Waste Service of Florida, Inc.MIAMI BEACH
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division INTERNAL AUDIT REPORT
TO:
VIA:
FROM:
DATE:
AUDIT:
PERIOD:
Jorge M. Gonzalez, City Manager !b
Kathie G. Brooks, Budget and~erfor ance Improvement Director .
James J. Sutter, Internal Auditor . ..--
August24,2009
Waste Service of Florida of Florida, Inc. (Non-Exclusive Franchise Contractor)
May 2007 to March 2009
This report is the result of a regularly scheduled audit of the Franchise Service Agreement with
Waste Service of Florida, Inc. (Waste service of Florida) It includes any revenues reported for
Franchise Waste, Public Right-of-Way and Roll-offs.
Chapter 90, Article IV Solid Waste of the City Code provides for the City to have Non-Exclusive
Franchise Waste Contractor Agreements and Service Agreements with five waste contractors.
These contractors provide waste collection and recycling services for Commercial and Residential
for multi-family residences with eight (8) or more units in the City of Miami Beach. According to the
Non-Exclusive Franchisee Waste Contractor Agreement, the waste contractor is granted the
franchise and is required to undertake and perform each and every obligation set forth in this
Agreement. The "Service Agreement" covers the provision of additional solid waste collection and
disposal and recycling services at certain City owned facilities and properties. The Service
Agreement is intended to have a term that will run concurrent with the terms of the Non-Exclusive
Franchise Waste Contractor Agreement.
The City Commission under resolution 2003-25385 renewed Waste Service of Florida and the other
waste contractor's franchise service agreement on October 15, 2003 for an additional five-year term
expiring September 30, 2008. Subsequently, the City Commission adopted Resolution (#2008-
26923) authorizing the further renewal of the City's existing four franchise waste contractors
including Waste Service of Florida for the collection and disposal of solid waste, to also included
recycling services. The waste contractors' renewal was for three years, commencing retroactively
on October 1, 2008 and ending on September 30, 2011.
For the past several years, the City had franchise waste contractor and service agreements with four
waste contractors to provide commercial service within its boundaries. On May 25, 2009 the City
Commission by resolution 2009-27020 approved a new waste contractor to be the fifth hauler.
Section 90-221 City Code 1964, 14A-16 (a) requires each franchise waste contractor to pay the City
a franchise fee consisting of a percentage of the licensee's total monthly gross receipts established
by resolution of the City Commission. Effective October 1, 2007 as required pursuant to section 90-
278 of the City Code, the franchise fee paid to the city by its franchise waste contractors was raised
from 16% of the franchisee's total monthly gross receipts for waste removal in the city, to 18% of
said gross receipts. However, the Public Right-of-way franchise fees remained the same (2%).
Section 90-278 City Code1964, 14A-7(c) requires each Roll-off waste contractor to pay the
City a franchise fee consisting of a percentage of the licensee's total monthly gross
receipts established by resolution of the City Commission. Effective October 1, 2008 the
on-street and off street permit fee for Roll-off waste containers serviced by licensed
contractors was raised from 16% to 18%.
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Internal Audit Report
Waste Service of Florida, Inc. (Non-Exclusive Franchise Waste Contractor)
August24, 2009
INTRODUCTION
Waste Service of Florida reported to the City of Miami Beach $8,477,334.87 in gross receipts for
Waste, Public Right-of-Way and Roll-offs. The franchise fee Waste Service of Florida remitted
amounted to $1,660,891.50 for the services performed within the city limits in compliance with the
City Code. The following table summarizes the total amount of gross receipts reported and related
fees paid:
2007 2008
(May-Dec) (Jan-Dec)
FRANCHISE WASTE & PUBLIC RIGHT-OF-WAY:
Audited Gross $2,415,560.46 $4,066,265.37 Receipts
16%/18% $405,242.32 $731,927,76 Franchise fee paid
2%Public Right-of-$54,340.68 $90,466.05 Wav
ROLL-OFF:
Audited Gross $310,125.89 $460,803.09 Receipts
16%/18% Roll-offs $51,049.00 $82,944.55 Franchise fee oaid
2009
(Jan-Mar)
$1,036,566.61
$186,581.99
$24,496.73
$188,013.45
$33,842.42
TOTAL
$7,518,392.44
$1 ,323,752.07
$169,303.46
$958,942.43
$167,835.97
Footnotes: On October, 2007 as required pursuant to section 90-278 of the City Code,
the franchise fee paid to the city by its franchise waste contractors was raised
from 16% of the franchisee's total monthly gross receipts for waste removal in
the City, to 18% of said gross receipts. However, the Public-Right-of Way
franchise fees remained the same. (2%) In addition, the Roll-offs permit fee was
raised from 16% to 18% on October, 2008.
Effective on March 31, 2007, BFI (Allied Waste) was sold to Waste Service of Florida. Waste
Service of Florida has been operating as a Non-Exclusive Franchise Contractor in the City of
Miami Beach since April1, 2007. They have been remitting franchise fees on a monthly basis
for Waste, Public Right-of-Way and Roll-offs.
OVERALL OPINION
Waste Service of Florida remitted the correct amount of franchise fees for Waste, Public Right-of-
Way and Roll-offs; based on the records provided in adherence to the City Code and Service
Agreement. The waste contractor properly and timely obtained an annual business tax receipt,
submitted the required certificate of liability insurance and provided the In-Kind Services to the City.
Also, during the audit Waste Service of Florida complied with a new section of the Service
Agreement (8.3) by purchasing recycling receptacles' for the amount of $36,544. In addition, the
contractor's franchise returns were timely filed and correctly recorded in the City's Financial System.
The following item was noted during our audit:
• Waste Service of Florida did not comply with City Code sections requiring monthly report of
recyclable materials.
PURPOSE
The purpose of this audit is to determine whether the franchise waste contractor reported all gross
receipts to the City, were correctly calculated, received timely and accurately recorded by the City,
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Internal Audit Report
Waste Service of Florida, Inc. (Non-Exclusive Franchise Waste Contractor)
August24, 2009
and the contractor was in compliance with designated sections of the City Code and related
Ordinances.
SCOPE
1. Review the private 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
and public right-of-way payments 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 City 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, and that amounts reported
therein agree with corresponding totals reported on the waste contractor's Monthly Reports
of Gross Receipts.
6. Confirm that the private waste contractor has obtained the required insurance in adherence
with Section 90-223 of the City Code and the signed service agreement.
7. Confirm that all monthly franchise and public right-of-way fee payments were timely and
correctly recorded in the City's Financial System.
8. Confirm that the private contractors are purchasing recycling bins for the City.
FINDINGS, RECOMMENDATIONS AND MANAGEMENT RESPONSE
1. Finding -Required Reporting
Waste Service of Florida did not submit the following documents in accordance with the
listed City Code sections during the audit period:
a. The City Code Section 90-308 Monthly Report, "Each recycling contractor shall deliver
monthly to the city manager an accurate report regarding the nature and disposition and
volume of Recyclable Materials collected by it from each account within the limits of the
city. Upon request by the City Manager, each contractor shall also furnish the city with
verifiable information regarding the method and place of final disposal or distribution of
said materials." Waste Service of Florida did not deliver to the City Manager the
required monthly report of recyclable materials as required by the City Code. Going
forward, a list that states address, size, number of containers or totters and frequency
serviced must be delivered monthly.
Recommendation ( s)
Waste Service of Florida must comply with the designated sections of the City Codes by
delivering monthly to the city manager an accurate report regarding the nature and
disposition and volume of Recyclable Materials collected by it from each account within the
limits of the city. Upon request by the City Manager, each contractor shall also furnish the
city with verifiable information regarding the method and place of final disposal or distribution
of said materials.
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Internal Audit Report
Waste Service of Florida, Inc. (Non-Exclusive Franchise Waste Contractor)
August24,2009
EXIT CONFERENCE
Audit findings were e-mailed on August 18, 2009 to Waste Services of Florida, Inc. We confirmed
their agreement to our findings on August 24, 2009.
JJS: CD
Audit performed by Carmin Dufour
F:lobpii$AUD\DOC08-9\REPORTS-I WASTE SERVICE OF FLORIDA AUDIT FINAL REPORT.doc
cc: Fred Beckmann, Public Works Director
Alberto Zamora, Sanitation Director
Patricia Walker, Chief Financial Officer
Larry Thogmartin (Regional Controller)
Juan Castillo (Assistant Region Controller)
Page 4 of 4