G7 Holdings Inc. DBA Garbageman.comMIAMI BEAC:H
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division
TO:
INTERNAL AUDIT REPORT
VIA:
FROM:
DATE:
Jimmy L. Morales, City Manager
John Woodruff, Budget and Pe~orm ce Improvement Director Iff:)
James J. Sutter, Internal Auditor ~ C.
August 27, 2015
AUDIT:
PERIOD:
G7 Holdings Inc. D/B/A Garbageman.com.
October 2013 to June 2015
This report is the result of a scheduled audit of the Roll-Off Fee Returns for G7 Holdings Inc. D/B/A
Garbageman.com.
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 twenty two companies currently possess business tax receipt demonstrating that they
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 calculated by using the applicable
percentage of Miami Beach gross receipts. Reports are to be submitted to the City's Finance
Department by the end of the subsequent month ..
Garbageman.com has been operating in the City of Miami Beach since October 2010. Their line of
business is junk removal, debris removal and cleaning services.
BACKGROUND
Previously, Internal Audit conducted an audit of Garbageman.com for period of October 2010 to
February 2012. Our audit report dated April 9, 2012 produced an audit assessment of $2,027.27
which was paid by Garbageman.com. Assessment was based on not filing returns.
OVERALL OPINION
This audit was schedule as a result of our division's monitoring of monthly franchise fees filings
according to Sec. 90-278. This account had not been recently filing returns. Historically the lack
of non-filing of franchise returns has led to the discovery of not reporting revenues to the City.
Therefore, we scheduled our audit to confirm whether this account is in compliance.
Garbageman.com has not complied with the City Codes as it relates to reporting requirements for
Roll-off contractors. The following items were noted during our audit:
We are committed to providing excellent public service and safety to all who live, work, and play in our vibrant, tropical, historic commumty.
Internal Audit Report
G7 Holdings Inc. D/B/A Garbageman.com
August 27, 2015
• Gross receipts in the amount of $100,411.78 were not reported resulting in the owing of
$20,666.13 in roll-off franchise fees and interest to the City.
• Garbageman.com has not filed an annual list of accounts, however a listing was provided
during the audit.
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 -Unreported 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 dump fees, fuel
surcharges, dry run, overload, extra month fees, relocation and waiting time charges should
be included in reported gross receipts.
Page 2 of 4
Internal Audit Report
G7 Holdings Inc. D/B/A Garbageman.com
August 27, 2015
Out of 21 months audited gross receipts, Garbageman.com did not file returns to the City for
the entire audited period. Garbageman.com collected franchise fees from their clients.
However, it was not remitted to the City.
Therefore, the amount of $18,074.12 in franchise fees for roll-off waste removal services
within the city limits was not reported. Garbageman.com is not in compliance with the City
Codes. The following table summarizes audited gross receipts and the amount due from
Garbageman.com for our audit period:
2013 2014 2015 TOTAL Oct.-Dec. (Jan-Dec.14) (Jan-Jun.15)
Audited Gross $14,190.00 $54,361.78 $31,860.00 $100,411.78 Receipts
Less Report 0.00 0.00 0.00 0.00 Gross Receipt
Unreported 14,190.00 54,361.78 31,860.00 100,411.78 Revenues
Roll-off fees 2,554.20 9,785.12 5,734.80 18,074.12 due
Interest 405.51 944.65 191.85 1,542.01
Late fees 150.00 600.00 300.00 1,050.00
Total Due $3,109.71 $11,329.77 $6,226.65 $20,666.13
2. Finding -Required Reporling
Garbageman.com did not submit the following documents in accordance with the listed City
Code sections during the audit period:
Section 90-278 (3) states" The licensed Roll-off waste contractor shalt 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." Garbageman.com 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. However, a listing of
customer names was provided during the audit.
Recommendation(s)
Garbageman.com must remit the amount of $20,666.13 for franchise fees relating to the unreported
gross receipts. Going forward, monthly reports with supporting revenues earned should be filed on
a monthly basis. If Garbageman.com continues not to pay the City of Miami Beach the franchise
fees collected from service addresses within the City, it may result in the termination of their
Business Tax Receipt. In addition, Garbageman.com must comply with the designated sections of
the City Codes by submitting reports to the City Manager and Sanitation Director listing of accounts
on an annual basis.
Page 3 of 4
Internal Audit Report
G7 Holdings Inc. D/B/A Garbageman.com
August 27, 2015
EXIT CONFERENCE
Audit findings were e-mailed on August 21, 2015 to Mr. Greg Davis (Garbageman.com). We
communicated with Mr. Davis on August 24, 2015 and he concurred with the audit assessment.
JJS: CD
Audit performed by Carmin Dufour
F:\obpi\$AUD\DOC014-15\REPORTS-G7 HOLDINGS D/B/A GARBAGEMAN.COM. AUDIT FINAL REPORT.doc
cc: Eric Carpenter, Director of Public Works
Alberto Zamora, Sanitation Director
Patricia Walker, Chief Financial Officer
Greg Davis, G7 Holdings, Inc. D/B/A Garbageman.com (Owner)
Page 4 of 4