Commission Meeting Portal

Audit Meeting on Aug 04, 2009 1:00PM

Minutes for the Port Of Seattle Commission meeting, held on Aug 04, 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 

             An audio of the meeting proceedings and meeting materials are available on the Port of
                                        Seattle web site - 
                     APPROVED MINUTES 
            The Port of Seattle Commission Audit Committee met in a special meeting at 9:00 a.m.,
            Tuesday, August 4, 2009 in the Commission Chambers at Pier 69, 2711 Alaskan Way,
            Seattle, WA. Committee members Hara and Miller were present, as well as CEO Tay
            Yoshitani. Commissioner Tarleton was also in attendance. Committee member
            Creighton was absent. 
        CALL TO ORDER 
            The committee special meeting was called to order at 9:00 a.m. by Commissioner Lloyd
           Approval of Minutes 
           Audits of Rent-A-Car Lease Agreements with Avis, Budget, and Hertz 
            Presentation documents: Memorandum dated August 4, 2009, computer slide
            presentation, and reports from Jack Hutchinson, Manager, Internal Audit Department 
             Presenter: Mr. Hutchinson 
            Mr. Hutchinson stated that the period of the audits conducted was November 2006
            through October 2008. The Internal Audit Department contracted with the independent
            CPA firm of Branch, Richards & Co. who conducted the audits using agreed-upon
            procedures. The objectives of the audits were 
               To determine whether the lessees properly calculated, reported and paid the
                 correct amount of concession fees 

                 July 72 SCM Audit Min

         TUESDAY, AUGUST 4, 2009                            P. 2 
               To determine whether the lessees properly collected and remitted the correct
                 amount of Customer Facility Charges (CFC) to the Port. 
            It was noted that CFC charges appeared to have been collected and paid to the Port in
            accordance with the lease agreements. 
           Avis Rent A Car System, Inc. 
            Mr. Hutchinson stated that Avis has been taking what is called an incremental discount
            and they have not been including this discount as part of the concessions agreement.
             Although the discount is legitimate, the agreement does not allow that discount to be
            deducted from concessionable revenue. He noted that there was a discrepancy of
            approximately $627,000 of undisclosed concessionable revenue. 
           Budget Rent A Car System, Inc. 
            It was noted that a discrepancy was also discovered in the audit of Budget for an amount
            of approximately $200,000, however it did not result in a recoverable concession fee 
           Hertz Corporation 
             Mr. Hutchinson noted that an issue from a previous audit of Hertz, called a local rental
            deduction, appears to have been resolved.
            Committee member Miller asked about upcoming contract negotiations, and Jim Schone,
            Director, Aviation Business Development and Management, responded that the rental car
            company contracts will be placed on a holdover status between the end of their current
             contract and the time they move into the new Rental Car Facility. 
            Mr. Miller stated that he felt there are some recommendations that would be useful in
            developing the next RFP as well as the contract negotiations, for example a requirement
             that every rental car company disclose all discounts that they have recorded in their
             books, not just the ones that are in the agreement; and that any new fees that they start to
             charge be reported. 
            CEO Yoshitani commented on the importance of clearly writing contracts in order to
            avoid ambiguity. 
             Mr. Miller suggested that perhaps in a year from now, staff consider an additional
            procedure that the auditors would look at to review contract language improvements. 
           Update on Requested Audits 
             Presenter: Jack Hutchinson, Manager, Internal Audit Department 
             Presenter: Mr. Hutchinson 

                August 4 SCM Audit Min

         TUESDAY, AUGUST 4, 2009                            P. 3 
            Mr. Hutchinson commented on audits not included as a part of the Internal Audit
            Department's work plan. He noted that these are reviews which are unforeseen when the
            budget is created and are covered out of contingency funds. 
             It was noted that a review currently in process was of the Acquisition and Relocation
             Department at the Airport, and that Internal Audit hoped to exit with the Audit
           Committee in September. 
           Review of Tracking Calendar 
            Presentation document: Annual Audit Committee Calendar for 2009 and Internal Audit
            work for 2009 
             Presenter: Tom Barnard, Commission Research and Policy Analyst 
            Committee member Miller suggested that the Committee review the calendar for the
            remaining months of 2009 to decide what why would like to have as items on upcoming
            agendas. He proposed that the 2010 Internal Audit workplan be placed on the November
             3 agenda for an initial discussion and n the December 1 agenda for final discussion. 
            Committee discussion also took place regarding the State Auditor's Office (SAO)
             returning to report on the performance audit. A date was not decided upon and it was
             decided that a schedule would be confirmed at a later date. 
            Other items discussed to be placed on the Committee calendar were the financial and
            grant audit, appointments and transition issues, and audit committee governance, which
            Commissioner Tarleton suggested be addressed prior to the end of the year when
            Commissioner Hara leaves office. 
            Commissioner Hara asked about the remaining length of the Moss Adams contract. Rudy
            Caluza, Director of Accounting and Financial Reporting, responded that their contract of
             3 years has concluded and has a renewal option of 4 to 5 years. Commissioner Hara
             stated that he felt discussion of this contract should come back to the Audit Committee. 
            Commissioner Hara stated that he had received a letter from the State Auditor's Office
            (SAO) regarding an estimated cost to complete certain audits during the 2009 audit
            period. A copy of the letter is, by reference, made a part of these minutes, is marked
            Exhibit 'A,' and is on file in Port offices. Commissioner Hara commented that he would
             like to have this as a topic of discussion at next month's committee meeting. 
        10. ADJOURNMENT 
            There being no further business, the meeting was adjourned at 9:45 a.m. 
             (A digital recording of the meeting is available on the Port's website.) 

           Lloyd Hara 

                August 4 SCM Audit Min