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
Compliance Report Re: Peter Karl Youngren
Issue Identified by Applicant
1. The Youngren campaign accepted contributions from two corporations.
City of Toronto
Compliance Report Re: Peter Karl Youngren
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
Compliance Report Re: Peter Karl Youngren
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
Compliance Report Re: Peter Karl Youngren
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
Compliance Report Re: Peter Karl Youngren
Findings – Contributions (Cont’d)
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
Compliance Report Re: Peter Karl Youngren
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
Compliance Report Re: Peter Karl Youngren
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
Apparent financial reporting contravention of s. 69(1)(k) and 78(1).
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
Compliance Report Re: Gus Cusimano
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
Compliance Report Re: Gus Cusimano
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
Compliance Report Re: Gus Cusimano
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
Compliance Report Re: Gus Cusimano
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
Compliance Report Re: Gus Cusimano
Findings – Contributions (Cont’d)
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
Compliance Report Re: Gus Cusimano
Findings – Contributions (Cont’d)
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
Compliance Report Re: Gus Cusimano
Findings – Contributions (Cont’d)
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
Compliance Report Re: Gus Cusimano
Findings – Contributions (Cont’d)
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
Details in paragraphs 3.25 to 3.31
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
Compliance Report Re: Gus Cusimano
Findings – Contributions (Cont’d)
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
Compliance Report Re: Gus Cusimano
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
Compliance Report Re: Gus Cusimano
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
No apparent contravention.
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
No apparent contravention.
City of Toronto
Compliance Report Re: Gus Cusimano
Findings – Expenses (Cont’d)
5. Occurrence of fundraising event at Mastro’s Restorante on June 10, 2010
Satisfied this event occurred
Details in paragraphs 3.52 to 3.54
No apparent contravention.
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
Details in paragraphs 3.55 to 3.63
No apparent contravention.
City of Toronto
Compliance Report Re: Gus Cusimano
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”
Apparent financial reporting contravention of s. 69(1)(k) and 78(1).
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.