Eastern Waste Systems Inc.MIAMJBEACH
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division
TO: Jimmy Morales, City Manager
INTERNAL AUDIT REPORT
VIA:
FROM:
Cintya Ramos, Budget and Performance Improvement Director Cf-
James J. Sutter, Internal Audito~
September 6, 2016 ( / r DATE:
AUDIT: Eastern Waste Systems, Inc.
PERIOD: August 2013 to July 2016
This report is the result of a scheduled audit of the Roll-off Fee Returns for Eastern Waste System, Inc.
(Eastern Waste)
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.
Eastern Waste has been in business since 2003. The majority line of their business is the waste
removal services. Eastern Waste most frequently used method, involves the loading of construction
debris with a claw directly from a pile into an attached container truck.
Approximately twenty two 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 18% 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.
Effective October 1, 2008 the ordinance requires that contractors having an annual gross receipts
reported to the City over $200,000 shall, on or before 60 days following the close of their fiscal year,
deliver to the Finance Department a statement of 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.
BACKGROUND
Previously, Internal Audit conducted an audit of Eastern Waste for period of April201 0 to July 2013. A
review of the company's invoices showed that Eastern Waste collected an additional amount of gross
receipts for the amount of $17,109.50 which was not reported due to a reporting error. As a result,
Eastern Waste paid $3,866.09 immediately to the City.
We are committed to providing excellent public servtce and safety to all who live, work, and play in our vibrant, tropical, historic community.
Internal Audit Report
Eastern Waste System, Inc.
September 6, 2016
OVERALL OPINION
A review of the company's invoices showed that franchise fees were charged and collected throughout
the audit period. The following table summarizes the audited gross receipts from roll-off services:
20013 2014 2015 2016 TOTAL Aug-Dec. Jan-Dec. Jan-Dec. Jan-Jul.
Audited $594,914.50 $2,157,617.71 $2,544,287.79 $745,766.68 $6,042,586.68 Receipts
Roll-Off
Fees Due $107,084.61 $388,371.19 $457,971.80 $134,238.00 $1 ,087,665.60 (18%)
Eastern Waste has generally complied with the provisions of the City Code's during the audit period.
However, there are two findings relating to not reporting current list of accounts and providing annual
statement of gross receipts certified by an independent certified public accountant.
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.
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Internal Audit Report
Eastern Waste System, Inc.
September 6, 2016
FINDINGS, RECOMMENDATIONS AND MANAGEMENT RESPONSES
Finding-Required Reporting
Eastern Waste did not submit the following documents in accordance with the listed City Code sections
during the audit period:
a. 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 seNice, the permit number and capacity of each Roll off container or
construction dumpster as per account and the address seNiced by each Roll off container
or construction dumpster." Eastern Waste 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.
b. 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". Eastern Waste
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. Effective October 1, 2008 the ordinance requires that contractors having
an annual gross receipts reported to the City over $200,000 shall, on or before 60 days following
the close of their fiscal year, deliver to the Finance Department a statement of 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. For the calendar
year 2013, 2014, 2015 and 2016. Eastern Waste exceeded the threshold amount for requiring
certified statements of gross receipt. However, CPA statements were provided during the audit.
Recommendation (s)
Eastern Waste must comply with the designated sections of the City Codes by submitting reports to
the City Manager and Sanitation Director listing of accounts and certified annual statements of gross
receipts for the year exceeding the reported threshold.
EXIT CONFERENCE
Audit findings were e-mailed on September 1, 2016 to Eastern Waste. We confirmed their agreement to
our finding.
JJS: CD
Audit performed by Carmin Dufour
F:\obpi\$AUD\DOC015-16\ FINAL REPORT EASTERN WASTE.doc
cc: Eric Carpenter, Director of Public Works
Alberto Zamora, Sanitation Director
Allison Williams, Chief Financial Officer
Cary Salero, Comptroller for Eastern Waste
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