Southeastern Recycling CorpH
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division INTERNAL AUDIT REPORT
To:
VIA:
From:
Date:
Jorge M. Gonzalez, City Manager . q_,
Kathie G. Brooks, Budget and P~·rform nee Improvement Directorf/1/
James J. Sutter, Internal Auditor nr
May 13, 2011 ,
Audit:
Period:
Southeastern Recycling Corp.
February 2008 to February 2011
This report is the result of a scheduled audit of the Roll-Off Fee Returns for Southeastern Recycling,
Corp. (Southeastern Recycling)
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%.
Southeastern has been operating in the City of Miami Beach since December 2006. Their majority
line of business is recycling. In addition, Southeastern Recycling provides roll-off waste service as a
supplemental line of business.
BACKGROUND
Previously, on July 2, 2008 an audit was performed at Southeastern's establishment. A review of
the company's invoices showed that franchise fees were charged and collected throughout the audit
period. Southeastern's records showed that franchise fees were remitted timely to the City of Miami
Beach. There was no audit assessment.
OVERALL OPINION
Southeastern 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 $5,737.77 were not reported resulting in the owing of
$1,881.63 in roll-off franchise fees and interest to the City. Hence, Southeastern Recycling
paid the audit assessment during the audit.
We ore committed to providing excellent public se!Vice and safety Ia all who live, worl<, ond play in our vibronl, tropicol, historic community.
Internal Audit Report
Southeastern Recycling Corp.
May 13, 2011
.. Southeastern Recycling has not filed a list of accounts, however a listing of customer names
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, overload, extra month fees, relocation and waiting time charges should
be included in reported gross receipts.
Out of 37 months audited gross receipts, Southeastern Recycling paid the City of Miami
Beach $567.00 in franchise fees for $3,150.00 in reported gross receipts. Southeastern
Recycling collected an additional $5,737.77 in gross receipts but did not report these
amounts in compliance with the City Code.
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Internal Audit Report
Southeastern Recycling Corp.
May 13, 2011
The following table summarizes audited gross receipts and the amount due from
Southeastern Recycling for our audit period:
2008 2009 2010 2011
Feb-Dec Jan-Dec Jan-Dec Jan-Feb
Audited I Reported $832.77 $3,290.00 $4,765.00 0.00 Gross Receipts
Reported Gross 0.00 0.00 3,150.00 0.00 Receipts
Unreported 832.77 3,290.00 1,615.00 0.00 Revenues
Roll-off fees due 149.90 592.20 290.70 0.00
Interest 34.66 95.72 68.45 0.00
Late filing 100.00 350.00 200.00 0.00
Total Due $284.56 $1,037.92 $559.15 $0.00
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.
TOTAL
$8,887.77
3,150.00
5,737.77
1,032.80
198.83
650.00
$1,881.63
Upon notification of our audit finding, Southeastern Recycling paid $1,881.63 for the
unreported gross receipts during the audit.
2. Finding -Required Reporting
Southeastern Recycling 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." Southeastern Recycling 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.
Recommendation (s)
Southeastern Recycling must comply with the designated sections of the City Codes and
submit timely lists of accounts.
EXIT CONFERENCE
Audit findings were e-mailed on May 5, 2011 to Southeastern Recycling. Upon notification of our
audit findings, Southeastern Recycling paid $1,881.63 for the unreported gross receipts during the
audit.
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Internal Audit Report
Southeastern Recycling Corp.
May 13, 2011
JJS: CD
Audit performed by Carmin Dufour
F:\obpi\$AUD\DOC010-11\REPORTS-\SOUTHEASTERN RECYCLING CORP. FINAL REPORT.doc
cc: Duncan Ballantyne, Assistant City Manager
Fred Beckmann, Public Works Director
Alberto Zamora, Sanitation Director
Patricia Walker, Chief Financial Officer
John Szkolnik, Southeastern Recycling Corp. (CEO)
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