CNC Management Group, Inc./\~~A/V\1 BE
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division INTERNAL AUDIT REPORT
TO:
VIA:
FROM:
Jorge M. Gonzalez, City Manager .. C)
Kathie G. Brooks, Budget and Perfo 1 ance Improvement Directo(~p
James J. Sutter, Internal Auditor: "'e;t~Af/
DATE:
AUDIT:
PERIOD:
November 5, 2010
CNC Management Group Inc. (CNC)
July 2007 to July 2010
This report is the result of a scheduled audit of the Roll-off Fee Returns for CNC Management
Inc.
INTRODUCTION
A Roll-off is defined as a container with a minimum capacity of ten cubic yards designed to be
transported by a motorized vehicle. They are typically used for the purpose of removing
construction debris, which include rock, metal and other materials used in connection with a
construction project or for the removal of large quantities of trash and bulky waste.
Approximately thirty companies currently possess business tax receipt demonstrating that they
operate Roll-offs within the City's boundaries. They are required to abide by the terms outlined
in the City Code. This includes the remittance of franchise fees calculated by using the
applicable percentage of Miami Beach gross receipts. Reports are to be submitted to the City's
Finance Department by the end of the subsequent month. Effective October 2008 the Roll-off
franchise fee was increased from 16% to18%.
CNC has been operating in the City of Miami Beach since July 2008. Their majority line of
business is Landscaping Maintenance Services, Landscape and design Services, Arbor care
Services, Irrigation and Design Services, Mulching Services, Dump Truck Services, Hauling
Services, Back Hoe Services, Transplanting Services. In addition, CNC provides roll-off waste
service as a supplemental line of business.
OVERALL OPINION
CNC has not fully complied with the City Codes as it relates to reporting requirements for Roll-
off contractors. The following items were noted during our audit.
• Gross receipts in the amount of $21,280.00 were not reported resulting in the owing of
$4,989.01 in delinquent roll-off franchise fees (interest and late filing charges) to the City.
• CNC has not filed list of accounts upon renewal. A listing of accounts was provided
during the audit.
We me committee/to providing excellent public service and safety to all who live, work, one/ ploy in our vibrant, tropicol, hi5toric community.
Internal Audit Report
CNC Management Group Inc.
November 5, 2010
• CNC had not previously submitted the certificate of liability insurance. However, it was
provided during the audit.
PURPOSE
The purpose of this audit is to determine whether all Roll-off waste contractor billings were
correct, and whether all City revenues were correctly calculated, received timely and accurately
recorded by the City, and the contractor was in compliance with designated sections of the City
Code and related Ordinances.
SCOPE
1. Review waste contractor's books and records to confirm that their billings were correct;
their gross receipts were correctly calculated and support the monthly franchise fee
submitted to the City.
2. Confirm that the private waste contractor timely sent the City the required reports in
adherence with the terms listed in the City Code.
3. Confirm that the private waste contractor is timely sending the required Monthly Report
of Gross Receipts along with their remittance to the City.
4. Confirm that the private waste contractor timely obtained their required annual business
tax receipt.
5. Confirm that the private waste contractor timely submitted their annual Certified Public
Accountant (CPA) Statements of Gross Receipts to the City (If applicable).
6. Confirm that the private waste contractor has obtained the required insurance in
adherence with Section 90-196 of the City Code.
7. Confirm that all monthly Roll-off Fee Return and were timely and correctly recorded in
the City's Financial System.
FINDINGS, RECOMMENDATIONS AND MANAGEMENT RESPONSE
1. Finding -Unreported Gross Receipts
City Code Section 90 -221 defines gross receipts as "the entire amount of the fees
collected by the licensee, exclusive of taxes as provided by law, whether wholly or
partially collected, within the city, for solid waste removal and disposal': Therefore, all
monies collected by the Roll-off waste contractor from Miami Beach service addresses,
including dump fees, fuel surcharges, dry run and overload should be included in
reported gross receipts.
Out of twenty five months reviewed during our audit period, CNC had gross receipts
within the City for eighteen months. No franchise taxes were filed to the City for these
months. The gross receipts amounted to $21,380. For the remaining months, there
were no other collected gross receipts within the City. Therefore, the amount of
Page 2 of 4
Internal Audit Report
CNC Management Group Inc.
November 5, 2010
$3,830.40 in franchise fees was not remitted and they were out of compliance with the
City Code.
The following table summarizes audited gross receipts and the amount due from CNC
for our audit period:
2009
I
2010 TOTAL
(Jan-Dec.) (Jan-Jul.)
Audited Gross Receipts $14,440.00 $6,840.00 $21,280.00
Less Report Gross Receipt 0.00 0.00 0.00
Unreported Revenues 14,440.00 6,840.00 21,280.00
Roll-off fees due 2,599.20 1,231.20 3,830.40
Interest 270.85 37.76 308.61
Late Filing 550.00 300.00 850.00
Total Due $3,420.05 $1,568.96 $4,989.01
Footnotes: On October, 2008 as required pursuant to section 90-278 of the City Code,
the franchise fee paid to the city by its franchise Roll-offs contractors was
raised from 16% of the franchisee's total monthly gross receipts to 18% of
said gross receipts.
Recommendation( s)
CNC should remit the amount of $4,989.01. All subsequent roll-off fees return should be
filed in a timely manner and remit any franchise tax due.
2. Finding -Required Reporting
CNC did not submit the following documents in accordance with the listed City Code
sections during the audit period:
a. Section 90-278 (3) states" The licensed Roll-off waste contractor shall provide the
city manager and the sanitation director with a current list of the names and
addresses of each account, upon initial application and upon application for renewal
of its business license, the frequency of service, the permit number and capacity of
each Roll-off container or construction dumpster as per account and the address
serviced by each Roll-off container or construction dumpster." CNC has not provided
the city manager and the sanitation director with a current list of names and
addresses of each account, upon the initial application and upon application for
renewal of its business license, the frequency of service, the permit number and
capacity of each Roll-off container. However, a listing of customer names was
provided during the audit.
b. City Code Section 90 -196 lists the insurance coverage that must be maintained by
Roll-off waste contractors. CNC provided proof of the required insurance during the
audit.
Page 3 of 4
Internal Audit Report
CNC Management Group Inc.
November 5, 2010
Recommendation( s)
CNC must comply with the designated sections of the City Codes by submitting a list of
accounts annually and insurance.
EXIT CONFERENCE
Audit findings were e-mailed on October 19, 2010 to CNC Management. We confirmed their
agreement to our findings on November 3, 2010 and they are working on a payment agreement
with the City's Finance Department.
JJS: CD
Audit performed by Carmin Dufour
F:\obpi\$AUD\DOC10-11\REPORTS-AUDIT FINAL REPORT\CNC.doc
cc: Jorge Gomez, Assistant City Manager
Fred Beckmann, Public Works Director
Alberto Zamora, Sanitation Director
Patricia Walker, Chief Financial Officer
Jody Rhodes, Office Manager
Carlos M. Vasquez, President
Page 4 of 4