Audit Services

County of Santa Barbara

Residential Recyclable Revenue Sharing Review (2005)

Project Description

The County of Santa Barbara entered into a 10-year agreement in 1998 with a solid waste contractor for the processing and marketing of residential commingled recyclables. The contractor and the County share revenues from the sale of these recyclable materials. In 2005 the County notified the contractor regarding concerns about the reported recyclable material prices used in revenue sharing calculations, and the contractor subsequently restated its revenue sharing calculations for a four-year period. HF&H was retained to review these recalculations.

HF&H Solution

The scope of the work for the review included the following:

• Reviewing background documents, such as the solid waste contractor reports and franchise agreement.

• Interviewing County and contractor staff.

• Verifying mathematical accuracy of reports submitted to the County.

Results

HF&H’s review of the revenue sharing program from its inception through 2004 found that the contractor underpaid the County for its share of the recyclables revenue by more than $1 million.