General Hauling Service Inc.MIAMI BEACH
BUDGET AND PERFORMANCE IMPROVEMENT INTERNAL AUDIT REPORT Internal Audit Division
TO: Jorge M. Gonzalez, City Manager ~
VIA: Kathie G. Brooks, Budget and Pe~~~e Improvement Director 1j:V
FROM: James J. Sutter, Internal Auditorip
DATE: February 18, 2009
AUDIT: General Hauling Service, Inc.
PERIOD: January 2006 to August 2008
This report is the result of a scheduled audit of the Roll-off Fee Returns for General Hauling
Services, 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 occupational licenses 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 16% of Miami Beach gross receipts to the
City's Finance Department by the end of the subsequent month, filing various reports, and
maintaining sufficient insurance.
General Hauling's provides roll-off waste services and have been in South Florida since 1945. Their
roll-off service includes delivery, hauling to the disposal site and the disposal of construction debris
at a licensed facility.
OVERALL OPINION
General Hauling has not fully complied with certain provisions of the City Code's during the audit.
As a result, some gross receipts were not reported and the franchise fees were not paid to the City.
The following items were noted during audit:
• Gross receipts in the amount of $137,048.88 were not reported resulting in $25,244.10 in
franchise fees and interest due to the City. The majority (92%) of this underreporting was
attributed to miscoding to other municipalities. General Hauling has changed their
procedures to prevent miscoding errors attributed to corporate billings.
• General Hauling has not filed a list of accounts upon renewal and the required CPA
statement of gross receipts. A listing of accounts was provided during the audit.
• General Hauling has submitted the certificate of liability insurance.
Internal Audit Report
General Hauling Services, Inc.
February 18, 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 fimely and accurately recorded by
the City, and the contractor was in compliance with designated sections of the City Code and related
Ordinances.
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 debris pickup on-
construction load, delivery charges, fuel surcharges, dry run and overload should be
included in reported gross receipts.
Out of $385,914.19 audited gross receipts, General Hauling paid the City of Miami Beach
$39,818.45 in franchise fees for $248,865.31 in reported gross receipts. General Hauling
collected an additional $137,048.88 in gross receipts for roll-off waste removal services
within the city limits and did not report these amounts in compliance with the City Code.
Initial confirmations with General Hauling's customers indicated that several invoices were
not included in their returns submitted to the City. Our results were submitted to General
Hauling's outside accountants who subsequently informed us that $125,348.88 (92%)were
miscoded to other municipalities using a corporate billing address outside of Miami Beach
rather than the service location address. As a result, franchise fees were incorrectly remitted
to other municipalities rather than to the City of Miami Beach. We were able to verify these
miscoding errors. The miscoding errors examined were inadvertently reported and paid to
the City of Miami (22%) of such monthly gross receipt as a regulatory permit fee as opposed
to remitting the City of Miami Beach's 16% franchise roll-off fee rate.
Their outside accountants performed an internal review and discovered two additional
accounts miscoded totaling $13,250 in gross receipts that were not reported to the City of
Miami Beach. We have included these additional amounts below that were not paid to the
City. We reviewed additional accounts and determined that they were correctly coded to the
City of Miami Beach.
The following table summarizes the amount due from General Hauling for our audit period:
2006 2007 2008 TOTAL
(Jan to Aug)
Audited Gross Receipts $147,340.50 $155,027.40 $83,546.29 $385,914.19
Less Report Gross 102,717.74 87,392.40 58,755.17 248,865.31 ReceiQt
Unreported Revenues 44,622.76 $67,635.00 $24,791.12 137,048.88
Roll-off fees due 7,139.64 10,821.60 3,966.58 $21,927.82
Interest 1,623.89 1,424.66 267.73 3,316.28
Total Due $8,763.53 $12,246.26 $4,234.31 $25,244.10
Page 2 of 4
Internal Audit Report
General Hauling Services, Inc.
February 18, 2009
During the course of our audit, General Hauling remitted the above amount to the City and
effective January 2009 changed their procedures to ensure that miscoding errors do notre-
occur by not permitting corporate billing.
Recommendation(s)
We recommend that the company continue to monitor the effectiveness of their procedural
change to ensure the proper coding of municipalities.
2. Finding-Required Reporting
General Hauling 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." General Hauling 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'. General Hauling did not provide a statement of its annual gross
receipts generated from accounts within the city certified by an independent public
accountant during the audit period. The waste contractor agreed to provide the annual
CPA statement going forward.
c. City Code Section 90 -196 lists the insurance coverage that must be maintained by Roll-
off waste contractors. General Hauling provided proof of the required insurance during
the audit.
Recommendation(s)
General Hauling must comply with the designated sections of the City Codes and submit
lists of accounts and certified statements of gross receipts annually.
EXIT CONFERENCE
The results of our audit were forwarded to General Hauling's accountants (Berkowitz Dick Pollack &
Brant) to present to their client. General Hauling concurred with our findings and paid the audit
assessment. In their response, they stated that procedures have been changed effective January
2009 to ensure that miscoding errors do not re-occur.
Page 3 of 4
Internal Audit Report
General Hauling Services, Inc.
February 18, 2009
JJS: CD
Audit performed by Carmin Dufour
F:\obpi\$AUD\DOC08-09\REPORTS-FINAL\GENERAL HAULING.doc
cc: Robert Middaugh, Interim Public Works Director
Alberto Zamora, Sanitation Director
Patricia Walker, Chief Financial Officer
Zachary Bush, General Hauling
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