Port of Seattle 
2013 Engagement Service Plan 
October 1, 2013

SCOPE OF WORK 
SUMMARY OF SERVICES 
Audit and report on financial statements for both the Enterprise Fund and
the Warehousemen's Pension Trust Fund to be included in the Port's
Comprehensive Annual Financial Report 
Audit and report on internal control and compliance over financial
reporting in accordance with Government Auditing Standards 
o Issue a management letter of recommendations and observations 
Audit and report on compliance related to the Airport Improvement
Program (AIP) and other Federal Award Programs, the Schedule of
Expenditures of Federal Awards and related internal controls in accordance
with Federal Circular OMB A-133 
Audit and report on the schedule of Passenger Facility Charge (PFC)
program receipts and expenditures and related internal controls 
Audit and report on the schedule of net revenue available for revenue bond
debt service 

2

PHASES OF THE AUDIT 
Planning and risk assessment 
Assessment and evaluation of internal controls 
Substantive audit procedures 
Reporting and presentation of audit results 


3

PLANNING AND RISK ASSESSMENT 
Audit risk involves the risk of material misstatement in
the financial statements 
Audit is designed to provide reasonable  not absolute  
assurance that the financial statements are free of
material misstatements 
Audit risk model  considers different types of risk 
o Inherent risk 
o Control risk 
o Detection risk 
Audit scope and approach is determined based upon
results of risk assessment 
4

EVALUATION OF INTERNAL CONTROLS 
Components of internal control which we evaluate 
o Control Environment 
o Risk Assessment 
o Control Activities 
o Information and Communication 
o Monitoring 
Top-down approach 
o Assess entity-level controls and information technology related
(general computer) controls 
o Identify significant accounts and processes 
o Obtain documentation of significant accounts and processes 
o Assess design and implementation and perform walkthroughs of
significant controls 
o Identify "key controls" for testing 
o Perform tests of controls and compliance 
5

SIGNIFICANT ACCOUNTS AND PROCESSES 
Administration of federal awards and related administrative
controls 
Billings, cash receipts, and receivables 
Airport, seaport, real estate lease agreements and other operating
leases 
Procurement, cash disbursements, and payables 
Payroll 
Capital assets and projects 
Treasury and investments 
Debt and related accounts 
Environmental remediation liability and contingencies 
Financial close and reporting 
Information technology (general computer controls) 
Budget 
6

INFORMATION TECHNOLOGY (IT)
TESTING APPROACH 
Determine application systems, databases, and operating
systems in scope 
Identify key IT general computing controls that support
automated and application controls integral to financial
accounting and reporting 
Conduct walkthroughs of significant application and general
computing controls to assess design and implementation 
Perform tests of IT controls and compliance 


7

IT CONTROL AREAS 
Application Controls 
o Procurement and cash disbursements 
o Payroll 
o Billing 
o Capital assets and projects 
o Financial close and reporting 
General Computing Controls 
o Security and access 
o System acquisition and implementation 
o System changes/change management 
o Computer operations 
8

ADMINISTRATION OF FEDERAL AWARDS 
Internal controls and tests of compliance will be performed
relative to the following administrative requirements: 
Allowable costs and activities 
Cash management 
Davis-Bacon Act compliance 
Equipment and real property management 
Matching and level of effort 
Period of availability 
Procurement and suspension and debarment 
Program income 
Reporting 
Sub-recipient monitoring 
Special tests and provisions 
9

SUBSTANTIVE AUDIT PROCEDURES 
Tests of Details 
Directed testing and audit sampling 
Random and judgmental sampling methods are used 
Compliance with requirements of the major federal awards and the PFC
program 
Analytical procedures 
Comparison of current and prior year results, and actual to budgeted
amounts 
Analysis of detailed changes within certain accounts such as capital assets,
long term debt and investments 
Predictive analytics for income statement accounts, based upon history ,
data independent of accounting department, and industry expectations 
Holistic review of overall financial statements 
10

AREAS OF AUDIT EFFORT 
Internal control cycles 
o  Key controls identified and tested 
o  Capital assets, payroll, cash disbursements are tested via attribute sampling 
o  All systems tested via inquiry and walkthroughs 
Management estimates 
o  Pollution remediation obligations, depreciation, allowance for doubtful accounts,
grant receivables, legal claims 
Bond accounts 
o  Arbitrage liability, capitalized interest, compliance with covenants, new issuances,
refunding or defeasances 
Accounting for leases 
Revenue recognition 
o  Airport lease agreement, seaport and real estate leasing arrangements, other
operating revenues, taxes, PFC and federal awards, investment income 
Capital assets 
Net Position classification 
Pension Plans and Other Postemployment Benefits 
o  Disclosures and reliance upon calculations performed by specialists 
11

TIMING 
Planning & Risk Assessment October 2013 
Tests of Internal Controls  October 2013 and December 2013 
Tests of General Computer Controls  December 2013 
Substantive Audit Procedures  February, March 2014 
Reporting and Communications  April 2014 



12

NEW ACCOUNTING STANDARDS 
GASB 61 'The Financial Reporting Entity: Omnibus- an amendment of
GASB Statement No. 14 and No. 34' 
o Clarifies the guidance for including, presenting, and disclosing information about
component units and equity interest transactions within the reporting entity 
GASB 65 'Items Previously Reported as Assets and Liabilities' 
o Clarifies the appropriate reporting of deferred outflows and inflows of resources,
which were previously reported as assets or liabilities 
GASB 66 'Technical Corrections  2011' 
o Resolves conflicting accounting and financial reporting guidance by amending
previous GASB statements which adopt certain FASB and AICPA
pronouncements 

13

QUESTIONS? 


14