Audit Division
Audit Summary

Department of Business and Industry
Taxicab Authority

Report LA96-14

Results in Brief

Although the Authority's management control system provides reasonable control, procedures were not always followed and could be improved to better enhance the Authority's operations. The Authority assessed the Clark County Department of Aviation approximately $56,000 more than allowed by the stated agreement terms for fiscal year 1995. The Authority used undocumented reimbursement factors and unwritten amendments to the agreement. Our analysis found the direct overhead reimbursement factors used by the Authority are overstated. In addition, the Authority does not include all supervisory personnel in calculating recoverable costs. Also, the Authority has not documented audits of taxi company records for reported trip fee accuracy since calendar year 1990. The Authority does apply some limited scope reviews and analytical procedures to review reported trip fees. However, not auditing trip fee documentation increases the risk of under reported revenues.

Principal Findings

1. The Authority bases its methods for calculating airport cost reimbursements on undocumented overhead reimbursement factors. The agreement between the Authority and Clark County allows the Authority to recover 50% of its payroll, payroll burden, and uniform costs. The Authority adds a charge of 12% of airport control officer payroll and uniform expenditures to cover administrative costs. Administrative costs were approximately 4% of direct payroll, resulting in the Authority over assessing the airport by approximately $52,400. (page 10)

2. Airport billings contain inaccuracies that affect cost reimbursements. The Authority does not bill the County for two supervisors who oversee airport operations. Additionally, the Authority billed two supervisors' payroll costs at unsubstantiated rates. Also, the Authority did not reduce the two supervisors' payroll costs by 50% as required by the agreement between it and the County. As a result, the Authority over assessed the airport approximately $3,600 for supervisory costs. (page 11)

3. Although the Authority established management controls for auditing trip charge documentation, it has not followed its procedures since 1992. The Authority uses analytical procedures to ensure taxi companies properly report trip fees. However, reviews of detailed records on a periodic basis are still needed to ensure the validity of reported trip fees. Our examination of taxi company records disclosed variances between reported trips and the number of trips recorded by taxi drivers. (page 11)