Parking Towing RevenueCH
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division
TO: Jorge M. Gonzalez, City Manager
INTERNAL AUDIT REPORT
VIA:
FROM:
Kathie G. Brooks, Budget and ~re.~rf .. o mance Improvement Director
James J. Sutter, Internal AuditoyY
February 8, 2010 DATE:
AUDIT:
PERIOD:
Parking Towing Revenue Audit
October 1, 2006 to June 30, 2009
This is a regularly scheduled audit of the Parking Department's towing revenue operations as
covered by the City's Towing Permits with Beach Towing and Tremont Towing Services, Inc. Audit
of towing revenues relating to the Police Department is reported in a separate report.
INTRODUCTION
Chapter 1 06, Article V, of the Miami Beach City Code, provides for the issuance by the City of towing
permits for the towing of vehicles identified by the City as requiring removal from public and private
property, as well as vehicle impoundments.
On January 11, 2006 the Mayor and City Commission waived (by 5/7 vote) the competitive bidding
requirement and approved towing permits with Beach Towing and Tremont Towing Services, said
permits having an initial three year commencing on March 1, 2006 and expiring on February 28,
2009, with a two year renewal at the sole and absolute discretion of the City.
The Major and Commission of the City of Miami Beach, under Resolution No. 2009-26999,
authorized and approved a month to month extension of the current towing permits with Beach
Towing and Tremont Towing Services, Inc. respectively subject to and contingent upon Beach
Towing and Tremont compliance with the additional conditions set forth in Amendment No. 14. Said
extension will be on a month to month commencing on March 1, 2009 and expiring no later than
August 31, 2009.
Later, on July 22, 2009, the Mayor and City Commission approved, under Resolution No. 2009-
27151, an extension of the towing permits with Beach Towing Services, Inc. and Tremont Towing
Services, Inc. for a term of two years commencing on September 1, 2009 and terminating on the
earlier of August 31, 2011, or the date that Tremont Towing is required to vacate its current
premises for commencement of construction of the Sunset Harbor Garage Project; provided, further,
that the aforementioned renewal of the towing permits is subject to and continued upon Beach and
Tremont's continued compliance with the conditions imposed by the City Commission pursuant to
Resolution No. 2009-26999; and further approving the new version of the Administrative Rules and
Regulations for Police Department and Parking Department Towing Permits.
Tows are initiated by the Parking Enforcement Officer after determining that a vehicle should be
towed. The Parking Enforcement Officer contacts the Parking Department dispatcher who enters
vehicle information into the Computer Assisted Dispatch (CAD) system. The CAD system
automatically generates a tow number which the dispatcher communicates to the Parking
Enforcement Officer in order to create the Vehicle Storage Receipt (VSR). The dispatcher proceeds
We ore committed to providing excellent public service and safety to all who live, work, ond ploy in our vibront, tropical, historic community
Internal Audit Report
Parking Towing Revenue Operations
February 8, 2010
to contact one of the two authorized tow companies to perform the tow on a rotation basis. At the
scene of the tow, the Parking Enforcement Officer obtains the signature of the towing company on
the VSR.
On a monthly basis, a towing revenue report is printed from the Parking Department's CAD system
and a reconciliation is performed between the tow companies and the Parking Department to
determine the amount of the towing revenue to be billed. The tow companies shall pay the City a
permit fee of $25.00 for each vehicle towed pursuant to the contracted towing permit and $12.50 for
each vehicle that is disconnected from the towing truck at the scene (drop fee). Amendment No. 14
contains a waiver of this drop fee effective February 1 ,· 2009. The invoices are prepared on the
City's Eden system and approved for billing by the Parking Department. Once the amount is
approved by the Parking Department, the invoice is printed and mailed by the Finance Department.
Per City of Miami Beach Police Department and Parking Department Towing Permit Amendment
No. 13 and 14, Section 34.1, "The City of Miami Beach shall bill the Permittee by the 1Oth of each
month for the tows occurring in the previous month. A late charge of $50.00 plus eighteen percent
per annum interest charges shall be assessed on all payments received after the 201h day of the
billing month."
Revenues generated for parking towing fees were as follows:
. F:0¥,06/07 FY 08/09 .... ·.
Revenues Generated $ 238,881.48 $ 255,834.00
OVERALL OPINION
The Parking Department's towing operation is sufficiently handled in regards to the dispatcher
assigning and recording tows in a manner that provides for the billing of monthly tows. However, the
department falls short as it relates to the following areas in need of improvement:
• Tow companies are not being billed in a timely manner by the City.
• Tow companies were not timely paying in accordance with the towing permit and carried
large balances due to the City until recently paid.
• Decreasing refund/release tows and improving documentation for releases of vehicles with
waiver of towing fees.
• Inaccurate recording of one month's revenues into the Parking Department's general ledger
account.
PURPOSE
The purpose of this audit is to review the operations of the Parking Department as it relates to
recording, invoicing and collecting revenues associated with owing fees in accordance with the
towing permits between the City of Miami Beach Police Department and Beach Towing and Tremont
Towing; determine whether the revenue from permit fees were paid in accordance with City Code
and operating policies and procedures; whether the amount paid agrees with the permit rates; and
whether all transactions were correctly billed and timely received by the City and properly recorded
in the City's Financial System.
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Internal Audit Report
Parking Towing Revenue Operations
February 8, 2010
OBJECTIVES
1. Confirm that the Parking Department has detailed policies and procedures for the
reconciliation and billing of towing services.
2. Determine whether internal controls are sufficient and in place to control billing and receipt
of revenues from the tow companies.
3. Determine if reconciliation of tows dispatched to amounts billed are performed.
4. Confirm that all vehicle storage receipts are compared to monthly systems report of tows
and the City bills issued.
5. Confirm that City billings are correctly calculated and are issued and paid by the tow
companies on a timely basis.
6. Verify that receipts were correctly recorded into the City's general ledger on a timely basis.
FINDINGS, RECOMMENDATIONS AND MANAGEMENT RESPONSES
1. Finding: Timeliness of Invoicing.
Amendment No.13, "City of Miami Beach Police Department and Parking Department towing
Permit", Paragraph 34.1, "Permit Fee-Monthly Billing", states "the City of Miami Beach shall
bill the Permittee by the 1 01h of each month for all tow occurring in the previous month".
Internal Audit tested all 69 invoices for the audit period of which none were billed in
accordance with the Towing Permit terms, by the 1oth of the month. The delay in the billing
process was partly due to the tow companies not having a representative available within the
first 10 days of each month to meet with the Parking Department in order to reconcile the
monthly tows.
Recommendation:
The Parking Department should discontinue meeting with the tow companies prior to
creating the invoice. Rather the invoice should be prepared from the Parking Department's
reports and then submitted to the tow companies. The tow companies in return would have
the responsibility to reconcile any discrepancies within 20 days and make payment to the
City.
Management's Response
In an effort to expedite the invoicing process, a City of Miami Beach Parking Operations
Supervisor will personally pick-up the tow slips from each company required to complete
the invoice for the previous month on the 3rd day of the following month. This will avoid
the delay of meeting with each company enabling us to complete the invoice before the
1Oth of the month.
2. Finding: Outstanding towing fees due to the City
Out of the sixty-nine (69) invoices tested, forty five (45) invoices were not paid timely by the
permit holders. In addition, ten (1 0) invoices from Beach Towing totaling $102,175.1 O,and
one (1) invoice from Tremont Towing totaling $11,325.00 were outstanding during our audit
as of October 16, 2009.
More over, we noted that past due fees and interest are not being billed to the tow
companies. As stated on the Towing Permit Amendment No. 13, "a late charge of $50.00
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Internal Audit Report
Parking Towing Revenue Operations
February 8, 2010
plus eighteen percent per annum interest charges shall be assessed on all payments
received after the 2oth day of the billing month". The lack of timely invoicing of past due fees
and interest leads to loss of additional revenues for the City.
In order to quantify the impact of not billing "late fees" and "interest", we reviewed the
invoices tested and noted the following, as of October 16, 2009:
INVOICES PAID LATE
~ < ;f > Number of f-:'l~l"~g~ ' ···••··' • • • '• .·.····••··. .··•··· .·.•• ·· •..... l . Tpt(ll /
/' ~r"'/1 ·. >' ' ::Invoices> r.·.· .. ·. N.· un)p(!fof ··· .. :'Ac,:,:.~ .•. ru~~·~L.a ... ·.·.t.·.e,• ·· .. .•...•• ~ecrU(!~ .•. · .. •.··.··•·.• ····•·······.A. m .•... ~ .. ·. u.· ... n.··.t.'' :· i H9ld~r > ' ; • .' i' Fees Interest • · . . • '· .. ·····. I . . Pa1d.Late bays uit~ < .·.· .. · · · •· .·•. ,, · .·.. . · •·· · owed ·•· ·
Tremont
Towing 17 6 $ 850.00 $ 420.87 $ 1,270.87
Beach
Towing 28 102
OUTSTANDING INVOICES
Tremont
Towing
Beach
Towing 10
$ 11,325.00
$ 102,175.10
$ 1,400.00 $13,111.18 $14,511.18
45 $ 50.00 $ 251.32(1) $ 11,626.32
166 $500.00 $7,778.70 (1) $110,453.80
(1 ): Amounts subject to change based on the amount of time that the balances remain outstanding.
During the audit the Parking Department met with the towing companies and assessed
penalties and interest for the late and unpaid amounts due. Outstanding invoices were
subsequently collected in the amounts of $11,325.00 and $111,087.15 from Tremont Towing
and Beach Towing respectively. Late fees and accrued interest for previous invoices paid
late are being research by the Parking Department.
Recommendation:
Going forward the Parking Department needs to closely monitor and follow up on any
unpaid or late invoices. Any outstanding invoice over 30 days should be considered cause
for termination of the towing permit. In addition, the Parking Department should invoice the
towing companies for any late fees and interest due.
Management's Response
Late fees and penalties under this contract are set at a different rate than the regular
Finance Department fees. This requires that the Parking Department prepare a separate
invoice for these fees. From this point forward the Parking Department will include any
previous month late fees in the current month's regular billing.
3. Finding: Decreasing refund/release tows and improving documentation for releases of
vehicles with waiver of towing fees
The Parking Department's Standard Operating Procedures (S.O.P.), as it relates to the
towing revenue operation, is silent with regards to criteria for towing a vehicle. Inquiries
made with parking personnel revealed that primary consideration before towing a vehicle is
determined by signage (Example: "No Parking anytime"); whether the vehicle is parked in a
manner that posses a safety issue; or when a tag number entered into the hand held
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Internal Audit Report
Parking Towing Revenue Operations
February 8, 2010
"AutoCite" computer shows an impound order, as a result of unpaid tickets or any other
reason. AutoCity computer information is downloaded daily from Miami Dade County with all
the vehicles that need to be impounded.
A review of City refunds made to vehicle owners for tows over the audit resulted in the
following amounts being paid:
! ' Li,' "····•··. <(· .. FYOS/Oi. · FY.07/08' FY08/d9.
Total Refunds $10,158.52 $8,506.85 $5,053.50
#of Refunds 49 43 23
While there may be inherent reasons that on occasion tows may occur resulting in a refund
to the vehicle owner, it is positive to see that this trend is decreasing.
In addition, we noted that there were a few impounded vehicles that were released at no
charge to the vehicle owners. While there is sometimes a CMB "Request to Release Towed
Vehicle" form or the "Vehicle Storage Receipt" form signed by either a Police or Parking
enforcement officer authorizing the release documentation, some did not have any
documentation supporting the reason or approval of the release. For example during the
month of April 2009 a total of twenty-one (21) cars, of which three involved City employees,
were release with no charge. The reasons given were officer's mistake or in the three
employee incidents at the discretion of a City of Miami Beach employee to other City
employees as a "professional courtesy to a colleague". For an additional thirteen months
tested, averages of 7.5 tows per towing company were not charged for similar reasons.
Per amendment number 13/14 of the City's towing permit contract, paragraph 12.4, 'The
City of Miami Beach Police or Parking Department shall pay the towing fees in an improper
tow." While this poses a risk that the tow companies may charge the City for a tow which the
City authorized a release without charge, this does not occur since the tow companies
absorb the cost of the tow for these releases.
Recommendation:
The Parking Department should establish Standard Operating Procedures, (S.O.P) to
include detailed criteria for towing a vehicle in order to minimize any exposure for
refund/release tows. Furthermore, vehicle release forms should be completed in their
entirety with the proper authorization. The City should limit the releases without charges to
employees if the tow was for valid reasons and discontinue extending a courtesy to
employees.
Management's Response
The Parking Department will institute the following policy:
Tow Refund/Release Policy
The Parking Department Director, Assistant Parking Director, and Parking Enforcement
Manager are empowered to authorize the refund or release of an impounded vehicle.
At times, members of the public that have had their vehicle impounded by a towing permittee
at the request of a Parking Department Enforcement Agent may demonstrate bona fide
reasons to effectuate a release or refund. The following are examples that may warrant a
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Internal Audit Report
Parking Towing Revenue Operations
February 8, 2010
release: including but are not limited to, undercover police vehicles; customer
service/goodwill gestures; customer's that can demonstrate extenuating circumstances. This
list is not intended to be all encompassing.
4. Finding: Inaccurate recording of transactions in general/edger account.
Two Police towing invoices totaling $7,000.00 (one for each towing company) for the month
of August 2008 were recorded in error to the Parking Towing Revenue general ledger
account. This resulted in the over reporting of revenues to the Parking fund and a under
reporting of revenues to the Police account in the General Fund.
Recommendation:
A monthly reconciliation should be performed by the Parking Department, to ensure that all
revenues are properly and timely recorded in the correct general ledger account. Any
discrepancies should be notified to the Finance Department immediately so that journal
entries may be performed.
Management's Response
Since December 2008-the Parking department has been entering the invoices (city bills)
directly into EDEN which should in turn avoid any erroneous posting with payments received
for invoices produced in the Parking Department. Once the invoice is entered, it is the
Finance Department's responsibility to post the payments to the appropriate open invoices
(the open invoices already include the GL account numbers). However, we periodically
check our accounts in order to make sure that everything is accounted for. This should also
be done by the Police Department and Finance Department.
EXIT CONFERENCE
An exit conference held on January 12, 2010 to discuss the audit report and to solicit management
responses noted above. Attendees were Saul Frances (Parking Director), Chuck Adams (Assistant
Parking Director), Rocio Rodriguez (Financial Analyst Ill), Robert Jenkins (Parking Operations
Manager) and James Sutter (Internal Auditor). Management responses were received shortly
thereafter. All were in agreement with the contents of this report.
Audit performed by Pablo Saballos, Internal Audit Contractor
F:\OBPI\$AUD\INTERNALAUDITFILES\DOC08-09\REPORTS-FINAL\TOWING REVENUE-PARKING DEPT
CC: Jorge Gomez, Assistant City Manager
Saul Frances, Parking Director
Patricia Walker, Chief Financial Director
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