Commissioners                                             Tay Yoshitani 
Tom Albro 
Chief Executive Officer 
Commission President 
Stephanie Bowman                      P.O. Box 1209 
Bill Bryant                               Seattle, Washington 98111 
John Creighton                          www.portseattle.org 
Courtney Gregoire                         206.787.3000 
APPROVED MINUTES 
AUDIT COMMITTEE SPECIAL MEETING JULY 29, 2014 
The Port of Seattle Commission Audit Committee met in a special meeting Tuesday, July 29, 2014 in the
Commission Chambers at Pier 69, 2711 Alaskan Way, Seattle, Washington. Committee members present
included Commissioner Bryant, Commissioner Creighton, and Christina Gehrke. Also present were  Tay
Yoshitani, Chief Executive Officer; Dan Thomas, Chief Financial Officer; Joyce Kirangi, Internal Audit
Department Director; Jeff Balentine, Mobius Industries, USA; Jack Hutchinson, Internal Audit Manager; 
Margaret Songtantaruk, Staff Auditor; Tyler Winchell, Audit Staff; Brian Nancekivell, Audit Staff; Ben
Wolfgram, Audit Staff; Roneel Prasad, Audit Staff; Ruth Riddle, Audit Staff; Jeff Hollingsworth, Senior
Manager, Risk Management; Tom Barnard, Research and Policy Analyst; and Amy Dressler, Assistant
Commission Clerk. 
Call to Order: 
The committee special meeting was called to order at 9:04 a.m. by Commissioner Bryant. 
Approval of Audit Committee Meeting Minutes of February 4, 2014, and May 20, 2014: 
On motion by Commissioner Creighton, seconded by Commissioner Bryant, the minutes of the
Audit Committee special meetings of February 4, 2014, and May 20, 2014, were approved. 
External Audit  CPO Efficiency Audit 
The Committee received a presentation from Mr. Balentine that included the following information: 
An external audit of the CPO process was requested by the Audit Committee at the beginning of
2014 for the purpose of evaluating the efficiency and effectiveness of the Port's procurement and
contracting procedures. 
The review period was January 1, 2014 through March 11, 2014, and examined fully executed Port
of Seattle contracts, selecting a sample of 10% of total contracts across all Port departments. 
Best practices were surveyed in order to benchmark the Port's practices as compared to other
public agencies, larger commercial entities, and port authorities. 
Collaboration is an important part of the procurement process. Engagement among the many
stakeholders is key to the success of the process. 
The audit determined that the process is well managed and meets internally set expectations. 
The process is slow when compared to similar organizations, but is flexible. 
There has been an improvement in speed over the past four years. 

Audio recordings of meeting proceedings and meeting materials are available on the Port of Seattle web site: www.portseattle.org




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TUESDAY, JULY 29, 2014 
97% of firms and consultants surveyed said they would do business with the Port; many said
working with the Port is no different from working with any other public agency they have worked
with in the past. 
Barriers to working with the Port include terms and conditions, bonding requirements, and safety
and security requirements. 50% of firms and consultants surveyed said working with the Port costs
them more, but 90% of those said their billing rates are not adjusted to cover this increased cost. 
Contract negotiators believe that they have the resources available to negotiate fair and
reasonable rates. 
Of 56 best practices identified, the Port is accomplishing 69%. One major exception is use of Key
Performance Indicators. 
The Port lacks a clear organization-wide procurement strategy that is aligned from the Commission
throughout the organization. 
Short-term recommendations include: 
Develop a practice that reinforces consistent application of authorizations, approvals and
segregation of duties, in order to increase understanding of the process. 
Clearly define a procurement strategy. 
Review and adjust practices in order to support procurement strategy, once it has been
defined. 
Provide training to negotiators with regards to rate negotiation, including an internal CPO
certification. 
Online procurement documents should be examined for relevance. 
Technology should be used more effectively. PeopleSoft should be better aligned with
departmental needs. 
Staffing was examined. The CPO department thinks they are staffed appropriately, although major
and small works thinks future staff increases will be necessary. 
More effective training will improve efficiency. 
Mid-term recommendations include: 
Assignment of CPO administrators to departments that infrequently use the procurement
process. 
Develop a flowchart for internal and external users that explains the process in layman's
terms. 
Develop one single contract database. 
The only long-term recommendation is to create a Port Authority Contracts and Procurement
association to facilitate sharing of best practices, controls, emerging technologies, and metrics. 
Lease and Concession Audit  Dollar Rent-A-Car 
The committee received a presentation from Mr. Hutchinson and Ms. Songtantaruk that includedthe 
following relevant information 
The audit objectives were determine whether: 
Concession fees were complete, correctly calculated, and paid on time. 
The Port and lessee were both in compliance with the provisions of the lease and
concession agreement 
Customer Facility Charges were properly collected. 
The audit period was November 1, 2010 to May 16, 2012. 
The audit determined that the terms of the lease and concession agreement were complied with.







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TUESDAY, JULY 29, 2014 
The audit determined that gross receipts were underreported in the amount of $9840.00. With
penalties and interest, the amount determined to be owed is approximately $14,000.00. 
The Customer Facility Charge was underreported by approximately $21,000.00 due to system
errors. An additional $28,000.00 in penalties is determined to be owed. 
Penalty and interest charges are pre-determined as part of the lease and concession agreement. 
Doris Cassan, principle of Dollar Rent-A-Car, spoke in response to the audit. Ms. Cassan noted that Dollar
Rent-A-Car has been in business with the Port for many years and has had several audits without
significant findings. She stated that the problem with calculation of Customer Facility Charges was due to
their vendor, and she was unaware of the underreporting. Ms. Cassan also pointed out the high amount of
the interest rate compared to the amount underreported. 
Comprehensive Operational Audit  Aviation Business Development: 
The committee received a presentation from Mr. Winchell that included the following relevant information: 
The audit examined whether Aviation Business Development management has appropriate
controls in place to manage its agreements. 
The audit period was January 1, 2013 to June 30, 2014. 
It was determined that management controls are adequate and sufficient for developing and
managing agreements. There are no reportable findings. 
Comprehensive Operational Audit  Terminal 91 Maritime Operations: 
The committee received a presentation  from Mr. Nancekivell  that included the following relevant
information: 
Cruise Ship Operations were not included in this audit as they are considered part of a separate
division, which was audited two years ago. 
Sources of revenue include dockage (tariff and preferential), wharfage, equipment rental, electricity
charges, and space rental. 
The purpose of the audit was to determine whether management has implemented adequate
controls to insure that all revenue is recorded accurately and on a timely, and that rates comply
with the tariff or preferential agreement. 
The audit period was January 1, 2013 to May 31, 2014. 
It was determined that adequate controls were in place. There are no reportable findings. 
Comprehensive Operational Audit  Shilshole Bay Marina: 
The committee received a presentation from Mr. Wolfgram that included the following relevant information: 
This facility is operated by the recreational boating department within the Real Estate division. The
primary source of revenue is moorage. 
The audit focused on Shilshole rather than other, smaller marinas because it is the largest portion
of this department's revenue, and the audit plan for this year was to focus on Shilshole in
particular. 
The audit period was January 1, 2013 to June 30, 2014. 
Department operations were examined to determine whether Guest Moorage, Dry Moorage, and
Parking revenue is complete and being charged at the appropriate rate, that rates are charged in
accordance with the  approved tariff, and that customer liability insurance complies with
requirements.






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TUESDAY, JULY 29, 2014 
It was found that the management controls are adequate. There are no reportable findings. 
Third Party Audit  Club International and Club Cascade Lounge: 
The committee received a presentation from Mr. Hutchinson and Mr. Prasad that included the following
relevant information: 
VIP Hospitality is contracted to manage Club International and Club Cascade Lounge. These are
Port operations that the Port does not have the capacity to manage. 
The Port entered into an agreement with VIP Hospitality to manage day-to-day operations of
common use lounges. The Port is responsible for operation expenses. 
The purpose of the audit was to determine that VIP is incurring expenses appropriately on behalf of
the Port. 
The review period for the audit was January 1, 2012-December 31, 2013. 
It was determined that VIP Hospitality was in compliance with the agreement in the areas of
budget, inventory, insurance requirements, customer billings and receipts, and expenses. 
It was determined that VIP Hospitality did not maintain accurate records of labor costs, and that
Port management control over employee payroll tax reimbursement is not adequate. 
Payroll accounts for 18-20% of total operating expenses. 
It was observed that there are two sets of payroll records for some months testing. Auditors were
unable to determine whether expenses paid were properly reported. 
Per the agreement, payroll expenses were paid by the Port as an estimate, with a plan to reconcile
at the end of the year. 
VIP has since instituted fingerprint timesheet reporting, and there is a new mechanism in place to
calculate payroll expenses. 
Audit staff does not think the underpayment was intentional. VIP notified the Port of the
overpayment. 
The contract with VIP expires in March, 2015, and audit findings will be taken in to account when
selecting a new contract. 
Third Party Audit  World Trade Center -- West: 
The committee received a presentation from Ms. Riddle that included the following relevant information: 
The World Trade Center  West has 14 tenants and is at 75% occupancy. There are new leases in
progress. 
The review period for this audit was January 1, 2013 to December 31, 2013. 
The purpose of this audit was to determine whether management controls over the Third-Party
Management Agreement with Kidder Matthews ensure that tenants are bill appropriately, payments
on behalf of the Port are properly handled, and that Kidder Matthews complies with the
requirements of the agreement. 
There were no reportable findings. 
Enterprise Risk Management Project: 
The committee received a presentation from Mr. Hollingsworth that included the following relevant
information: 
This year's project was completed over the course of two months, and focused on Facility and
Infrastructure Operations.


PORT COMMISSION AUDIT COMMITTEE MEETING MINUTES         Page 5 of 5 
TUESDAY, JULY 29, 2014 
Two workshops were held in order to examine strategies and objectives determined by a team of
subject matter experts from Aviation and Facility Infrastructure Operations. 
The tool used to measure risk is a "heat map" matrix, which charts the likelihood and impact of risk. 
Critical and insignificant risks were judged based on the number and potential duration of risks. 
Risks were narrowed down to 11 risk definitions, which subject matter experts then voted upon in
order to rank them and place them on the heat map. 

2014 Work Plan Status: 
The committee received a presentation from Ms. Kirangi that included the following relevant information: 
The purpose of this report is for the Audit Committee's information, to report regarding staff's
progress on the 2014 work plan. 
One category requiring discussion is projects that have been outsourced based on project priority. 
The budget allocated to these audits was spent on the CPO efficiency audit. 
It is recommended that Scheidt Bachman IT review be removed from the work plan because a
consultant reviewed that system last year, and the direction of the system is still being assessed by
management. 
Staff would still like to perform the two remaining IT projects  PeopleSoft post-implementation,
and Data Center review. There is no budget remaining to perform these projects, but the CFO is
able to provide additional funds with approval from the Audit Committee. 
Discussion of additional funds to perform the PeopleSoft post-implementation and Data Center review
audits resulted in the Audit Committee's approval. 
Adjournment: 
There being no further business, the special meeting was adjourned at 11:02 a.m. 
John Creighton 
Minutes approved: October 21, 2014