Code Compliance and Fire Prevention Complaints and Cases (Analysis)MIAMI BEACH
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division INTERNAL AUDIT MEMORANDUM
TO:
FROM:
DATE:
Kathie G. Brooks, Interim City Manager .-
James J. Sutter, Internal Auditor~
November 30, 2012
SUBJECT:
PERIOD:
Analysis of Code Compliance and Fire Prevention Complaints and Cases
January 1, 2010 through April30, 2012
This report is the result of an analysis conducted at the City Administration's request of the Code
Compliance and Fire Prevention Divisions' processes as well as a review of sampled complaints,
cases and adjustments recorded in the Permits Plus and Eden Systems between January 1, 2010
and April 30, 2012. It is separated into the following identifiable sections for the reader:
Introduction, Current Processes, Analyses Performed, Conclusions and Recommendations.
INTRODUCTION
On April 11, 2012, seven (7) City employees were arrested by federal agents as part of a criminal
investigation. The arrests of these four (4) Code Compliance Officers, the lead Code Compliance
Administrator and two (2) Firefighter I employees have adversely impacted the City and its
business, particularly within the Code Compliance and Fire Prevention disciplines. Furthermore,
the arrests have placed a cloud of suspicion over past, as well as future, Code Compliance and
Fire Prevention Division endeavors and regulatory efforts.
As a result, the Internal Audit Division of the Office of Budget and Process Improvement with the
aid of the Code Compliance Division Director performed various analyses on selected Code
Compliance and Fire Prevention complaints, cases and adjustments occurring during the 28
month period of January 1, 2010 through April 30, 2012. The focus of the analysis was on
reviewing all complaints, cases and adjustments through electronic means to determine whether
there were any significant trends in the data which would reflect abnormalities in need of further
review. A summary of the total population (excluding adjustments) generated from the City's
Permits Plus System as of May 7, 2012 is as follows:
Number
Code Compliance Complaints (XC) 7,226
Code Compliance Cases (CE) 33,658
Fire Cases -Day Time {FI} 9,348
Night Fire Inspections (FI) 6,847
Total 57,079
Lastly, a total of 479 Eden System adjustments equaling $609,861 were performed for 274 Code
Compliance Division customer accounts during the reviewed period with some of these cases
originating prior to January 1, 2010.
CURRENT PROCESSES
A. Code Compliance Violations
The Code Compliance Division is tasked with addressing violations of the City Code, and with
maintaining City neighborhoods' standards and the community's overall quality of life. Code
Compliance Officers proactively monitor and respond to complaints within residential and
We are committed to providing excellent public service and safely to all who live, work, and play in our vibrant, tropical, historic communily.
Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
commercial districts for these potential violations. The division is responsible for ensuring
compliance with the City of Miami Beach's code of ordinances; which include Zoning, Property
Maintenance, Sanitation, Marine, Noise, and City Code (dogs off leash, handbills, beach litter,
etc.). Complaints are received through such various means as email, in person, telephone
calls to the division or directly to Code Compliance personnel through the WebQA internet
complaint tracking system and through calls obtained from Dispatch (operated by the Parking
Department). The division operates from 6:00am till 1:OOam on Mondays through
Wednesdays; and 24 hours per day on Thursdays through Sundays.
Code Compliance Officers are to provide all the pertinent information to an Administrative Aide
I upon returning to the office so that the corresponding cases can be created or updated in the
Permits Plus System. Based on these entries and the corresponding approvals from the
designated Code Compliance Administrator(s), any of five (5) designated Administrative Aide
Is were authorized to create City Bills in the Eden System's Accounts Receivable Module to
start the billing/collection process. While all five (5) Administrative Aides Is had access, one
was tasked with the primary responsibility of inputting City Bills while another served as his
backup. Invoices were then mailed by the Finance Department notifying the customer of any
amounts due until either full payment is received or the outstanding balance is eliminated due
to rulings by the Special Master, the monies are deemed uncollectible and are written off, etc.
B. Fire -Night Inspections
Firefighters volunteer to perform night inspections of the City's entertainment establishments
each Friday and Saturday from 1 O:OOpm till 4:00am. Two (2) firefighters work as a team for
each six (6) hour shift and are paid overtime with at least the lead inspector required to be
properly certified. As a result of obtaining their certification, these lead inspectors receive an
additional 5% pay supplement in accordance with section 7.5A of the International Association
of Fire Fighters Local 1510 signed agreement in effect between October 1, 2009 and
September 30, 2012.
For special event weekends, additional two (2) person teams may be assigned. The teams
usually select which businesses to visit nightly from a listing maintained by the Fire Marshal
that typically fluctuates between 100 and 150 establishments.
These night inspections focus on the safety of the establishment, particularly in relation to
overcrowdings and blocked exits, as more detailed fire inspections are performed during the
daytime hours. If the establishment exceeds capacity, then the inspectors would instruct the
establishment's management not to allow any more patrons to enter, and would issue a pre-
numbered ticket with a designated fine. For blocked exits, immediate action is to be similarly
taken to correct the deficiency and tickets/fines are to be issued.
Inspection information is to be entered into the Permits Plus System by a designated Fire
Department Administrative Assistant I utilizing a Master A/P/0 number for each location.
Current system limitations only allow for the lead inspector's name to be entered into Permits
Plus. Any warranted fines are to be subsequently entered into the Eden System's Accounts
Receivable Module as City Bills by the same Administrative Assistant I.
C. Code Compliance Adjustment of Outstanding Fines
Outstanding City Bills occasionally need to be adjusted because of a reduction of fines or a
dismissal of cases by the Special Master; change or transfer of property prior to the placement
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Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
of a lien; the violations were issued incorrectly or to the wrong party; the customer paid monies
which were processed through a Miscellaneous Cash Receipt by the Central Cashier's Office
rather than on a City Bill, etc. The designated Code Compliance Division Administrative Aide I
would typically be notified of the need to prepare the adjustment either verbally or by an email
from the lead Code Compliance Administrator. Once entered in the Eden System, the
corresponding pre-programmed approval queue would notify the applicable City employees of
their need to review the pending transaction. If approved by all parties, the transaction would
be processed and the City Bill adjusted accordingly.
ANALYSES PERFORMED
It should be noted that the testing conducted and any conclusions derived is based on the quality
and completeness of the data entered. Any incomplete, omitted or altered data cannot yield a true
and accurate picture. In addition, all system reports received from external sources were
assumed to be complete as any testing performed was based on their listed information.
A. Code Compliance Violations
Upon request, the Information Technology Division provided four (4) separate Permit Plus
System's data extractions (Code Compliance Complaints, Code Compliance Cases, Fire
Cases -Day Time, and Night Fire Inspections) which were merged into one consolidated
report containing a total population of 57,079 complaints and cases for 7,462 addresses.
Although Code Compliance Officers have other duties besides investigating complaints and
issuing warnings/violations resulting in the creation of cases, a rough calculation shows that
full time and part time Code Compliance Officers responded to and created an average of 2.52
complaints and cases per day between January 1, 2010 and April 30, 2012. In lieu of any
identified departmental benchmarks, it is difficult to determine if this figure is reasonable.1
This consolidated report was initially sorted and reviewed through electronic means by
employee, address, location (including commercial/entertainment and residential), violation
status, violation type and subtype, etc., to determine whether there were any significant
patterns, trends or abnormalities in the data that warranted further review. The following data
pertaining to the arrested five (5) Code Compliance and two (2) Fire Department employees
was reviewed whereby no trends or patterns were noted:
• 1 ,362 addresses representing those locations involving any of the seven (7) employees.
• 620 addresses where any combination of these seven (7) ~mployees individually visited
a location but at different times.
• 82 addresses where one of the seven (7) employees worked with another Code
Compliance Officer whose name was also listed in Permits Plus. (It should be noted that
not all cases had second officers in the officer's field.)
• 8 addresses where at least any two (2) of the seven (7) employees concurrently visited
the designated location.
1 Number of Code Compliance complaints 7,226 (page 1 XE) + 33,658 number of Code Compliance
cases (page 1 CE) = 40,884 (total complaints and cases) I 28 (months during the reviewed period) =
1,460.14 (complaints and cases per month) I 20 (working days per month) = 73.01 (number of
complaints and cases per day) I 29 (full time and part time Code Compliance Officers) = 2.52
(complaints and cases per officer per day).
Page 3 of 14
Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
Next, the focus shifted to inspected addresses, regardless of the employee(s) who performed
the initial inspection. A sample of 50 addresses containing 5,646 cases were selected which
consisted of the 25 addresses having the most total inspections while the remaining 25 were
randomly chosen. Testing did not identify any behavioral trends with respect to the number of
cases or the frequency of inspections primarily because during morning shifts, Code
Compliance Officers are assigned areas of coverage which do not overlap. According to the
Code Compliance Division Director, these areas are assigned annually so only three (3)
rotations took place between January 1, 2010 and April 30, 2012. In addition, the rotations
that took place may have changed officers to different quadrants within the zone, but not from
zone to zone (ex. North to South, South to Middle, etc.).
Officer zone allocations and distributions are assigned considering their performance and
experience, while shift hours (ex. morning vs. afternoon shifts) are assigned in accordance
with union contracts. As a result, no trends and/or relationships between Code Compliance
Officers and locations were noted, considering that most cases observed for a given address
or location were typically issued by the officer assigned to that zone.
Only the reduced number of employees working the afternoon and night shifts (approximately
five (5) per shift) were able to float between zones or were assigned Citywide. However, no
effective internal controls existed to help ensure that all Code Compliance Officers' visits
during a shift were properly entered and documented.
Daily reports reflecting the Code Compliance Officer's activity details were not always properly
prepared as they were often found to be incomplete and used broad terms. Complaints were
usually logged by third parties (Dispatchers) and were provided to the Code Compliance
Officers through their respective Code Compliance Administrators, but the corresponding
results and findings were primarily up to the judgment and discretion of the Code Compliance
Officers, as well as the level of documentation, narratives and support for the same.
During the review, the most predominant trends observed involved significant control
weaknesses in both operation and supervision. Closed and voided cases were poorly
documented by the Code Compliance Officers and were rarely questioned or verified by their
direct supervisors, Code Compliance Administrators. The majority of cases closed by the
Code Compliance Officers alleging compliance could not be verified as they rarely provided
any supporting documentation as to the reasons why they were closed. Instead, only
photographs of the violation and poorly written details would be entered into Permits Plus.
It was also found that the Code Compliance Administrators typically relied on Code
Compliance Officers' decisions without conducting any further verification or questioning, when
determining whether to give their approvals to closed cases. They did not perform random
unannounced site visits to help verify the accuracy of the listed information and to gauge the
performance of the corresponding Code Compliance Officers.
Another observation noted during review of the 57,079 Code Compliance and Fire Prevention
complaints and cases population as of April 30, 2012 was the lack of follow-up on outstanding
cases as shown by the following table (sorted by the number of c<:~ses):
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Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
*
Case Status Number of Cases
Open 4,139
Bill Owed 2,354
Special Master 578
Bill Pending 538
OpenF 307
xxxxxxxx * 299
Pending 49
Open C 2
Total 8,266
According to the Code Compliance Division Director, the "XXXXXX XX" status was given to cases that were in
transit from the Code Compliance Officer to the administrative staff in order to be entered and documented in
the Permits Plus System and/or it was pending the delivery of proper service.
Not all of these cases should have additional actions taken and their statuses changed since a
few were inspected at the end of the April 2012, some contained permitting or building
construction issues which take longer to be resolved, etc. Review of these sampled cases that
should have been closed found that the delays were primarily due to either the Code
Compliance Officers taking too long to provide the supporting documentation or the
administrative staff not entering the cases timely thereby potentially hindering collection or
closure. Either way, many of these cases need to be resolved promptly so that the necessary
actions can be taken (create City Bills, write-off as uncollectible, etc.). Finally, follow up
inspections were not necessarily performed by the predetermined "comply by" date thereby
further delaying closure.
The overall actions taken by the five arrested Code Compliance employees for received
complaints (XC) was compared to the average of those taken for all the remaining Code
Compliance Officers. Table 1 below summarizes the results of the analyses and is listed by
percentages so that they can be more easily compared given the differences in the number of
relevant Code Compliance Officers:
Table 1-#of Complaints (XC) Handled by% selected Code Officers Compared to the Remaining Officers by Status
Complaints Received
For the 5 For the Remaining For All Officers
Status Officers Officers Description
Complaint substantiated/violation case
VIO 201 22.38% 1,637 29.03% 1,838 28.12% to be opened
INVALID 606 67.48% 2,911 51.62% 3,517 53.80% Complaint was not substantiated
Courtesy Notice issued (pending re-
NOTICE 6 0.67% 141 2.50% 147 2.25% i~spection)
Courtesy Notice issued /compliance
NOVIO-C so 5.57% 683 12.11% 733 11.21% achieved
Courtesy Notice issued I compliance
VIO-C 7 0.78% 127 2.25% 134 2.05% NOT achieved
Complaint routed to an inspector to
ASSIGNED 24 2.67% 114 2.02% 138 2.11% check out
VOID 4 0.45% 26 0.46% 30 0.46% Miscellaneous status (Others)
898 100.00% 5,639 100.00% 6,537* 100.00%
Page 5 of 14
Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
* The total number of complaints received of 6,537 (898 + 5,639 = 6,537) in Table 1 differs from the 7,226 listed
in the table on page 1 by 689 due to the exclusion of 89 complaints for which the name of the Code
Compliance Officer was omitted and 600 additional complaints that either occurred on the City's public right-of-
way or the address field was left blank.
Table 1 shows the concerning trend that the five (5) Code Compliance officers issued a lower
percentage of violations (22.38% to 29.03%) and invalidated a higher percentage of
complaints investigated (67.48% vs. 51.62%) than the average for the remaining Code
Compliance Officers. Next, the violation and invalid percentages were calculated individually
for the 17 Code Compliance Officers who responded to at least 100 complaints between
January 1, 201 0 and April 30, 2012. As a result, the following observations were noted:
• Three (3) of the 17 officers' violation percentages ranging from 16.71% to 21.65% were
less than the five (5) officers' 22.38% average.
• 12 of the 17 applicable officers' invalid rates exceeded the 51.62% average for their
group of remaining officers. These 12 officers' percentages also exceeded the
individual percentages rates for four (4) of the five (5) officers with complaints (77.78%,
74.32%, 63.63% and 53.44%).
• The highest calculated officer's invalid percentage of 74.89% was 10.74% higher than
the next ranked officer and was the only one to exceed the five (5) officers 67.48%
average and was similar to two (2) of the five (5) officers' percentages (77.78% and
74.30%)
Although these individual Code Compliance Officer's percentages were similar to those of the
five (5) officers' corresponding percentages, there may be extenuating circumstances that
would justify these outliers. Division management should perform additional analyses on
these complaints and further scrutiny of the individuals' performance to better determine if any
wrongdoings occurred.
Similarly, Table 2 compares the overall actions taken by the five (5) arrested Code
Compliance employees for cases (CE) to the average of those taken for all the remaining
Code Compliance Officers:
Type of
Violation Invalid
CNOISE-Noise 40.55% 2 34 37.14% 80 280
CCVIO-City
Code 1,625 35.10% 26 23.84% 81
CPMVIO-
Property
Maintenance 424 9.16% 2 11.12% 31
CSVIO-
327 7.06% 3 20.15% 33
372 8.04% 2 7.68% 17
Marine 0.09% 0.07% 1
35 243
%to Total
Cases
%to Noise
cases
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Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
For All Code Officers
of Violation #of Cases Void Cancelled Invalid
37.74% 82 314 15
CCVIO-25.83% 107
10.78% 33
17.84% 36
7.74% 19
0.07% 1
278
%to Total Cases
%to Noise cases
* The total number of cases recorded of 26,216 (4,629 + 21,587 = 26,216) in Table 2 excludes 109 cases
whereby the address was not completed and 7,333 that occurred on the City's public rights-of-way. When
included, the total number of cases increases to 33,658 which equals the total number reported in the table on
page 1.
On a positive note, Table 2 shows that the five (5) officers' total cases voided (0.76%) and
cancelled (0. 73%) percentages were lower than the averages for the remaining officers
(1.13% and 1.30% respectively). A further review of the remaining officers' individual cases
data did not reveal any particular trends for other types of violations, excluding noise
violations.
In addition, Table 2 shows that the number of invalid noise cases for the five (5) officers was in
line with the remaining officers. However, subsequent calculation of each individual remaining
officer's noise violations percentage found that 12 of the remaining officers exceeded the
average (76.51 %) of the five (5) officers. Of these, seven (7) officers had high invalid
percentages of noise cases ranging from 82.62% to 88.79%.
B. Fire-Night Inspections
Twenty-three (23) firefighters worked as the certified lead inspector at least once for the 6,847
night inspections performed at 132 entertainment establishments between January 1, 2010
and April 30, 2012. The second firefighter that accompanied the lead inspector is not reported
in the Permits Plus System so the analysis performed below focused on the identified lead
inspector. According to the Fire Department's provided schedules, firefighters earned a total
of $241,203 in overtime for performing these night inspections.
The calculated overall average percentage of fines issued (54) to the number of night
inspections performed (6,847) equaled 0.79% as most establishments were found to be in
compliance. One lead inspector issued 33 of these fines during his 621 night inspections
(5.31%) which skewed the overall percentage upwards. Yet, reviews of this lead inspector's
Permits Plus System entries found that three (3) additional fines apparently should have been
issued for overcrowding but were not. When questioned by the Fire Marshal, the lead
inspector responded that he felt that it was better to concentrate on resolving the problem
rather than to issue a ticket, given the need to control the situation at the time. If these specific
Page 7 of 14
Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
lead inspector's results are removed from analysis, then the rema1n1ng 22 certified lead
inspectors issued only 21 fines during their 6,226 night inspections performed (0.34%).
Further analysis found that only three (3) lead inspectors' fine per inspection percentage
exceeded 1.00%, excluding one firefighter who issued a fine during his only night inspection.
Their calculated percentages ranged from a low of 2.50% to the aforementioned high of
5.31 %. In comparison, the two (2) arrested Fire Department employees combined issued only
one (1) fine out of their 1,423 inspections performed (0.07%) which is well below the overall
average percentage of 0.79%.
Additionally, it was calculated that the certified lead inspector who performed the most night
inspections (1, 1 08) only issued one (1) fine. Inquiries with the Fire Marshal found that this
Firefighter I continues to earn large amounts of overtime performing these night inspections,
especially since the arrests of the two former lead inspectors in April 2012.
More extensive testing was performed on 911 night inspections completed on 15 randomly
sampled entertainment establishments which ranged from a low of two (2) inspections to a
high of 165 whereby the following was found:
• Ten (10) lead inspectors, including the two (2) that were arrested, performed 870 of the
911 sampled night inspections or 95.50%.
• One (1) sampled establishment was inspected on ten (1 0) different dates during May
2010 with no fines being issued. Another establishment had 165 night inspections during
the 28 month period which resulted in an average of 5.89 inspections per month and still
no fines were issued. Conversely, another sampled establishment had only 16
inspections performed with no fines issued despite also being open for the entire 28
month reviewed period. Inquiries found that the lead inspectors tended to personally
select which establishments to visit from a master listing maintained by the Fire Marshal.
• Although 17 different lead inspectors performed these 911 sampled night inspections,
only seven (7) fines were issued by three (3) firefighters (one performed only two (2)
inspections). An eighth fine was warranted for 330 Lincoln Road on September 16, 2011
for $200 per Permits Plus but was not billed in the Eden System for unknown reasons.
• The two (2) arrested Fire Department employees performed 203 night inspections for
these 15 randomly sampled establishments but did not issue any fines.
Since inspections are performed on a volunteer basis and inspectors' visits are not randomly
selected and assigned, often the same groups of firefighters inspect the same entertainment
establishments, which could lead to collusion, favoritism, misappropriations, etc. Although
there is no known way to identify whether additional fines were warranted without physically
accompanying the inspectors or performing unannounced site visits immediately following their
departure, one could reasonably conclude that the high number of inspections with a low
amount being fined means that compliance is apparently high. As a result, fewer night
inspections may be needed thereby resulting in less departmental overtime.
Yet, it is disconcerting that one lead inspector would issue 33 of the 54 total fines issued
(61.11%) during the 28 month period despite only performing 9.07% (621/6,847) of the night
inspections. The next highest lead inspector issued seven (7) fines despite completing more
night inspections (708). The sequentially pre-numbered tickets issued by the firefighters
levying fines were not adequately controlled to help ensure that all were accounted for and
Page 8 of 14
Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
there was insufficient supervisory oversight to verify that all issued tickets/fines were recorded
in the Permits Plus and Eden Systems.
C. Adjustments of Code Compliance Outstanding Fines
The City's Information Technology Division provided an Excel report showing that 479 Eden
System adjustments totaling $609,861 were performed for 274 Code Compliance Division
customer accounts during the reviewed period. No Eden System adjustments were noted for
the Fire Department's issued night inspection fines during the 28 month reviewed period so
the analysis below pertains to only those adjustments relating to Code Compliance Division
fines.
All 155 customer accounts having total adjustments equal to or in excess of $250 were
examined which amounted to $597,630 or 97.99% of the $609,861 population. Also, 15
customer accounts were randomly sampled whereby the total adjustments were less than
$250 which amounted to $1,343 or 10.98% of the remaining $12,231 population balance due
to the perceived smaller risk exposure. Included in the analysis was the review of customers'
account histories prior to the evaluation period since the adjustments corresponding violation
date could have occurred well before January 1, 2010.
It should be noted that in what appears to be an effort to close cases and to seek monetary
compensation for the City, the lead Code Compliance Administrator negotiated settlements for
various fines. Some of these settlements took place in 201 0 as a result of the Division's effort
to clean up old outstanding cases that were deemed uncollectible and were subsequently
written off. While the Code Compliance Division did not have any written approved
procedures to settle accounts, it appears as if the lead Code Compliance Administrator
proceeded to settle and close many cases without anyone else in the division reviewing or
approving these transactions.
The following table summarizes the review of each of the sampled 170 customer accounts'
containing 353 adjustments and totaling $598,973 to determine whether the supporting
documentation justified the reduction in the outstanding balance (questionable or valid
adjustments) and as to the type (Code Compliance violations, Sanitation fines, paid by
Miscellaneous Cash Receipts (MCR), older accounts written off, etc.) and to their calculated
percentage as to the whole in dollars·
#of Amount of %of Dollars
Adjustments Adjustments Total
Questionable Adjustments
Code Compliance Violations 65 $147,031 24.55%
Sanitation Fines 138 $36,991 6.17%
Total Questionable 203 $184,022 30.72%
Valid Adjustments
Paid by MCR (1) 32 $20,017 3.34%
Old Accounts Written Off (2) 58 $263,669 44.02%
Special Master (3) 39 $43,603 7.28%
Litigation/Settlement ( 4) 21 $87,662 14.64%
Total Valid Adjustments 150 $414,952 69.28%
Total Sampled Adjustments I 353 $598,973 100.00%
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Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
(1) Paid by MCR means that the customer paid monies which were processed through a Miscellaneous
Cash Receipt by the Finance Department's Central Cashier's Office rather than by providing the City Bill
so that the payment could be applied against it. Staff entered these transactions as adjustments for
accounting reasons but in reality they represent customer payments and therefore would always be
classified as "valid" in this analysis.
(2) Accounts were written off whereby fines relating to prior financial system conversion to the current Eden
System, 1995-2005 fines not collected or billed 3-8 years later with no further established contact. Two
accounts represented $208,419 of these total adjustments.
(3) Represent adjustments made through the Special Master.
(4) Adjustments made on behalf of settlements made the City Attorney's Office and/or the City's Finance
Department.
Incomplete and/or insufficient documentation was provided to justify the adjustment of the 203
deemed questionable accounts totaling $184,022. However, their omission does not
necessarily mean that the adjustment was not warranted; just that proper supporting
documentation was not provided. The City Administration should decide whether to pursue
collection against these customers or to accept the questionable adjustment transactions.
Subsequent inquiries found that the City's Sanitation Division Director was not contacted
concerning the legitimacy of any imposed Sanitation fines and was not included in the Eden
System's approval queue. This scenario should be revised since these collected revenues are
used to offset labor, equipment and/or tipping (dumping) charges incurred by the Sanitation
Division.
The decentralization of the write-off process (accounts receivable adjustments) has resulted in
the individual City departments/divisions having the primary responsibility to determine the
collectability of their outstanding accounts receivable. Consequently, a greater emphasis is
placed on the internal controls and approvals within the originating department/division since
supporting documents cannot be scanned into the Eden System to be reviewed by the
designated Finance Department employee(s) before being posted into the Eden System.
The following table identifies the City employees' positions that approved these 203
questionable adjustments according to the Eden System's approval queue:
*
First Approver by Second Approver by #of Amount of %of Dollars
Employee Position Employee Position Questionable Questionable Total
Administrative Aide I N/A * 57 $36,809 20.00%
Financial Analyst Ill Financial Analyst Ill ** 40 $42,002 22.82%
Financial Analyst Ill Assistant Finance 1 $50 .03%
Director
Financial Analyst Ill N/A * 1 $250 .14%
Lead Code Compliance Financial Analyst Ill 104 $104,911 57.01%
Administrator
Total Questionable 203 $184,022 100%
N/A means that no employee's name was present in this field of the approval queue so only one person
would have approved the reviewed adjustment.
** For these cases, the same Financial Analyst Ill was the first and second approver so again only one person
would have approved the reviewed adjustment.
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Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
The analysis completed in the table above revealed two (2) concerning facts:
• The only approver for 57 reviewed questionable adjustments was the same
Administrative Aide I that entered the transactions based primarily on verbal instructions
or emails provided by the lead Code Compliance Administrator.
• Only a designated Financial Analyst Ill approved 40 reviewed questionable adjustments
entered by Code Compliance Division before it was posted into the Eden System but
they did not receive or review any supporting documentation.
CONCLUSIONS
In the review of the complaints, cases, and adjustments through electronic means, the following
significant trends can be summarized as follows:
• Although Code Compliance Officers have other duties besides investigating complaints
and issuing warnings/violations resulting in the creation of cases, a rough calculation
shows that full time and part time Code Compliance Officers responded to and created
an average of 2.52 complaints and cases per day.
• There was a lack of follow-up for outstanding cases in the Permits Plus System to
determine whether additional actions are needed or can they be closed.
• The five (5) arrested Code Compliance Division employees issued fewer violations
(22.38% vs. 29.03%) than their counterparts for investigated complaints. Additionally,
three (3) of the 17 remaining Code Compliance Officers, who responded to a minimum of
100 complaints, individually calculated violation percentages were less than the five (5)
officers' average ranging from 16.71% to 21.65%.
• The five (5) Code Compliance Division employees also classified more complaints
received as invalid (67 .48% vs. 51.62%) percentagewise than their counterparts.
• The highest calculated Code Compliance Officer's invalid percentage of 74.89% for
cases was 10.74% higher than the next ranked officer and was the only one to exceed
the (5) five officers 67.48% average. Additionally, 12 of the 17 applicable officers' invalid
rates for cases or 70.59% exceeded the 51.62% average for the remaining officers.
• The calculated number of Fire Night violations issued by the two (2) arrested certified
lead inspectors was less (0.07% vs. 0.79%) than the overall average percentage.
• Another certified lead inspector who performed the most night inspections (1, 108 out of a
total 6,847) only issued one fine.
• 203 sampled adjustments of Code Compliance Division initiated fines totaling $184,022
appear to be questionable based on the lack of sufficient supporting documentation. Of
these questionable adjustments, 97 had only one individual approve the transactions in
the Eden System before the customers' accounts receivable balances were reduced.
A constant shortcoming found throughout this review was the lack of internal controls whereby
lower level employees were not properly supervised. For example, the Code Compliance
Administrators did not question the incomplete inspection descriptions entered into Permits Plus
by the Code Compliance Officers to support the decisions reached as instead they relied heavily
on their subordinates' judgment; the Fire Department's high night inspection compliance rates and
repeated visits to the same establishments were accepted; etc.
Similarly, mid-level management was granted too much authority and their actions were not
questioned by subordinates or superiors. A designated Administrative Assistant I made Eden
System adjustments based on the lead Code Compliance Administrator's submitted incomplete or
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Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
insufficient documentation and did not question any of his decisions to superiors; they were
basically able to approve their own initiated Eden System entries with no one verifying their
accuracy; etc. Meanwhile, higher level management did not perform any reviews of the lead Code
Compliance Administrator's actions or the current processes to determine if changes were
needed.
Supporting documentation was often found to be either incomplete or missing which hindered
analysis. Although time consuming to enter detailed information, it is necessary for management
and external reviewers to better assess employee performance and to perform desired testing.
Lastly, one must remember that the Permits Plus System used during the reviewed period by
Code Compliance and Fire, as well as other City departments/divisions, does not maintain a
sufficient audit trail recording the employee's name that entered or changed the data , transactions
can be backdated, etc. Instead of trying to correct these and other deficiencies, the City should
expedite the testing and implementation of the pending new system (Accela Automation) which is
expected to occur in the next fiscal year.
Despite the inherent risks associated with Code Compliance and Fire Department inspections, the
current processes followed are in need of prompt revision to further reduce the likelihood that
similar fraudulent actions may occur. The implementation and continued enforcement of the
suggested items listed in the "Recommendations" section should help better accomplish this goal.
Yet, these are dynamic processes that should continue to be closely monitored and amended as
needed by management in the future.
RECOMMENDATIONS
This analysis should be viewed as an opportunity to effectively and comprehensively assert
changes and further improve internal controls in an effort to improve the business processes and
to help increase accountability and transparency. As such, the implementation of the following
recommended corrective actions by the Code Compliance and/or Fire Prevention Divisions, along
with management's continued vigilance, should help improve their business processes and
accountability:
a. Develop detailed Standard Operating Procedures describing the divisions' various
processes. Once finalized and approved by executive management, they should be
distributed to and reviewed with employees so that they could be understood and followed.
Employees should then be held accountable, following the progressive disciplinary process,
for not following the procedures.
b. Additional training should be held so that all employees are informed of their duties and
responsibilities. Continued deviations should be documented with the proper disciplinary
actions taken.
c. Code Compliance and Fire Department employees should complete an independence letter
(at least annually) denoting any potential conflicts of interest caused when relatives own
property on Miami Beach or work at Miami Beach businesses, when they own stock in a
Miami Beach business, etc. If conflicts exist, then their schedules should be adjusted
accordingly. Additionally, the affected employees should promptly notify management of any
changes that occur in the interim so that schedules can be revised if needed.
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Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
d. Any cases listed as open, bill pending, bill owed, etc. should be reviewed to determine if they
can be closed. If they cannot be closed, staff should determine what additional actions are
necessary to achieve this status. Going forward, all Code Compliance Officers and Code
Compliance Administrators should more closely monitor these cases and be disciplined
accordingly if the specified timelines are not satisfied.
e. Supervisors should better scrutinize their staff's daily work and the corresponding Permits
Plus and Eden System entries. This practice should help ensure that all needed information
is present, that the provided supporting documentation warrants the status of the case, that
the proper fines were issued and billed, etc.
f. The Fire Marshal or her designee should safeguard all unused pre-numbered sequential
tickets and log their issuance to certified lead inspectors. Furthermore, they should perform
periodic reconciliations of the tickets to ensure that all are accounted for (including voids)
with any differences investigated.
g. Conduct random unannounced auditing and spot checking of cases by a designated
representative of the Administration and/or the Code Compliance and Fire Prevention
Divisions.
h. The Code Compliance Division should perform comparative analyses of individual
enforcement officers with the overall division's average. Repeated variances that fall outside
of acceptable ranges should be investigated to determine the reasons for these differences.
i. Management should determine an appropriate benchmark for the average daily number of
received complaints investigated and created cases. Once established, this benchmark
should be used in evaluating the employees' and the overall division's performance.
j. Designated employees independent of the Fire Prevention's night inspection process should
randomly select the entertainment establishments to be visited during a given shift.
Furthermore, the sampling process should be stratified to help ensure that all applicable
establishments receive a sufficient number of inspections during the year as determined by
the Fire Marshal.
k. Assignment of zones to Code Compliance Officers and Administrators should be rotated at
least annually to help reduce the possibility of favoritism and to help prevent improper
relationships from forming with customers. Budgeted staffing levels should be met and any
vacant Code Compliance Division positions should be filled.
I. Inquiries should be made to revise the Eden System's Accounts Receivable Module so that
all approving departments can view the supporting documentation scanned by the
origination department in order for designated approvers to better confirm the need for and
the accuracy of the desired adjustment.
m. Guidelines should be written detailing the instances whereby adjustments can be made (a
reduction of fines or a dismissal of cases by the Special Master, change or transfer of
property prior to the placement of a lien, the violations were· issued incorrectly or to the
wrong party, etc.). Any adjustments for other nonspecified reasons should be prohibited.
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Internal Audit Memorandum
Analysis of Code Compliance and Fire Prevention Complaints and Cases
November 30, 2012
n. Code Compliance adjustment approval queues in the Eden System should be revised so
that the corresponding Code Compliance Administrator, the lead Code Compliance
Administrator, the Division Director, the Division Commander, and a Finance Department
designee are always included. Additionally, the Sanitation Division Director should be
included in the adjustment of any Sanitation fines since that division's budget is directly
affected.
o. The City's conversion from Permits Plus to Accela Automation should be expedited as much
as possible to take advantage of its supposedly stronger internal control environment.
p. All listed Permits Plus fines should be promptly billed in the Eden System's Accounts
Receivable Module unless a valid explanation is provided, approved by a designated
hierarchy and recorded in Permits Plus.
cc: Jorge Gomez, Assistant City Manager
Patricia Walker, Chief Financial Officer
Stephen Scott, Building Director
Hernan Gardena, Code Compliance Division Commander
Robert Santos-Aiborna, Code Compliance Division Director
Javier Otero, Fire Chief
Sonia Machen, Fire Marshal
JJS:LFR:MC:FM:
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