PT the Auditor
Itís not always a grand slam!
As I write this, it’s that time of the year in professional baseball where division, league and world championships are dreamed of. As part of the dream, the exciting grand slam is always the show-stopper; it’s what everyone remembers.
In parking auditing, from time to time we do see the industry’s version of the grand slam, when noticeable amounts of money just can’t be accounted for and someone does an investigation. But just like in baseball, where games are won by simply getting a runner on base and then advancing him, a base at a time until he scores, so it is the same in parking and auditing.
So many times, it’s the little things that either go unnoticed or are noticed but waved off because you just can’t be bothered looking at the $2.95, $5 or $10 items. Many times, we don’t even see such a small number on the statement when looking at lines and lines of items in the journal ledger sent each month to support the reimbursable charges.
Trust me, over time, these “nickels and dimes” do add up! Here are a couple of examples.
As an operator changed policy relating to meal breaks, the manager of one parking facility couldn’t be bothered with the extra time it took to keep the employees properly clocking in and out correctly for their meal periods. Instead of working an 8.5-hour schedule with a 30-minute meal break, the manager simply changed everyone’s schedule to a straight 8 hours and permitted the employees to take their meal break without clocking out or back in.
When the audit was completed, the 30 minutes amounted to almost $48,000 because there was direct labor paid for non-work hours, FICA, SUI, FUI, Workers Comp and then the union payment for health/welfare and pension for non-worked hours. So those little 30 minutes a day did add up!
Uniforms are a great area to look at. Compare the employee names/hours on a payroll report against the uniform invoice. If the name does not appear on the uniform invoice but does on the payroll, maybe that’s a sign of a “ghost” employee. If, however, there is no employee name on the payroll, but there is a uniform charge, maybe someone forgot to remove the employee and you are still paying the uniform costs. Or the employee was transferred to another location, and you are still paying for his uniforms.
The best one that we saw was the employee who was transferred from location “X” to location “Y” on Dec. 28. The employee passed away in May, but uniforms were still being charged in August. We have it on good authority that the individual was not buried in his parking uniform.
OK, so it was only $6.50 week for uniforms. But by the time the problem was resolved, the owner of the property had paid $227.50 for uniforms for a person who did not work at their location.
Take a look at bank charges. As I reviewed one monthly management statement, the operator charged ownership between $450 and $750 a month for “bank fees.” An explanation was requested on what the fees were for as well as copies of the bank statements. This dragged on for months and then years with a different story offered each time the bank fees were questioned. The claim was the statement could not be shared since the garage money was comingled with deposits from other sites.
Finally, ownership demanded that there be a separate bank account for their property at the same bank that had been used for all the previous years. Month after month, the bank statement on the new account showed zero ($0) service fees. Seems the balance in the account earned more interest than the cost of the bank fees. Bottom line: The operator credited ownership more than $16,000 for previous “bank fee” charges.
Another area to check is insurance, both Workers Comp and Garage Keepers Legal Liability (GKLL). We are fortunate to see many different management statements from various operators in the same city.
In one city, we found that the Workers Comp rate was between 2.75% and 4.9%, and averaged about 3.5%. However, one operator, who was self-insured, charged 10.27%. So what is 6.77% you might ask? In this garage, it was “only” $84,025…
The GKLL was quoted at $3/space monthly or $36/space annually. The facility has 1,100 spaces. I did the math, using all four paws, and saw that it was only $3,300 per month. When I looked at the statement, I saw the monthly charge fluctuated from $3,500 to $5,500 a month. Hmmm, must be that “cloud-based” computing for all those extra spaces on the floating decks.
The bottom line is, if you don’t look at the details and question what every nickel or dime is being spent on, it may be dollars that are walking out the door, and not the nickels or dimes that you suspect.
Article Abstract from November, 2012