OIG No. 20-02: Follow-Up Review of the State Beachfront Management Agreement, No. 3595TO:
FROM:
Joseph M. Centorino, Inspector General
Honorable Mayor and Members of th
Joseph Centorino, Inspector General
ission
DATE: February 12, 2020
FOLLOW-UP REVIEW
SUBJECT: Follow-Up Review of the State Beach ont Management Agreement (No. 3595) Audit
OIG Audit No. 20-02 (Follow-up Review)
PERIOD: October 1, 2017 through September 30, 2018 (Sand Tax Payments)
October 1, 2018 through September 30, 2019 (Beachfront Concession Fees)
Attached is a summary of the status of recommendations as determined from our follow-up
review of our audit report entitled State Beachfront Management Agreement (No. 3595) audit
previously issued on December 5, 2019 covering October 1, 2018 through September 30, 2018
for sand tax payments and October 1, 2018 through September 30, 2019 for beachfront
concession fees.
RESULTS:
Of the nine (9) findings contained in the report that required corrective action by a City
department/division, based upon management responses, eight (8) recommendations were fully
implemented and one (1) recommendation was partially implemented as shown in Exhibit A
located at the end of this report. It is recommended that the Office of Real Estate continue to
address the one item (finding number 4) which is still open. Office of the Inspector General staff
will verify the statuses listed by the City departments/divisions management as part of the next
annual State Beachfront Management Agreement audit to be performed during the 2019/20 fiscal
year.
STATUS DEFINED:
The statuses of the findings used in our follow-up review are defined as follows:
• "Not implemented" means that the applicable parties have not taken any corrective action
since the completion of the original audit to decrease the likelihood that the noted deficiency
may continue to occur.
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Internal Audit Report
Follow-Up Review of the State Beachfront Management Agreement (No. 3595) Audit
February 12, 2020
• "Partially implemented" means that the applicable parties have taken some steps to remedy
the shortcoming, but additional ones are necessary to further reduce the associated risk to
more acceptable levels.
• "Fully implemented" means that the applicable parties have taken the necessary actions to
provide reasonable assurance that the aforementioned deficiency will not continue to occur.
• "No longer applicable" means that the circumstances have changed since the completion of
the original audit (new technology implemented, new agreements reached, new vendors
providing the stated service, etc.) thereby making the listed recommendation inapplicable to
existing circumstances.
F:\OBPI\$01G\INTERNAL AUDIT FILES\DOC18-19\FOLLOW-UP AUDITS\Followup Review Memo-State Beachfront Management
Agreement.docx
cc: Jimmy Morales, City Manager
Mark Taxis, Assistant City Manager
Eric Carpenter, Assistant City Manager
Marcia Monserrat, Chief of Staff
Matt Kenny, Tourism and Culture Department Director
Bo Martinez, Economic Development Department Director
Mark Milisits, Division Director, Office of Real Estate
John Woodruff, Chief Financial Officer
OFFICE OF THE INSPECTOR GENERAL, City of Miami Beach
1130 Washington Avenue, 61h Floor, Miami Beach, FL 33139
Tel: 305.673.7020 • Fax: 305.587.2401 • Hotline: 786.897.11 1 1
Email: CityofMiamiBeachOIG@miamibeachfl.gov
Website: www. mbinspectorgeneral.com
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Internal Audit Report
Follow-Up Review of the State Beachfront Management Agreement (No. 3595) Audit
February 12, 2020
EXHIBIT A
Audit #20-02
Audit Name State Beachfront Management Agreement (No. 3595)
Audit Period 10/01/17 - 09/30/18 (Sand Tax Payments)
10/01/18 - 09/30/19 (Beachfront Concession Fees)
Report Date December 5, 2019
Implementation Status: Not Implemented, Partially Implemented, Fully Implemented or No Longer Applicable
Audit
Finding #
Report
Page #Responsible Party (Auditees)Audit Finding
Implementation Status per
Auditee Auditee Comments
1 3 Finance Department The State of Florida was Inadvertently overpaid by $2,363.94 in sand
tax during the audit period due to incorrect general ledger entries.
Fully Implemented Additional analysis concluded that the payment to the State of Florida should be
reduced by $2,260.50 instead of $2,363.94, which was included in the 10/2019
remittance. See item A below for detail breakdown.
1 3 Office of Real Estate The State of Florida was Inadvertently overpaid by $2,363.94 in sand
tax during the audit period due to incorrect general ledger entries.
Fully Implemented The Office of Real Estate submitted the necessary journal entries to adjust the
$226.58 underpayment and the $2,097.70 overpayment on 09/09/19.
1 3 Tourism and Culture Department The State of Florida was Inadvertently overpaid by $2,363.94 in sand
tax during the audit period due to incorrect general ledger entries.
Fully Implemented As stated in the memo response, TCD conducts an internal quarterly audit and had
already submitted Journal Entries to correct in May '19 prior to the City Audit. It was
still a finding, because although TCD had submitted Journal Entries to Finance in May-
it had still not been done by Finance when this Audit was done.
2 6 Finance Department Beachfront upland fees of $7,051.00 were not properly billed based on
a comparison with the signed beachfront concession letter agreements.
Fully Implemented Shelbourne & Four Points Sheraton Hotels was billed, $6,072 and $1,100 respectively
for a total of $7,051.00 on september 9th, 2019.
2 6 Office of Real Estate Beachfront upland fees of $7,051.00 were not properly billed based on
a comparison with the signed beachfront concession letter agreements.
Fully Implemented Non-Upland Mondrian was not included on the orginal master summary and has
since been added as a Non-Upland property to the Shelborne Hotel's permit including
the corresponding fee of $6,072.00.
3 8 Finance Department Beachfront concession permit fees were incorrectly charged resulting in
one (1) entity being overbilled by a total of $810.00.
Fully Implemented The overbilling invoice was reversed and all related accounts were automatically
adjusted. The credit was applied to the Shore Club UB account # 512946-00 on
9/12/2019.
4 9 Office of Real Estate The tested Boucher Brothers Inc.'s 21st and 46th Street concession
payments were not properly distributed among the City's general ledger
accounts by the Office of Real Estate and they were not calculated in
accordance with Section 4.2 of the concession agreement's terms,
resulting in a $72,151.72 (excluding state sales tax) underbilling by the
City of Miami Beach and a $13,470.94 sand tax underpayment to the
State of Florida's Department of Environmental Protection.
Partially Implemented The Administration is preparing an item to present to the City Commission regarding
the interpretation of Section 4.2 of the agreement, which accounts for $56,000 of the
72,151.72 amount identified by Internal Audit. Of the remaining $16,151.72,
concessionaire had already paid $8,953.27. The remaining amount of $7,198.45 was
billed and paid in September 2019 with the corresponding amount applied to sand
tax.
5 14 Office of Real Estate Penrod Brothers Inc. incorrectly reported food & beverage sales to the
City resulting in a net $113.56 overpayment to the State of Florida's
Department of Environmental Protection.
Fully Implemented Prior to receiving OIG's findings, the Office of Real Estate had identified the
duplicative reporting and requested corrected sales reports from Penrods on
06/06/19. The Office of Real Estate requested the supporting documentation be
provided with the monthly payments and Penrods has been including such
documentation since July 2019. The Office of Real Estate submitted the necessary
journal entry to adjust the sand tax amount of $113.56 on 09/09/19.
6 14 Office of Real Estate The Office of Real Estate did not include sand tax on the additional
lump-sum amount remitted by Penrod Brothers Inc. needed to meet the
minimum guarantee resulting in a $555.25 underpayment to the State of
Florida's Department of Environmental Protection.
Fully Implemented The Office of Real Estate submitted the necessary journal entry to adjust the sand tax
amount of $555.25 on 09/09/19.