2. 2010 MUNICIPAL ELECTION COMPLIANCE AUDIT COMMITTEE

COMITÉ DE VÉRIFICATION DE LA CONFORMITÉ POUR LES ÉLECTIONS MUNICIPALES DE 2010

COMMITTEE RECOMMENDATIONS

That Council approve:

1. The establishment of an Election Compliance Audit Committee as prescribed by Section 81.1 of the Municipal Elections Act, 1996; and,

2. The terms of reference for the Election Compliance Audit Committee as outlined in Document 1.

RecommandationS du ComitÉ

Que le Conseil approuve :

1. la création d’un comité de vérification de la conformité en matière d’élections, comme le prescrit l’article 81.1 de la Loi de 1996 sur les élections municipales;

2. le mandat du Comité de vérification de la conformité en matière d’élections, comme l’indique le document 1.

DOCUMENTATION

1. City Clerk and Solicitor’s report dated 25 May 2010 (ACS2010-CMR-CCB-0039).

Report to/Rapport au :

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

and Council / et au Conseil

May 25 2010 / le 25 mai 2010

Submitted by/Soumis par: M. Rick O'Connor

City Clerk and Solicitor/Greffier et Chef du contentieux

Contact Person/Personne ressource : Catherine Bergeron, Manager,

Elections & MFIPPA/Gestionnaire, Élections & LAIMPVP

(613) 580-2424 x44127, catherine.bergeron@ottawa.ca

City Wide/à l'échelle de la Ville

Ref N°: ACS2010-CMR-CCB-0039

SUBJECT:	2010 MUNICIPAL ELECTION COMPLIANCE AUDIT COMMITTEE

OBJET :	COMITÉ DE VÉRIFICATION DE LA CONFORMITÉ POUR LES ÉLECTIONS MUNICIPALES DE 2010

REPORT RECOMMENDATIONS

That the Corporate Services and Economic Development Committee recommend that Council approve:

1. The establishment of an Election Compliance Audit Committee as prescribed by Section 81.1 of the Municipal Elections Act, 1996; and,

2. The terms of reference for the Election Compliance Audit Committee as outlined in Document 1.

RECOMMANDATIONS DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil d’approuver :

1. la création d’un comité de vérification de la conformité en matière d’élections, comme le prescrit l’article 81.1 de la Loi de 1996 sur les élections municipales;

2. le mandat du Comité de vérification de la conformité en matière d’élections, comme l’indique le document 1.

BACKGROUND

Under the Municipal Elections Act, 1996 (“the Act”), candidates are bound by specific election campaign finance rules and must file provincially prescribed financial statements with the City Clerk outlining their campaign finance activities. Any eligible elector who believes that a candidate has contravened these election campaign finance rules has the right to request a compliance audit of the candidate’s election campaign finances. The application must be submitted to the City Clerk in writing, include the reasons for the application, and be made within 90 days after the filing date for financial statements.

In the past, it has been up to the discretion of Council to either deal with the application for a compliance audit itself or delegate the responsibility to a separate committee for consideration. Since amalgamation, the City has received two applications for compliance audits: the first following the 2000 Municipal Election and the second following the 2003 Municipal Election. In both instances, Council opted to deal with the complaints directly.

As a result of changes to the Act included in Bill 212, Ontario municipalities are now required to establish an independent compliance audit committee for the purposes of reviewing and making decisions on applications for compliance audits. The Election Compliance Audit Committee must be in place by October 1, 2010, for a four-year term.

DISCUSSION

Under the Municipal Elections Act, 1996 as amended by Bill 212, municipalities are now required to establish an independent committee to review applications for a compliance audit. It is the responsibility of the Election Compliance Audit Committee (the “Committee”) to assess the validity of each application and, where a compliance audit has been granted, to review the results of the compliance audit.

Responsibilities and Powers

The Committee’s responsibilities and powers are restricted to determining whether a compliance audit is required as well as reviewing the compliance audits that are conducted. The Committee shall be responsible for any applications for a compliance audit resulting from the regular municipal election or any by-election held during the term of Council for which the Committee was appointed. The powers and responsibilities outlined for the Committee in the Act include:

Initial consideration of the application to determine whether the compliance audit should be granted or rejected;
Appointment of an auditor, if the compliance audit is granted;
Receive the compliance audit report from the auditor;
Review the auditor’s report and:

If the report finds a contravention did occur, decide whether legal proceedings should be commenced against the candidate; or
If the report finds that no contravention occurred, decide whether there were reasonable grounds for the application.

In the event that the auditor’s report does not find a contravention and the Committee determines that there were no reasonable grounds for the application, City Council is entitled to recover the auditor’s costs from the applicant.

In terms of reporting, Council shall receive:

· A copy of the application for a compliance audit [ss.81(4)];

· A copy of the auditor’s report [ss.81(10)]; and

· A report from the Committee outlining its findings and recommendations as a result of the auditor’s report.

The Committee must review an application for a compliance audit within 30 days of its receipt. A similar 30 day legislated timeframe exists for reviewing a report from an auditor.

Staff recommends that applications for a compliance audit be dealt with in a similar fashion to requests for information under the Municipal Freedom of Information and Protection of Privacy Act and requests for investigations of closed meetings. It is recommended that a process similar to the following would be facilitated by the Elections Office, as a delegate of the City Clerk:

1. An Application for a Compliance Audit would be submitted to the Elections Office.

2. Application would be logged and forwarded to the Election Compliance Audit Committee and City Council. An initial collection of relevant information (i.e. financial statements) would take place in order to assist the Election Compliance Audit Committee in assessing the validity of the application.

3. The Election Compliance Audit Committee would then review the application and determine whether the application should be granted or rejected.

4. In the case that the Election Compliance Audit Committee decides to grant the application, the Committee would then proceed in appointing an auditor to complete an audit of the election campaign finances of the candidate in question.

5. Upon receipt of the auditor’s report, the Election Compliance Audit Committee would review the report and:

If the report finds a contravention did occur, decide whether legal proceedings should be commenced against the candidate; or
If the report finds that no contravention occurred, decide whether there were reasonable grounds for the application.

6. Following its review, the Committee would prepare a report to City Council with its findings and recommendations (including a copy of auditor’s report).

7. The Committee shall provide notice of its intent to submit a report City Council one meeting in advance.

Composition

The Act requires that the Committee must be established prior to October 1 of the municipal election year and serves for the same four year term of office as the Council for which it was appointed.

The Act also requires that the Committee must have no fewer than three members and no more than seven members.

Members of the Committee must not be:

a) Employees or officers of the municipality;

b) Members of Council; or

c) Any person who is a candidate in the election for which the Committee is established.

In order to ensure that the Committee is able to meet all the legislated timeframes outlined in the Act, staff is recommending a five-member committee, with three being quorum.

Given the specialized nature of the Committee’s work, staff believes that members should possess knowledge of campaign finance rules and accounting principles. It would also be valuable for members to have past experience on committees or tribunals, as the Committee will be quasi-judicial in nature. Ideal candidates include auditors, accountants, lawyers, or other individuals with knowledge of the campaign financing rules of the Municipal Elections Act, 1996 or its provincial or federal counterparts. Given the anticipated qualifications of the members of the Committee and requirement to address compliance audit requests in a timely fashion, staff are recommending that members of the Committee be paid an honorarium and per diem commensurate with what is provided to the City’s Meetings Investigator (e.g. a $600 retainer annually, then $175 an hour to a maximum of $1250 a day).

Upon Council’s approval of the establishment and composition of the Committee, staff will undertake the recruitment process.

Recruitment will be targeted towards relevant organizations and professional bodies such as the Institute of Chartered Accountants of Ontario who offers a free service to find Chartered Accountant volunteers, and the Law Society of Upper Canada. Extra precaution will be taken to ensure that, in the case of auditors or accountants, individuals appointed to the Committee do not audit or prepare financial statements or have any other formal relationship with any candidate running for office on City Council (e.g. being a member of a campaign team or a contributor). An individual who fails to adhere to this requirement would no longer be eligible to sit as a member of the Committee. In addition, staff will ensure that at least two members are bilingual.

Individuals selected for the Committee will receive quasi-judicial training in order to prepare them for their role on the Committee.

Given that all Members of Council for the next term will have been candidates in that election, staff are recommending that Council delegate the selection of the members of the Election Compliance Audit Committee to the City Clerk and Solicitor, the Deputy City Clerk and the City Treasurer.

Staff will provide Council with an information report indicating the membership of the Committee as well as the communications materials related to this Committee (including the process for requesting a compliance audit) prior to Nomination Day.

RURAL IMPLICATIONS

There are no rural implications associated with this report.

CONSULTATION

No public consultation was required for this report.

COMMENTS BY THE WARD COUNCILLOR(S)

This report is city-wide.

LEGAL/RISK MANAGEMENT IMPLICATIONS

There are no legal/risk management implications associated with this report.

CITY STRATEGIC PLAN

This report relates directly to a Provincial requirement rather than the City’s Strategic Plan.

TECHNICAL IMPLICATIONS

There are no technical implications associated with this report.

FINANCIAL IMPLICATIONS

The costs of the Committee’s operation and activities will be funded from the Election Reserve Fund.

SUPPORTING DOCUMENTATION

Document 1 – Election Compliance Audit Committee – Terms of Reference

Document 2 – Section 81 & 81.1 of the Municipal Elections Act, 1996

DISPOSITION

Upon Council approval, the Legislative Services Branch staff will conduct a recruitment process for the appointment of the Election Compliance Audit Committee members. Staff will bring forward an information report identifying the selected individuals and confirming the process for submitting an application for a compliance audit to the Corporate Services and Economic Development Committee prior to September 10, 2010 (Nomination Day).

Document 1

City of Ottawa Election Compliance

Audit Committee

TERMS OF REFERENCE

MANDATE

The Election Compliance Audit Committee is responsible for reviewing and making decisions on applications for municipal election campaign finance compliance audits.

RESPONSIBILITIES

The Election Compliance Audit Committee shall be responsible for:

Receiving and considering an application for a compliance audit and determining whether the compliance audit should be granted or rejected;
Appointing an auditor, if the compliance audit is granted;
Receiving the compliance audit report from the auditor;
Reviewing the auditor’s report and:

If the report finds a contravention did occur, deciding whether legal proceedings should be commenced against the candidate; or
If the report finds that no contravention occurred, deciding whether there were reasonable grounds for the application.

The Committee is required to review applications for compliance audits and reports from an auditor within 30 days of receipt.

REPORTING PROTOCOLS

Following its consideration of an auditor’s report, the Committee shall provide a report to Council outlining its findings and any recommendation for further action. The Committee shall provide notice of its intent to submit a report to Council one meeting in advance.

MEMBERSHIP

The Election Compliance Audit Committee will be comprised of five (5) members selected by the City Clerk and Solicitor, the Deputy City Clerk and the Manager of Elections and MFIPPA. At least 2 of the members shall be bilingual.

The following are not eligible to sit on the Election Compliance Audit Committee:

· Employees or officers of the City;

· Members of Council; or

· Candidates of the municipal election for which the Committee is established.

Members must have a thorough understanding of the campaign finance rules (i.e. auditors, accountants, lawyers, etc.)

Three members will be required for quorum.

An individual shall be deemed ineligible to be a member of the Committee if they prepare the financial statements of any candidate running for office on City Council during the term for which the Committee has been established.

MEETINGS

The Election Compliance Audit Committee will meet as necessary for the purposes of reviewing an application for a compliance audit or a report from an auditor. The Committee may also meet as necessary to organize and plan its work.

Meetings of the Election Compliance Audit Committee shall be held in accordance with the open meeting provisions of the Municipal Act, 2001 (Section 239). Meeting notices and agendas will be communicated through the City’s website.

The Chair and Vice-Chair shall be elected at the Committee’s first meeting.

TERM

Members of the Election Compliance Audit Committee shall serve the same term of office as the Council that takes office following a regular municipal election. Each new Committee shall be appointed by October 1 of a regular municipal election year.

Document 2

Municipal Elections Act, 1996

Compliance audit Application

81. (1) An elector who is entitled to vote in an election and believes on reasonable grounds that a candidate has contravened a provision of this Act relating to election campaign finances may apply for a compliance audit of the candidate’s election campaign finances.

Requirements

(2) An application for a compliance audit shall be made to the clerk of the municipality or the secretary of the local board for which the candidate was nominated for office; and it shall be in writing and shall set out the reasons for the elector’s belief.

Deadline

(3) The application must be made within 90 days after the latest of,

(a) the filing date under section 78;

(b) the candidate’s supplementary filing date, if any, under section 78;

(d) the date on which the candidate’s extension, if any, under subsection 80 (4) expires.

Application to be forwarded to committee

(4) Within 10 days after receiving the application, the clerk of the municipality or the secretary of the local board, as the case may be, shall forward the application to the compliance audit committee established under section 81.1 and provide a copy of the application to the council or local board.

Decision

(5) Within 30 days after receiving the application, the committee shall consider the application and decide whether it should be granted or rejected.

Appeal

(6) The decision of the committee may be appealed to the Ontario Court of Justice within 15 days after the decision is made and the court may make any decision the committee could have made.

Appointment of auditor

(7) If the committee decides under subsection (5) to grant the application, it shall appoint an auditor to conduct a compliance audit of the candidate’s election campaign finances.

Same

(8) Only auditors licensed under the Public Accounting Act, 2004 or prescribed persons are eligible to be appointed under subsection (7).

Duty of auditor

(9) The auditor shall promptly conduct an audit of the candidate’s election campaign finances to determine whether he or she has complied with the provisions of this Act relating to election campaign finances and shall prepare a report outlining any apparent contravention by the candidate.

Who receives report

(10) The auditor shall submit the report to,

(a) the candidate;

(b) the council or local board, as the case may be;

(d) the secretary of the local board, if applicable; and

(e) the applicant.

Report to be forwarded to committee

(11) Within 10 days after receiving the report, the clerk of the municipality or the secretary of the local board shall forward the report to the compliance audit committee.

Powers of auditor

(12) For the purpose of the audit, the auditor,

(a) is entitled to have access, at all reasonable hours, to all relevant books, papers, documents or things of the candidate and of the municipality or local board; and

(b) has the powers of a commission under Part II of the Public Inquiries Act, which Part applies to the audit as if it were an inquiry under that Act.

Note: On a day to be named by proclamation of the Lieutenant Governor, clause (b) is repealed and the following substituted:

(b) has the powers set out in section 34 of the Public Inquiries Act, 2009 and section 34 applies to the audit.

See: 2009, c. 33, Sched. 21, ss. 8 (45), 13 (2).

Costs

(13) The municipality or local board shall pay the auditor’s costs of performing the audit.

Power of committee

(14) The committee shall consider the report within 30 days after receiving it and may,

(a) if the report concludes that the candidate appears to have contravened a provision of this Act relating to election campaign finances, commence a legal proceeding against the candidate for the apparent contravention;

(b) if the report concludes that the candidate does not appear to have contravened a provision of this Act relating to election campaign finances, make a finding as to whether there were reasonable grounds for the application.

Recovery of costs

(15) If the report indicates that there was no apparent contravention and the committee finds that there were no reasonable grounds for the application, the council or local board is entitled to recover the auditor’s costs from the applicant.

Immunity

(16) No action or other proceeding for damages shall be instituted against an auditor appointed under subsection (7) for any act done in good faith in the execution or intended execution of the audit or for any alleged neglect or default in its execution in good faith.

Saving provision

(17) This section does not prevent a person from laying a charge or taking any other legal action, at any time, with respect to an alleged contravention of a provision of this Act relating to election campaign finances.

Compliance audit committee

81.1 (1) A council or local board shall, before October 1 of an election year, establish a committee for the purposes of section 81.

Composition

(2) The committee shall be composed of not fewer than three and not more than seven members and shall not include,

(a) employees or officers of the municipality or local board;

(b) members of the council or local board; or

Term of office

(3) The term of office of the committee is the same as the term of office of the council or local board that takes office following the next regular election, and the term of office of the members of the committee is the same as the term of the committee to which they have been appointed.

Role of clerk or secretary

(4) The clerk of the municipality or the secretary of the local board, as the case may be, shall establish administrative practices and procedures for the committee and shall carry out any other duties required under this Act to implement the committee’s decisions.