C & C Waste Removal, Inc.MIAMI BEACH
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division INTERNAL AUDIT REPORT
To:
Via:
From:
Jorge M. Gonzalez, City Manager .1. Q
Kathie G. Brooks, Budget and Performance Improvement Director r~
James J. Sutter, Internal Auditor~
June 19, 2008 / / Date:
Audit:
Period:
C&C Waste Removal, Inc. Roll-Off Fees
September 2005 to February 2008
This report is the result of a scheduled audit of the Roll-Off Fee Returns for C&C Waste Removal, Inc.
(C&C).
INTRODUCTION
A roll-off is defined as a container with a m1n1mum 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. In return, they are required to abide by the terms outlined in the City Code. This
includes the remittance of franchise fees equaling 16% 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 C&C for period of January 2001 to August 2005. Our
audit report dated November 6, 2006 produced an audit assessment of $22,657.20. This assessment
was attributed to under reporting of roll-off revenues. On 05/31/07 the City negotiated a payment
arrangement at the request of C&C resulting in weekly payments to be made for the amount of
$706.26. Weekly payments were made for the first 16 weeks and then were .. subsequently stopped. It
was also noticed that monthly returns were not being filed. Late fees were assessed for all late returns.
After contacting C&C, payments for the prior audit assessment began to be intermittently submitted
late.
Prior to the commencement of this audit, C&C has had internal management problems that are being
resolved by the Circuit Court. The court ordered a temporary injunction dated January 4, 2008 and
appointed a receiver to handle all operations at C&C. The court found evidence that one of O&C major
shareholder was diverting corporate funds for personal purposes, and C&C was not being run for the
benefits of its shareholders.
\!Ve ore cc>rnmitled tr:> (JI(Widing excellent public sc•l\'ice and sofety to oil who live, wod., ond ploy in our vil:nonl, lro,:.>icol, historic community
Internal Audit Report
C&C Waste Removal, Inc. Roll-Off Fees
June 19, 2008
The current management has been very cooperative with us in conducting our audit and to resolve the
previous audit assessment by making current payments. In addition past due reports have been
identified and amounts of revenues were reported to us. Current report as of April 2008 has been filed
timely.
OVERALL OPINION
C&C did not fully comply with the City Code's reporting provisions during the audit period. As a result,
gross receipts were not reported and franchise fees were not paid to the City. The following items were
noted during our audit:
• Gross receipts in the amount of $134,104.19 were not reported, therefore C&C owes the City
$24,569.84 in delinquent roll-off franchise fees (including interest and late filing charges).
• C&C has not filed monthly Roll-off fee returns on a timely basis. C&C has nine outstanding city
bills for filing franchise fees late and placing roll-offs without a permit. The total amount of
outstanding city bills owed is $3,857.38 as of June 18, 2008.
• As of June 18, 2008, C&C has an outstanding balance of $3,162.66 from our previous audit
report dated November 08, 2006.
• C&C has not filed a list of accounts and the required CPA annual statement of gross receipts.
• C&C has submitted the certificate of liability insurance.
• Internal audit discovered that boxes of invoices were missing from C&C's storage room. C&C
must enhance its system of recordkeeping in order for the audit not to be hindered.
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.
FINDINGS, RECOMMENDATIONS AND MANAGEMENT RESPONSES
1. Finding -Unreported Gross Receipts
City Code Section 90-221 defines gross receipts as "the entire amountofthe 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, should be included in reported gross receipts. During our audit period, C&C
did not repori all gross receipts on returns filed with the City of Miami Beach. In addition, we
found invoices and received several confirmations from C&C's customers who paid for roll off
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Internal Audit Report
C&C Waste Removal, Inc. Roll-Off Fees
June 19, 2008
services within the City of Miami Beach. This amounted to $40,689.31 in gross receipts for roll
off waste removal services within the city limits which were not reported in compliance with the
City Code.
C&C reported twenty-nine months of gross receipts starting from September 2005 to May 2007.
However, roll off returns listing gross receipts totaling $93.414.88 for the months of June 2007
through February 2008 were provided during the audit. C&C did not pay the roll off franchise
for these nine returns.
The following table summarizes the amount due from C&C for our audit period:
2005 ,2006 2007 2008 TOTAL {4 Months) Jan-Dec. Jan-Dec. Jan-Feb.
Audited Receipts $38,889.24 $249,062.15 $172,124.38 $13,606.88 $473,682.65
Less Reported Receipts (5,160.00) (244, 186.58) (170,039.88) (13,606.88) (432,993.34)
Add Back Gross
Receipts on Returns not 0 0 79,808.00 13,606.88 93,414.88
paid (1)
Unreported Gross $33,729.24 $4,875.57 $81,892.50 $13,606.88 $134,104.19 Receipts
Roll-Off Fees Due $5,396.68 $780.09 $13,102.80 $2,177.10 $21,456.67 (16%)
Interest Due 1,204.52 116.87 1,189.26 2.52 2,513.17
Late Filing Fees Due 50.00 0 500.00 50.00 600.00
Total Due $6,651.20 $896.96 $14,792.06 $2,229.62 $24,569.84
Note (1 ): During our audit, C&C prepared returns for the past due period of June 2007 to February 2008. These
numbers were used in our Reported Receipts above, however they were then adjusted for non-payment.
Recommendation
C&C must remit the amount of $24,569.84 for unreported receipts. Roll-off franchise fees
should be charged, collected and remitted timely on all Miami Beach gross receipts.
2. Finding-Outstanding City Bills
During the audit period, the following City Bills were issued due to the late filing of several
months of roll off fee returns. In addition one code violation was issued and payment is still
outstanding.
Date Reference# Item Amount
11/30/06 CB#3957 Late Return $931.61
12/15/06 CB#4074 Late Return 299.44
02/21/07 CB#4560 Late Return 152.13
04/11/07 CB#4967 Placing roll off w/o a permit 1,000.00
04/25/07 CB#5036 Late Return 199.52
06/13/07 CB#5874 Late Return 328.14
06/20/07 CB#5936 Late Return 248.91
01/15/08 CB#7108 Late Return 327.13
04/02/08 CB#7752 Late Return 370.50
Totals $3,857.38
Recommendation
C&C must remit the amount of $3,857.38 for the above city bills. Roll-off franchise fees should
timely remitted 30 days after the end of each month. Recordkeeping needs to be improved in
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Internal Audit Report
C&C Waste Removal, Inc. Roll-Off Fees
June 19, 2008
order for C &C to release payment in a timely manner. In addition, permits should be obtained
for all locations of roll off containers.
3. Finding-Required Reporting
c&c did not submit the following documents in accordance with the listed City Code sections
during the audit period:
a. Section 90-278 (4) states "The licensee shall deliver to the finance director and the city
manager a true and correct monthly report of gross receipts generated during the
previous month from accounts within the city on or before the last day of each month.
This detailed monthly report shall include the customers' names, service addresses,
account numbers, and the actual amount collected from each customer." Therefore, all
monies collected by the roll-off waste contractor from Miami Beach service addresses,
including fuel surcharges and overloading fees, should be included in reported gross
receipts. C&C under reported gross receipts on returns filed with the City of Miami
Beach. Returns were filed for twenty-nine months during the audit period; they did not
contain all related Miami Beach revenues and the supporting listing of accounts.
However, a list of accounts was provided during the audit.
b. 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 setvice, 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. "C&C 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.
c. 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 certified by an
independent certified public accountant reflecting gross receipts within the city for the
preceding fiscal year". C&C did not provide a statement of its annual gross receipts
generated from accounts within the city certified by an independent public accountant
reflecting gross receipts within the city for the preceding fiscal year.
d. City Code Section 90-196 lists the insurance coverage that must be maintained by roll-
off waste cont'ractors. C&C provided the required insurance to the city.
Recommendation
C&C must comply w"ith the designated sections of the City Codes and submit timely monthly
reports of gross receipts, lists of accounts and certified annual statements of gross receipts.
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Internal Audit Report
C&C Waste Removal, Inc. Roll-Off Fees
June 19, 2008
EXIT CONFERENCE
Audit findings were faxed on 05/23/08 to John Cinellis and Howard lzenwasser of C&C Waste. They
concurred with our audit assessment on 06/13/08 and a city bill will be mailed for the amount.
JJS: CD
Audit performed by Carmin Dufour
F:\obpi\$AUD\DOC007-08\REPORTS-FINAL\ C&C WASTE REPORT.doc
cc: Robert Middaugh Jr., Assistant City Manager
Fred Beckmann, Public Works Director
Alberto Zamora, Sanitation Director
Patricia Walker, Chief Financial Officer
John Cinellis, C&C Waste, Inc.
Howard lzenwasser, C &C Waste, Inc.
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