National State Auditors Association 2014 Excellence in Accountability Awards ENTRY FORM Name of project: Department of Business and Industry –Taxicab Authority State submitting entry: Nevada Office: Nevada Legislative Counsel Bureau Audit Division State contact person: Rocky Cooper, Audit Supervisor Phone number: (775) 684-6815 Email address: [email protected] Please indicate the award type you are submitting for: Performance (small) X Number audit hours 2,340 (must be less than 2,500 hours) Performance (large) Number audit hours (must be 2,500 hours or more) Forensic Report Special Project Each entry must be submitted in unprotected PDF format only to Sherri Rowland at [email protected] , and should include the following: • Completed entry form. • A write-up (maximum of 2 pages) identifying the report/project performed and the result. • A copy of the formal report or project. • Additional information such as copies of newspaper articles, legislation or policy changes that resulted from the report or project. If the submitting office has additional materials (e.g., video of a news item) that it would like the judges to consider, six (6) copies of the CD or DVD must be received by Sherri Rowland at NSAA prior to the submission deadline. CDs or DVDs should be mailed to Sherri at 449 Lewis Hargett Circle, Suite, 290, Lexington, KY 40503. Please note: • It is solely the submitter’s responsibility to ensure that all materials are received by Sherri Rowland prior to the submission deadline. • To be considered for an award, all documents must be submitted electronically in PDF format . Note: Links to documents on a website will not be accepted. • PDF documents must not be protected in any manner that would prevent printing or require a password to access the documents. Protected documents will be disqualified. The entry must be e-mailed to Sherri Rowland at [email protected] and received no later than 5:00 p.m. EST on Friday, February 28, 2014. Submissions received after the deadline will not be accepted. You will receive a confirmation e-mail confirming your entry was received. If you have not received confirmation within two business days, please contact Sherri directly at (859) 276-1147. NEVADA LEGISLATIVE AUDITOR DEPARTMENT OF BUSINESS AND INDUSTRY TAXICAB AUTHORITY The Taxicab Authority was created by the Nevada a percentage of the fare revenue collected. Because Legislature to regulate the taxicab industry in taxicab companies receive millions of dollars in Clark County, which includes Las Vegas. There revenues from long hauling activities, companies are 16 taxicab companies in Clark County; have little incentive to deter long hauling practices. employing 9,000 drivers, operating a taxicab fleet The Taxicab Authority’s activities to prevent and of 3,100 vehicles, and providing about 27 million detect long hauling were limited. The Authority trips per year. The mission of the Authority is to performed some detection activities, like “sting provide for the safety, comfort, and convenience of operations,” to identify long hauling activities. In the taxicab riding public. Attachment A contains addition, the Authority administered a long hauling the audit report. complaint process that was ineffective and time consuming, resulting in most complaints being SCOPE AND POTENTIAL FOR dropped. SIGNIFICANT IMPACT Medallion Allocation and Tracking: Tourism is vital to Nevada. When tourists think of Medallions Nevada, they generally think of Las Vegas. are used to regulate the number of taxicabs Taxicabs are important to the tourism industry operating in Las Vegas. The number of authorized because taxicab trips are often the first and last taxicabs is important because too few will increase experience tourists have in Las Vegas. Therefore, passengers’ wait times. Conversely, too many this audit primarily focused on the Taxicab taxicabs reduce the number of trips drivers can Authority’s activities to help ensure proper take per shift; thereby, increasing the pressure for oversight of taxicab company operations. drivers to long haul passengers to make more money. During our audit, some drivers stated that Auditors found weaknesses with the Taxicab long hauling occurs because too many medallions Authority’s actions to prevent and detect long are authorized. Furthermore, tracking the hauling. Long hauling occurs when a driver takes a medallion inventory is important because each longer route than necessary to increase the fare permanent medallion generates about $190,000 in amount. The audit concluded that tourists were gross revenue annually for taxicab companies. overcharged millions of dollars for taxicab trips, resulting in a negative experience while Information provided to the Taxicab Authority vacationing in Las Vegas. In addition, auditors Board did not always help members with their found weaknesses with the way taxicab medallion decision to allocate additional medallions. allocations were determined and tracked. Information was not always provided timely, Medallions are the small metal plates affixed to included large amounts of repetitive data, and did taxicabs authorizing them to operate. As a result, not have passenger wait times or other important decision makers did not have sufficient taxicab demand and capacity information. information to ensure the appropriate number of taxicabs was operating in Las Vegas. The Taxicab Authority did not adequately track its taxicab medallion inventory. Specifically, the Long Hauling: Long hauling is one of the biggest Authority did not perform activities to validate the enforcement issues for the Taxicab Authority. The accuracy of its inventory and investigate inaccurate number of taxicab trips recorded annually in Las information reported by taxicab companies. For Vegas has exceeded 22 million for the past decade, example, one company reported 76 of its 114 with the most recent years approaching 27 million. (76%) authorized medallions as lost or stolen since Auditor testing of drivers’ trip sheets identified 2006. Because the Authority did not maintain an long hauling occurred for 614 of 2,730 (22.5%) accurate medallion inventory, there is a greater risk trips to and from McCarran International Airport. companies will gain unauthorized market share. Based on the percent of long haul trips identified, FOCUS OF RECOMMENDATIONS ON EFFECTIVE it was conservatively estimated airport passengers AND EFFICIENT GOVERNMENT were overcharged $14.8 million in 2012. As the Taxicab Authority has the monumental task When passengers are long hauled, both the driver of regulating 9,000 drivers, it was important that and company benefit financially. Most drivers the audit recommendations focus on efficient and operate under a profit sharing formula and receive effective solutions. As such, the audit identified 2014 NSAA Awards Program –Small Performance Audit 1 specific areas where efficiencies could be combined with the estimated percentage of long improved, including: modifying existing practices haul trips and overcharge amounts, allowed the like taxicab company audits to identify companies auditors to conservatively estimate the amount and drivers that engage in long hauling, working airport passengers were overcharged in 2012. with the Authority’s governing body to improve information regarding medallion allocations, and PERSUASIVENESS OF CONCLUSIONS, using officers to verify medallion validity when USEFULNESS, AND ACTION PRODUCED performing enforcement activities. However, the The persuasiveness of the audit’s conclusions and audit’s most significant recommendation required usefulness of the report can be seen in the efficient effective the Authority to be both and in immediate impact it had on the media and public, its efforts to prevent and detect long hauling. By the Nevada Legislature, the taxicab industry, and providing fare information to passengers, long the Taxicab Authority. hauling can be prevented or immediately identified. Media and Public: The audit report received CLARITY, CONCISENESS, AND INNOVATION nationwide coverage in the media, and strong agreement from the public. Several Las Vegas Evidence of the clarity and conciseness of the audit news channels did stories about the audit and one report is found in the nationwide coverage the station performed an experiment to see if their audit received the day it was released to the public reporter would be long hauled (Video 1). The (Attachments B and C). The report included a one reporter’s experiment found she was long hauled page highlight that summarized the report’s major consistent with the frequency found in the audit findings and conclusions. In addition, the report report. used many exhibits to help convey information to the readers. For example, to help readers Nevada Legislature and Taxicab Industry: The understand how a driver might long haul a audit was released during the Nevada Legislature’s passenger, the report contained an exhibit with a 2013 session and was instrumental in the passage map showing the direct route and a common long of legislation that requires the Taxicab Authority haul route to a major resort. to collect and use a technology fee to develop computer systems that will help it regulate taxicab Auditors performed innovative testing procedures trips (Attachments D through F). As a result, one to help determine the extent of the long hauling taxicab company has received approval from the problem in Las Vegas, and to calculate taxicab Taxicab Authority to perform a pilot project that drivers’ wages. Due