THEODORE P.

GUBA, CPA, CIA, CFE Telephone (305) 416-2044

INDEPENDENT AUDITOR GENERAL E-Mail: [email protected]

September 29, 2016

Honorable Members of the City Commission

City of Miami
3500 Pan American Drive
Coconut Grove, FL 33133-5504

Re: Audit of Off-Duty Police Employment Activities

Report No. 16-10

Executive Summary

We have completed an audit of off-duty police employment activities. Our audit covered the period
primarily from October 1, 2013 through June 30, 2015.

The audit was performed to determine whether the City of Miami (City) is collecting accurate surcharge
fees in accordance with Section 42-8 of the City Code, in exchange for providing Miami Police
Department (MPD) off-duty police services. Fees collected during our scope period approximated $2.2
million while compensation paid to officers for off-duty employment activities totaled $24.8 million.

We also conducted an examination to determine the existence and effectiveness of internal control
policies and procedures regarding the Miami Police Special Event Services Office (PSES) management
of off-duty police operations, which includes recording, scheduling, planning, and processing off-duty
services for special events, special taxing districts, permanent jobs, and temporary jobs; additionally,
we reviewed the processing of payroll information with certain vendors and the management of off-duty
service surcharge billings and collections.

Based on the results of our audit, we noted the following:

1. Maximum Allowable Off-Duty Hours were being Exceeded.
2. PSES Office Lacks Policies and Procedures that Place Limitations on the Number of Jobs
Officers can Coordinate.
3. Officers Apparently Worked at Ranks above their Official Rank due to Possible Input Errors.
4. Erroneously Recorded Hours in the Off-Duty Trak System were Billed to Clients.
5. Off-Duty Surcharges and Fees Billed to Customers are Significantly Overdue.
6. Surcharge Fee Increase Effective June 2016 Was Not Approved By the City Commission.

In addition, we recommended that management: 7) Centralize Accounting for Off-Duty Hours and
Compensation Payments to Officers as well as for Billings and Collections of Surcharge Fees.

OFFICE OF INDEPENDENT AUDITOR GENERAL, 444 S.W. 2ND AVENUE, 7th Floor, MIAMI, FLORIDA 33130-1910
These and other findings are included on pages 6 through 13 of the report.

We wish to express our appreciation for the cooperation and courtesies extended to us by all City
personnel while conducting this audit.

Sincerely,

Theodore P. Guba, CPA, CIA, CFE

Independent Auditor General
Office of the Independent Auditor General

cc: The Honorable Mayor Tomas Regalado

Daniel J. Alfonso, City Manager
Victoria Mendez, City Attorney
George Wysong, Assistant City Attorney
Todd Hannon, City Clerk
Alberto Parjus, Assistant City Manager
Fernando Casamayor, Assistant City Manager/Chief Financial Officer
Nzeribe Ihekwaba, Assistant City Manager/Chief of Operations
Rodolfo Llanes, Chief, Miami Police Department
Jorge Gomez, Assistant Chief, Miami Police Department
Alberto Alberto, Jr., Major, Miami Police Department
Joel Gonzalez, Lieutenant, Miami Police Department
Michelle Choi, Budget and Finance Manager, Miami Police Department
Lidia Aguirre, Senior Accountant, Miami Police Department
Christopher Rose, Director, Office of Management and Budget
Jose M. Fernandez, Director, Finance Department
Armando Blanco, Treasurer, Finance Department
Kevin Burns, Director and Chief Information Officer, Information Technology Department
Demetrio Constantiny, Accounts Receivable Supervisor, Finance Department
Members of the Audit Advisory Committee
Audit Documentation File

Audit conducted by: Marcus Cabral, CPA, CISA, Senior Auditor

Paulino Garcia, Staff Auditor

Audit reviewed by: Lewis R. Blake, CPA, CIA, Audit Manager

 Audit of Off-Duty Police Employment Activities
October 1, 2013 through June 30, 2015
Report No. 16-10

TABLE OF CONTENTS

SCOPE, OBJECTIVES AND METHODOLOGY ............................................................................................................... 1

BACKGROUND ..................................................................................................................................................................... 2

AUDIT FINDINGS AND RECOMMENDATIONS .............................................................................................................. 6

FINDING 1: MAXIMUM ALLOWABLE OFF-DUTY HOURS WERE BEING EXCEEDED...................................... 6
FINDING 2: PSES OFFICE LACKS POLICIES AND PROCEDURES THAT PLACE LIMITATIONS ON THE
NUMBER OF JOBS OFFICERS CAN COORDINATE ................................................................................................ 7
FINDING 3: OFFICERS APPARENTLY WORKED AT RANKS ABOVE THEIR OFFICIAL RANK DUE TO
POSSIBLE INPUT ERRORS ........................................................................................................................................... 8
FINDING 4: ERRONEOUSLY RECORDED HOURS IN THE OFF-DUTY TRAK SYSTEM WERE BILLED TO
CLIENTS ............................................................................................................................................................................. 9
FINDING 5: OFF-DUTY SURCHARGE FEES BILLED TO CUSTOMERS ARE SIGNIFICANTLY OVERDUE 10
FINDING 6: SURCHARGE FEE INCREASE EFFECTIVE JUNE 2016 WAS NOT APPROVED BY THE CITY
COMMISSION .................................................................................................................................................................. 11
FINDING 7: CENTRALIZE ACCOUNTING FOR OFF-DUTY HOURS AND COMPENSATION PAYMENTS TO
OFFICERS, AS WELL AS FOR BILLINGS AND COLLECTIONS OF SURCHARGE FEES .............................. 12
 SCOPE, OBJECTIVES AND METHODOLOGY
The scope of the audit included an examination of the procedures and controls over the City’s
extra duty (off-duty) police employment activities. The audit primarily covered the period October
1, 2013 through June 30, 2015 and focused on the following objectives:

 To determine whether policies and procedures have been established to effectively govern
off-duty police services;
 To determine whether surcharge fees owed to the City were processed and collected as
required by City Code;
 Other audit procedures as deemed necessary.

We conducted this audit in accordance with Generally Accepted Government Auditing Standards.
Those standards require that we plan and perform the audit to obtain sufficient and appropriate
evidence in order to provide a reasonable basis for our findings and conclusions based on our
audit objectives. We believe that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives. The audit methodology included the
following:

 Interviews and inquiries of appropriate personnel.

 Reviews of written policies and procedures in order to gain an understanding of the
internal controls.
 Observations of current practices and processing techniques.
 Tests of applicable transactions and records.
 Other audit procedures as deemed necessary.

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 BACKGROUND
The PSES administers and coordinates off-duty police services within the City. The office is
responsible for analyzing, planning and implementing police protection needed to assure public
safety for:

 Road construction projects within the City.

 Private and public gatherings (e.g., private parties, sporting events, public festivals)
located within the City.
 Commercial businesses that generate large amounts of cash transactions (e.g., banks,
large retail/wholesale stores).
 Neighborhood communities (e.g., condominiums and special taxing districts).

Accordingly, PSES is responsible for: maintaining records related to off-duty assignments;

coordinating personnel assignments, traffic control, and payroll with customers/event sponsors;
and, managing off-duty service surcharge billings and collections. Surcharge fees collected during
fiscal years (FY) 2014 and 2015 totaled $1.23 million and $1.42 million respectively. As of June
2016, collected surcharge fees totaled $1.13 million.

Off-Duty Job Types

The types of off-duty jobs worked by officers include: “Special Events”, “Temporary”, “Permanent”,
and “Special Taxing Districts”. Special Events include sporting events, concerts and street
festivals. Temporary jobs are short term assignments that are non-repetitive in nature and usually
occur on short notice (parties, dances, etc.); however, a customer may decide to convert a
Temporary job into a Permanent job if it becomes repetitive and periodic in nature (e.g., a weekly
assignment to a popular restaurant; daily assignments to a regional/national chain store). Special
Taxing Districts are Permanent jobs used by small residential areas within the City, wherein
property owners elect to pay special assessments levied on their properties in order to receive
police security (off-duty) services.

Off-Duty Job Requests

Requests for off-duty services are made when a customer applies for a job at the PSES office
(located in the City’s “MRC” Building) or at one of the City’s NET (Neighborhood Enhancement
Team) offices. According to Section 42-8 of the City Code, all off-duty job requests must be
evaluated on the basis of the reasonableness of each job which should include an evaluation of
“personnel scheduling availability, risk of harm to personnel, and police department efficiency.”

Off-Duty Surcharges and Fees

Subsequent to the evaluation and approval of off-duty services, PSES personnel enter the job
into the “Off- Duty Trak” system software (Trak). Employees then utilize this information to record
surcharge revenue in the City’s Oracle financial accounting software (Oracle). The information in
Trak is also utilized to coordinate/plan all off-duty jobs, and monitor employee sign-up and hires
(i.e., officers can electronically register for off-duty work via using Trak).

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The system also maintains a count of assigned and worked job hours and compensation for each
off-duty employee. Compensation rates for off-duty officers are as follows:

Rate Effective
Officer Rank Rate June 2016
Public Service Aide $28 per hour $28 per hour
Police Officer $32 per hour $36 per hour
Sergeant $36 per hour $40 per hour
Lieutenant $40 per hour $44 per hour
Captain $44 per hour $48 per hour

Customers must pay an administrative surcharge fee of $3 per hour ($4 as of June 1, 2016, and
$3 effective September 20, 2016 – see Finding 6, page 11), per employee, per location (a three-
hour, $9 minimum per employee, per location is required) for Special Events, Permanent and
Temporary jobs. For Special Taxing District jobs, a $10 administrative fee per employee, per day
is assessed.

Payment of Surcharges and Fees

Customers must initially meet with appropriate PSES personnel in order to formulate an
operational plan (logistics and staffing requirements) for all off-duty jobs. Subsequently,
depending on the job-type, a customer may either be required to prepay off-duty surcharges, fees
and officer compensation or have these items billed. In cases where prepayment is required,
PSES gives the customer a voucher in order to pay for the surcharge (total surcharges due = $3
administrative surcharge per hour x estimated hours) and the estimated amount of employee
compensation (estimated number of required employees x applicable compensation rate x
estimated hours). The customer then takes the voucher to the City’s Finance Department (FD)
and pays for the surcharge and estimated compensation. FD provides the customer with a
payment receipt which is taken to PSES so that information pertaining to the job can be entered
into Trak. Once the job is entered into Trak, interested officers may request assignment to the job
on a first-come/first-served basis.

 Special Events Jobs—Upon completion of Special Event jobs, the City uses ADP Payroll
Services (ADP) to pay officers based on actual documented hours worked. The customer
is then billed for officer hours and the ADP processing fee. Surcharges ($3 x assigned
hours) and permits/fees (i.e., for street closures) can be paid in advance as described
above after an operational plan is created. Alternatively, instead of being paid through
ADP, officers can be paid directly by clients upon receiving a final invoice for hours worked
and surcharges due.

 Temporary Jobs—Subsequent to completion of the assignment, officers must document

assigned hours (e.g., time card); however, if the officer was used for less time than what
the customer prepaid, the customer must return to the MRC for a refund and PSES then
enters the actual hours into Trak. If, however, the officer works in excess of the hours that
were prepaid, the customer must pay the officer for the additional hours worked including
surcharges which the officer submits to FD.

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  Permanent Jobs—Off-duty jobs are “temporary” (i.e., surcharges are paid in advance as
described above) until the customer decides to make the job “permanent”. Surcharges ($3
x assigned hours) are billed to customers by the MPD Budget Unit on a monthly basis.
For periodic Permanent jobs (e.g. banks, chain stores), customers pay off-duty officers
directly for documented hours worked. After certain Permanent jobs are completed (e.g.,
road/sewer construction), actual off-duty hours worked are reconciled to those entered
into Trak and a final bill is sent to the customer for payment of surcharge fees.

 Special Taxing Districts—The surcharge amount for Special Taxing Districts is $10 per
day, per officer; however, the City pays officers for hours worked and then submits
documented hours to Miami-Dade County (County) for reimbursement (i.e. the County
collects the Special Taxing District assessments from the residents which pays for the off-
duty work and the surcharge).

Off-Duty Job Coordinators

According to PSES “Standard Operating Procedures” (SOP), MPD employees may not solicit
prospective customers for off-duty jobs, but they may bring jobs into PSES that are given directly
to them by a private employer. In such cases, subject to the approval of the NET commander, the
employee becomes the temporary “coordinator” for that specific job. Responsibilities of off-duty
job coordinators include interacting with outside clients in planning the logistics for police
protection, scheduling job staffing, maintaining schedules to ensure protection coverage, and
submitting hours worked to the MPD’s Budget Unit (PBU) for billing. These tasks may be
performed during regular duty hours. Best practices require coordinators to be selected by rank,
then seniority, and that job coordinators cannot coordinate more than two permanent off-
duty details at the same time unless conditions warrant exceptions.

Surcharge Fees Paid to City and Compensation Paid to Officers

According to data downloaded from the Trak system, there were a total of 4,145 off-duty jobs
staffed by 2,854 officers (some were assigned to multiple jobs and were counted more than once)
over the audit period (October 2013 through June 2015) with a total of 749,635 hours charged.
Schedule 1 (page 5) provides a breakdown of job types worked, officer rank, and total hours
charged to each job type during our audit period. Based on the hours worked by officers and
reported in Trak, we estimate that a total of $24.8 million of off-duty pay was earned during the
period, or approximately $2.1 million per month, and that approximately $2.2 million of surcharge
fees were collected; however, it is important to note that the City is sometimes required to utilize
officers from external law enforcement agencies when internal resources are not sufficient to
adequately staff large events. Therefore, a portion of the Special Event hours in Schedule 1 were
charged by officers from other agencies (112 officers during our audit period). However, the
surcharges generated from this work are paid to the City.

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 Schedule 1

Total Surcharge Fees Paid To City and Compensation Paid to Officers Per Off-Duty Trak System
October 2013 through June 2015
Surcharge Fees
Amounts Paid to
Number Generated for the City
Officers Based on
Officer of Based on Hours
Job Type Hours Rank & Hours
Rank Officers Logged in Off-Duty
Logged in Off-Duty
(note 1) Trak
Trak
(note 2)
Special Events Captain 9,804 72 $ 29,412 $ 431,376
Special Events Lieutenant 3,616 29 $ 10,848 $ 144,640
Special Events Sergeant 16,685 142 $ 50,055 $ 600,660
Special Events Officer 151,674 764 $ 455,022 $ 4,853,568
Special Events Total 181,779 1,007 $ 545,337 $ 6,030,244

Special Taxing Districts Captain 1,816 11 $ 4,560 $ 79,904

Special Taxing Districts Lieutenant 3,252 3 $ 5,420 $ 130,080
Special Taxing Districts Sergeant 3,692 13 $ 5,640 $ 132,912
Special Taxing Districts Officer 26,631 92 $ 41,600 $ 852,192
Special Taxing Districts Total 35,391 119 $ 57,220 $ 1,195,088

Permanent Jobs Captain 24,977 184 $ 74,931 $ 1,098,988

Permanent Jobs Lieutenant 6,339 28 $ 19,017 $ 253,560
Permanent Jobs Sergeant 53,573 102 $ 160,719 $ 1,928,628
Permanent Jobs Officer 351,629 655 $ 1,054,887 $ 11,252,128
Permanent Jobs Total 436,518 969 $ 1,309,554 $ 14,533,304

Temporary Jobs Captain 313 10 $ 939 $ 13,772

Temporary Jobs Lieutenant 161 5 $ 483 $ 6,440
Temporary Jobs Sergeant 2,410 70 $ 7,230 $ 86,760
Temporary Jobs Officer 93,063 674 $ 279,189 $ 2,978,016
Temporary Jobs Total 95,947 759 $ 287,841 $ 3,084,988
Grand Total 749,635 2,854 $ 2,199,952 $ 24,843,624
Note 1: Some officers have been assigned to multiple jobs. Special Events utilizes officers from other jurisdictions to cover large
events that require resources in excess of MPD’s capacity. The total number of officers noted in the Special Events section above
includes 112 officers from other jurisdictions.

Note 2: Special Taxing District surcharge based on $10 per day; all other based on $3 per hour worked.

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 AUDIT FINDINGS AND RECOMMENDATIONS
Overall Conclusion:
Based on the results of our audit, we noted the following:
1. Maximum Allowable Off-Duty Hours were being Exceeded.
2. PSES Office Lacks Policies and Procedures that Place Limitations on the Number of
Jobs Officers can Coordinate.
3. Officers Apparently Worked at Ranks above their Official Rank due to Possible Input
Errors.
4. Erroneously Recorded Hours in the Off-Duty Trak System were Billed to Clients.
5. Off-Duty Surcharges and Fees Billed to Customers are Significantly Overdue.
6. Surcharge Fee Increase Effective June 2016 Was Not Approved By the City
Commission.

In addition, we recommended that management: 7) Centralize Accounting for Off-Duty Hours

and Compensation Payments to Officers as well as for Billings and Collections of Surcharge
Fees.

Details of our findings and recommendations follow:

FINDING 1: MAXIMUM ALLOWABLE OFF-DUTY HOURS WERE BEING EXCEEDED

According to PSES Order 12, Section 1.6.8, “Members are prohibited from working more than
sixteen (16) hours during a (24) hour period. The (16) hour maximum will include a combined total
of extra (off) duty and on duty working hours.” Additionally, the policy states that total extra hours
worked during a given work week (Sunday through Saturday) shall not exceed (36) hours or
approximately five hours per day; and, “Any exceptions must be approved by the Special
Operations Section Commander or his designee.”

Observations:

During our scope period, we noted that there were 2,281 instances during which employees
worked more than the policy maximum of 16 hours within a single shift. Also, we noted that 93
officers worked more than 1,000 off-duty hours during 2014 and we found instances where the
extra hours worked during a work week exceeded 36 hours.

Working off-duty hours in excess of the MPD’s maximum could diminish an officer’s on-duty
effectiveness, cause injury to the officer, and be injurious to the public he/she must serve and
protect. Due to the magnitude of off-duty hours worked during our scope period, we plan to
analyze off-duty hours in more depth in a separate report.

RECOMMENDATION 1: Miami Police Department (MPD)

 The PSES office should monitor hours worked to ensure that officers’ extra duty hours
remain within the policy limits.
 The MPD should request the City’s Information Technology Department to add input
controls into the Off Duty Trak system in order to ensure that input time exceeding policy
limits is appropriately handled. This includes adding authorization requirements when
officers will work hours that are beyond policy limits.

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  MPD Response:
The SE Unit is working with the IT section to put in place safeguards against allowing
officers to work in excess of the allowable hours.

 Implementation Date:

September 30, 2017

FINDING 2: PSES OFFICE LACKS POLICIES AND PROCEDURES THAT PLACE

LIMITATIONS ON THE NUMBER OF JOBS OFFICERS CAN COORDINATE

Off-duty job coordinators must interact with outside clients in planning the logistics for police
protection, schedule job staffing, maintain schedules to ensure protection coverage, and submit
hours worked to the MPD’s Budget Unit for billing. During the audit, we obtained best practices
followed by other municipalities for the management of off-duty employment. Additionally, we
obtained a “Police Executive Research Forum” review and assessment of a local municipality’s
off-duty and secondary employment function. The policy described in the review stated that “job
coordinators cannot coordinate more than two permanent off-duty details at the same time…”
Exceptions to the policy must be appropriately approved.

Observations:

An MPD police officer’s on-duty responsibilities can include high-risk/dangerous encounters with
the public, as well as court appearances and overtime under certain circumstances. Therefore,
the additional demands of off-duty responsibilities can possibly increase exhaustion and stress;
and, there is a risk that coordinating a high number of jobs can negatively impact an officer’s on-
duty job performance.

However, during our review of a list provided by PSES of 154 active permanent off-duty jobs, we
noted that contrary to the best practice described above, there were nine MPD officers that
coordinated more than two jobs including one officer that coordinated up to ten permanent off-
duty jobs; and, the other eight officers coordinated between three to nine jobs. Additionally, the
PSES did not have policies and procedures that limit the maximum number of permanent jobs
that can be coordinated by a single officer. It should be noted that coordinator duties may be
performed both during their regular on-duty assignments or when they are off-duty.

Furthermore, the office did not have a policy or procedure to ensure that all off-duty assignment
selections are fair, equitable and are not based on favoritism. The absence of this policy raises
the risk that certain permanent off-duty jobs are controlled by a few officers who can offer
assignments to officers he/she chooses. This increases the risk that those desiring work are not
selected for employment.

RECOMMENDATION 2: Miami Police Department (MPD)

To ensure off-duty work does not interfere with each officer’s on-duty responsibilities, we
recommend that the MPD expand its written policies to place limitations on the number of jobs an
officer can coordinate. A policy and procedure should be developed to ensure that off-duty
assignments are fair, equitable and not based on favoritism. For example, a master list of officers
desiring off-duty work should be maintained and off-duty work should be assigned from this list
using systematic methodology.

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  MPD Response:
Although we strive to achieve best practices, the SE unit already has extreme difficulty in
staffing Special Events. Coordinators are necessary to ensure permanent jobs and others
are fully staffed. Coordinators do so voluntarily and are not compensated for their time so
we should not limit the jobs they coordinate. Lastly, officers are not assigned to become
Permanent and Special Event job coordinators based on favoritism but based on whether
they are capable and available for the assignment.

 Implementation Date: Not Applicable

FINDING 3: OFFICERS APPARENTLY WORKED AT RANKS ABOVE THEIR

OFFICIAL RANK DUE TO POSSIBLE INPUT ERRORS
Our review of the “officer rank” recorded in Trak during the audit period (October 2013 through
June 2015) for ten judgmentally selected employees revealed that all ten employees were input
in the system as working Permanent off-duty jobs at higher ranks than their official on-duty rank.
Schedule 4 below shows the official rank of each employee, according to Oracle, along with the
rank recorded in Trak while working Permanent off-duty jobs.

Schedule 4
Officers Working Extra Duty Jobs at Ranks Above His/Her Official Rank
October 2013 through June 2015
Higher Rank Worked on Extra Duty Jobs Per
Trak
Did Trak show
Officer working
Official Rank as
at Rank Higher
Selections per the City's Captain Lieutenant Sergeant Officer
than His/Her
Oracle System
Official Rank
(Yes/No)
Employee 1 Police Officer Yes  ‐ ‐ ‐
Employee 2 Police Officer Yes  ‐ ‐ ‐
Employee 3 Police Officer Yes  ‐ ‐ ‐
Employee 4 Police Officer Yes  ‐ ‐ ‐
Public
Employee 5 Yes   ‐ 
Service Aide
Employee 6 Police Officer Yes  ‐  ‐
Employee 7 Police Officer Yes   ‐ ‐
Employee 8 Police Officer Yes  ‐ ‐ ‐
Employee 9 Police Officer Yes  ‐ ‐ ‐
Employee 10 Police Officer Yes  ‐  ‐

If employees are working at ranks above their official rank, they can potentially be overpaid for
the work performed. Furthermore, they may not have the training and experience required to
perform in a situation where a higher ranking officer is needed, which could result in exposing the

8
public to greater safety risks. Upon inquiry, MPD management explained that the reason for
officers apparently working above their official on-duty ranks may be attributed to input errors;
additionally, newly promoted officers have difficulty signing-up for off-duty jobs in Trak at their
new rank due to system issues. We attempted to confirm compensation information from
customers, but we received only one response that indicated the employee was paid at the official
rank rather than the rank noted in Trak.

RECOMMENDATION 3: Miami Police Department (MPD)

To improve controls, the MPD should request that the City’s Information Technology Department
add input controls into the Off Duty Trak system in order to ensure that police personnel are not
allowed to work off-duty jobs higher than their on-duty rank unless approved and documented by
a NET commander. Also, MPD should request IT to program Trak so as to allow newly promoted
officers to register for jobs at their new rank.

 MPD Response:
This is an error in the data entry at the time the information was entered or extracted from
Extra Duty Trak. Additionally, new promotes have difficulty signing up at their new rank
since the system does not allow them to. We will address the issues.

 Implementation Date:

September 30, 2017

FINDING 4: ERRONEOUSLY RECORDED HOURS IN THE OFF-DUTY TRAK SYSTEM

WERE BILLED TO CLIENTS

As previously described, PSES policy prohibits employees from working more than 16 hours daily.
However, during our audit period we noted 321 instances where more than 24 hours were
recorded in the Trak system as being worked in a single day. A total of 18,947 hours were
recorded in the Trak system for these employees during the audit period, or an average of 59
hours per day.

We judgmentally selected five of these instances of excess hours and noted the following:

 One of the selected employees had 105 hours charged within one day to a single
Temporary job. The employee actually worked 68 hours over seven shifts covering seven
days; however, the officer failed to end the shift after starting it, which resulted in additional
erroneous hours that were not worked.
 The other four employees were on Permanent jobs with three of them charging time to
multiple jobs within a single day. We noted that all four employees charged hours in excess
of 24 hours ranging from 30 hours to 79 hours. Management could not explain these
excess hours.

In conducting our testing, we also reviewed the Trak “Monthly Surcharge Report” for the hours
logged under Permanent jobs. This report is completed by the Permanent job coordinators and is
sent to clients for the purpose of billing for surcharges for off-duty hours worked by officers. Our
review revealed that all hours from the Trak system, including hours that were in excess of 24
hours in a day, were included on the Surcharge Reports and forwarded to clients for payment. As
a result, clients received erroneous reports that included over-charges. Also, we noted that:

9
  The PSES did not adequately review off-duty officer’s hours to ensure that daily and
weekly policy limits were not exceeded.
 The Permanent job coordinators did not review hours included on the Monthly Surcharge
reports to ensure that they were accurate, prior to submitting them to customers for billing
purposes.

RECOMMENDATION 4: Miami Police Department (MPD)

PSES should ensure that Permanent job coordinators thoroughly review, document and retain
evidence of their review of hours recorded in the Trak System to ensure that off-duty hour’s policy
limits are not exceeded and that hours billed to clients are accurate. This review should be
performed at least monthly.

 MPD Response:
There were isolated incidents where the information entered into Extra Duty Trak was
erroneous. This was usually on permanent jobs where the officer’s hours were entered
incorrectly. Many of these, were in fact, found by the SE Unit and corrected prior to billing
the client. The SE Unit is working with IT to identify shifts in excess of 16 hours so they
can be corrected.

 Implementation Date:

September 30, 2017

FINDING 5: OFF-DUTY SURCHARGE FEES BILLED TO CUSTOMERS ARE

SIGNIFICANTLY OVERDUE
During our examination of off-duty customer billings, we noted that customers owed the City
$94,475 in past due surcharge fees (See Schedule 5 below), and accounts totaling $55,343 (or
59%) are more than 90 days past due ranging from 103 days to 13.6 years past due. As noted in
the previous finding (Finding 4), these unpaid surcharge fees could be attributed to customers
who have contested amounts due because surcharge fee billings included erroneous hours. It
should be noted that there is no documented evidence of any collection efforts regarding past due
accounts.

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 Schedule 5

Accounts Receivable for Surcharge Fees as of May 24, 2016

Outstanding
Total
Receivables
Aging Range Outstanding
Over 90
Receivables
days
30 - 60 Days $9,146
60 - 90 Days $29,986
103 days to 173 days $12,061
184 days to 360 days $16,383
1 year to 4.8 years $8,486 $55,343
5 years to 7 years $12,885
10 years to 13.6 years $5,529
Total Outstanding Receivables $55,343 $94,475

RECOMMENDATION 5: Miami Police Department (MPD)

We recommend that the MPD evaluate the collectability of the accounts that are over 90 days
past due and consider writing off amounts deemed to be uncollectible. Also, we recommend that
MPD work with the City’s Finance Department to create and implement an effective collection
policy for off-duty customer accounts.

 MPD Response:
The SE Unit is working to evaluate the collectability of the accounts that are severely
overdue to determine if they should be written off. We are also working with finance to
implement an effective collection strategy.

 Implementation Date:

September 30, 2017

FINDING 6: SURCHARGE FEE INCREASE EFFECTIVE JUNE 2016 WAS NOT

APPROVED BY THE CITY COMMISSION

As part of our audit procedures, we reconciled FY 2014 off-duty surcharges recorded in Trak
($1.21 million) with surcharges recorded in the City’s Oracle financial accounting system (Oracle)
($1.23 million) and noted that there was an immaterial difference. We also noted that effective
June 2016, the surcharge fee was adjusted upward by 33%; from $3 to $4 per hour. The $3 fee
was initially established by ordinance on December 12, 1996, and was brought back to the
Commission to increase the fee to $4 on February 8, 2007, but the item was deferred. The current
increase was not submitted to the City Commission for review and approval. After we informed
the MDP of this issue, they stated that effective September 20, 2016, the fee was reduced to $3

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and a proposed ordinance to increase the fee will be proffered at the October 13, 2016
Commission meeting.

We also noted that the surcharge increase was not supported by an analysis indicating that it
would cover the costs of the program. During FY 2016, the PSES Office was staffed by eight full-
time employees including one lieutenant, two sergeants, three officers and two civilian staff at a
projected annual cost of approximately $937,000. However, these costs do not include the facility
rent, maintenance and repairs, and utility costs allocable to the PSES office, as well as other costs
specifically associated with off-duty jobs such as:

 Costs of other full-time employees offering part-time assistance (coordinators)

 Workers’ compensation claims
 Fuel and costs associated with patrol vehicles
 Uniforms and police equipment, and
 Any other actual or potential costs to the City

RECOMMENDATION 6: Miami Police Department (MPD)

 We recommend that any surcharge fee adjustment be brought to the City Commission for
approval.

 We recommend that the MPD, in coordination with the Office of Management and Budget,
analyze surcharge revenues as well as the total costs to administer the off-duty program.
Based on the results of the analysis, fees should be adjusted to ensure that costs are
recovered via the surcharge fees paid by vendors requiring the use of off-duty officers.

 MPD Response:
We will bring the surcharge fee adjustment to the City Commission for approval at its
October 13, 2016 meeting. In determining the cost of the Extra Duty Office, one must
consider all of the responsibilities of the Unit. These include, but are not limited to,
coordinating and managing Special Events, writing Street Closure Permits based on
several different applications, assessing demonstrations/protests and writing appropriate
permits, as well as administering the Extra Duty program.

 Implementation Date:

September 30, 2017

FINDING 7: CENTRALIZE ACCOUNTING FOR OFF-DUTY HOURS AND

COMPENSATION PAYMENTS TO OFFICERS, AS WELL AS FOR BILLINGS AND
COLLECTIONS OF SURCHARGE FEES

Total estimated off-duty compensation pay during the audit period was $24.84 million or an
average of $14.2 million annually (See Schedule 6 below). Also, surcharge fees paid by
customers averaged more than $1 million annually. As detailed in the background section of this
report, both off-duty compensation payments to officers and billings and collections of surcharge
fees to customers are handled inconsistently for the different types of off-duty work (Special
Events, Temporary and Permanent jobs).

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 Schedule 6

Police Officers' and Public Service Aides' Salaries, Overtime and

Estimated Off-Duty Pay: October 2013 through June 2015
Estimated Off-
Salaries Overtime
Duty Pay
Police Officers $161,114,157 $5,522,246 0

Public Service
3,217,982 56,698 0
Aides
Officers and
0 0 $24,843,624
Aides
Totals $164,332,139 $5,578,944 $24,843,624
Note: During the audit period, Off-Duty Pay averaged $14.2 million annually

For example, if Temporary customers who have prepaid off-duty surcharge fees require additional
off-duty hours from an officer, they must pay the officer the additional hourly compensation and
the officer is entrusted to collect and submit the additional surcharge from the customer. For
Permanent jobs, customers pay officers directly for hours worked and they are periodically billed
by the City for surcharge fees. For certain Special Events, ADP pays the officers and the City bills
the customer for the compensation amounts.

These procedures are inconsistent and increase the risk that surcharges and compensation
amounts will be inaccurate. Also, the City is unable to accurately reconcile compensation paid to
officers with collected surcharge fees; the officer is burdened with the additional responsibility of
collecting monies and remitting them to the City. Finally, the officer may receive multiple 1099
forms from vendors for year-end tax reporting purposes rather from having this information
consolidated on one form. As indicated earlier in the report, these conditions may have resulted
in officers working more than maximum allowable hours, and erroneous surcharge fee billings to
clients.

RECOMMENDATION 7: Miami Police Department (MPD)

To improve internal controls, enable proper accounting, ensure that off-duty compensation and
surcharge fees are reconcilable, accurate and transparent, we recommend that the MPD
centralize the accounting for off-duty hours worked and compensation payments to officers as
well as billing and collections of surcharge fees.

 MPD Response:
We agree and have held meetings with finance, IT and city leaders to try and identify ways
to implement a procedure where all Extra Duty Jobs are billed and paid by the finance unit.
This requires IT to create a way of doing this and an entire unit to manage the process.

 Implementation Date:

September 30, 2017

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