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Audit Meeting on Apr 14, 2009 1:00PM

Minutes for the Port Of Seattle Commission meeting, held on Apr 14, 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. portseattle.org 
                   Gael Tarleton                              206.728.3000 

                      APPROVED MINUTES 
               AUDIT COMMITTEE SPECIAL MEETING APRIL 14, 2009 
            The Port of Seattle Commission Audit Committee met in a special meeting at 9:00 a.m.,
            Tuesday, April 14, 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 CEO Tay Yoshitani and Joyce Kirangi, Port
            Internal Audit Manager. 
        CALL TO ORDER 
            The committee special meeting was called to order at 9:07 a.m. by Commissioner Lloyd
            Hara. 
           Approval of Minutes 
            Motion for approval of the Minutes of the February 3, 2009 Audit Committee Meeting  
            Creighton 
            Motion carried by the following vote: 
            In Favor: Creighton, Hara (2) 
            Mr. Miller participates as a non-voting member of the Committee 
            Motion for approval of the Minutes of the February 27, 2009 Audit Committee Meeting  
            Creighton 
            Motion carried by the following vote: 
            In Favor: Creighton, Hara (2) 
            Mr. Miller participates as a non-voting member of the Committee 

                Apr 14 SCM Audit Min

        MINUTES OF AUDIT COMMITTEE MEETING 
          TUESDAY, APRIL 14, 2009                             P. 2 
           Internal Audit Report of Bell Harbor International Conference Center 
            Presentation documents: Computer slide presentation from Joyce Kirangi and report titled,
            "Internal Audit Report  Bell Harbor International Conference Center (BHICC) Management
           Services Agreement No.488" 
             Presenters: Ms. Kirangi and Margaret Songtantaruk, Internal Auditor 
            Staff provided background on the audit, which was conducted for the period of January 1,
           2005 through December 31, 2007. 
            Ms. Kirangi spoke to the objectives of the audit, which included determining: 
                  1.  Whether Columbia Hospitality, Inc. (CHI) complied with the provisions of the
                 management services agreement, as well as other applicable laws and regulations, and 
                  2.  Whether Port management effectively monitored the agreement with Columbia
                   Hospitality, Inc. 
             Ms. Kirangi noted that there was only one area of concern within this particular audit, which
            was from a management point of view, and the need to be more connected to the
            management of the agreement, as well as the need to further monitor the day-to-day
             operations of the contractor who monitors activities at Bell Harbor. 
            Regarding the inadequate monitoring system of BHICC, staff addressed the following, more
              specific issues: 
                Lack of an established level of monitoring related to the third-party employee
                 compensation costs paid by the Port 
               Unsubstantiated methodology or support for cost allocation 
                Improper advance of public funds for private activities 
               Improper classification of expenses 
                Ineffective monitoring of sales activity to CHI and its affiliates 
             Staff clarified to the Committee that other similar contracts to the one being discussed are
            with the World Trade Center Seattle, which CHI also manages, and also a contract with
            Wright-Runstad. 
            It was noted that although there are areas of concern with CHI, CHI is doing what they are
             allowed to under the current contract. It was suggested that the contract be looked at
            regarding possible double incentives being provided, when perhaps there should be one
             incentive. 
             It was suggested that staff return in 90 days to follow-up on the implementation of changes
            recommended as a result of the audit. 

                Apr 14 SCM Audit Min

        MINUTES OF AUDIT COMMITTEE MEETING 
          TUESDAY, APRIL 14, 2009                             P. 3 
           Operational Risk Assessment & Mitigation of Accounting and Financial Reporting 
            Presentation document: Computer slide presentation titled, "Risk Assessment & Mitigation  
           Accounting & Financial Reporting (AFR) Department" 
             Presenters: Rudy Caluza, Director, Accounting & Financial Reporting and Diane Jensen,
            Senior Manager, Accounting & Financial Reporting, Business Technology 
            Mr. Caluza commented that the Accounting & Financial Reporting Department had recently
            completed a risk assessment of the department and reviewed ways in which any risks found
            could be addressed. 
            Mr. Caluza provided background on the department, the responsibilities and core operations,
            of the department, and commented on how the department staff are effectively stewards of 
             public funds and assets. 
            Mr. Caluza noted that the approach to the assessment was more of a practical approach than a
            structured approach, and commented that it may be a model which could be used by other
             Port departments in the future. 
            Five key areas of focus of the risk assessment were noted by Mr. Caluza, which included: 
               Legal compliance with policies and procedures 
               Organizational structure 
             Management oversight 
              Records and documentation 
             Risk management 
            Ms. Jensen reported on the broad scope taken during the assessment, which included all
            members of the department, covering all of the department's key operations. 
            Key action areas noted by Ms. Jensen were: 
               Strengthen control points & Confirm system controls 
              Enhance monitoring & reviews 
               Refine policies & desk procedures 
               Strengthen organizational training & communication 
             It was noted that out of 150 action items identified in the risk assessment, 100 have been
            completed, and the remaining 50 have been assigned with a name and due date. There is also
             a plan to continue monitoring the results with action plan updates. 
             Responding to a question from Mr. Miller, Mr. Caluza stated that as a result of the
            assessment, no new objectives were really identified; however, the result was to be more
             serious about and strengthen current objectives. 

                Apr 14 SCM Audit Min

        MINUTES OF AUDIT COMMITTEE MEETING 
          TUESDAY, APRIL 14, 2009                             P. 4 
            Although no timeline was stated, Commissioner Hara suggested that staff may want to come
            back to the Committee to report on the payoffs of the risk assessment which was conducted. 
            Mr. Miller expressed appreciation for the report on the AFR risk assessment, noting that
             hopefully it could set the tone to provide some sort of template for other departments within
              the Port. 
       ADJOURNMENT 
            There being no further business, the meeting was adjourned at 10:44 a.m. 

           Commissioner Lloyd Hara 













                Apr 14 SCM Audit Min