Imperial Parking Agmt for Cashiers, Attendants and Supervisors – Year 3DEPARTMENT
Internal Audit Division INTERNAL AUDIT REPORT
TO:
VIA:
FROM:
DATE:
AUDIT:
PERIOD:
Jorge M. Gonzalez, City Manager ;;
Kathie G. Brooks, Budget and P~rf~~lmprovement Director
James J. Sutter, Internal Auditor -~
June 6, 2012 ·
Imperial Parking (U.S.), Inc. -Agreement to Provide Cashiers, Attendants and
Supervisors -Compliance Audit
Contract year starting on August 11, 2010 through August 10, 2011
This report is the result of a regularly scheduled compliance audit of the professional service
agreement between Imperial Parking (U.S.), Inc. and the City to provide cashiers, attendants,
and supervisors for the City's parking system. The agreement requires an annual evaluation of
the contractor's profitability to determine whether pre-determined base profit thresholds are
achieved that would require sharing equally any excess between the contractor and the City.
This audit encompasses year three (final year) of the agreement.
INTRODUCTION
The City of Miami Beach Parking Department is responsible for managing more than 11 ,500 on-
street parking spaces, nine (9) garages, and sixty-four (64) surface parking lots. Surface lots
are often attended by cashiers, supervisors, and traffic personnel during special events to
improve the incidence of parking violations and minimize any adverse impact on the demand for
parking. Oversight for the garages and attended surface lots is provided by the Off-Street
Division, and includes responsibility for the administration of the contracted provision of
cashiers, attendants, and supervisors to the City's parking system.
On June 25, 2008 the Mayor and Commission, through Resolution No. 2008-26839, approved
and authorized the execution of the agreement with Imperial Parking (U.S.), Inc, pursuant to
Request for Proposal (RFP) No. 11-07/08, to provide parking cashiers, attendants, and
supervisors for the City of Miami Beach parking system. The agreement was executed on July
30, 2008. The term of the agreement was three (3) years, commencing on August 11, 2008 and
ending on August 10, 2011, with two (2) one-year renewal options at the City's sole discretion.
A provision was added requiring that an annual performance evaluation and a review of the
profitability of the agreement be conducted for revenue sharing purposes.
At its February 9, 2011 meeting, the Mayor and City Commission authorized the Administration
to issue a new Request for Proposals (RFP) No. 17-10/11 for Parking Attendants for the City's
Parking Garages. The City Manager presented his recommendation at the May 11, 2011
Commission meeting and the City Mayor and Commission accepted the City Manager's
recommendation and authorized the administration, through the issuance of Resolution No.
2011-27658 to enter into negotiations with the top ranked firm, Standard Parking which replaced
Imperial Parking on August 15, 2011.
Among other duties, Imperial Parking's employees were responsible for collecting and
reconciling revenue generated by the parking facilities on a daily basis, completing and
providing to the City all related supporting documentation and reports, as well as providing
excellent customer service, guidance, and reporting maintenance issues to the Parking
We ore committed to providing excellent public service and safety to all who live, work, and ploy in our vibrant, tropical, historic community.
Internal Audit Report
Imperial Parking (U.S.), Inc. -Agreement to Provide Cashiers, Attendants and Supervisors -
Compliance Audit
June 6, 2012
Department, among other things.
Invoices were submitted by Imperial Parking to the Parking Department based on the hours
worked by each employee, in each position classification, and in each parking facility.
Contractor hourly billing rates are $13.88 per hour for parking attendants/cashiers, and $16.77
per hour for supervisors. These rates consider Contractor's employee wages and overhead.
Hours to be worked by employees in each position/classification were determined by the Off-
Street Parking Division management on a weekly basis considering the optimal and most
efficient level of employees required to operate the parking facilities. Invoiced hours were then
compared to hours requested accordingly. Any exceptions, if any, were communicated to the
Contractor for correction prior to processing payment.
The following schedule reflects the total actual payments made to the Contractor, per the City's
general ledger, associated with the service agreement as of March 15, 2012:
7TH
STREET $ 379,765 $ 318,076 $ 410,666 $ 1,108,507
GARAGE
ANCHOR $ 307,047 $ 260,121 $ 354,215 $ 921,383 GARAGE
ALL $ 2,691,019 $ 1,716,754 $ 1,780,084 $ 6,187,857. OTHERS (1)
GRAND $3,377,831 $ 2,294,951 $ 2,544,965 $ 8, 217,747 TOTAL
(1): "ALL OTHERS" represent four garages, and all City attended lots, as needed for,
but not limited to, special events.
OVERALL OPINION
With the culmination of the third and final year of the service agreement between the City and
Imperial Parking (U.S.), Inc (D/B/A lmpark), to provide cashiers, attendants, and supervisors to
the City's parking system, Internal Audit was engaged to review compliance to section 4.9.3 of
the service agreement, which in essence, required for the contractor to share equally at the end
of the three year contract term any revenues in excess of $262,500 base estimated profit.
Accordingly Internal Audit performed audit testing and procedures to identify whether the base
estimated profit level had been reached and/or surpassed by the contractor and to verify
whether operating expenses accrued and accounted for by the contractor were reasonably
substantiated by supporting documentation. Only those operating expenses reasonably
substantiated were considered in our calculations. Results from our testing have been
summarized in the following figure:
Page 2 of 6
Internal Audit Report
Imperial Parking (U.S.), Inc. -Agreement to Provide Cashiers, Attendants and Supervisors -
Compliance Audit
June 6, 2012
Amounts Paid to
Contractor
Operating Expenses
Incurred by Contractor
Reasonably Substantiated
Profit
LESS: Base Estimated
Profit
Total
Profits in excess of the
Base Estimated Profit
Amounts owed to the City
(1/2 of amount in excess of
Base Estimated Profit)
1 sr CONTRACT
YEAR (2009)
$3,377,831
$3,165,079
$ 212,752
2ND CONTRACT
YEAR (2010)
$2,294,951
$2,383,232
$ (88,281)
3RD CONTRACT
YEAR (2011)
$2,544,965
$2,528,537
$ 16,428
TOTALS
$8,217,747
$8,076,848
$ 140,899
$(262,500)
$(121 ,601)
$0
$0
Additional details have been provided on Table 1 at the end of this report for further reference.
As shown on the figure above and later on Table 1, at the end of this report, results from the
contractor's operations did not surpassed the Base Estimated Profit threshold that would require
the contractor to share the excess equally with the City. Consequently there are no moneys
owed to the City as a result from provisions stipulated under section 4.9.3 of the service
agreement.
Testing and procedures performed during this audit were not designed to find fraud or
defalcations. They were only designed to establish compliance by the contractor to section
4.9.3 of the service agreement and to ensure that reasonable supporting documents and
calculation schedules exist and are maintained by the contractor. In addition, we were not
engaged to express an opinion on the contractor's financial statements, financial reports, or
exercised accounting policies, procedures, or principles. Accordingly, we do not express an
opinion on such.
PURPOSE
The purpose of this audit is to verify compliance with section 4.9.3 of the professional services
agreement between the City of Miami Beach and Imperial Parking to provide parking cashiers,
attendants, and supervisors for the City's parking system; and ensure that any revenues in
excess of the "Base Estimated Profit" of $262,500 (if applicable) be shared equally between the
Contractor and the City.
SCOPE
1. Review compliance to Section 4. 9.3 of the Service Agreement (profit sharing provisions).
2. Verify expenses and corresponding schedules, allocations and support to ensure
reasonable substantiation.
Page 3 of 6
Internal Audit Report
Imperial Parking (U.S.), Inc. -Agreement to Provide Cashiers, Attendants and Supervisors -
Compliance Audit
June 6, 2012
3. Verify cumulative effect of profit sharing provisions over the three year term service
agreement.
FINDINGS, RECOMMENDATIONS, AND MANAGEMENT RESPONSES
1. Finding -Base Estimated Profit levels were not exceeded and/or met by the contractor
over the term of the agreement.
Section 4.9.3 of the Service Agreement stipulates that "Contractor and City hereby agree
and acknowledge to share equally in any excess revenues over and above Contractor's
"Base Estimated Profit" over the initial three (3) year term of this agreement. It further
mentions that "at the end of each contract year during the term of this Agreement, the City
and Contractor agree to meet to review the profitability of the contract, which shall include
the City's review of all necessary documents and records to substantiate such profitability''.
Accordingly, Internal Audit reviewed all necessary documents and records to reasonably
substantiate the profitability of the contractor on each of the three years of the contract
(contract term). In addition, an opportunity was provided to the contractor to present
supporting documents not provided during the previous two audits to reasonably
substantiate expenses incurred, but not properly documented/substantiated. As a result,
we have included Table 1 at the end of this report to help to illustrate those operating
expenses incurred by the contractor that were reasonably substantiated, compared to
amounts paid to the contractor by the City, in order to determine the contractor's
profitability over the contract term (3 years).
As in the two previous audits performed, there were operating expenses reflected, but not
reasonably substantiated by the contractor as a result of system limitations that although
allow to maintain full accountability by regions (Organizations under contract in the Miami-
Dade County vicinities), it does not maintain a separate sub-ledger for locations or "lots",
which is the term used by the contractor to identify different contracts in a region.
Furthermore there were expenses that were not reasonably substantiated due to a lack of
appropriate documentation available for our review. None of these expenses not
reasonably substantiated were considered in our analysis. However, it is prudent to
recognized that there could have been additional reasonable expenses (Example: legal
and professional fees) that were not considered or provided by the contractor despite
possibly incurred. With this in mind, it is important to reiterate that profitability, as
calculated in our review, only considers the total amounts paid by the City to the
contractor, as revenues, and considers only those reasonably substantiated expenses for
which reasonable supporting documentation was provided; therefore the calculation may
not, and does not reflect the contractor's net income or loss from operations.
None the less, as reflected in Table 1 at the end of this report, reasonably substantiated
expenses are sufficient to prevent the contractor from reaching and/or exceeding the
"Base Estimated Profit" of $262,500 over the contract term. Consequently, no amounts
are due to the City with respect to profit sharing provisions under section 4.9.3 of the
service agreement.
Response(s)
Both, the City and the Contractor have been made aware of our findings and have
acknowledged the results without further comments. No additional responses are
necessary.
Page 4 of 6
Internal Audit Report
Imperial Parking (U.S.), Inc. -Agreement to Provide Cashiers, Attendants and Supervisors -
Compliance Audit
June 6, 2012
EXIT CONFERENCE
Findings were forwarded to the City's Parking Department and the Contractor Offices to solicit
further discussion and management responses. Management responses were received
thereafter.
Audit performed by Fidel Miranda, Auditor
F:\OBPI\$AUD\INTERNAL AUDIT FILES\DOC11-12\REPORTS-FINAL \Imperial Parking Contract for Cashiers (2011 ).docx
cc: Jorge Gomez, Assistant City Manager
Saul Frances, Parking Department Director
Charles Adams, Assistant Parking Director
Page 5 of 6
Internal Audit Report
Imperial Parking (U.S.), Inc. -Agreement to Provide Cashiers, Attendants and Supervisors -
Compliance Audit
June 6, 2012
Table 1:
City of Miami Beach -Internal Audit
Contractor's Reasonable Substantiated Income and Expenses
Contract Years One to Three
~~~lrsiii~fli~~Jt~XP~NSES; ft CQ~T,ro~YE~~~--:;~~;f~~~ EAitl ''-''{
COURIER $ 262.00 $ 547.00
EQUIPMENT RENTAL-COPIERS $ 5,013.00 $ 5,971.00
PARKER PETE EXPENSES $ 8,051.00 $ 9,300.00
REPAIRS & MAINTENANCE $ 1,280.00 $ 92.00
SUPPLIES $ 38,038.00 $ 15,370.00
UNIFORMS $ 25,704.00 $ -
TELEPHONE $ 10,610.00 $ 7,204.00
TRAINING {CPR) $ 3,629.00 $ -
HIRING & PLACEMENT $ 22,028.00 $ 2,509.00
GASOLINE/FUEL $ 14,733.00 $ 17,142.00
VEHICLE REPAIRS $ 8,787.00 $ 9,382.00
WAGES $ 2,588,016.00 $ 1,963,702.74
PAYROLL TAX EXPENSES-{S.S. & MED.) $ 197,984.00 $ 150,223.26
VEHICLE DEPRECIATION-$10, 000 $ 12,405.00 $ 12,913.50 SALVAGE VALUE
VEHICLE INSURANCE $ 5,837.00 $ 9,347.00
LIABILITY INSURANCE $ 70,070.00 $ 70,956.00
WORKERS COMPENSATION INSURANCE $ 103,520.64 $ 78,548.11
UNEMPLOYMENT TAXES-STATE {SUTA) $ 36,397.07 $ 20,492.72
UNEMPLOYMENTTAXES-FEDERAL {FUTA) $ 12,714.38 $ 9,531.50
TOTAL REASONABLY SUBSTANTIATED $ 3,165,079.09 $ 2,383,231.83 EXPENSES:
AMOUNTS PAID TO CONTRACTOR $ 3,377,831.00 $ 2,294,951.00
REASONABLY
SUBSTANTIATEDCONTRACTOR'S NET $ 212,751.91 $ (88,280.83)
PROFIT
Page 6 of6
'''9 <fl,0:~cdN~ ': ~: )., 'N} '-~£= ~~
-7. :l '~-,: ·-~ ~-~ j: if.
$ 6.00 $ 815.00
$ 5,937.14 $ 16,921.14
$ 12,950.00 $ 30,301.00
$ 1,080.49 $ 2,452.49
$ 14,023.18 $ 67,431.18
$ 1,750.90 $ 27,454.90
$ 8,252.40 $ 26,066.40
$ 2,152.50 $ 5,781.50
$ 1,927.62 $ 26,464.62
$ 18,111.48 $ 49,986.48
$ 10,036.72 $ 28,205.72
$ 2,087,378.11 $ 6,639,096.85
$ 159,684.43 $ 507,891.69
$ 12,021.50 $ 37,340.00
$ 10,967.54 $ 26,151.54
$ 70,860.13 $ 211,886.13
$ 83,495.12 $ 265,563.87
$ 20,904.34 $ 77,794.13
$ 6,997.27 $ 29,243.15
$ 2,528,536.87 $ 8,076,847. 79
$ 2,544,965.00 $ 8,217,747.00
$ 16,428.13 $ 140,899.21