SOLID WASTE DIVISION ROLL-OFF AUDIT

Transcription

1 SOLID WASTE DIVISION ROLL-OFF AUDIT Exit Conference Date: July 6, 2017 Release Date: July 26, 2017 Report No R City of Orlando Office of Audit Services and Management Support George J. McGowan, CPA Director Sheila Jones Senior Auditor Joanne Cambridge, CIA Senior Auditor

2 TABLE OF CONTENTS MEMORANDUM OF TRANSMITTAL... 3 SUMMARY OF RECOMMENDATIONS, MANAGEMENT RESPONSES AND ACTION PLAN ISSUES, RECOMMENDATIONS AND MANAGEMENT ACTIONS... 7 ISSUES AND RECOMMENDATIONS... 9 FULLY DOCUMENT EACH ROLL-OFF PULL... 9 REVIEW SUPPORTING DOCUMENTATION FOR ACCURACY AND COMPLETENESS CONDUCT DUE DILIGENCE REVIEW ON SERVICE AGREEMENTS... 12

3 MEMORANDUM OF TRANSMITTAL To: Michael Carroll, Solid Waste Division Manager From: George J. McGowan, CPA Director, Office of Audit Services and Management Support Dates: Exit Conference: July 6, 2017 Release: July 26, 2017 Subject: Solid Waste Division Roll-Off Audit (Report No R) We have completed the franchise fee audit of the City of Orlando s Solid Waste Division for the period January 1, 2013 through December 31, We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objective. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objective. The objective of our audit was to determine compliance with the City s Franchise Ordinance, specifically regarding whether: 1. Customer accounts within the City limits were properly coded to identify revenue due to the City. 2. The proper number of City-related roll-off pulls was correctly reported to the City and the correct fee of $25 per roll-off pull was remitted to the City. 3. Copies of service agreements/contracts of all customers of the Solid Waste Division were accurate and complete. Based on our review and testing, the Solid Waste Division has correctly reported and paid the City of Orlando general fund for the roll-off services performed during the above mentioned audit period. We offer a few recommendations for improving the administrative processes of the Division. The following report contains the issues identified during the audit, recommendations for improvement and management s replies regarding actions taken/planned to be taken with respect to the identified issues. We appreciate the cooperation and courtesies extended by the staff of the Solid Waste Division during the course of this audit. GJM/JC c: Mary Anne Gauvin, Public Works Billing Supervisor Jody Litchford, Deputy City Attorney Michael O Dowd, Assistant City Attorney Charles Wade, Solid Waste Assistant Division Manager

4 SUMMARY OF RECOMMENDATIONS, MANAGEMENT RESPONSES AND ACTION PLAN MANAGEMENT RESPONSE & ACTION PLAN # RECOMMENDATIONS CONCUR PARTIALLY CONCUR DO NOT CONCUR ACTION PLAN TARGET DATE 1. The Solid Waste Division should develop a process to fully document each roll-off pull so that a record exists of the details of each transaction. Current records are kept manually and that system should be replaced by the PWK software project in 2018 and improve accuracy. Routing software will also greatly improve accuracy of records. FY2018 with TM support 2. The Solid Waste Division should develop a process to ensure supporting documentation used to develop the monthly reporting are accurate, complete and in compliance with City Ordinance. Current manual system is fairly accurate, however, Solid Waste routing software will greatly improve accuracy of records. FY2018 Page 4

5 MANAGEMENT RESPONSE & ACTION PLAN # RECOMMENDATIONS CONCUR PARTIALLY CONCUR DO NOT CONCUR ACTION PLAN TARGET DATE 3. The Solid Waste Division should implement an automated system to facilitate proper documentation and record storage to reduce errors and provide details for each transaction. Strongly concur that the manual system is outdated and should be modernized. PWK customer service software project should address this need. FY The Solid Waste Division should ensure service agreements are properly executed by conducting a due diligence review for accuracy and correctness. Accuracy can be improved. 1/1/18 Page 5

6 ISSUES, RECOMMENDATIONS AND MANAGEMENT ACTIONS

7 ISSUES, RECOMMENDATIONS AND MANAGEMENT ACTIONS BACKGROUND The Solid Waste (SW) Division of the City of Orlando provides refuse collection and disposal service for residential garbage, recycling and yard waste and commercial solid waste. These services are offered to households and businesses located within the City limits of Orlando. Customers who have chosen to use the City of Orlando for their SW collections are required to sign a service agreement with the SW Division. The Solid Waste Division complies with the City Franchise Ordinance by paying the City s general fund a fee of $25.00 for all roll-off pulls with contracted customers. They also grant and monitor franchisee agreements with outside entities who conduct roll-off services to City residents according to the entity s franchise agreement and City Code Chapter 28. The Solid Waste Division generates approximately $3.4 million dollars in revenue each year to the City s general fund and is subject to the same ordinance as all other franchise haulers with the City of Orlando. The Office of Audit Services and Management Support performed a roll-off audit of the processes and controls of the City s Solid Waste Division similar to the roll-off audits we conduct with businesses that have a franchise fee agreement to provide roll-off service to customers in the City. OBJECTIVES AND SCOPE The audit objectives were to ensure compliance with the City Franchise Ordinance related to customer contract accounts reflecting proper City coding, complete and accurate recordkeeping and reporting the proper number of container pick-ups with correct remittance in a timely manner. Page 7

8 The scope of this audit focused on monthly pull remittance reporting associated with roll-off truck activities in the City between January 1, 2013 and December 31, The testing performed to determine if the SW Division was compliant with regards to the service agreement contracts was reduced to 4 months out of the 36 month audit period due to the volume of data that had to be reviewed. These months were haphazardly selected by Audit Services. METHODOLOGY We determined whether the customer list accurately captured residences and businesses located within the City limits of Orlando. We also interviewed various personnel to gain an understanding of the Division s processes for developing and executing roll-off service agreements. The specific areas we tested were: Compliance with City jurisdiction rules Pull reporting accuracy Recordkeeping completeness (work orders and dump tickets) Service agreement compliance and completeness RESULTS The Solid Waste Division has correctly reported and paid the City of Orlando general fund for the roll-off services it provided during the audit period. As a result of our review, we have also identified opportunities to improve the administrative processes of the Solid Waste Division. Page 8

9 ISSUES AND RECOMMENDATIONS Fully document each roll-off pull We could not determine whether some work order requests were properly executed and reported on the monthly Franchise Fee Statement. There were some work order numbers, dump ticket numbers and dump ticket dates that were not listed on the monthly Franchise Fee Statement report. These included but are not limited to a large number of work orders for service at 55 W. Pine Street and 60 N. Court Street. Per City Franchise Ordinance, a $25 pull fee must be remitted to the City of Orlando for pulls for roll-off service other than those classified as clean concrete or cardboard and should be reported on the monthly Franchise Fee Statement report. The Solid Waste Accounting Specialist explained that there are multiple pulls (container pick-ups) in any given month for the service locations mentioned above, and as such, the service is reported as a sum of the number of pulls each month rather than recording each individual work order and dump ticket number. She further explained that some work order requests have future service dates (one or two months in advance) and the corresponding pulls will be reported in the month of the future service date. Based on her explanation, in addition to examining the monthly Franchise Fee Statements for January 2013 through December 2016, we extended our review into January and February 2017 but had no success obtaining evidence that work orders for the addresses above were executed. Page 9

10 Recommendation 1 Management Response We recommend that the Solid Waste Division develop a process to fully document each roll-off pull so that a record exists of the details for each transaction. Concur. Current records are kept manually and that system should be replaced by the PWK software project in 2018 and improve accuracy. Routing software will also greatly improve accuracy of records. Review supporting documentation for accuracy and completeness We reviewed service agreements, work orders, and dump tickets for the months of March 2013, May 2014, July 2015 and November 2016 to determine whether the monthly pull reporting was accurate. Our review revealed several recordkeeping issues that we believe could have had a significant impact on the monthly pull reporting. They are as follows: Eighty-five instances where addresses on work orders did not agree with the address on the Monthly Franchise Fee Statement. Ten instances where the date on the dump ticket did not agree with the date on the Franchise Fee Statement report. We were informed that these were typographical errors. Two instances where the Work order numbers on the Franchise Fee Statement was incorrect. One hundred and seventy-five instances where the service agreement was incomplete. There was no selection for Page 10

11 number of dumps required per week or if service was based on calls. The Accounting Specialist stated that if there is no selection it should be treated as an on-call service but this was not documented on the agreements we reviewed. Forty-eight instances where pulls did not have a corresponding service agreement. The Accounting Specialist stated that these are in-house dumps related to Service Agreement Solid Waste, therefore no contract is needed. However, ASMS noted a discrepancy with this explanation, as we observed another service agreement with Solid Waste with an effective date of 5/28/15. Seventeen instances where the dump ticket did not have a work order attached. The Accounting Specialist stated it's not necessary. These dumps were related to service agreement Solid Waste. Fifteen instances where the documents were either coded and/or filed incorrectly. Overall, we found that the instances noted in the sections above can be corrected most efficiently by automating several currently manual processes. We suggest that the Solid Waste Division investigate possible automated solutions to their internal management of their roll-off customers and the associated documentation required by the City Ordinance governing the provision of roll-off services to the public. Page 11

12 Recommendation 2 Management Response We recommend that Solid Waste Division develop a process to ensure supporting documentation used to develop monthly reporting of pulls are accurate, complete and in compliance with City Ordinance. Concur. Current manual system is fairly accurate, however, Solid Waste routing software will greatly improve accuracy of records. Recommendation 3 We recommend that Solid Waste Division implement an automated system to facilitate proper documentation and record storage to reduce errors and provide details for all roll off transactions (i.e. service agreements, work orders and dump ticket tracking and storage). Management Response Concur. Strongly concur that the manual system is outdated and should be modernized. PWK customer service software project should address this need. Conduct due diligence review on service agreements We noticed that some service agreements did not appear to be accurately prepared. For example, service agreement held with Federal Express did not have an effective date, service agreement with the City of Orlando s Solid Waste Division had an effective date of 5/25/15 but the dates of service were in March Service agreement , held with the Department of Veterans Affairs had a service term of 5 pick- ups weekly, however the monthly Franchise Fee Statement report revealed that Page 12

13 on average 3 pick-ups were conducted weekly during the month of February Recommendation 4 We recommend that the Solid Waste Division ensure service agreements are properly executed by conducting a due diligence review for accuracy and correctness. Management Response Concur. Accuracy can be improved. Page 13