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Audit Meeting on Feb 03, 2009 1:00PM

Minutes for the Port Of Seattle Commission meeting, held on Feb 03, 2009 1:00PM

        Commissioners                                               Tay Yoshitani 
                                                                                              Chief Executive Officer 
                      Bill Bryant 
                      Chair and President 
                   John Creighton                           P.O. Box 1209 
                     Patricia Davis                           Seattle, Washington 98111 
                   Lloyd Hara                             www. 
                   Gael Tarleton                              206.728.3000 

                      APPROVED MINUTES 
            The Port of Seattle Commission Audit Committee met in a special meeting at 9:00 a.m.,
            Tuesday, February 3, 2009 in the Commission Chambers at Pier 69, 2711 Alaskan Way,
            Seattle, WA. Commissioners Hara and Creighton were present, as well as citizen committee
            member Steve Miller. Also in attendance were Deputy CEO Linda Strout and Joyce Kirangi,
            Port Internal Audit Manager. 
        CALL TO ORDER 
            The committee special meeting was called to order at 9:00 a.m. by Commissioner Lloyd
           Hara. Commissioner Hara acknowledged Commissioner Creighton as a new member of the
            Audit Committee for 2009, replacing Commissioner Tarleton. 
           Approval of Minutes  None. 
           Discussion of Concession and Lease Audits 
             Presenters: Mark Reis, Managing Director, Aviation Division and Rudy Caluza, Director,
            Accounting and Financial Reporting 
             Mr. Reis expressed to the committee his positive feelings of the internal audit department,
            referencing audits performed over the past year, including the departments of Aviation
            Maintenance, Security and ID Access, and Landside Operations. 
            The committee and staff discussed the importance of lease administration. Mr. Reis stated
             that although it is the responsibility of management to keep up to date on information related
             to insurance and security of tenants, the internal audit department can also identify areas
            where management can improve with their lease administration efforts. 
            Mr. Miller suggested that there might be a way to come up with clear division of functions of
             both managerial staff and internal audit staff regarding lease administration and contract
           compliance work. 

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            Responding to comments from Commissioner Hara regarding cash activity at the Airport
            parking garage, Mr. Reis noted that significant improvements had been made in that area,
            and stated the importance that staff auditors are independent from those who work in the
             operation area and actually handle the cash. 
            Rudy Caluza, Director of Accounting and Financial Reporting, noted that audits being done
             are two-fold. The concessionaires need to be audited to be in compliance with their leases
             and contracts, and also the departments responsible for administering the leases need to be
             audited. He reiterated the need for independence in the conducting of the audits. 
             Mr. Caluza noted that after looking at trends at other airports comparable to Sea-Tac,
             industry best practices show that concessions are high revenue loss risks and internal audit
             functions are focused very highly in the concessions area. 
            Ms. Strout noted some concern within the internal audit team about having some clarity
             about the possible need to contract out for some audit work in the future, due to the need for
              different skill sets. 
           Status Report on Response to the 2007 TKW Audit 
             Presenter: Elaine Ko, Director, Office of Social Responsibility (OSR) 
            Ms. Ko provided a report summary document, reflecting audit recommendations completed,
             and a timeline for those still in progress. 
            Ms. Ko noted that of the recommendations within the TKW audit report, 12 findings have
            been completed, 7 more would be completed by the end of second quarter, including
           obtaining Commission approval of a new OSR Policy/Procedure, and thAT 7
            recommendations are ongoing, such as training and work with the Chief Procurement Office
             on small business issues. 
            Commissioner Hara commented on the need to address public perceptions that the Port only
             selects contractors from a very limited pool of candidates, most notably in the small business
             sector. Ms. Ko responded that the Office of Social Responsibility is making good progress
            by making information easily available to businesses regarding what they need to know if
             they are interested in working with the Port. 
            In response to an earlier question from the committee, Ms. Ko provided a chart of "Small
             Business Program Metrics," and noted that refining the metrics would be a priority activity in
           the 2009 OSR work plan. 
            Public comment regarding the Port"s small business program was received from the
               David Fukuhara, Concessionaire at Sea-Tac Airport. Mr. Fukuhara commented that
                  he feels Sea-Tac is making good progress in the small business program, but that it is

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         TUESDAY, FEBRUARY 3, 2009                         P. 3 
                  difficult to get into the Port and feels that providing guidelines for small business
                 would be a good thing. 
            Commissioner Hara noted that the following item was being added to the agenda: 
           Follow-up on Response to TKW Audit on Project Delivery 
             Presenter: Ray Rawe, Director, Engineering Services. 
            Mr. Rawe provided a report summary document, reflecting audit recommendations
             completed, and a timeline for those still in progress. 
            Mr. Rawe stated that within the 11 recommendations resulting from the audit, there was a
             total of 37 action items. He noted that 17 action items had been completed, 6 are nearly
            completed, and the remaining 14 had yet to be vetted. 
           Discussion of Updated Audit Committee Charter 
             Presenter: Tom Barnard, Research and Policy Analyst 
            Mr. Barnard provided and reviewed a document for discussion which showed the main
            differences between the current Audit Committee Charter (Charter) and the proposed revised
            Commissioner Hara clarified that today"s meeting would be for input from the Committee to
            finalize the Charter, and it would then need to be approved by the full Commission in public
            Mr. Miller requested the section stating that the Committee would abide by "Yellow Book
            Standards" be either deleted or modified to state that the "Yellow Book Standards" would be
             used as a guide. 
             Mr. Miller suggested that under the section of "Duties," there be additional language
            regarding the relationship with the State Auditor"s Office (SAO). Commissioner Creighton
             stated that he would like to see separated out a section regarding the SAO. 
            Ms. Strout asked that under the section "Purpose and Authority," language be added
            regarding keeping the CEO apprised of requests for information from Port employees on
             departmental audit matters. 
            Mr. Miller noted a provision added to the proposed new Charter stated that the public
            member may be removed during his or her term by the Commission President. 
            Commissioner Hara stated that the proposed changes would be incorporated into the
            document and the item would be placed on an upcoming agenda for final committee
            approval, which would be followed by a vote by the full Commission. 

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           Review of Upcoming Audit Committee Calendar Dates 
             The suggestion was made to not schedule internal audit reports for each month, but to list
             them as an item every other month, with the exception that if an internal audit report is
            completed, they will come to report sooner. 
             Mr. Miller stated that he would still like to see a report back on Enterprise Risk Management
            and current thinking, and commented that this is an item which should be included in the
            Mr. Miller commented on moving certain calendar items up earlier in the year, for example
            having in December the discussion of the draft internal audit workplan for the following
            Commissioner Hara noted his interest in contacting the SAO to see when they can come for
             their entrance conference regarding the scope of their next audit 
             Mr. Miller stated he would like to see a line item soon regarding the Port"s plan for planning
            and helping to conduct the next SAO audit, and perhaps looking again at lessons learned
             from the previous audit. 
            Mr. Miller commented that he thought discussion of the long-term vision and mission may
            only need to be addressed twice a year rather than every 3 months. Commissioner Hara
             suggested having an initial discussion after 90 days, and then decide when to have follow-up. 
            There being no further business, the meeting was adjourned at 11:07 a.m. 

           Commissioner Lloyd Hara 

                Feb 3 SCM Audit Min