Auditors took inventory of carts in this Charlotte County, Fla., neighborhood. The full audit took several months because auditors had to pull together different types of data. Photo: SCS Engineers
- Selection of a random three-month sample of monthly statements of fees payable submitted to the city by Consolidated
- A 15% sample of commercial bin service accounts
- A sample of the 100 largest multifamily accounts.
The auditor's aim: to verify supporting documents and schedules from Consolidated. The first test ensured source documents supported the monthly statements. The second test used account information maintained in Consolidated's customer database through the performance of selected site inspections to document service levels. Lastly, the consultant reviewed Redondo Beach City Planning Agency records and contacted customers to identify differences with the company's customer database.
The audit revealed a number of important findings. Records for the commercial and multifamily accounts revealed that 14.3% of the 83 sampled accounts were billed incorrectly, of which 12% were under billed and 2.4% were over billed. Collectively, the 83 accounts were incorrectly billed by 10.9%.
The estimated annualized error was $94,828, calculated by applying this error rate from the sample. They mostly found container errors—when the size of the containers in the field did not agree with the quantity and size of containers billed.
The auditor's review of the customer billing records also noted a minor error in the customer billing rate for administrative fees due the city. Consolidated had billed each customer at a rate of 1.71% for administrative fees rather than the rate of 1.70% as noted in the agreement. A software glitch in the billing program developed by Consolidated's main headquarters caused this error. They corrected it in a revised billing schedule and issued customer reimbursements for overcharges.
Lastly, the review of the monthly statements and multifamily accounts indicated that there were minor inconsistencies in revenues and house counts resulting in the franchisee overpaying recycling revenues to the city by about $2000.
Redondo Beach used this “extra” money to pay for the cost of recycling services and household hazardous waste disposal.Inconsistent Reporting
In Marion County, Fla., each franchisee collecting commercial and construction and demolition debris must remit a fee Call Jan Gurath at 773-824-2449 to place your classified ad in Public Works Magazine or on www.pwmag.com of 10% of gross receipts to the county quarterly for services rendered to these customers. Pursuant to the county code, the county engaged a consultant to conduct an independent audit to ensure that their 22 franchisees complied with the requirements of the franchise and remitted the proper solid waste franchise fee to the county.
The objectives: to validate the franchisees' records and whether reasonable adjustments could be made based on solid waste industry standards.
As expected, the typical business practices of customer service, recordkeeping, billing software, and reporting varied dramatically from business to business, making the audit complex. Some firms used tailored financial software with online access while others used accounting software programs like Quicken, QuickBooks, customized templates using Microsoft Access or Excel, or manual data-entry forms.
The results of this six-month audit, completed in June, suggests that the definition of gross receipts varied, and as a consequence, affected the total fees remitted to the county. For example, some haulers billed their customers the 10% franchise fee for all services, while others did not include items such as fuel adjustments charges, or fees for replacement of roll-off boxes on a jobsite. Others remitted only those franchise fees paid by their customers, not all gross receipts billed to their customers.