asbull mut ofouraudit~ oottd the roliowlna bnM wlh an lmpact on the roMOlkbltd atatrmmt of6nancial Jgt04hion ond conx1lidatcd Gtatcmoent o ( op6natlonbull tind tcCUmuhtlN s-urplut

-D~1tr11Jt(o11 Curr4tll Yeor

Su11gtlus 0Ultr (Under) Stutelti

lYnonclol AtUJhl (Otflr)Ur1ticr Suited

Lfrtbililies 01JCr(Undltbullr) Suited

Nltn1middot Firu1nciol A81CI (OtitJr ) U11dc1bull Sto l ed

Opcnittq Accuuu1lated Surph4$ Ouer(Under) Shdccl

bull 1 -Amonltallon t~tnseNcOrded in the ttuTtnt )ftr ttlaring eo prior DrMtumulaltd

Cr AmOrtiution txpense

($2855500)

S2855500

Total (S2855500) bullmiddot bullmiddot $2855500

As lI result or ouraudit we conclude LJu111he nbove u1wijurted ilcms are immateri11I - individually and in total 4 to the oonsolldtted financial statements taken tis a whole

Appendi C Internal control recontmendations

SuJJervi$O tbulleuicio qfenah oollectl()tt ouerogesl1orto9e reports is not perfo1bull11tell 1n ltt lltUicient lcool ofdetail to detect otnisatons ofirlforntation

Observation SUpeliisor reltie ofcash oolcction ovtrigcsho1111ge reports is not detai1td tnough to detect omls1Jon1 ln doeumentatlon In addldon 10 lhls it vv noted tha1 ln one instUlce a new employee was not provided wi1h the appropritte leiel of trbullining to ensure that they undersaood their requirement to ensure this m1ew was pufonned by 1 su~nisor

Implication Ladt ofdcuiled SUpefisor _ _cbOpportuoil) for~TIS in cunroh as wtll U _being undetecled hkh may hs-e an imped on the finllndampI and operatingresults

Recommendation Supervisors should ptrform a MtaHed mo~ of~panlion ofcash overagesiortage reports to maure that all aspetts ofthe control are aplaquoahnamp rffectiwly

Matiagement respon se Area superviSQrs will complete detailed reviews of Otn1gcsbortage ~ports and iRCStigiilions Thibull will include revievng anomalies brought fofbullard by bulltaff and cnswlng that staffis diligently inwstigalh1g issues that arise and that au required doeomentalion it plovided In addJtion training has been organized (or newer 41U1ff tu ensure that they are properly trained and J)OSse~ the aldllset necdoi to complete theiL assigried dutlc11

Stgnganon Qfduties 1uitliin inuCnlOrJJ f PS OJgtJJlicatiori

Obsenmiddotation -1anagcmcnt bas deslgned the l11-eoto1y bwiincSf JgtfOCtU sueh that store supe_rvtso18 are retponsiblc (or the end to end actiities in the lntfltOJy procta lnduiling acth1Les to perform good ncciptsgoods 15Ue enttrclia~e invemory post invmloty diff~renen and auap inmiddotent(lr) in IFS application ett As wth tht rote Is dt$iampned to aJlow$UpeNisors or any users asslgntd with this roc tt perform thebullbo-e acthities

Lmplleatiomiddotn Without ~cunathe dutiff ofollt-hJlnv fn-ntllT) ~nd (lnI in~torydtffttlflCCS lhil allowsusen to pOSt unauthorized ttan$11C1ions ftlaite-d to mi5smginVllOlY pans Also thisallows a stng)I lndMduaJ to pllcntially ~report inmrory ruords ln IFS and fniuduk-ntly removing pbyskll paru ampom lht watt~

Recommend ation Management should consider ~inc the role for store supervisors bastd on tht-Lr job Mpons1bilidn Md remove broad access from thtlr TFS rolc-1

l1auagemeut rcspons~ ~lampP Inventoty Management has determined thnt Store Supervisors have IFS access eomparritlvc to 1heir urea of responsibilities All inventory related lrontGctiona )XrfOnncd in I FS sre in the histOty 108$ And capture Lhe User 10 tbot performed the transaction MampP b committed tu run reports against the hislOl) lop to ensure thlt there ore no fraudulent transactions crcnlcd We will en1ure the historical log reports are n m on a rrcquettl basts and property reiewed by oor management Jn addition fUtP has requested IT 10 appropriately limit Su1gte1vlsors access with the intent of ensuring a proper trgrcgbtkln ofduties to avoid any oppcgtrtunlty for fraud

Appendix D Management represenlnLion letter

Ms catlw Russell Plrtncr Pricev-a1erhouseCoopcrs 11J PwCfower JS YorkStreet amplite 2-600 Toronto ON MSJ 082

Dear Ms Russell

w pnMdinampthis letter In-middot1th )OOI bullodil oftho ccnoclidated finondal itlltaDltOb or T0ngtn10 Transit Commission and tu bullubampicliaria (tOgtbtr 1TC) as at Dtttmbtt31~ 2016and for tbr )-ar 1hen ended for the purpose orupreampSiAg an oplnion asto whctbtr such (ONOlidated finandal ttattmentl p fairly in au mattriol pltetgt tho cvnsolida1 financW position consolidated results of operatio~consoidattd remeaiurtmtnt pins and bsses ~lidattd chanies ln nn dtbt and consolidated cash fto-s ornc in accotdnncc wtlh ClDOtdian public sector accounting standards

A lUanagenlentbulls r cspons lbU1L1u le ha1c poundtdfi1led our rtgtfJgtOnliblllriu as wt out in the terms of the audit engnaemcnl letttr doted November30 2015 In p1nlcular we confirm torou that

Ve arc responsible for lhe p1bullep1ration and fair presentation of the consolirln1cd flnunclal statements in 11ccord11ncc wttb ~nad11UJ ptblic sector acoountinampSlilndardsi Ve are respon1ible for deslgning implementing and 01alntaining an 4ffoetlve l)llltm of lnternaJ eorurol over flno ncl1l rcportlng tu cn~ble U1e preparation and (air prCentalion of the consolidated fin11nclal s1111cmcnts 1hat arc fret from material misstatement whethtr due 10 fraud orenOr In this reprd we are responsible or establishing polides and 1gtTOCedurt1 that pc_nbullin to the nuilntenance oraccounting syslcmS tnd records tlle authorization of nOClplt and disbursements the 1afc-au1rdh8 orassets and for reporting 6nanclal tnform1rion Ytgt lagte ~dtd you witb all rdCUt lnCcnnaOon and bullccess as agreed tn the tenns of the audit eng-sement and All uonsactlons ha bffn iod in IM 1gtWlting records and arlt rdlaquoted In tho ~nft finbullnriA11JbulllllNnlA

Wecoalinn tho following -prtSltntatloN

B Prepsration orcon~olldaled t1nanela l s1a 1emcnu The consolidattd finand1l stattment11ndudc al di~dosures necessaI)bull for fair prtttntallon ln 1laquo0rdance with Canadian public settor accounting standard$ and disdocurH 6thttWke ~ttd to be incluced thtrtln by tile laws nnd rtgulntions to which TfC is subject

We haveilppropriatcly rcconclled OJr booksandrecords (eg general ledger oltcounll) underlying the oonsolidoted linAlltitll ampf4ttmtnt5 to their relatedsupporting informntion (og sub leltlger or third party data) All relalcd reconciUng hems considEred to be material were identified and indudodon the reoonci1iti1ions and frt appffl1gtri11tdy ttdjlalcd in the consolidated finanltlal titt1ner11a There ~ nQ materi11l unreconciled dilYcrcncc or mnleriaJgeneral ledger suspltnse acoomn Items that should hae been t1dj1iucd or rcclDiSlflcd to another acoount balanceThere vere 10 11Criil1 tencral ledger suspense account henu wrltlen offto a btlancesheet account whicll 1hould ht1ft been writt~n off to a proft1 and loss 11ccount and vice versa Al consolidating entries have been properly rooorded All incrbullgovtmment11I unh 11coounlJ have been tlimln3led orappropriately mcas1red and co1siducd for disclosurein theconsolJclotcd finandaJ statements

Accounting policies We confirm that v-e ha ve revifwcd1TCs accounting policies and having regard to the possible ltllternative policies our selection and applicatkm or accounting policies and estimation techniques used for the prepara tion an d presentation of the consolidated 6nancial statement$ is a ppropriate in the 1~rCs partieularclreuntSlances to present iafrly in all mate11al mpects its financia1 position resu1u of operations remeaS-urement gains a nd lo~es and cash flows in accordance ~ith canadian public sector accounting standards

Internal controls over Culancial reporti11g e have designed disclosure controls an d procedures to ensure material information relating to the l TC including its consolidated subsidiaries is made known to us by others ~thin those entities

1e have designed lnteJnal control over financial reporting to provide reasonable assuranoc regarding the relia bility of 6na nciaJ reporting and the prtparation of the consolidated fi1ianclal statelnen ts ror externa l purposes in accordance wilh Ganadian public s ector accoonting standards

c ha1e nol identified a ny s-ignlficanl dclicienies in th e design or operation of disclosure controls and procedwmiddotes a nd internal control ovel financial reporting as ti t December 31 2016

linutes All matters req_uiring disclosure to or app1middot0bullalof the Board of Directors or the shareholders hn-e ))(en brought before them flt nppropriate meetings a nd a re reflected in the minutes

Co1nple tcncssoftransactions A11 contractual arrangements eruen~d ii1to by1TC ~th t hird parties have been properly reflected in the accounting records orand where material (or polentiaUy mltlterial) to theoonsolidated financial statements hamiddotc been disdooed to you Ve hwe complied with all aspects of contractual agreements that coukl have a matelial effect on the consolidated financial statements ln the event ofnon shycomplianct There a rc no side agreements or other arrangements (either written or oral) undisclosed to you

Fraud Ve have disclosed to you The results ofour Msessment or the risk that the consolidated financial statements may be ma terially misstated as a rcsu1t of fraud All informnion in relation to fraud or suspected fraud ofwhich we are aware a ffectJng TIC invold ng management employees wbo hiwesignificant rotes in internal control or others where the fra1d oould have a material effect on the eonsolidated firanci11statements and All information in relation to any allegations of rrnud or suspected fraud affecting11Cs consolidated financial statements comm11niealed by cmptorees rormere mployees analysts regulators or others

Disclosure ofinformation We have provided you with Access to all information of which v-e are aware that is relevant to the 1gt1middoteparation of the consolidated financial statements such as records documenta tion and other matters lnduding CQntraets and related data Information regarding sig_nificant t ransactions and arrangements tha l are outside the normal courSt ofbusiness Minutes of the meetings of managemrnt and of the boird Includingconfidential minutes Additional information that )OU have requested frorn us for the purpose of the ald it and Unrestricted acctss to persons within the entity from whom )OU determined il tlcctSSaty to obtain audit evidence

Except for the allegations of the c-mployee bendil fraud discusced in the minutes of the Novtmbcr 12 2015 mettlngof the Aldit a nd Risk ~fnnag_emnt Committee we have no knowledge of any allegations offTaud or suspceted fra ud affecti~ the con1pany reltehed in communications from empJoyelZ fonner employees analysts regulators shortseUcrS or others

I Complianc-e witlbull laws 11nd rcguJations le httc disclosed to you 111 aspects ofiws rcgbulll11tion$ and oontraetual agreemcnbl that may affect the consolidated linanclal statements includingactuaJ o r suspetted non-complhmce with l11w11 aod regulations whose erfecta should be oonsidcnd when p~paring financit1l $tatemenlt

le are not twt1re offtny llltiht or 1gt~sibly Ulcg1 ttcts committed bylTCa directors ofncers or employees acting on 1TCs behalf

J Accounting esliinatcs 11nd rair value mCtl$UJbullCltlents Significant assumptions used by middotrrc In making ccounting estimates inc-JudJng faIr valut 11eeounting estimates are ttaiOnable

For recorded or discloltd amounll lo the consoldated financiaJ statements that Incorporate fair -Jue measurements we eocllinn that

Tht-measuttmtnt rnttbodt are approprialt and consistend) applied 1be$gnifieanl ~RI used in ddenriningfairvalue measuttmentI rtpreetnl ourblI estimates att ttaJOnable and ha-c bttn cooslstmtly applied No suhwquent event requiret Mljwtment b the accountiogestimatet and dildcwurw lndudtd ln theronsoUdated nnnndal bullbulltmwnts ard The s-igni(~nt A1sumpdon1 wed ln detenrJning fair aluc mHSuremtnts 1rc ttm$lstent vth TlCs planned coursts or action Ve have no plaos or intentions that haw not been dMdosed to you whilth may mate rLoUy lffcrt the recorded ordisclosed faiT values of M1tlS or Iia bihties

Significint estimates and nbulleasuren1ent uncertainties known to management th1t a~ requlred to be disclosed in accordance with CPA Canada Public Sector Aooounting HAndboolc Sclaquolon PS 2130 Measurement Unce11alnty hove beenappropriately disclosed

K Rel ated pnrtici c confirm that we havediscloKod to )OU the id~ntily of1TCs related parties os denned b) Crmadian Auditing Stt1nd11rd 5501 11nd all the related pa11yrelationships and transactions

The identity of re1ation4hip balanceamp and transactions rjth related panies hnvc been pro1gter1y recorded and adequotely dllclOllCd in tbt oonsotidated financial statttients as required by CAS 550

The tist of rclated partiesatlMOOd to 1his letter IS Appendix A aceuratdy and complettlydealtTibel 1be entities underTJCbull control and other entities wder common control with theTrC vith whom significant transadlons oecur

1- Going agtnttnt Ve ba-e no plansor inttndons that may materially alter the canying valut orelasdftcation ofasscu ond liabilities nti in the tltMwolidated fuwdalements(4-lO~ olthc bincorto ceaseMas)

rt Assets and liabilities We hayemiddotsatlsfactory lhlt or control OYft 1U adS All liens or encumbranees on TTC1 MKU and MSets pledged as eollaterlll to the tx(ent material have been disclosed in thf note~ to the consolidated tlnanelal 1-ta(emenu

We hlt1ve recorded or dJsdaed 11 applopriate all liabilities in accordance with Canndian public sectoT accounting standt1rds All liabilities end c1gtntingmcies iltc1uding those assocl1tted with guarantees whether written or orol under which middotrrc ls contlngentJy liable in acoordanec wlLb tho CPA Canada Public Sector Accounting l lilndbook Secticn PS 3300 Contingent Llnbllhlet have bten disclosed to you and arc apJ)roprlolel) reflected in the consolldtited Onimcial 4tatcmcnt1

N Litigation a11d claln1bull All known actlal or possiblc lit411Uon twd claims which existed at thestntement or financin l position date oruist now have bttn dbclo1td to )Ou and accounted for and disclosed in aecorltlance with Canadian public sector 1tccounOng11t1ndt1rds whether o r not they have been diteussed with logal counsel The significant lISSU1nptiona used tn dettrminlng our bes1estimate for cLnirnf are bullt1SObulll1b1e and hlve been applfod con-istentJy No subsequent eent requires adjustment co any llCCOUJlling estimate forclaims included In the oonsolidatcd financlalstate-ments

o tlisstateu1tnts detected during the oudll Ccrtaln representations In this letter are described as being limited to those manm that arc 111Alerial Items are also oonsidertd maltr11I ltglrdless ofsizt iftbey1 invoh-e an omiSdon or mlSitatement of attounhng tnfonnation that n light ofaurrounclng circumstantts makes it probable th1u the judgmcn1 oa rasonabte petIOn relying on the lnfonnation would have been chan~orinflutnoed bythe omission or mistitalemtnL

-re confirm tha11hecont0ttda1td financial statements att freeof matuial mlata1emen1~ lnctudmamp omissiom

TbecffttU of theunconutecl milstat~mtnts in the consolidated finandal slatemen~ a5 wmmarlttd in the acltompaD)iI schedule (Appeoduc 8)orltimmaterial both lndMdually ond In thlt_ to the consolidated finandal itnttmtnlbull ~om a whole ie confinn that 1r are not aware ot any unoorrttted m~temcnt1 other than lhote indided in Appendix 6

There are no adjusted misstatementbull in the financial statements

P Events afterbnlante s hect dttlc Ve have idcntifled t1 ll CYCntt thllt occurred bttween the statement of finanefal position dAtc and the date ofthis 1ett(r that may require odjuitmcnt uf ur dlsclosure in the consolidated nnnJcl1tl statements and h1we t ffectcd 1urh ndjuMment or dlsclo-sure

Q Cash and hnnk~ The books and records proplaquolly rtflett and rcrotd ampll transaetions affecting cosh funds bank accounts and bank indebtedneiS of11C

AD eash balantts att under tllt control ofTTC ~e from assignment or other tharscs and unrestricttd as touse txcept u disclosed to )OU

The amount shmft or cash on hand orin bank accounts excludes crust ororhtt amounts ~1dcb 1re not the pr0ptt1y 01 rn

Anangcnents il1 tlnlndaJ lns1ltut5om inOivbg compensating balances orotherarrange~ts lmOlving ttStricricns on cash balances linesoluecbt OTsimJJar anancements bat betn property ctisclosltd

A11 cash and bonlc accounu and all other propertits and assets ofTIC are indudcd in thecoMOLklated financial statemerls as It December 3l 1016

R Accounts rec~iv11ble AJJ 3mo11nts rtteiwble by 1TC wert noordcd in the books and records

Amounts receivable amounted to $81298000 and 1tre considered to be fully (Ollcctlble An appropriate a1lowrmce htis been 1nadc in the acoounts fo r potential unooUcctible tl(COlllllJ

Amounts receivable are lOt l ubjcct to dlscount ocept for nortoal cash and volume dl8COunts wbllth are appropriatdy provided for

Al1 receivables Ve frtt from hypocheca1km or assignment as security for adv4nttt toTfC cxcepC u hereundtr stated

S Portfolio inveitmc ntSI a nd other fin11neial assets All securiliC$ andother flnanclttl asaets that middotcrt owned byTTC wert rlaquoorded in the nccountt

All income earned on the finanltlal assets has been rteorded in the accounts tmd any lnlcrtsl Income bas been actnied using the cffeetlve Interest ratemethod

Ve arc not awutt orany objective evidence ofi~ainncnt that would result in tlH rcoognlliun ofan impairment kiss on any fln111cl1I asset

There Ms been no mhity in any donnant or inactive subsidiaries business cnlCJmiddotpriJ~t 1gta11nt-flbips joint entures or 01hcr partldpations except as disclcmd toyou

T tnvcntory lmtntories rerordtd in tht contobdatcd tiAmeW mtementJ are stated ar Cbt kgtwtr otcost or net realizable -ahle_ rost bc1nadttemuoed on the basis ofCigbted ~~COil with due pnwlsloo rtt0rded to ~tt alllttrnlgfd wlaolly or putiaUy obsol~ CN unusable intttorles to tbdr estimatedseUlng prlot lets estlmattd cost totell lmlntotyqucititin at the bamplanttahMC dltt wue deunnincd (rocn ph~lltal lt00n1tor from TlCamp -i mory-wlUch have been adjustedon thebasis or phydtal lmtnlories taktn by eompeteru employtts at yeaend Lilbilititafor amounuunpeid att ttcorded torall Items induoed in inntories at balantt thttt cbta

A provision ha been rMde lo reduce uc85 or o1Jsolete inventories held (or male to their estimated net ~iuble value

There h~vc been no events condlrions or changes in clrtumstances that indicate inv(ntory held for consumption wil1 no longer be wicd or conswned ln ITCs operations

U laug1ble capllnl nsscli AJI charges to t11nglb1t ttlJ)itul nssct nccounls represented the actual eost of oddltlons to ttl_nglblc capital assets

No signitlcant Utngible ca1gtflftl uHt additions wt-recharged to repairs and maintenance or other expense accounts

Book values oftangiblt cap11al 81111tU told destlO)degtd abandoned orother1-ampe dlsPoitd of hle been climinattd from the 1eeoun11

Tangible capital-bull oed by 1TC being ~tltd on a S)Slemaic degUU-imatod useful lnu and 1he Plt01-l (oc dtpredamptloa calculated on a basis oonsisltnl wllh Wt ofthe prniousdate

AD lease ayltemtnlj ltOvttlngu byor from TIC have been disdootd lo )OU and dasslficd as I~ tangible caph1l bullurt1 oroptrampling ~ces

There hadeg bttn no ~nll condldons or changes ln circumstances that indicate thlt 1 11ngiblt1 capital asset no longer eontributQ to TTCbull ability to provide goods and scllfces or thAt the vtilue of future economic btneflts anoclated with the tangible capital asset is less than Its net book value c beUeve that the canying amount o(TlC long-lived tangibJe tltlpital assets ii fully rtoCOtmble lo accordance vbullith CPA Canada Public SectorACCltlUlltlng Handbook PS 3150

V Oeferred revenue All material mounts ordcfc1bullrcd revenue were appropriately reoorded in the book1 iand middot~corltle

1 Retire1nent bcne nts 11os~c1nr1loy111c11t benefits eornpensattd absence s a nd termination benefits All an3ngements to provide 1bulledrtment bcndils pOst-emploYfllent bcndllS comper111uM abscnctS and termination btneli11 hacbeen ldenlified toyou and bnbullcbeen included In the 6ciuari1l valuatioo as required

The actU11rial vaJuadons tncorponttt managcrncnta best estimates as detailccl in note 9 or the consolidated tlnand11l sutemcnu

The ilCtuilrial 11ssumptions 1111d methods used to measure UabiJitles andeosts for flnanclal oceountlng pnrposes for ~nsion 11nd Olhcr lJ08lmiddotrcti1Cmcnl benefits are appropriate in the clrltums11111ces

t hc 1TC does no1pltm to m11kc frtqucnt ampJneodmeots to the pension orother po5tmiddotnitlrcmenl benefit plan

All changes lo the plan and tJu employee group w d lhe plans performance sinoe lht lASt 1cluarla1 valuation hitve btien re1cwed and considered indetermining the ~nslon plan Npensc and the estimated actuarial present value of1ccruOO pension benefits and vtlue of p-n1ion plln a8Mlt where lateSt actuarial aluttion for xountmg puIJ)OISCSis not at the balance1httt date

TTCs actuaries lurvebeen pr01ded with all information requiml to romplete lhdr V1h11tion u at January 1 ~016 and their otrapobtion to Deoroba31 2016

e- confinn that the ~lrapolationt art accvrteand includetheproper ttlltttionoltbc dleetso( changes and tCMS oemninamp iutquenl lothem06l recent valuation that had a matmI dfttton the- ecnapolation

The employee future benefit c03U 11Sd1 and obligations ha-ebeen dct~rmlntd accounttd for and disclosed in accordAncc with CPA Cuada Public Sector Accounting Handbook PS 3250 Rctlrtment Benefits and CPA Canada Public Sector Accountng tfandbook PS 3255 Postbullemploymtnl Uenefits Compen~tcdAbsences ond TcnnlnuUon DeneJis

The significant 11ccounllng Polide1 th 111 1~rc haiadopted ln applying CPA CanAdll Publlc Sedor Accounting l lttndbook Sccltdon PS 3250 rutd CPA Canadi Public SectorAcoolndlIJ 111ndbook Sectton PS 325511re accurately nnd rltgtrnJ)IClCb disdoampeltlin the notes to theconsolJdatcd flnanclu1JtatemcntI

F41ch of the best cslimltt lls5Umptions used rcOtcts managemenfs judgment oftlte mott likely outoomes of future event1

The-best estimate assumptio1u UJOd bull11 u a whole intemaUy consisttnt and eond1lem ith the asset valuarton method 1111dopted

Tbe discount rate ustd to dtttnnine thc ccruedbenefit obligation as drtennlntd by me~noe to lbc City ofTorontobull1 bonvwlng rate U$lng asswapeions that are intemaUycons4tcnt th other -tUllNJ iu=wullilraquoD ~ ln the ckulation ofthe~ benefit obiampArion and pl$n _

11x- assumptions hwt~ ln the aduarlal vamioo are those that management lnllruetlaquoI Mttetr and Aon Hewitt to use fn con1puting amounts tobe used by managanimt in dderminlng ptnsaon costS and obligations bullnd In llWlltana requirtd dbd()6UleS in theabooe~named eonsolidn1ed finaoclal state-menu in alaquoordancc ~1thCPA Cnad Putlic Sector Mcoonting Handbook Sedkgtn PS 3250 ln arriving at tbtte ssumptions management 003 obtained the advtceofthe 11bove mcndonitd consulting aetWlrlts who 1JSl1ted in r-aching best estinutes but has retained lhe lin111 respornibility for them

The source data and plan provblon5 provided to tht actuary for preparation ofthe t1Cfl1nrinl vnhmtion are accurate and complete

The disd OSllre of the1TCt share o( thc 11Sks and benclits under joint defined btntfit plruu the toto1 financial status ofany jolnl 1gtlt1n8 11gnificant 1gt0icic and a description of the unique nan11-t and terms ofany joint plarS nre accur11te and complete

All changes to plan provlt~nt or ewntt occurrlng subsequent to the dat4 of the ae1uarlal valuation and op to the date ofthis lttter have been comiiered ln the determination of pension COttt and obligations and as wch havt bHn oommunicated to )OU aswell as lo the actUAI)

X Envirou1nental 1u111ttcr11 There are no liabiliti~ orcon(b1genclcs ar15lng foom environmental matters that have not 11lready been disclOiSed to the 11udltar

liabilities orconlingcncifl lClateltl lo environmental mattengt have been recognl-icd mesurcd nnd disclosed BS op1gtngt1Jrl C110 In the cltmt1olidotL-ltl financial statements

e have considered the cfrect ofcnllronrnenhd -natters and the carrying va)ue ofthe rtl~llnt assets is Jecognized measured and cliKIOKd ls appropriate in the consoHdated nnandnl stiatwnena

All commitments fflbullted 10 envlronmcntal malltrt have been measured and disclosed RS llppropMale ln thecoosoJidated finand1l RatetntJgtlJ

Y Consolidations bulle confirm that theTIC has iOOK ownmhlp of theToronto ltoachTenninal Jnc and theTolOoto Tnlosit Commission 1Cornpony Umite3 Accordingly theyatt conlrollod mt11oi Ibo 1TC TheTora110 Tnlnsil Corn- Sick Bendit Assodalon ls aho cootrollcd bythe 1TC Wlt abo confum that thtre is insignificant acthity in the Toronto Transit Commission Sick Btndil Assodatlon

Z Use or a specialist We a~umc ruponsibllfty for the flndings o(spedallsts ln ewluaring the tmploytt bcnerit obliption and haveadequ3tely conside~ the qualificatiors ofthot sptdalists in detennining the amounts and disclosures usttl in the COnsolldated financial st11t cmet1ts and tmdierlying accounting ncords We did not give or cause any inttNclionii to be glvtn to specialists with respect to the V11 h1es or 1tmounl derhmiddoted in an attempt 10 bias tht lr lo-Ork and wean not otherwise aware ofany mntttrs thot have bid an impact on the inde1)cndcnce or objcctivity or~he specialists

AA Derivative financlul lusumiddot11n1cn1s The TfC has rcoognized 1nd 1ttordcd at fampir valubull all embedded derfrative instnunents thAt rt re required to be separated Crom their h06t contrac-s in accordance 11th CPA Canada Publl~Slaquotor Accounting Handbook Stetion PS 3450 finanetl lnstroments

The JTC ht1ts ~ircd and recorded fair va1bullc all nonmiddotfinancial derivative1 that arc 1nclultJed ioithin the iCO~ofCPA Canada fJublic Soclor Aoooonting Handbook Section JgtS 3450 Pinanoal lnSlmments

We confirm that ourobjecdvts wtth rClpCd to d-riampth~financial instrumtn1s art f~ htdslng-We conlirm lhat tht

The reconlt rtflcct all tramaction$ inOlvirg dem1lth-c financial instrumtnts and fh~ assumptions and mrthodologin ustd fn lbe bullahJ3tion models applltd to dtttath-e financial instrumenu are nnsonablt

A11 transactions lnvolvingderiV1tl~ financial instruments have bten conducted fl t Arms length and at fair values

Ve hae disclosed to you the terms ol trunsaetioclS Ut()]ving derivlrie 6nanel11l instn1mcfts

t here are no side ngrccmenls as11ltgtcillled with auy derivatibullmiddotc financiaJ Instrumenta

-6B General There are no proJ)OJlals RMflllJlCroents or action comp1dcd tn process or contemJ)18ted lhtil would result in the suspension or t~nnl11Llon o(any nuteriaJ part ofTfCs opcratiOllS

lnformaOOn relatic to any maners handled on tehalf ofTIC by any 1ega1 oounRl including aU coinspond~ and othtrfi~s bu been mtde a11ilable to you

CC Cobullcrnmenl transfe1-s We havedisclosed all signifieant tcnnt and agrcnncnl$ ln tCSped oftrarufCJI ~ved from goytmmwls

TruCmwtthout digibiity crlteN orJtJpulatiols havebeen reoogniud u rCCnuc oooc the tnosrer bu btto bullbulllhorigted

TraMfrra w1th rligibility criteria bul Without stipulations haioe bttn ttcOgt1btd u TC-cnuconce the transJtr has been authorized and all ellglbU1ty cntcrla have betn me1

lransfers with or without eligSbUity crilerin but oith stjpuJations have been recognized as revenue in the ycnr the transfer has been Autho1bulliicd nnd all cligibility criterill have been met fxcicpt when and to the extent that the transfer gives rllc to an obliJotion that meets the dcRnlLlon ofrbull llabllily for the 1-eclpient government in aocordanoe vbull11h CPA Clnada Public Seo1or AOCOllnl1ng Hllndbook PS 3200 Ut1bll1tilS

DO Budactary data We hav~ iocludcd budgetary data tn our consoliuitcd fllllndal suitemtnu hich b rcl~UJl to the UMrt or Ihe comolidared financil) sut~nlI aod ooosisteot th that oricinally pbnned and apprOtd Planned results wett prtSCnted for thtamr scope ofactivfdd and on bullbasis ooruistmt w1h tba1 WlaquoI forutwol resulu

Your1 truly

Toronto Tlansit COmmisslon

Mr Vinccnt Rocio Chief t-lnancial amp- AdminlstllltionOfficer-

Mr Micht1e1 Roche Head of Ftnanoe ampTrct1surcr

Ma Jennifer Imbrogno Director- CapItal Att0untiag

~ts Sharon lippdt rdanager - Financial StatcmMtl

~ls Nnncy lhni Supervisor - Accountlng Polley amp AnanciaJ Reporting

AppenclixAmiddot Listmiddotofelatecl part ies

City ofToronto

Toronto Coach Terminal Inc

toronlo middotrraoslt Commlsslon IJtsuranee Com~(l1ty Umited

The TIC Sick Benefit Association

Thf Trlt Pfn~ion Fnnrl SoMttgtbull

Poronlo Wattrfront Revitalftatlon 0orJ)Oratioll (TVRC)

Toronto Hydro Corporation

Toronto Par4ing Authority

Appendix B Summary ofunadjusted items

A$ a resu1t ofour audit we noted the rollowing itcmJwitb an impact on the consoHdated ttmemenl or financial position and conolklotcd 1tttcment of opcations and accunn1fateltl sur1gth1J

Descnption

bullbull - Amortllation expense recorded in the curnnt y~ar rclatin3 10 prior yurs Dr Alaquoumulaled surplus 0- Atnonization expense Total

Cormiddotcnl Yctrr S urygtlu 011ltr (tlgtlder) Statltd

($28sssocgtgt

(fgt854ioo)

F11uuuial Asvetbull (Oucr) Unlcr Stahd

Smiddot

Li(Jbilities Over (Under) StutJ

Nonmiddot 0JJCUing Pinnneiol A ccuuudoted AsNel $ ur11lu8 (Ovc1) 0-1

(Ud1bullr)Lnder StatedStated

$bullSSSsoltgt

$1855500

As a rt$OIbull of our audit we conclude lhtH the tbullbove madjusted items are immaterial -lndlv1duolly fOd in tota1 middot to the consolida1ed flnftndnl 1t1tcincnts taken as a whole

Appendix E Independence letter

MvnbtN ofthe Audit And Risk Ma~vnentCommittee ofthe Toronto Transit CommlssJon 1900 Yonampe Strtiet Toronto ON M4S 112

Dear Membm of 1he Audit and 1Usk ~tanagOMnt Committee

c haTe been engaged to auda the oonsolidattd financial 5Uternenu ofthe TorontoTrtMit Commission (the 11C) for the ~ar tnded Dtlaquomber 31 20_6

Canadjan genelllly occqgtltod oultbling standards require that -e commun1ctte at least 11nnually Wlth you regardiog all relatlonshlps betWoen the lTC its management and us that may reasonnbly be thought to ~ar on our lndepcndcnce

Jn detennining which relntio11ship1110 report lhcse standtultls Nquire us to confdoerle RuJes of Profes$ionnl COnduet ol the Chartered Proressonal Accoontants ofOntario tmd 1JgtJgtllL11blc leglslallon oove1ing svch mauc1yen 1LS

a holdlng ~financial in1~rc1t tilhtr clirecll~ or indirectly i n a cUtnt b stling as an officer ord1rcctor of t1 cl~nt c ptrlorma1lce of mbullnqcmcnt functions fer an asrurance client d ptfSOn1) or builneu relaDonahips o(imn-ediate family ctose relatives par1nttt or rttired partnm

titherdlttcelyor lndlttctl)bull with 1 dien1 its managemcnt c ttOOOmie dtpendtnct on a ditnl j

( 1-wodatlon oltltNor ~With a liitS entity audit client g Audn and Risk ~llftlgtmtnlCommitttt ipprOal ofseMces to a listed tntity 1ud1t chent and b ~ ol_In additloo 10 llie auh engagcmcnL

Wbull - prepgtt rIlt lollowtna rommenlJ to Olitab our discusskgtn willl )OU reprdinc inckpagtdenclt mattmarislng slnce Pf1y u 2016 the date o(our last letter

Ve are not a ntt of any relatJoruhipt betweea the TIC or its management and Price~terbouscCoopers llP thMt moy rtasonably be thought to bearon our lndepcnd(ncc that ha~ occurred from May t1 2016 to May 24 2ol7

Ve hereby contlm1 lhlt we are Independent th respect to theTrC within the mcon1g of 1he Rules or Professional Conduct o( the Chnrto-00 Professional coounta111$ ofOntario rui of May 11) iOt7

r---middot---middotmiddotmiddotmiddotmiddot ~~~rtW PwCTowfr 18 YortsrroecSuti~Torontcgt Ontario Ouaodo MsJolD T +1416863ussP bull141631Stius~

Summary

Recommendations

Decision History The City of Toronto Act requires the city auditor (PwC) to annually audit the accounts and transactions of the City and its local boards and to express an opinion on their financial statements

Comments The consolidated financial statements of the TTC for the year ended December 31 2016 were prepared by management They were audited by PwC in accordance with the plan approved by the Audit amp Risk Management Committee at its October 19 2016 meeting as set out in item 1 at httpwwwttccaAbout_the_TTCCommission_reports_and_informationCommittee_mee tingsAudit_Risk_Management2016October19Agendaindexjsp

The attached report was prepared by PwC and it includes their comments on the significant accounting auditing and reporting matters which are summarized on pages 1-4

PwC proposes to issue an unqualified Independent Auditorrsquos Report (or ldquoclean opinionrdquo) on the 2016 consolidated financial statements (see Appendix A) once the outstanding items noted on page 1 have been completed

Both staff and PwC would be pleased to answer any questions that you may have about the report or audit in general

Contact Michael Roche Head of Finance Tel (416) 393-3654 E-mail MichaelRochettcca

Attachments Audit Results Report from PwC LLP ndash Year-Ended December 31 2016

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Recommendations

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Subsequent event

a Uncuiusted i tems

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City ofToronto

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Smiddot

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$1855500

Summary

Recommendations

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report

Subsequent event

a Uncuiusted i tems

($2855500)

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City ofToronto

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($28sssocgtgt

(fgt854ioo)

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$1855500

Summary

Recommendations

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Independence

report

Subsequent event

a Uncuiusted i tems

($2855500)

S2855500

Dear Ms Russell

Your1 truly

City ofToronto

Descnption

($28sssocgtgt

(fgt854ioo)

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$1855500

Summary

Recommendations

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report

Subsequent event

a Uncuiusted i tems

($2855500)

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City ofToronto

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Summary

Recommendations

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Summary

Recommendations

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report

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a Uncuiusted i tems

($2855500)

S2855500

Dear Ms Russell

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City ofToronto

Descnption

($28sssocgtgt

(fgt854ioo)

Smiddot

$bullSSSsoltgt

$1855500

Summary

Recommendations

a Uncuiusted i tems

($2855500)

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Dear Ms Russell

Your1 truly

City ofToronto

Descnption

($28sssocgtgt

(fgt854ioo)

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$bullSSSsoltgt

$1855500

Summary

Recommendations

a Uncuiusted i tems

($2855500)

S2855500

Dear Ms Russell

Your1 truly

City ofToronto

Descnption

($28sssocgtgt

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Smiddot

$bullSSSsoltgt

$1855500

Summary

Recommendations

a Uncuiusted i tems

($2855500)

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Dear Ms Russell

Your1 truly

City ofToronto

Descnption

($28sssocgtgt

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Smiddot

$bullSSSsoltgt

$1855500

Summary

Recommendations

a Uncuiusted i tems

($2855500)

S2855500

Dear Ms Russell

Your1 truly

City ofToronto

Descnption

($28sssocgtgt

(fgt854ioo)

Smiddot

$bullSSSsoltgt

$1855500

Summary

Recommendations

Dear Ms Russell

Your1 truly

City ofToronto

Descnption

($28sssocgtgt

(fgt854ioo)

Smiddot

$bullSSSsoltgt

$1855500

Summary

Recommendations

Dear Ms Russell

Your1 truly

City ofToronto

Descnption

($28sssocgtgt

(fgt854ioo)

Smiddot

$bullSSSsoltgt

$1855500

Summary

Recommendations

Dear Ms Russell

Your1 truly

City ofToronto

Descnption

($28sssocgtgt

(fgt854ioo)

Smiddot

$bullSSSsoltgt

$1855500

Summary

Recommendations

Your1 truly

City ofToronto

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$1855500

Summary

Recommendations

Your1 truly

City ofToronto

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$1855500

Summary

Recommendations

Your1 truly

City ofToronto

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($28sssocgtgt

(fgt854ioo)

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$bullSSSsoltgt

$1855500

Summary

Recommendations

Your1 truly

City ofToronto

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$bullSSSsoltgt

$1855500

Summary

Recommendations

Your1 truly

City ofToronto

Descnption

($28sssocgtgt

(fgt854ioo)

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$bullSSSsoltgt

$1855500

Summary

Recommendations

Your1 truly

City ofToronto

Descnption

($28sssocgtgt

(fgt854ioo)

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$bullSSSsoltgt

$1855500

Summary

Recommendations

Your1 truly

City ofToronto

Descnption

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(fgt854ioo)

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$bullSSSsoltgt

$1855500

Summary

Recommendations

City ofToronto

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$bullSSSsoltgt

$1855500

Summary

Recommendations

Descnption

($28sssocgtgt

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Smiddot

$bullSSSsoltgt

$1855500

Summary

Recommendations

Summary

Recommendations

Summary

Recommendations

Summary

Recommendations

Documents

STAFF REPORT ACTION REQUIRED - Toronto · Decision History . The . City of Toronto Act . requires the city auditor (PwC) to annually audit the accounts and transactions of the City