Staff Report #12
March 30, 2026
To All Commissioners
Re: 2025 Audit Requirements
Recommendation
That the Commission:
- CONFIRM the responses to the Audit Inquiry form as set out in Enclosure I; and
- DIRECT Administration to complete and submit the form on behalf of the Commission.
Background
The Commission’s auditor (KPMG) conducted the field work associated with the audit during the period February 17 through February 27, 2026, and the draft audited financial statements are scheduled to be tabled with the Commission for approval at the April 27, 2026 meeting. The audit process includes the completion of various inquiries with legal and actuarial firms affiliated with the Commission for work that is reflected in the financial statements.
In addition, Administration completed various inquiries, whether formally through completion of a form, or verbally through discussions with the field auditors as part of the regular process. The inquiry form relating to those charged with governance has been expanded this year to include a number of new areas of question (see Enclosure I). Given these new questions, coupled with the fact the current Commission was not in place for the entirety of 2025, the remainder of this report provides background information for Commission consideration when completing this form. Any additional questions with respect to the form can be addressed during the Commission meeting.
It should be noted that in a number of instances, the form makes reference to an “audit committee”. Given the historical makeup of the Commission has been five members, an “audit committee” has never been established, rather the entire Commission receives financial updates and the annual audit report. As noted in the report recommendation, subsequent to Commission review and discussion of the questions included on the Inquiry Form, Administration will complete the form based on the information provided in this report and any other discussions, and the Chair will sign off prior to submission to the auditors.
Controls to Prevent, Detect and Deter Fraud
A number of the questions below refer to an “audit committee”.
- How do you exercise oversight over management’s assessment of fraud risk and establishment of controls to address/mitigate fraud risks?
The Commission exercises oversight in a variety of ways, including but not limited to the approval of corporate policies (a number of which are referenced later in this report), engagement with the external auditors during their presentation of the audited financial statements and audit findings report, and approval of the annual budgets including the ongoing monitoring and reporting of actual results.
- What are your views about fraud risks, including management override of controls, at the entity and whether you have taken any actions to respond to these risks?
The Commission received a detailed line by line operating budget for both the conventional and specialized service as part of the annual budget approval process. In addition, monthly financial updates are provided which highlight any significant variances from budget and include explanations of same.
The only risk that has been identified in the past number of years through the audit process was the practice relating to the recording and posting of journal entries. Auditors recommended an extra control be added to this process, which requires that all journal entries be signed off by the Manager of Accounting or Director of Finance prior to posting. This practice was updated in 2023 and has remained in place.
- Are you aware of or have you received tips or complaints regarding the entity’s financial reporting (including those received through the internal whistleblower program, (if such program exists) and, if so, what was your response to such tips and complaints?
The Commission does not have a “whistleblower program”. In the event that a complaint is brought to the attention of Administration, it is brought forward to the Commission with any additional information that may be required in order for the Commission to understand the process surrounding the complaint.
There were no complaints relating to the Commission’s financial reporting in 2025 that Administration was made aware of.
- Are you aware of, or have you identified, any instances of actual, suspected, or alleged fraud, including misconduct or unethical behaviour related to financial reporting or misappropriation of assets? If so, have the instances been appropriately addressed and how have they been addressed?
In the event that Administration is aware of a suspicion of fraud, misconduct or unethical behaviour relating to financial reporting or misappropriation of assets, it is brought forward to the Commission with any additional information that may be required in order for the Commission to understand the process surrounding the complaint.
Administration is not aware of any suspicion of fraud, misconduct or unethical behaviour relating to financial reporting or misappropriation of assets in 2025.
- Has the entity entered into any significant unusual transactions?
The excerpt from the Commission’s Purchasing Policy which establishes spending approval authorities is set out below:
For the purchase of goods and/or services, not specifically addressed in this policy, the authorization limits, as listed below will apply.
- Supervisor – up to $5,000 limit
- Manager – up to $10,000
- Director – up to $25,000
- General Manager – up to $100,000
The limits apply to those goods and services contained in the approved operating budget programs and subject to the procurement of same in accordance with the provisions of this document.
Exceptions to above authorization limits and the need for Commission approval include utility bills, fare media purchase, snow removal if contracted with the City of London, payroll, tax remittances and ongoing maintenance for computer hardware and software.
Formal Commission approval is required for the purchase of certain goods and services, which include the following:
- All capital purchases as required by project parameters or guidelines specific to the source of funding being utilized.
- All contracts (operating or capital) for the supply of goods and/or services where the cost of such contract is greater than $100,000 on an annual basis or $300,000 if over multiple years
This policy is strictly adhered to by Administration, and as such, any transaction over $100,000 would be subject to Commission approval.
- What is the audit committee’s understanding of the entity’s relationship and transactions with related parties that are significant to the entity?
Any transactions with a related party (City of London) are disclosed in annual budget approval reports and/or monthly financial updates as appropriate.
- Does any member of the audit committee have concerns regarding relationships of transactions with related parties and, if so, what are those concerns?
Confirmation will be required from each member of the Commission whether they have any concerns.
- Has there been any correspondence with regulators or licensing authorities?
Administration regularly communicates with a range of regulators and licensing authorities as part of normal operations. Examples include:
- Financial Services Regulatory Authority of Ontario (FSRA) – submission of annual pension plan filings following completion of the annual audit and Commission approval;
- Ministry of Transportation (MTO) – bi-annual audits of training programs and instructors associated with the organization’s authority to provide driver’s licence upgrades (Driver Certification Program), as well as periodic site visits and vehicle compliance inspections;
- Ministry of Labour, Immigration, Training and Skills Development (MLITSD) – engagement with respect to occupational health and safety matters, including workplace incidents, inspections, investigations, and compliance-related inquiries;
- Workplace Safety and Insurance Board (WSIB) – administration of workplace injury and illness claims, including reporting and claims management;
- Ministry for Seniors and Accessibility – bi-annual compliance reporting under the Accessibility for Ontarians with Disabilities Act (AODA), along with responses to audits or inquiries from compliance officials;
- Office of the Information and Privacy Commissioner of Ontario – engagement related to access to information requests, privacy matters, and associated investigations or compliance inquiries, and
- Environmental and technical safety regulators (including the Ministry of the Environment, Conservation and Parks and the Technical Standards and Safety Authority) – compliance related to environmental protection, fuel systems, and facility operations
Where these interactions are routine, they are incorporated into the annual Work Program, with updates provided to the Commission through the quarterly reporting process.
Where interactions result in formal orders, findings, or directives, this information is reported to the Commission through regular reporting channels. Depending on the nature and sensitivity of the matter, updates may be provided in camera.
- Have there been any instances of actual or possible violations of laws and regulations, including illegal acts (irrespective of materiality threshold)?
In the event where any violation of laws or regulations occurs, Administration would notify the Commission in a timely fashion. Administration is not aware of any situations of this nature that occurred in 2025.
Compensation Structure
- What is the structure of the entity’s compensation for executive officers?
See the excerpt below from the Management Employee Policy Statement relating to compensation structure.
“A relative ranking of positions will be maintained through the London Transit Job Evaluation plan. The plan so maintained constitutes London Transit’s posted Pay Equity Plan using the proportional method of comparison (factor point plan). New positions, or existing positions, which undergo a material change, shall be assessed under the Job Evaluation Plan. It should be noted that Job Evaluation establishes the relative worth of positions, and does not take into account the individual’s performance. Position ranges are salary ranges based upon a “job rate” (range maximum) and a range calculated on 80% of the job rate.
The Pay for Performance Plan is comprised of two components:
- Economic component – all managers, other than those, whose performance is determined to be unsatisfactory, will be eligible to receive an economic increment up to the job rate. The economic component is an across the board adjustment, based on an inflationary formula approved by the Commission.
- In-range merit adjustment – all managers whose performance is satisfactory and whose pay after adjustment for the economic component is not at the job rate will be eligible for consideration for an in-range merit adjustment. The actual in-range merit adjustment will be determined in consideration of the employee’s performance (as documented in performance feedback forms) particularly for the previous year and the approved funds available.
Both component adjustments will be determined at the same time of year for all employees during the annual review. All adjustments are subject to the concurrence of the General Manager.”
- How and for whom are incentive compensation arrangements created, and who has input into the terms?
The Commission’s pay structure does not include incentive compensation arrangements for any position.
- How much of management’s target compensation is discretionary (i.e. not tied to measurable criteria) and why does the compensation committee believe that is appropriate?
There is no part of the Management Compensation program that is considered discretionary. Any progress toward the top of the salary band is tied to annual performance reviews, and subject to approval of the General Manager.
- How is the compensation structure set and approved, including targets for measuring performance?
See question 10 above for the manner in which the compensation structure is set and approved.
The following excerpt from the Management Employment Policy details the manner in which performance targets are established.
“Position Descriptions will be developed and maintained for all positions. The Position Descriptions will outline the main duties and expectations of the position.”
“Accountabilities and expectations will be established for all positions in terms of leadership, process management and project management, noting targets in the areas of process management and project management will be tied to the approved work program for the year, and initiatives that the employee will play a role in and/or lead.”
- How is an individual’s performance evaluated against the terms of the compensation agreement?
The following excerpt from Management Employment Policy details the manner in which performance is measured.
“Managers will receive ongoing feedback regarding performance and progress in these areas, typically through daily communication and regular one-on-one meetings. On an annual basis, senior managers will receive consolidated and summarized feedback concerning their performance through a formalized Performance Feedback and Planning Program. An overall assessment/rating will be determined on an annual basis. The program also provides an opportunity to plan for future performance, which might include training, development and other supports as required.”
- How is fraudulent financial reporting considered in overseeing compensation arrangements?
Adjustments to compensation rates for all management employees are prepared by the Manager of Accounting and subject to approval of the General Manager prior to processing.
Compensation rates for bargaining unit employees are subject to the terms of the collective agreement, which is approved by the Commission.
Compensation rates for Administrative employees is tied to the rates in the collective agreement as the result of pay equity requirements.
Enclosure
I – Required Inquiries – Those Charged with Governance (KPMG Questionnaire)
Recommended by:
Ted Graham, Manager of Accounting
Mike Gregor, Director of Finance
Joanne Galloway, Director of Human Resources
Concurred in by:
Kelly S. Paleczny, General Manager