PH Waste Removal, Inc./V\IAtv'\1 BE
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division
TO: Jorge M. Gonzalez, City Manager
INTERNAL AUDIT REPORT
VIA:
FROM:
DATE:
Kathie G. Brooks, Budget and ~erfor . a,l}_ye Improvement Director
James J. Sutter, Internal Auditor-""~t:f
September 2, 2010 ~)
PH Waste Collection Service, Inc.~ AUDIT:
PERIOD: April 2007 to September 2009
This report is the result of a scheduled audit of the Roll-Off Fee Returns for PH Waste Collection
Services, Inc. (P.H Waste).
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 receipts to 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 equaling 18% of Miami Beach gross receipts to the City's
Finance Department by the end of the subsequent month, filing various reports, maintaining
sufficient insurance, etc.
Background
Previously, Internal Audit conducted an audit of PH Waste for period of January 2003 to March
2007. A review of the company's invoices showed that franchise fees were charged and collected
throughout the audit period. PH Waste collected an additional amount of gross receipts for
$5,859.51 which was not reported. As a result, PH Waste paid $1,077.05 in franchise fees and
interest to the City. As of October 2009, PH Waste stopped doing business within the City of Miami
Beach. Therefore, they did not renew their business tax receipt for the current year.
OVERALL OPINION
PH Waste has not complied with certain provisions of the City Code's during the audit. As a result,
gross receipts were not fully reported and the franchise fees were not paid to the City. The following
items were noted during our audit:
• Gross receipts in the amount of $1,651.25 were not reported. Therefore, PH Waste owes
the City $534.84 roll-off franchise fees (including interest & late fees).
• PH Waste has submitted the certificate of liability insurance.
• PH Waste has not filed a list of accounts and the required CPA statement of gross receipts
for the years prior to 10/1/08.
We ore cornmilleclto providing excellent public service ond sofety to oil who live, work, one/ ploy in our vibronl, /ropicol, historic communi/)!.
Internal Audit Report
PH Waste Removal, Inc. Roll-Off Fees
September 2, 2010
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 -Under Reported 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 fuel surcharges and
overloading fees and relocation fees should be included in reported gross receipts. Review
of provided documents showed that gross receipts were properly reported to the City.
However, for the month of October 2007, PH Waste inadvertently made an error by under
paying the franchise tax due by $264.20. In addition returns for four months were not
submitted in a timely manner resulting in $200 due for late fees.
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Internal Audit Report
PH Waste Removal, Inc. Roll-Off Fees
September 2, 2010
The following table summarizes the amount due from PH Waste for our audit period:
2007 2008 2009 TOTAL
Audited Gross Receipts $71,919.75 $12,731.25 $2,940.00 $87,591.00
Reported Gross Receipts $71,919.75 12,731.25 2,940.00 $87,591.00
Roll-Off Fees Due $11,507.16 $2,104.20 $529.20 $14,140.56
Roll-Off Fees Paid (11 ,242.96) (2, 1 04.20) (529.20) (13,876.36)
Roll-Off Fees Not paid $264.20 $0.00 $0.00 $264.20
Interest Due 68.76 1.23 .64 70.64
Late fees 50.00 50.00 100.00 200.00
Total Due $382.96 $51.23 $100.64 $534.84
Footnotes: On October, 2008 as required pursuant to sect1on 90-278 of the C1ty 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)
PH Waste should remit the amount of $534.84. Any past due monthly roll-off fee returns
and corresponding late charges occurring outside the audit period should also be remitted to
the city as soon as possible.
2. Finding -Required Reporting
PH Waste 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." PH Waste 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 or construction dumpster. However, a listing of customer names was provided
during the audit.
b. Section 90-278 (4) states" The licensee shall on or before 30 days following the close
of its fiscal year deliver to the finance director and the city manager a statement of its
annual gross receipts generated from accounts within the city celtified by an
independent certified public accountant reflecting gross receipts within the city for the
preceding fiscal year". PH Waste did not provide a statement of its annual gross
receipts generated from accounts within the city certified by an independent public
accountant during the audit period.
Effective October 1, 2008 the ordinance was changed exempting contractors having
annual gross receipts reported to the City under $200,000 from filing annual statements
of gross receipts certified by an independent auditor. For our audit period, PH Waste
reported revenues were less than this recent established threshold. Therefore, they
were compliant to this provision for 2008 and forward.
Page 3 of 4
Internal Audit Report
PH Waste Removal, Inc. Roll-Off Fees
September 2, 2010
c. City Code Section 90 -196 lists the insurance coverage that must be maintained by roll-
off waste contractors. PH Waste provided proof of the required insurance during the
audit.
Recommendation(s)
PH Waste must comply with the designated sections of the City Codes and submit timely
lists of accounts, and certified annual statements of gross receipt (if reported revenues are
over the threshold amount).
EXIT CONFERENCE
Audit findings were e-mailed to PH Waste Collection Service, Inc. on 08/31/2010. We confirmed
their agreement to our findings on 09/01/2010. They agreed to submit payment upon receipt of the
City bill from Finance.
JJS: CD
Audit performed by Carmin Dufour
F:\obpi\$AUD\DOC09-1 0\REPORT-FINAL/PH WASTE REPORT.doc
cc: Jorge Gomez, Assistant City Manager
Fred Beckmann, Public Works Director
Alberto Zamora, Sanitation Director
Patricia Walker, Chief Financial Officer
Wilma Estevez, Controller
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