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Audit Meeting on May 05, 2009 1:00PM

Minutes for the Port Of Seattle Commission meeting, held on May 05, 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 MAY 5, 2009 
            The Port of Seattle Commission Audit Committee met in a special meeting at 9:00 a.m., 
            Tuesday, May 5, 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. 
           Approval of Minutes 
           None. 
           Lease and Concession Audit: Anton Airfood of Seattle, Inc. 
            Presentation documents: Computer slide presentation and report from Joyce Kirangi,
            Internal Audit Manager 
             Presenter: Jack Hutchinson, Senior Internal Auditor 
            Mr. Hutchinson reported on an audit done of Anton Airfood of Seattle, Inc., which operates a
             restaurant at Seattle-Tacoma International Airport. The audit covered the period of July 1,
            2005 through June 30, 2008.
             Mr. Hutchinson reported that there were no audit issues resulting from the audit, and that
            Anton Airfood was found to have adequate management monitoring and accurate and timely
            reporting and remittance of concession payments. 
            In summary, the audit of Anton Airfood was a clean audit with no reportable findings. 

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          Management Agreement Audit  World Trade Center West, Managed by Wright-
          Runstad 
            Presentation documents: Computer slide presentation and report from Joyce Kirangi,
            Internal Audit Manager 
             Presenter: Jack Hutchinson, Senior Internal Auditor 
            Mr. Hutchinson noted that this was an audit of a third-party management agreement,
           specifically Wright-Runstad, who manages the World Trade Center West (WTC-W). The
            period of the audit conducted was from January 1, 2007 through December 31, 2008. 
            Mr. Hutchinson provided background of the third-party agreement, noting that day-to-day
           management of WTC-W was outsourced to Wright-Runstad & Company. He stated that all
             revenue generated by the facility is remitted to the Port, and the Port pays for all facility
             operating expenses, including costs related to compensation, benefits, and payroll taxes for
           Wright-Runstad employees working at WTC-W. 
             It was noted that at the end of the audit, it was found that Wright-Runstad materially
            complied with the terms of the agreement, but that the current Port monitoring system in not
            effective in managing the risks associated with the agreement. Specifically, compensation
             costs paid by the Port was ineffective for the period of the audit. 
            The recommendation made regarding the audit finding was that Port management should
             implement an appropriate level of monitoring and review to ensure that it is aware of what it
            pays at WTC-W related to third-party employee compensation costs. 
            Responding to questions from Commissioner Hara about the return on investment at WTCW
            , Dan Thomas, Chief Financial Officer stated that an analysis had not been done, but that
             staff could return with that information if needed. Commissioner Hara stated that it would be
             helpful, in terms of understanding the asset. 
             Mr. Miller stated his appreciation of a more current audit report than some that have
            previously come before the committee. 
           Moss-Adams 2008 Audit Exit Conference of Financial Statements 
            Presentation document: Computer slide presentation titled, "Results of 2008 Audit" 
             Presenters: Laurie Tish, Moss-Adams and Lillian Mramba, Moss-Adams 
            Ms. Tish noted that reports would be issued dated April 30, 2009, which was when audit
            work was completed on the Enterprise Fund; the Warehousemen's Pension Trust Fund; and
            the Schedule of Net Revenues Available for Revenue Bond Debt Service. She stated that
            also nearly complete was the audit and report on Schedule of Passenger Facility Charges

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            (PFC's), and that the audit of the Federal Financial Assistance Program should be completed
            in about two weeks. 
            Ms. Tish noted that although a management letter of recommendations would be issued,
            there were not really any material weaknesses found, and that the letter was more along the
             lines of providing helpful hints. 
            Ms. Mramba reviewed major areas of focus of the financial statement audits, which included: 
              Internal Control Environment 
             Management Estimates 
              Bonds and Related Accounts 
             Revenue Recognition 
              Signatory Lease and Operating Agreement (SLOA) 
              Accounting For Leases 
             Net Assets 
              Capital Assets 
              Pollution Remediation Obligations (GASB No. 49) 
               Administration of Federal Awards and Related Administrative Controls 
            Within the PFC Program Audit, it was stated that one instance of noncompliance was noted. 
            Responding to Commissioner Hara's questions about areas which were tested this year in
            comparison to last year, Ms. Tish responded that the implementation of GASB 49, regarding
             pollution, was one area, as well as leases, which were looked at more closely than in the past. 
            Ms. Tish reviewed information that would be forthcoming in the Moss-Adams letter of
            recommendations, including the importance of staff taking annual inventory of oldest capital
              assets to see if they are still pertinent. She also commented on the complexity of GASB 49
            and stated there would be suggestions for management to help maintain consistency with the 
             policy. Ms. Tish commented on observations of information technology, including the fact
             that some of the Port software programs are nearing the end of their life, as well as of their
            vendor support.
            Mr. Miller commented on responsibilities of the committee to external auditors, which
             include a review of the independent auditors' annual financial statements and related notes
            and management discussion analysis; review of the management letters and the schedule of
             unadjusted differences; review of the independent auditors' single audit of the federal grant
            awards administered by the Port. He noted that in addition to these three items, which are
             included as a part of the Audit Committee Charter, is an item that he also wanted to see
            addressed, that being a review of the independent auditors' judgments about the quality of
             the Port's accounting procedures as applied in its financial statements. 
             Ms. Tish responded that she believed some of the results speak for themselves, in that it is
             fairly rare for her on any audit to not have a post-audit adjustment. She commented on the

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             level of professionalism and level of technical expertise in the accounting department, that is
            is outstanding and something to be very proud of. 
       ADJOURNMENT 
            There being no further business, the meeting was adjourned at 10:05 a.m. 

           Commissioner Lloyd Hara 















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