• Eric Johnson

Do You Need a Fee Audit?

After going through the process of doing a Fee Study and getting the fees approved by your Council, your thoughts turn to having a really big margarita. Oh, and they might also turn to actually implementing the new fees. This should be pretty simple, right? Just put the new fee schedule on your website and send it to all the departments and you’re good to go. Unfortunately, there are a lot more moving pieces.

The new fees need to be input into whatever permit or registration system that is being used by each department. That may entail reprogramming certain parts of it if the structure of how fees are charged has changed, as well as adding in new fees. This process can be as simple as checking a few boxes in the software or many hours of your IT staff. You will want to check with them as soon as possible to get the process going if it is going to take more time.

Then, of course, you will still want to make sure that every permit and registration counter has the current fee schedule. Burn the old ones because they will hold onto them stronger than life itself. It has happened more than once that I have gone back to an agency a few years after an update to find out that the Permit Counter is still charging the old fees because this step did not happen.

But you can do all this and still have the wrong fees be charged to the customer. To ensure that you are receiving all the revenue you should be receiving, you should consider doing a Fee Audit. This at a minimum involves a couple of steps. First, you will want to review the actual systems that are being used. Does the user have to choose the fee amount that is in the system or can they type in any value? Does the user have the ability to override the fee amount in the system? If so, how often is that being used? By asking these questions you can start to determine if the proper fees are being charged to all customers.

Second, you will want to determine which accounts are set up for each fee, and, most importantly, make sure that staff is using the correct account. I have seen a number of instances where the correct account had almost no revenue, but the Miscellaneous account had a large amount for this very reason. Staff should be able to choose the fee category but not the account.

Then, once six to nine months have passed since the fees went into place, you will want to go through the fees in each department and review the data over that time period to see if the volume data makes sense when compared to the revenue data. Is your per unit revenue $10 when the fee is $30?

Very important budget decisions are being made based on revenue amounts, so you should make sure that the information is correct. If you are experience the above issues to a large enough degree, you could be leaving a significant amount of money on the table or making decisions based on bad data.

Please let RCS know if this is something that you want to explore.

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