city of toronto€¦ · city of toronto compliance report re: peter karl youngren chronology march...

City of Toronto

Compliance Audit Reports

for

Peter Karl Youngren

Gus Cusimano

City of Toronto

Compliance Report Re: Both Candidates

Compliance Audit

Purpose: “to determine whether the auditee is following specific procedures

or rules set down by some higher authority”(1)

Address issues raised by the Applicant as well as other matters identified

through the compliance audit process as summarized in paragraph 1.8

Reconcile every number on the Financial Statement to supporting details

Materiality considerations

Procedures summarized in paragraph 1.9.

(1) Page 5, "Auditing An Integrated Approach" Canadian Fourth Edition, by Lemon, Arens & Loebbecke

City of Toronto

Compliance Report Re: Both Candidates

Compliance Audit (Cont’d)

Report any apparent contraventions of the Municipal Elections Act

Difference between Sections 2 and 3 of our report

Everything examined; not everything reported on

Appendix A sets out a summary of what the Act says about financial records

and reporting.

(1) Page 5, "Auditing An Integrated Approach" Canadian Fourth Edition, by Lemon, Arens & Loebbecke

Compliance Audit Report

Re: Peter Karl Youngren

City of Toronto

Compliance Report Re: Peter Karl Youngren

Chronology

March 29, 2010 – Youngren registered for the election campaign

March 16, 2011 – Filing of Financial Statements for the period from March 29, 2010 to December 31, 2010

June 22, 2011 – Applicant (Adam Chaleff-Freudenthaler) submitted request for compliance audit

July 20, 2011 – CAC determined that a compliance audit be conducted

December 19, 2011 – Froese Forensic Partners Ltd (“FFP”) retained to conduct a compliance audit

May 25, 2012 – FFP signed and released the compliance audit report

June 8, 2012 – Compliance Audit Committee meeting.

City of Toronto


Issue Identified by Applicant

1. The Youngren campaign accepted contributions from two corporations.

City of Toronto


Findings - General

Co-operation

Good record keeping

As reported, campaign adhered to authorized expense limitation

As reported, the campaign incurred a small deficit.

City of Toronto


Findings – Contributions

1. One instance of corporate contribution

Star Media Branded Entertainment Group Inc contributed $500

Cheque should have been returned and a personal cheque written by Giacomo Moncada, the principal of Star Media

Apparent contravention of s. 70(1) of the Act and City of Toronto By-Law 1177-2009 by the contributor and the Candidate.

2. Contribution from sole proprietorship

Greenscapes Irrigation contributed $300 to campaign

Recorded as a corporate contribution, but Greenscapes was a sole proprietorship at the time, making the contribution source an individual

Apparent financial reporting contravention of s. 69(1)(k) and 78(1) of the Act.

City of Toronto


Findings – Contributions (Cont’d)

3. Contribution in the form of cash

Contribution of $300.00 received in cash by Amy Youngren

Apparent contravention of s. 69(1)(l) and 70(8) of the Act.

4. Contributions from Candidate and Spouse

$1,000.00 total contributed by Youngren and spouse recorded in the incorrect location in the Financial Statement

Should have been recorded on separate lines allocated for contribution from Candidate and Candidate’s spouse

Apparent financial reporting contravention of s. 69(1)(k) and 78(1) of the Act.

City of Toronto



5. Contributions from Joint Bank Accounts

Instances identified where contributions were made from a joint bank

account where the receipt was not issued to the cheque signor or the

signature was illegible

No apparent contravention of the Act, but the issuance of receipts did

not, in all cases, follow the Guide.

6. Contributions

No individual contributions in excess of the $750.00 allowable limit

prescribed by the Act.

City of Toronto


Findings – Financial Reporting

1. Bank charges understated, audit fees overstated

Details in paragraphs 3.14 and 3.15

After Expenses adjusted, they were overstated by $36.95

Apparent financial reporting contravention of s. 69(1)(k) and 78(1).

2. Adjusted Campaign Deficit

Some of our earlier findings affect the Financial Statement outcome

Campaign deficit increased from $37.10 to $800.15.

City of Toronto


Findings – Financial Reporting (Cont’d)

3. Campaign Spending Limit

Youngren understated his allowable spending limit by $1,419.90

Does not affect the adjusted deficit


Compliance Audit Report

Re: Gus Cusimano

City of Toronto

Compliance Report Re: Gus Cusimano

Chronology

January 4, 2010 – Cusimano registered for the election campaign

March 24, 2011 – Filing of Primary Financial Statement for the period from January 4, 2010 to December 31, 2010

September 30, 2011 – Filing of Supplementary Financial Statement for the period from January 4, 2010 to June 30, 2011

June 23, 2011 – Applicants (Donna Lynn Tucker & Howard Moscoe) submitted request for compliance audit

July 18, 2011 – Compliance Audit Committee (“CAC”) determined that a compliance audit be conducted

December 19, 2011 – Froese Forensic Partners Ltd (“FFP”) retained to conduct a compliance audit

City of Toronto


Chronology

May 25, 2012 – FFP signed and released the compliance audit report

June 5, 2012 – Response to the compliance audit report from Jack Siegel, on behalf of the Candidate:

Request for supplementary report

Corporate contributions

Campaign reporting period

June 6, 2012 – Submission to CAC from the Applicants

June 6, 2012 – Submission to the CAC from Jack Siegel, on behalf of the Candidate

June 8, 2012 – CAC meeting.

City of Toronto


Issues Identified by Applicants

1. Cusimano failed to report the purchase of all wooden stakes that would have been required to support all of his campaign signs;

2. Cusimano failed to report the replacement value of a large arterial election sign that was retrieved from inventory;

3. Cusimano failed to report the use of donated computers for his campaign;

4. Cusimano’s campaign accepted corporate contributions of goods in kind;

5. Campaign expenses were incorrectly classified as fundraising in an attempt to remain below the campaign spending limit; and

6. Cusimano improperly commenced the proceeding for a controverted election and his associated legal expenses were improperly accounted for.

City of Toronto


Findings - General

Co-operation

Good record keeping

Deficit reported in the Primary Financial Statement

Larger deficit reported in the Supplementary Financial Statement

As reported, the campaign adhered to the authorized expense limitation.

City of Toronto


Findings – Contributions

1. Two instances of corporate contributions

Shoreham Chronic Pain and Assessment Centre Inc and Fine Arts

Assessments & Treatments each contributed $300.00; Receipts

issued in the names of Peter LiPreti and Ida LiPreti respectively, who

are principals of the companies

Follow-up with the contributors and concern raised by Jack Siegel

Cheques should have been returned and personal cheques written by

the principals

Apparent contravention of s. 70.1(1) of the Act and City of Toronto By-

Law 1177-2009 by both the Candidate and the Contributor

Further enforced by s. 70(7).

City of Toronto



2. Post June 30, 2011 Contributions

Details in paragraphs 3.5 to 3.15 and Schedule 1

28 cheques totaling $5,050.00 were dated and deposited to the campaign account after June 30, 2011.

Concern raised by Jack Siegel regarding the campaign period

S. 68(1)(5)(i) is somewhat ambiguous when mentioning “any further contributions”

S. 68(1)(5)(iv) quite clear in identifying an outer limit for “until the earliest of”

Correspondence from City Solicitor dated August 26, 2011

“New for 2010” provides guidance on page 5 of the Ontario Municipal Elections 2010 Guide

City of Toronto



2. Post June 30, 2011 Contributions

Concern raised by Jack Siegel regarding the campaign period (Cont’d)

Refer to paragraph 3.59 point 3 of our report for limits “after June 30, 2011 as set out on page 91 of the Toronto 2010 Municipal Election Candidate’s Guide (“the Guide”)

FFP interpretation of the meaning of continuation on page 92 of the Guide

Agreement dated June 13, 2011 between Rob Davis and Candidate - Exhibit A

Details in Schedule 1 in hands of both the Candidate and his counsel and discussed at interview on April 3, 2012.

Contributions should be returned and the campaign deficit adjusted

Apparent contravention of s. 68(1)(4)(i) and 69(1)(m) of the Act.

City of Toronto



3. Altered Cheque Dates

6 cheques totaling $2,550.00 where the original cheque date was

altered from 07 (July) to 06 (June);

1 additional cheque with altered date had a stop payment placed on it

Some (but not all) alterations acknowledged by the contributors

See Schedule 2 and Exhibits

Contributions should be returned and the campaign deficit adjusted

Apparent contravention of s. 89(h) and 69(1)(m) of the Act.

City of Toronto



4. Cash Contributions Accepted

Cash was accepted by the campaign to purchase money orders that were deposited to the campaign account

Details in paragraphs 3.25 to 3.32

Apparent contravention of s. 70(8)of the Act.

5. Processing Credit Card Contributions at Candidate’s Place of Business


Credit Card contributions totaling $2,400.00 were processed through the payment terminal at Deerborne Insurance; The fees charged to Deerborne Insurance for processing the credit cards were paid for by Cusimano and not reported as expenses subject to a limitation

Apparent contravention of s. 67(2)(2) and 70.1(1) of the Act and City of Toronto By-Law 1177-2009.

City of Toronto



6. Contributions from Joint Bank Accounts

Instances identified where contributions were made from a joint bank

account where the receipt was not issued to the cheque signor or the

signature was illegible

No apparent contravention of the Act, but the issuance of receipts did

not, in all cases, follow the Guide.

City of Toronto


Findings – Expenses

1. Expenses omitted from Primary Financial Statement but correctly included in Supplementary Financial Statement

Expenses for computer use

Replacement value of a large campaign sign from 1976

Apparent contravention of s. 67(1) and 67(2)(1), respectively.

2. Wooden Stakes

Applicants submitted the number of wooden stakes was below the number required for Candidate’s campaign signs

Costs were properly included

Details in paragraph 3.43

No apparent contravention.

City of Toronto


Findings – Expenses (Cont’d)

3. Campaign-Related Emails Sent from Corporate Email Address

Contribution of supervised Deerborne employee time, as allowed by s. 66(2)(2)(ii)

Details in paragraphs 3.44 and 3.45


4. Cost, Print Quality and Distribution of Fundraising Flyers were Inflated

Applicants: The purpose of this was to reduce the expenses subject to limitation.

Details and Table in paragraphs 3.46 to 3.51

Purpose of flyers was fundraising and costs and quantity were appropriate


City of Toronto


Findings – Expenses (Cont’d)

5. Occurrence of fundraising event at Mastro’s Restorante on June 10, 2010

Satisfied this event occurred



6. Campaign Funds Used for Post-Election Litigation

Applicants stated that anyone engaging in post-election litigation does so as a private citizen – the $132,253.92 incurred is done as a voter/citizen not as a candidate

Candidate complied with requirements for extending his campaign as set out in the Guide

Entitled to accept contributions for the purpose of assisting with legal costs



City of Toronto


Findings – Financial Reporting

1. Contract Amount for Fundraising Work Reported as “Event Advertising”

Included in the section Expenses Not Subject to Spending Limit, this expense should have been reported under the heading of “Other”


2. Adjusted Campaign Deficit

Adjustments noted in paragraph 3.68 and Table

Remained within the allowable spending limit

Campaign deficit increased from $80,096.06 to $89,196.06.

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