Internal audit finds safety, billing and contract issues in Garland commercial sanitation unit; management proposes phased fixes

Internal Audit presented a comprehensive review of Garland's commercial sanitation operations at the March 25 Audit Committee meeting, praising revenue growth while flagging safety-process and billing weaknesses and proposing a timeline of corrective actions.

Audit lead Zach (last name not specified) told the committee the division manages roughly 2,200 commercial customer accounts and that revenue has doubled over seven years, from about $3.8 million in fiscal 2018 to $7.56 million in fiscal 2024. "They manage approximately 2,200 customer accounts," Zach said, crediting expanded marketing and customer service for the growth.

The audit highlighted favorable operational controls: drivers documented pre- and post-trip inspections, training logs were maintained, and segregation of duties existed between account setup and payment processing. But auditors identified multiple opportunities for improvement:

- Driver safety and incident review: Auditors documented 73 recorded incidents during the audit period and noted one employee involved in eight preventable incidents over seven months. The audit said the current incident-review process is largely internal to the division and recommended a formal review partnership with Risk Management. Risk Management proposed changes including an anonymous vehicle accident review process, a driver point system, and stricter corrective-action guidelines; the proposed implementation date for the motor vehicle and equipment operation guidelines is Oct. 1, 2025. The sanitation director said new and recurring drivers receive paired training and that staff will retrain any employee who records preventable incidents.

- Contract compliance and lost revenue: Economic Development has nine agreements that either require or encourage businesses to use city solid-waste services; auditors found seven of nine businesses were not using the city's services. The audit conservatively estimated an annual revenue loss of $81,248 at fiscal 2024 rates if those businesses shifted to city service as required by agreements. Commercial sanitation management agreed to coordinate with Economic Development and begin outreach to the identified accounts with a target start date of April 1, 2025.

- Shared-container allocation and rate code RC 36: The audit identified 19 shared containers and several allocation errors. Five shared containers were not fully allocated, producing an estimated underbilling of $190 per month. Three containers allocated at more than 100% produced estimated overbilling of $230 per month. The RC 36 flexible commercial rate (established Feb. 2024) was used in several downtown-area cases; auditors recommended a standard allocation methodology and semiannual reviews, with an implementation target of June 1, 2025.

- Discount accuracy: Of 1,760 commercial customers, 103 received discounts. Auditors found one multifamily account receiving a 52.46% discount where the city ordinance authorizes a maximum 45%, producing an estimated annual revenue loss of about $5,400. Auditors also found cases where discounts were not reapplied after containers were swapped, producing monthly overbillings (sample amounts: $356.37 and $242.49). Management committed to semiannual contract and bill sampling and a discount-review process to be in place by May 1, 2025.

- Deposits and account setup: Of 126 "sanitation-only" accounts sampled, auditors tested 45 and found eight accounts lacking required deposits and tax identification numbers. Management committed to aligning deposit practices with city ordinances and updating contracts by June 1, 2025.

- Pickup frequency and route records: Auditors compared billing records and driver route sheets for 2,367 containers and found 105 containers where pickup frequency did not align. A sample showed one customer billed for once-per-week service but receiving twice-per-week pickups; the division uses live mapping and dash cam footage for verification. Management will review route sheets semiannually and assess use of existing software to manage routes, with a feasibility decision targeted by May 1, 2025.

Sanitation leadership and audit staff emphasized both the division's strong revenue performance and the need for improved documentation and formalized policies to protect revenue and safety. Zach and audit director Jets Johnson thanked sanitation staff (including Phil, Uriel, Thomas and Oz) and other contributors such as customer service and risk management. Uriel, identified in the presentation as the sanitation director, told the committee: "We will never put an employee on their own unless we feel 100% comfortable that they can operate that equipment safely." Committee members praised the audit and asked for regular updates on progress toward the listed action-plan dates.