Agmt 2005 R3 Consulting Group Inc

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^ Using the portion of the sample selected within the current operating year, R3 will physically examine the cart or bin at the service address to verify the accuracy of the customer container size billing record6. At the conclusion of these tests, R3 will make a determination of the level of accuracy of the ACI subscriber billing system, and formulate suggestions, as appropriate, to improve the accuracy of the system. As part of this task, R3 will also review the status of delinquent accounts and collections. Task 2.4 Test of Revenue Transactions The purpose of this test is to determine if revenues from subscription services are properly recorded in the ACI accounting system. The test of revenue transactions will include the following items: ^ A statistically significant sample of residential and commercial subscribers' transactions will be selected for the test period. Each transaction will be tested to verify that the billed amount and corresponding payment were properly posted in the billing and accounting systems. In the event that payments were not received, the test procedure will include a review of the documentation of the authorization to write-off the account as uncollectible. At the conclusion of this test, R3 will make a determination of the accuracy of the accounting and billing systems to record billed receivables and payments, and will formulate suggestions, as appropriate, to improve the accuracy of the system. Task 2.5 Test of Franchise Fee Transactions The purpose of this test is to determine if franchise fees were properly calculated in accordance with the terms of the franchise agreement. The test of franchise fee transactions will include the following items: ^ A statistically significant sample of franchise fee payments will be selected for the test period. Each selected transaction will be tested to verify that the calculation is based on the appropriate gross revenue and franchise fee percentage. This process will also include a verification of the number of residential and commercial subscribers for the months tested, by service level, to ensure that gross revenues were calculated correctly by ACI. Finally, we will compare the calculated franchise fee payment to the payment received by the City. At the conclusion of this test, R3 will make a determination of the accuracy of the methodology used to calculate franchise fees, and if franchise fees are correctly paid and received as calculated. Task 2.6 Review of City and ACWMA Revenue Neutrality Payments The purpose of this task is to document and review the accuracy of any revenue neutrality payments to the City and/or the Alameda County Waste Management Authority. R3 will review the ACI's data and support for any such payments. 6 This Task will be coordinated with the field observations as discussed in Task 1.3. Consulting Services Agreement between 3/14/2005 City of San Leandro and R3 Consulting Group, Inc. Page 26 of 26