Hurricane Waste ServicesMIAMI BEACH
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division INTERNAL AUDIT REPORT
TO:
VIA:
FROM:
DATE:
Jorge M. Gonzalez, City Manager ,Q.,
Kathie G. Brooks, Budget and ~erfor .nee Improvement Director 1~
James J. Sutter, Internal Auditor . ~
December 31, 2009
AUDIT:
PERIOD:
Hurricane Waste Services, Inc. (Hurricane Waste)
July 2007 to September 2009
This report is the result of a scheduled audit of the Roll-off Fee Returns for Hurricane Waste,
Inc.
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 thirty companies currently possess business tax receipt 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 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. Effective October 2008 the Roll-off franchise
fee was increased from 16% to18%.
Hurricane Waste has been operating in the City of Miami Beach since December 2007. Their
line of business is the rental of roll-off containers.
OVERALL OPINION
Hurricane Waste has not fully complied with the City Codes as it relates to reporting
requirements for Roll-off contractors. The following items were noted during our audit.
• Gross receipts in the amount of $18,974.94 were not reported resulting in the owing of
$3,861.14 in delinquent roll-off franchise fees (including interest and late filing charges)
to the City.
• Hurricane Waste has submitted the certificate of liability insurance.
• Hurricane Waste has not filed list of accounts upon renewal. A listing of accounts was
provided during the audit.
vVe we commilfed to providing excellent public se1vico ondsofety to oil who live, wmk, ond ploy in our vibront, tropicol, historic community.
Internal Audit Report
Hurricane Waste Services Inc.
December 31, 2009
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 and overload should be included in
reported gross receipts.
Out of 26 months audited gross receipts, Hurricane Waste under reported gross receipts
returns to the City of Miami Beach resulting in $18,974.94 of unreported gross receipts
and did not file returns for a period of 8 months (Feb 2009 to September 2009). In
addition, as of October 2008 the roll-off franchise fee was increased from 16% to 18%
and the 2% was not paid. As a result, the amount of $3,552.31 in franchise fees for roll-
off waste removal services within the city limits was not reported. Therefore, Hurricane
Waste is not in compliance with the City Code.
Page 2 of 4
Internal Audit Report
Hurricane Waste Services Inc.
December 31, 2009
The following table summarizes audited gross receipts and the amount due from
Hurricane Waste for our audit period:
2007 2008 2009 TOTAL
(Aug-Dec.) (Jan-Dec.) (Jan-Sept.)
Audited Gross Receipts $9,770.00 $44,527.00 $13,974.00 $68,271.00
Less Report Gross (5,350.00) (41,846.06) (2,100.00) (49,296.06) Receipt
Unreported Revenues 4,420.00 2,680.94 11,874.00 18,974.94
Roll-off fees due 707.20 665.79 2,179.32 3,552.31
Interest 0.00 0.00 58.83 58.83
Late Filing 0.00 0.00 250.00 250.00
Total Due $707.20 $665.79 $2,488.15 $3,861.14
Footnotes: On October, 2008 as required pursuant to section 90-278 of the City
Code, the franchise fee paid to the city by its franchise waste contractors was raised
from 16% of the franchisee's total monthly gross receipts for waste removal in
the City, to 18% of said gross receipts.
Recommendation(s)
Hurricane Waste should remit the amount of $3,861.14. All subsequent roll-off fee
return should be filed in a timely manner and remit any franchise tax due.
2. Finding -Required Reporting
Hurricane 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 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." Hurricane 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. City Code Section 90 -196 lists the insurance coverage that must be maintained by
Roll-off waste contractors. Hurricane Waste provided proof of the required insurance
during the audit.
Recommendation(s)
Hurricane Waste must comply with the designated sections of the City Codes by
submitting a list of accounts annually and insurance.
Page 3 of 4
Internal Audit Report
Hurricane Waste Services Inc.
December 31, 2009
EXIT CONFERENCE
Audit findings were e-mailed on 12/07/2009 to Hurricane Waste Services, Inc. We confirmed
their agreement to our findings on 12/30/2009.
JJS: CD
Audit performed by Carmin Dufour
F:\obpi\$AUD\DOC09-10\REPORTS-AUDIT FINAL REPORT\HURRICANE WASTE.doc
cc: Fred Beckmann, Public Works Director
Alberto Zamora, Sanitation Director
Patricia Walker, Chief Financial Officer
Sam Lobue, (Officer/Director for Hurricane Waste Services, Inc.)
Leslie J. Freedman, (CPA for Hurricane Waste Services, Inc.)
Page 4 of 4