Police Towing RevenueMIA/V\!BEACH
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division
TO: Jorge M. Gonzalez, City Manager
INTERNAL AUDIT REPORT
VIA:
FROM:
DATE:
Kathie G. Brooks, Budget and ~erf rmance Improvement Director
James J. Sutter, Internal Auditor ,:;Jfr
June 7, 2010
AUDIT:
PERIOD:
Police Towing Revenue Audit
October 1, 2006-June 30, 2009
This is a regularly scheduled audit of the Police Department's towing revenue operations as covered
by the City's Towing Permits with Beach Towing and Tremont Towing Services, Inc. Audit of towing
revenues relating to the Parking Department is reported in a separate report.
INTRODUCTION
Chapter 106, Article V, of the Miami Beach City Code, provides for the issuance by the City of towing
permits for the towing of vehicles identified by the City as requiring removal from public and private
property, as well as vehicle impoundments.
On January 11, 2006 the Mayor and City Commission waived (by 5/7 vote) the competitive bidding
requirement and approved towing permits with Beach Towing and Tremont Towing Services, said
permits having an initial three year commencing on March 1, 2006 and expiring on February 28,
2009, with a two year renewal at the sole and absolute discretion of the City.
The Major and Commission of the City of Miami Beach, under Resolution No. 2009-26999,
authorized and approved a month to month extension of the current towing permits with Beach
Towing and Tremont Towing Services, Inc. respectively subject to and contingent upon Beach
Towing and Tremont compliance with the additional conditions set forth in Amendment No. 14.
Said extension will be on a month to month Commencing on March 1, 2009 and expiring no later
than August 31, 2009.
Later, on July 22, 2009, the Mayor and City Commission approved, under Resolution No. 2009-
27151, an extension of the towing permits with Beach Towing Services, Inc. and Tremont Towing
Services, Inc. for a term of two years commencing on September 1, 2009 and terminating on the
earlier of August 31, 2011, or the date that Tremont Towing is required to vacate its current
premises for commencement of construction of the Sunset Harbor Garage Project; provided, further,
that the aforementioned renewal of the towing permits is subject to and continued upon Beach and
Tremont's continued compliance with the conditions imposed by the City Commission pursuant to
Resolution No. 2009-26999; and further approving the new version of the Administrative Rules and
Regulations for Police Department and Parking Department Towing Permits.
The Police Department Standard Operating Procedure (SOP) list several reasons as to why a
vehicle would be towed. The most common ones are as follows; severe injury or death to the
driver/occupants and/or disabling damage incurred in a motor vehicle traffic accident; the driver
taken into custody, the vehicle would left unattended on the street; and the vehicle has been stolen
or used in the commission of a crime.
We are cornmilledto providing excellent public se1vice and safety to all who live, work, and play in our vibrant, tropical, hi.storic community.
Internal Audit Report
Police Towing Revenue Operations
June 7, 2010
Tows are initiated when a Miami Beach Police Officer radios in to the Public Safety Communications
Unit (PSCU) to request tow service usually due to an arrest or traffic accident. PSCU Dispatcher
initiates a case and assigns a case number to the call and communicates it to the MBP Officer. An
FCIC (Florida Crime Information Center) Acknowledgement check based on the Vehicle
Identification Number (VIN) as well as a Clearance Check on the registered owner is run and the
vehicle is recorded into the FCIC system as having been towed. The officer fills out and signs a
Vehicle Storage Receipt (VSR) which becomes the controlling document for the process. The
wrecker driver signs the VSR and keeps two copies (yellow and pink copies). Two copies (white
and green) of all VSRs are turned into the Property & Evidence Unit by each MBP Officer that fills
one out and each officer keeps one copy (blue) for their report review by their supervisor.
An MBPD messenger picks up the tow companies' payment receipts (with yellow copy of the tow
company's VSR) for all vehicles impounded that have been picked up by their owners. These get
delivered to the Property & Evidence Technician (PE Tech) who reconciles them.
After each month, the PE Tech prints out the Impounded Vehicles Report from the CAD system
which lists the information of each vehicle that has been towed and impounded by each the two tow
companies for the month. The PE Tech uses the report total to create a memorandum with the total
number of vehicles towed for the month by each tow company. This memorandum is forwarded to
the Finance Department via interoffice mail to be processed for billing of Towing Fees. The tow
companies shall pay the City a permit fee of $25.00 for each vehicle towed pursuant to the
contracted towing permit and $12.50 for each vehicle that is disconnected from the towing truck at
the scene (drop fee). Amendment No. 14 contains a waiver of this drop fee effective February 1 ,·
2009. The Finance Specialist creates an invoice in the Eden system with the information in the
memorandum received from the Police Department and the invoice is mailed out.
Per the City of Miami Beach Police Department and Parking Department Towing Permit Amendment
No. 13 and 14, Section 34.1, ''The City of Miami Beach shall bill the Permittee by the 1Oth of each
month for the tows occurring in the previous month. A late charge of $50.00 plus eighteen percent
per annum interest charges shall be assessed on all payments received after the 2oth day of the
billing month."
Revenues generated by police tows were as follows:
I Revenues
Generated
OVERALL OPINION
$ 101,050 $ 93,500 $ 147,325 $341,875
The Police Department's towing operation is sufficiently handled in regards to the dispatcher
assigning tows. However, the department falls short as it relates to the following:
• Timeliness of invoicing and completeness of supporting documentation.
• Errors were noted in City billings which reflected private tows.
• Records could not be located to substantiate payment for missing invoices for the month of
April2008.
• Tow companies are not timely paying in accordance with the towing permit and/or have
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Internal Audit Report
Police Towing Revenue Operations
June 7, 2010
outstanding balances due to the City.
PURPOSE
The purpose of this audit is to review the operations of the Police Department as it relates to
recording, invoicing and collecting revenues associated with owing fees in accordance with the
towing permit between the City of Miami Beach Police Department and Beach Towing and Tremont
Towing; determine whether the revenue from permit fees were paid in accordance with City Code
and operating policies and procedures; whether the amount paid agrees with the permit rates; and
whether all transactions were correctly billed and timely received by the City and properly recorded
in the City's Financial System.
OBJECTIVES
1. Confirm that the Police Department has detailed policies and procedures for the
reconciliation and billing of towing services.
2. Determine whether internal controls are sufficient and in place to control billing and receipt
of revenues from the tow companies.
3. Determine if reconciliation of tows dispatched to amounts billed are performed.
4. Confirm that all vehicle storage receipts are compared to monthly systems report of tows
and the City bills issued.
5. Confirm that City billings are correctly calculated and are issued and paid by the tow
companies on a timely basis.
6. Verify that receipts were correctly recorded into the City's general ledger on a timely basis.
FINDINGS, RECOMMENDATIONS AND MANAGEMENT RESPONSES
1. Finding: Timeliness of Invoicing and completeness of supporting documentation
Amendment No.13 City of Miami Beach Police Department and Parking Department towing
Permit, Paragraph 34.1 Permit Fee-Monthly Billing, states that the City of Miami Beach shall
bill the Permittee by the 1oth of each month for all tows occurring in the previous month.
Internal Audit tested all sixty-two (62) invoices for timeliness, accuracy and completion.
None of these invoices were billed in a timely manner and/or in accordance with Police and
Parking Towing Permit terms. On average, invoices were dated on the 28 1h day of billing
month.
In addition, eighteen (18) out of twenty-two (22) invoices selected from the 62 invoices
above for detail testing, had no detailed supporting documentation to support the number of
tows forwarded to the Finance Department for billing. The Police Department only
maintained a copy of the memorandum sent to the Finance Department for billing. The old
CAD system reports were not kept by Police nor were they forwarded to Finance
Department.
Recommendation:
The Police Department should forward any and all relevant information supporting monthly
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Internal Audit Report
Police Towing Revenue Operations
June 7, 2010
tows performed to the Finance Department at month end to allow sufficient time for timely
invoicing the corresponding tow companies. In addition, the Police Department should
consider revising their Standard Operating Procedures to include datelines to verify the
accuracy and reliability of monthly tows and corresponding reports, as well as to ensure that
such information is forwarded to the Finance Department with sufficient time to allow the
invoices to be prepared and issued timely in accordance to Amendment No. 13.
Management's Response
The Police Department shall forward any and all relevant information supporting monthly
tows performed to the Finance Department no later than the end of the first week of the
following month. This will provide sufficient time to allow the invoices to be prepared and
issued timely in accordance to Amendment No. 13. In addition, the Police Department shall
maintain a copy of the information sent for later review if needed.
2. Finding: Errors in City Billings reflecting private tows
Out of the twenty-two (22) invoices selected from the initial sample for detail testing, four (4)
invoices were inaccurately billed due to the Computer Assisted Dispatch (CAD) system
report used. After closer review, it was noted that the new CAD report was capturing
"Private" tows that are not supposed to be billed since the CAD system was updated in
December 2008. As a result the numbers of tows reported to Finance Department have
been overstated causing inaccurate billings from December 2008 forward.
A review of the detailed report for April 2009 was performed and individual private tows were
deducted resulting in overbillings to Tremont Towing in the amount of $3,775.00 and to
Beach Towing in the amount of $275.00.
Recommendation:
Invoices prepared since December 2008 should be corrected to remove private tows and
revised to reflect the correct amount outstanding which should then be communicated to the
tow companies.
The CAD system report should be reviewed and the parameters corrected for accurate
billings. Inquiry with the PSCU revealed that there has been an approval of the purchase of
a module for the CAD system, which will allow the creation of customized reports to filter out
any tow records not to be billed. Until this module is in place, and sufficient testing has been
performed to ensure the reports are capturing accurate data, the PE Technician must review
each record on the Impounded Vehicle Report to quantify the total tows to be billed.
Management's Response
The CAD System reports prepared since December 2008 are currently being reviewed and
corrected to remove private tows. Once complete, these figures should be forwarded to the
Finance Department so invoices can be revised to reflect the correct amount outstanding.
A new CAD System report has been developed with revised parameters to ensure accurate
billings. This report shall be compared to each record on the Impounded Vehicle Report for
a 90 day test period to ensure accurate data is being captured.
Any future invoice disputes must be submitted by the towing companies within 30 days of
issuance of the invoice to the Police Department, Property and Evidence Unit Commander.
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Internal Audit Report
Police Towing Revenue Operations
June 7, 2010
3. Finding: Outstanding towing fees due to the City.
Towing fees are not collected in accordance with towing permit terms. A total of sixty-two
(62) invoices representing the entire population were tested revealing a total of eight (8)
invoices (seven from Beach Towing and one from Tremont Towing) totaling $39,850.00,
excluding late fees and accrued interest that were yet to be collected from the tow
companies as of October 13, 2009. Furthermore, there were five invoices (Tremont Towing)
that were partially paid and therefore with outstanding balances totaling $19,675.00
collectively. As of October 13, 2009 Beach Towing owed the City a total of $43,675.00 of
past due invoices, and at the same time, a total of $42,872.00 was owed by Tremont Towing
from past due invoices, excluding late fees and accrued interest. One of the contributing
factors for the nonpayment of invoices since December 2008 maybe due to the inaccuracy
of invoices attributed to the updating of the City's CAD system as discussed in the finding
above. While the more recent invoices may have been inaccurate, this does not account for
as to why other older invoices have not been paid timely.
Additionally, we noted that past due fees and accrued interest are not being billed to the tow
companies. As stated on the Towing Permit Amendment No. 13, "a late charge of $50.00
plus eighteen percent per annum interest charges shall be assessed on all payments
received after the 201h day of the billing month".
In order to quantify the impact of not billing past due fees and interest, we reviewed the
invoices tested and noted the following:
INVOICE BALANCES PAID LATE
··· •····. ·' · ·' Numbercifr • • ... ·.• .. ".·.A .... v.·.·.e .. · .. ·.r.·.a.· .. · •... 9· .. ·.a .. ·.·.· .. < >•·::: ·.: <:·:, .:•:·'< ·• • · . ·:. ', .............. · .. • Total Permit'. ' · · · · · · · · ·· · · ·· ·· ·· ·· · · Accru~9.L.ate>' .•· Accrued · · · ··· · ·· · ·· · ··
:·H·.·0.·· ... I·d··.·.· .. E:!·.··.·.r· .. ··::.• ·.··rn. yi!Hc ... •·.~.s ..•.•••. t'· •. •Nu.: .. ~ ... · ..... ~ .. er ..... ~f .·· ... · .. ·, .... F. , . ... .• •····1·t···········t'···. ,:·A:ffi~ul)t
Tremont
Towing
Beach
Towing
· Paid.Late · Days Late 1 '' · 66 ~. •··•· · : .n ere~ / ';c)V,¢((•
20 (1) 24 $ 1,000.00 $ 868.67 $ 1,868.67
25 90 $ 1,250.00 $ 3,330.48 $4,580.48
(1 ): Partial Payments for five (5) invoices were included. Accrued interest on outstanding balances from partial payments was
included on the next table. However, one time late fees for partially paid invoices were accounted on this table to prevent
duplication.
OUTSTANDING INVOICE BALANCES
Towin
Beach
Towin
9 (2) $42,875.00
10 $43,675.00
148 $200.00
143 $500.00
(2): Outstanding Balances from five (5) partially paid invoices were included
$ 2,483.32 (3) $ 45,558.32
$ 3,049.04 (3) $ 47,224.04
(3): Amounts subject to change based on the amount of time that the balances remain outstanding.
It is the responsibility of each department to collect revenues associated within its area. The
lack of collection of past due fees and interest may results in a loss of revenues to the City.
Outstanding invoices were subsequently collected from Beach Towing totaling$ 43,675.00.
Additionally, a portion corresponding to late penalties and accrued interest were invoiced
and paid by Beach Towing in the amount of $3, 868.37 on November 4, 2009. No additional
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Internal Audit Report
Police Towing Revenue Operations
June 7, 2010
amounts for late fees and accrued interest have been paid.
However, out of the total of $42,875.00 from outstanding invoice balances identified in our
finding from Tremont Towing, $4,000.00 has been collected with a balance of $38,875.00
still outstanding, as of June 1, 2010, for invoices issued during our audit period. No payment
for applicable late charges and accrued interest has been received.
Recommendation:
The Police Department should immediately pursue collection of all balances due from the
tow companies of all outstanding invoices and corresponding late fees and accrued interest.
Reconciliation of any outstanding invoices which are in dispute by the tow companies
should be immediately performed. The Finance Department should consider transferring the
billing function to the Police Department similar to the process used for the Parking
Department's billings. This will enable the Police Department to have direct access to Eden
reports to determine whether collections of invoices are timely. Going forward the Police
Department needs to closely monitor and follow up on any unpaid or late invoices. Any
outstanding invoice over 30 days should be considered cause for termination of the towing
permit. In addition, the Police Department should separately invoice the towing companies
for any late fees and interest due.
Management's Response
Police Department
As stated earlier, the Police Department is currently reviewing it's reporting of towed vehicles
since December 2008. Upon completion, representatives of the Police and Finance
Departments should meet to review outstanding balances and payments received to
determine if credits are warranted.
Finance Department
The Finance Department will train the Police Department on how to use the City's integrated
financial system's accounts receivable module in order to properly and timely invoice for
monies due to the City; as well as, using system generated reports for collection efforts.
This process is currently in effect in various other City Departments and has proven to be
efficient, effective and successful.
4. Finding : Missing Invoices for April 2008
No records available reflected any invoice for tows performed in the month of April of 2008
for each tow company. General ledger accounts do not reflect amounts billed for this month.
Lack of detailed support for invoices billed and a monthly review of the tow billings results in
inaccurate billings and/or inaccurate recording of transactions.
Subsequent to Internal Audit's finding, invoice number 00013465 was prepared on August
28, 2009 by the Finance Department and issued for the amount of $4,025.00 corresponding
to the tows performed during the month of April, 2008. No amounts corresponding to this
invoice have been collected, as of June 1, 2010.
Recommendation:
Transferring the billing function to the Police Department as specified in finding #3 above
would enhance accountability of ensuring that all invoices are billed. In the meantime, the
Finance Department should provided training to the Police Department to perform cursory
reviews of invoices on Eden system to ensure that no monthly billing is overlooked or
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Internal Audit Report
Police Towing Revenue Operations
June 7, 2010
skipped. Following up on the collection of this invoice should be included in the Police
Department's collection efforts.
Management's Response
Finance Department:
The billing function will be completely transferred to the Police Department as specified in
finding #3 and should provide enhanced accountability of ensuring that all invoices are
billed. The Finance Department will provide training to the Police Department on how to
perform cursory reviews of invoices on the City's integrated financial system's accounts
receivable module to ensure that no monthly billing is overlooked or skipped. Following up
on the collection of this invoice will be included in the Police Department's collection efforts.
EXIT CONFERENCE
An exit conference held to discuss the audit report and to solicit management responses noted
above. Attendees were Raymond Martinez (Assistant Police Chief), Hernan Gardena (Division
Commander) and James Sutter (Internal Auditor). Management responses were received shortly
thereafter. All were in agreement with the contents of this report.
Audit performed by Pablo Saballos (Audit Consultant)
F:\obpi\$AUD\INTERNAL AUDIT FILES\DOCOS-09\REPORTS-FINAL\Towing Revenue-Police Dept.doc
cc: Carlos Noriega, Chief of Police
Raymond Martinez, Assistant Police Chief
Hernan Gardena, Division Commander
Richard Gullage, Police Property & Evidence Unit Captain
Patricia Walker, Chief Financial Officer
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