Finance Committee Agenda and Packet 2013 10 15

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Proposed Scope of Work - Cable a. Comparisons of reported revenues by type over the entire review period; b. Determine if the franchisee reported amounts received from franchise fees, PEG fees, late fees, and returned check fees; and, c. Review and analyze read histories to identify errors in billing and revenues processes. 13. On a test basis, reconcile gross revenues submitted as supporting documentation with the cable fee payments to revenues recorded on the audited financial statements or equivalent reporting information. 14. Utilize proprietary systems and software operated by Azavar Audit Solutions, Inc. to analyze gross revenues by subscriber service point in the City that are not reported as service addresses by the franchisee. Azavar will identify any address coding discrepancies and will correct miscoded addresses so that the franchisee properly identifies the address property as in the City for future remittances of cable fees. 15. Identify each revenue type or source that the franchisee did not include in the determination of cable fees remitted to the City for the review period from failure to report or include as a City address. 16. Ensure that gross revenues recorded on the general ledger are properly included in the cable fee payments in accordance with the franchise agreement. 17. Note whether the franchisee has substantively fulfilled its financial obligations in regards to its franchise agreement with the City and determine that it adheres to the general parameters of the franchise agreement. 18. Verify that the accounting methodologies and procedures used by the franchisee accurately identify revenues subject to cable fees within the City during the review period. One key task will be to verify the methodology used to allocate bundled cable and non -cable packages to assign the proper amount to the cable gross revenue determination. Investigate any inconsistencies and provide recommendations, if applicable. Verify the franchisee, as specified in the franchise agreement, has: a. Identified the appropriate source of revenue on which the franchisee's cable fee collections will be based upon (revenues); b. Applied the appropriate cable fee calculations, as specified in the franchise agreement; and, c. Retained supporting documentation such as customer billing and receipt records to substantiate cable fee base. 19. Review the growth of the franchisee and perform an analysis that confirms that the revenue growth of the franchisee is similar to the growth of the revenues reported to the City in the cable fee payments. Calculate and Report Dollar Amount of Cable Fee Underpayments 20. Develop a spreadsheet model that includes the following calculations: 12 29