Internal Audit Internal Audit Briefing 
Presented to the Port of Seattle 
Audit Committee and Tay Yoshitani, CEO 

Joyce Kirangi, CPA, CGMA 
Director, Internal Audit 
May 20, 2014

Agenda 
Audit Report 
1.   Lease and Concession Audits 
None 
2.    Operational Audits 
Central Processing System 
None 
Comprehensive Operational Audit /Departmental Audit 
Airport Public Parking Operation 
Aviation Building Department 
Limited Operational Audit 
Fire and Police Payroll Process Review 
Police Forfeiture Funds 
Tuition Reimbursement Program 
3rd Party Audit 
None 
Briefing/Updates 
CPO Efficiency Review by an Independent Consultant

Comprehensive Operational Audit 
Airport Public Parking Operation 
Our audit focused on the management established monitoring controls over parking
receipting operations based on system reports and other information. 
Review of Established Management Controls: 
(these are controls outside a system application)
Safeguarding and accountability of collected parking receipts
Establish policies and procedure over parking receipting operation
Management monitoring and review of daily system output reports
Supervisor approval of exception parking transactions
Evidence of management verification and review of exception parking transactions
Documentation and audit trail -- evidence of management review
Review and reconciliation of collected parking fee receipts to system generated reports
Reconciliation of bank deposits to supporting records
Etc.

Comprehensive Operational Audit 
Airport Public Parking Operation 
Background 
The Port of Seattle owns and operates the Seattle-Tacoma International Airport
(STIA) parking garage. The Landside Operations Department runs the day-to-day
operation using an automated parking revenue system to process parking
transactions and to report parking revenue. 
Revenue from parking operations is a significant portion of Port revenue,
bringing in approximately $50 million per year; this is the single largest Portoperated
revenue stream. Credit cards are the most common method of
payment comprising of almost 95% of total parking receipts in 2012 and 2013. 
Public Parking Receipts 
2012                      2013 
Payment Type                 Receipts      Percentage   Receipts      Percentage 
Cash             $2,925,112        5.5%    $2,874,971        5.2% 
Credit Card        $50,725,355       94.5%   $52,655,053       94.8% 
Total              $53,650,467                $55,530,023
Source: Parking Revenue System

Comprehensive Operational Audit 
Airport Public Parking Operation 
Audit Objectives 
The purpose of the audit was to determine whether: 
1.   Established management controls are adequate to ensure: 
Parking exception transactions are properly reviewed, approved, and
documented 
Recorded cash and credit card transactions are reconciled to bank deposits 
Parking fees are charged in compliance with Commission- approved tariff
rates 
2.   To determine whether the parking revenue system completely captures a
record of each vehicle exiting the parking garage. 
We reviewed Airport Public Parking Garage information for the period January
1, 2013  April 11, 2014.

Comprehensive Operational Audit 
Airport Public Parking Operation 
Audit Result  No Reportable Condition /Finding 
Management controls are adequate to ensure that exception transactions are
properly reviewed, approved and documented, recorded cash and credit card
transactions are reconciled to bank deposits, and parking fees are charged in
accordance with the Commission-approved tariff. The tube-counting devices
captured 99.2% of the vehicles exiting the garage when compared to the vehicle
records captured in the parking revenue system.

Comprehensive Operational Audit 
Aviation Building Department 
Background 
The Aviation Building Department formed in 1997, by an interlocal agreement
between the Port of Seattle and the City of SeaTac. The agreement allows the
Port to administer and issue permits for all Port of Seattle projects located
within the city limits. 
The Department collects permit fees for building and mechanical plan reviews
for tenant construction projects at the airport. The Department employs five
FTEs, three of whom are field and plan review inspectors. The Department
utilizes an internally developed Permit Tracking System (ABD system) for billing
and collecting fees. 
AVIATION BUILDING DEPARTMENT PERMIT REVENUES AND EXPENSES 
PERMIT TYPE                                          2011            2012            2013 
Building Permit and Plan Review Fee Revenue             $137,291         $208,541         $191,230 
Salaries and Benefits Expense                              639,634           654,502           554,886 
Other Expense                                            26,935           37,515           28,219 
TOTAL                                             $803,860        $900,558        $774,335 
Data Source: PeopleSoft Financials

Comprehensive Operational Audit 
Aviation Building Department 

Audit Objectives 
The purpose of the audit was to determine whether Port management controls
are adequate to ensure: 
1.  Permit and plan review fee receipts were complete, properly recorded and
deposited timely and intact. 
2.  Inspections and/or plan reviews outside normal business hours were properly
authorized and billed. 
3.  Department expenditures were properly authorized and for legitimate
business purposes.
We reviewed information for the period January 1, 2011 - December 31, 2013.

Comprehensive Operational Audit 
Aviation Building Department 
Audit Result 
Management monitoring controls are not adequate to mitigate the
risks related to the complete, properly recorded, timely, and intact
deposit of permit and plan review fee receipts, proper authorization
and billing of after-hour inspection services, and properly authorized
and legitimate expenditures. 
One Reportable Condition/Finding 
The aviation building department's management controls are not
adequate to mitigate the risks associated with the absence of the
separation of duties.

Limited Operational Audit 
Fire and Police Payroll Process Review 
Background 
Pay and benefits are the most significant expense for Fire and Police. Due to
the union agreements, there is significant complexity in the departments'
payroll processes as compared to salaried, non-represented Port employees. 
PORT FIRE AND POLICE SALARIES, WAGES, AND BENEFITS - 2013 
FIRE DEPARTMENT 
Actual Salaries, Wages, and Benefits                                                      $11.8 M 
Total Represented Employees (Local 1257)          Fire Fighters                                         67 
Total Employees* --                                         73 
POLICE DEPARTMENT 
Actual Salaries, Wages, and Benefits                                                      $20.1 M 
Represented Employees (Local 117)**              Officers                                        76 
Sergeants                               16 
Dispatch                                 16 
Communication Specialist                 8 
Non-Sworn Supervisors                   3 
Commanders                         5 
TOTAL REPRESENTED                124 
Total Employees* --                                       131 
Data Source: PeopleSoft Financials 
Data Note: *As of December 31, 2012 
**Each labor group has a separate agreement under Local 117

Limited Operational Audit 
Fire and Police Payroll Process Review 

Audit Objectives 
The purpose of the audit was to determine whether Fire and Police
management has implemented adequate controls to ensure: 
1.  Actual pay and benefits meet the terms of the union agreements and
applicable state laws and regulations. 
2.  Payroll records at Fire and Police Departments are accurate and complete. 
We reviewed information for the period from January 1, 2012 - August 31, 2013.
We audited only represented employees.

Limited Operational Audit 
Fire and Police Payroll Process Review 
Audit Result 
Fire and Police Departments have implemented adequate controls to
ensure their actual pay and benefits are reasonably accurate and
complete. However, the management of other Port departments
involved in pay and benefits administration processes has not designed
or implemented adequate inter-department communication controls to
ensure that actual pay and benefits administration processes fully meet
the terms of the union agreements. Although the known
errors/oversights have not been financially significant, there have been
numerous errors and omissions that have impacted a number of
employees over prolonged periods. 
One Reportable Condition/Finding 
More formalized communications and coordination efforts are required
among port departments in order to successfully implement labor
agreements.

Limited Operational Audit 
Police Forfeiture Funds 
Background 
Police participates in seizure and forfeiture programs to control illegal
narcotics. The Department has participated in the federal and Valley Narcotics
Enforcement Team (VNET) programs as far back as 2005. The state program
began in late 2009. When seizures occur, the seizures are held in trust until
there is a legal order to return the seized item or money to the party from
which it was seized or to release the item or money to the seizing agency. 

PORT OF SEATTLE POLICE DEPARTMENT FORFEITURE REVENUES 
Source of Forfeiture Revenues             2010       2011       2012       2013      TOTAL 
Federal                                $177,893     $25,603          $0     $29,323   $232,819 
Valley Narcotics Enforcement Team       81,000     50,000           0           0    131,000 
State                                     271,449     189,339      98,790      56,438     616,016 
TOTAL                             $530,342   $264,942    $98,790    $85,761   $979,835 
Data Source: PeopleSoft Financials

Limited Operational Audit 
Police Forfeiture Funds 
Audit Objectives 
The purpose of the audit was to determine whether management controls over
Police Forfeiture Funds are adequate to ensure: 
1.  Seized property is properly processed in accordance with state law from
point of seizure to point of forfeiture. 
2.  Forfeited property is properly accounted for. 
3.  Expenditures of forfeited property are in compliance with federal, state,
and local laws regarding: 
a.   Allowability of expenditures of forfeiture funds. 
b.   Timely and accurate reporting of activity of forfeited funds. 
c.   Time period within which forfeited funds are to be expended. 
We reviewed information for the period January 1, 2010  December 31, 2013.

Limited Operational Audit 
Police Forfeiture Funds 
Audit Result 
Management controls over Police Forfeiture Funds are adequate to
ensure seized property is properly processed, forfeited property is
properly accounted for, reports are timely and accurate, and funds
are expended within mandated time period. However, controls are
not adequate to ensure expenditures of forfeited funds are
allowable. 
One Reportable Condition/Finding 
The police department did not comply with the applicable legal
requirements for the use of forfeiture funds.

Limited Operational Audit 
Tuition Reimbursement Program (HR -12) 
Background 
The Employee Learning and Development Policy (HR-12) provides for college
tuition reimbursement funded and administered by HRD. Employees must
submit a request one year prior to anticipated enrollment. The employee's
manager, department director, and division director must approve the
employee's request. Annually, a committee reviews all employee requests and
scores them based on available budget. The HRD Director provides final
approval of the committee's recommendations. 
TUITION REIMBURSEMENT PROGRAM FINANCIAL HIGHLIGHTS 
NUMBER OF           BUDGETED              ACTUAL
FISCAL YEAR 
PARTICIPANTS         EXPENDITURES         EXPENDITURES 
2012                                        27                 $150,000                 $130,878 
2013                                        21                 180,000                  148,268 
TOTAL                                     48                $330,000                $279,146 
Data Source: Human Resources Department, PeopleSoft Financials

Limited Operational Audit 
Tuition Reimbursement Program (HR -12) 
Audit Objectives 
The purpose of the audit was to determine whether management has
implemented adequate controls to ensure compliance with the
Employee Learning and Development Policy (HR-12). 
We reviewed information for the period January 1, 2012 - December 31,
2013.

Limited Operational Audit 
Tuition Reimbursement Program (HR -12) 
Audit Result  No Reportable Condition /Finding 
Management has implemented adequate controls to ensure compliance
with the Employee Learning and Development Policy.

Briefing / Updates 

CPO Efficiency Review by an Independent Consultant 
Mobius Industries was awarded the contract, and the work began on 3/3/2014. 
The review is scheduled to be complete no later than 6/30/2014. 
To date, it is about 60% complete, schedule-wise.