Port of Seattle 
2013 Audit Engagement Service Plan 
(Provided to management and the Audit Committee on October 1, 2013) 











999 Third Avenue, Suite 2800 
Seattle, WA 98104 
206. 302-6500

SCOPE OF WORK 
The primary purpose of our audit engagements is to form an opinion on the fairness of
presentation of the financial statements of the Port of Seattle for the year ended December 31,
2013 in accordance with accounting principles generally accepted in the United States of
America and to audit and report on the administration of federal awards received by the Port 
in accordance with Federal Circular OMB A-133. The audits will be performed in accordance
with auditing standards generally accepted in the United States of America and Government
Auditing Standards. 
The following summarizes the services to be provided: 
Audit and report on financial statements for both the Enterprise Fund and the
Warehousemen's Pension Trust Fund 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. 
Audit and report on the Airport Improvement Program  and other major Federal
Financial  Assistance  Programs  and  related  internal  controls  and  compliance  in
accordance with Federal Circular OMB A-133 (Single Audit). 
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 Revenues Available for Revenue Bond
Debt Service. 
Issue a management letter of recommendations and observations. 







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OUR AUDIT APPROACH 
In accordance with generally accepted auditing standards and Government Auditing Standards,
our firm utilizes a risk based approach to conduct our audits. Moss Adams performs its audit
engagements using a risk-based approach that requires the auditor to obtain an in-depth
knowledge of the Port's operations and the industry as a whole. 
Audit risk involves the risk of material misstatement in the Port's financial statements and
arises because the audit is designed to provide reasonable (not absolute) assurance that the
financial statements are free of material misstatements. The audit risk model is composed of
three elements; inherent risk, control risk, and detection risk, which must be evaluated and
assessed separately, either quantitatively or qualitatively. We assess risk at the level of high,
medium, or low. 
Inherent risk represents the susceptibility of an account balance, class of transaction, or
disclosure to material misstatement based solely on their nature; this risk exists
independently of the audit. For example, due to the complexity of the estimate,
environmental  remediation  liability is an inherently risky balance. Inherent risk
includes fraud risk and the risk of material misstatement due to fraud. 
Control risk represents the risk that a material misstatement could occur in a system or
in an assertion that will not be prevented or detected on a timely basis by the Port's
structure of internal control. Although control risk exists independently of the audit and
is the responsibility of management, we will modify our audit procedures based upon
assessment of the risk. 
Detection risk represents the risk that the auditor will not detect a material
misstatement that exists in an assertion. It is a function of the effectiveness of applying
our audit procedures. 
We assess audit risk at the overall financial statement level, individual account balance,
transaction, or disclosure level during the planning phase of our audit (risk assessment
procedures). Our overall judgment about the level of the risks above will affect the scope of
the audit, including the nature, timing, and extent of our audit procedures. 
Phase I - Planning 
The following risk assessment activities are performed: 
Entrance meetings with relevant Port management and staff to discuss expectations,
the audit process and timelines, and to obtain key strategic, financial, and operational
information. 
Observation and inspection of documents. 
Identify Port-specific and industry developments that might require an expansion or
modification of audit tests. 

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Conduct risk brainstorming meeting with our own staff as well as meetings with Port
Commissioners, executives, management, and other personnel. 
Based on the results of the risk assessment procedures noted above, we conclude the planning
phase by performing the following: 
Define the scope of the engagement including  determination of  potential major
programs for the Federal Circular OMB A-133 audit procedures. 
Ascertain timing of conduct and completion of audit, reporting submission deadlines,
and nature of reports to be issued. 
Design an efficient audit approach and audit programs with sufficient risk coverage. 
Establish preliminary materiality and the non-posting threshold for trivial matters
noted during the audit 
Materiality 
Materiality is the maximum level of misstatement that can be tolerated in the financial
statements without causing a reasonable person's judgment about them to be significantly
changed or influenced. We determine materiality as follows: 
Conduct preliminary analysis of financial statements to make initial judgment of
materiality. 
Consider the needs and expectations of the readers of the financial statements. 
Consider both quantitative and qualitative factors. 
Major program determination is made using the guidance provided by Federal Circular
OMB A-133. 
Re-evaluate materiality level throughout the engagement and conclude on  final
materiality level upon completion of the audit. 
We identify all quantitative critical components to the financial statements such as total
assets, net assets (net position), capital assets, revenue, and net income. We determine the
most relevant critical component to the users of the financial statement and using a
benchmark percentage, we calculate an overall materiality amount; for example a benchmark
percentage multiplied by a critical component such as total revenues. We also utilize planning
materiality to determine the extent of applying audit procedures; for example, it can be used
in connection with performing substantive analytical procedures and in determining sample
size. 


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Non-Posting Threshold for Trivial Matters 
The trivial matters threshold establishes a level for which misstatements are considered to be
inconsequential to the financial statements. The trivial matters threshold is established at the
planning stage and is calculated as a percentage of planning materiality. We notify Port
management regarding all misstatements discovered in the audit and although we may
consider a misstatement inconsequential, management may elect to record an adjustment,
even if it is deemed to be trivial. All potential adjustment amounts above the trivial matters
threshold are analyzed individually and in aggregate to determine potential impact to the
financial statements. 
Phase II - Assessment of Internal Control 
Internal control is a process that is designed to provide reasonable assurance over the
achievement of the Port's objectives such as reliability of the Port's financial reporting,
effectiveness and efficiency of operations, and compliance with the laws and regulations. The 
framework used in assessing the Port's internal control consists of five interrelated
components; control environment, risk assessment, control activities, information and
technology, and monitoring. Our firm follows a top-down approach when evaluating internal
control starting with entity-level controls and narrowing to controls that relate to specific
financial statement assertions as follows: 
Obtain and assess the Port'sentity-level controls including the information technology
environment and the effect on the internal control structure. This includes assessing
the 'tone at the top'; i.e. controls in place at the Commission and executive level. 
Identify significant accounts and processes: 
Administration of federal awards and related administrative controls 
Billings, cash receipts, and receivables 
Airport lease agreements, seaport and real estate leasing arrangements  and other
operating leases in place 
Procurement, cash disbursements, and payables 
Payroll 
Capital projects 
Treasury and investments 
Debt and related accounts 
Environmental remediation liability and contingencies 
Third party management 
Financial close and reporting 
Information technology (general computer controls) 
Budget 

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Obtain  copies  of  system,  policy,  and  procedure  documentation  from  various
departments. We retain these copies in our permanent working paper files and update
them annually. 
Obtain knowledge of design and implementation of controls relevant to financial
statement assertions and compliance with laws and regulations that have direct and
material effect on determination of financial statement amounts. After gathering this
information we perform "walkthroughs" to verify that our understanding of the system
and its controls is accurate and that key controls exist and are operating as designed. 
Perform tests of controls that relate to financial statement assertions and perform tests
of controls and compliance related to the Port's federal awards: 
Allowable costs and activities 
Cash management 
Davis-Bacon Act 
Equipment and real property management 
Matching and level of effort 
Period of availability 
Procurement and suspension and debarment 
Program income 
Reporting 
Subrecipient monitoring 
Special tests and provisions unique to the major programs 
Information Technology Systems and General Computer Controls 
Determine application systems, databases, and operating systems in scope based on the
business process walkthroughs of our financial audit team. 
Identify any application controls our financial audit team is planning to place reliance
upon. 
Procurement, cash disbursements 
Payroll 
Billing 
Capital projects 
Financial close and reporting 


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Identify key IT general computing controls that support automated and application
controls to be relied upon by our financial audit team. 
Security and access 
System acquisition and implementation 
System changes/change management 
Computer operations 
Conduct walkthroughs of significant application and general computing controls to
assess effectiveness of design and implementation. 
Perform tests of IT controls and compliance. 
Phase III - Substantive Audit Procedures 
We tailor our audit programs for each balance to obtain evidence from a combination of (1)
internal control testing, (2) analytical procedures, and (3) substantive testing. The balance of
evidence to be obtained from each of the three general types of procedures is determined
using an audit approach decision model taking into account the strength of the Port's system
of internal controls. 
Test of Details 
Directed testing and audit sampling are used to perform tests of certain financial
statement account balances. 
Directed testing utilizes judgment and expertise and selections are based on risk and
dollar value; we use directed testing approach for most financial statement balances
where efficient. 
Random  and judgmental  sampling methods are utilized  (method depends on
population). 
Compliance with requirements of the major federal award programs is tested. 
Analytical Procedures 
In the planning phase, we perform a comparison of current and prior year results and
actual and budgetary information, as well as an analysis of the Port's major transactions
during the year. 
During substantive testing, we perform an analysis of the detail of changes to certain
accounts such as capital asset, long-term debt, and investment accounts. For other
accounts, we frequently use predictive analytical tests such as using specific data to
develop expectations. 

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At the conclusion of the audit, we do a holistic review of the financial statements in light
of the results of other auditing procedures and assess whether we have appropriately
addressed all critical areas. 
Conferences and Audit Progress Reports 
We will schedule both an entrance and exit conference with the Port'sAudit Committee and
management. On a weekly basis during audit fieldwork we will provide management with a
status report of progress, unusual or significant accounting issues, proposed and passed audit
adjustments, potential management letter comments, and difficulties encountered, if any. 
Phase IV - Completion of Audit and Presentation of the Audit Results 
Upon completion of substantive procedures, we assemble testing results to determine the
matters that are reportable to management and to the Audit Committee. This process entails
assessing whether there are control deficiencies, whether individually or in aggregate, which
are severe enough to meet the definition of a significant deficiency or a material weakness. We
also conduct final engagement quality control reviews and prepare required deliverables. 
Finally, we are required by auditing standards to communicate, in writing, to management
and those charged with governance, all significant deficiencies and material weaknesses noted
as a result of our audit. For minor observations, we provide information on our observations
regarding controls and various other communications either verbally or in the form of a
formal management letter of recommendations to the Port. 










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AUDIT, ACCOUNTING, AND REPORTING MATTERS 
We have highlighted certain matters of audit emphasis pertinent to the Port: 
Bond Accounts 
The bond related accounts always provide challenging audit and accounting issues. Among
them are: 
New debt issuances 
Refunding, defeasances or extinguishment 
Compliance with covenants 
Capitalized interest 
Arbitrage liability 
Leases 
Leasing issues are complex and are prevalent in all the Port's lines of business. For instance,
we will devote audit effort and resources to the following: 
Real estate transactions within the Real Estate Division 
New and significant leases at the Airport and Seaport Divisions 
Review of Port's controls over ongoing accounting and monitoring of existing leases 
Revenue Recognition 
Revenue recognition complexities: 
Airline lease agreements 
Other operating revenue 
Tax, PFC and federal grant receipts, and investment income 
Capital Assets 
Capital assets issues and related accounts: 
Capitalization policies and classification of closed and on-going projects 
Asset retirements and demolition 
Project costs and overhead allocation 
Depreciation expense 
Impairment analysis 
Environmental Remediation Liability 
Environmental remediation complexities include: 
Estimation by site of future liabilities and related expense 
Asbestos remediation efforts 
Superfund site remediation efforts 
Capital vs. expense classification 
Pension Plans and Other Post-Employment Benefits 
These include complex disclosure requirements and calculations performed by specialists
which are relied upon by Port management. 

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NEW ACCOUNTING PRONOUNCEMENTS 
GASB Statement No. 61, "TheFinancial Reporting Entity: Omnibus- an amendment of GASB
Statement No. 14 and No. 34", effective for periods beginning after June 15, 2012, clarifies the
guidance for including, presenting, and disclosing information about component units and
equity interest transactions of a reporting entity.  We will work with management to
determine the impact of this statement on the Port's financial statements. 
GASB Statement No. 65, "Items Previously Reported as Assets and Liabilities", effectivefor
periods beginning after December 15, 2012, clarifies the appropriate reporting of deferred
outflows and inflows of resources to ensure consistency in financial reporting. We will work
with management to determine the impact of this statement on the Port's financial
statements. 
GASB Statement No. 66, "TechnicalCorrections  2011", effective for periods beginning after
December 15, 2012, resolves conflicting accounting and financial reporting guidance by
amending previous GASB statements which adopt certain FASB and AICPA pronouncements.
We will work with management to determine the impact of this statement on the Port's
financial statements. 
GASB Statements that will be effective for the Port in 2014 or later and should be evaluated
are: 
GASB Statement No. 67, "Financial Reporting for Pension Plans", effective for the Port in 2014,
and improves financial reporting by state and local government pension plans by providing a
decision-useful information, supporting assessments of accountability and interperiod equity
and creating additional transparency. This statement replaces statement 25. We will work
with management to determine the impact of this statement on the Port's financial
statements. 
GASB Statement No. 68, "Accounting and Financial Reporting for Pensions", effective for the
Port in 2015, provides standards for measuring and recognizing liabilities, deferred outs of
resources, and deferred inflows or resource, and expense/expenditures.  This standard will
impact the Port's note disclosures and the accounting and reporting for the enterprise fund
and the Warehousemen's Pension Trust's pension obligation. We will work with management
to plan for the implementation of this standard. 
GASB No. 69 "Government Combinations and Disposals of Government Operations", effective for
the Port in 2014, and establishes accounting and financial reporting standards related to
government combinations, such as mergers, acquisitions, and transfers of operations. This
statement requires the use of carrying values to measure the assets and liabilities in a
government merger. It also requires measurement of assets acquired and liabilities assumed
to be based upon the acquisition value. This statement also provides guidance for disposals of
government operations and combinations. We will work with management to determine the
impact of this statement on the Port's financial statements. 

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GASB No. 70 "Accounting and Financial Reporting for Nonexchange Financial Guarantees",
effective for the Port in 2014, and improves accounting and financial reporting by state and
local governments that extend and receive nonexchange financial guarantees. We will work
with management to determine the impact of this statement on the Port's financial
statements. 

















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AUDIT TIMING 

AUDIT SCHEDULE                                            TIMING 
Audit Planning 
Meet with your management and accounting staff to set up the        October 2013 
year-end audit timeline, identify and resolve pertinent issues,
perform  a  risk  assessment,  and  address  any  concerns  of
management or members of the audit committee or Port
Commission. 
Provide management with a detailed comprehensive list of account       October 2013 
analyses and other materials to prepare prior to the start of the
audit. Work closely with those involved in the audit process to
clearly identify roles and responsibilities during the audit. 
Meet with the audit committee to provide  an overview of the      October 1, 2013 
planned scope and timing of the audit in our engagement
service plan. 
Meet with Port management to discuss new Port transactions or      Quarterly 
activities and new or pending accounting and auditing guidance. 
Audit Fieldwork 
Perform interim field work to perform testing of the Port's internal        October 2013 and December
controls and to facilitate planning for year-end audit fieldwork.       2013 (Testing of IT controls in
Test  certain  accounts  such  as  revenue  recognition,  leases,       December 2013) 
environmental liabilities, and construction in progress. 
Perform procedures related to administration of federal awards in      October 2013 and March 2014 
accordance with Federal Circular OMB A-133. 
Perform the year-end audit fieldwork of the Port's account      February to March 2014 
balances (financial statement audits and testing of Schedule of
Federal Awards). 
Perform the audit on PFC receipts and expenditures and related      March 2014 
internal controls. 
Report Preparation 
Issue our opinion on the financial statements and schedule of Net       On or before April 30, 2014 
Revenues Available for Revenue Bond Debt Service. 
Issue Single Audit reports and PFC program audit report.                   On or before June 30, 2014 
Issue the draft management letter of recommendations.                   On or before June 30, 2014 
Meet with the Audit Committee  and management to present      As requested; no later than
audit results.                                                                   June 30, 2014 

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MOSS ADAMS AUDIT TEAM 
The management team serving on our audits of the Port of Seattle is as follows: 
Laurie J. Tish, CPA, Business Assurance Partner 
Laurie is our firm's national practice leader for Government Services. Laurie has
specialized in serving governmental entities since she began her career in public
accounting over 30 years ago. Laurie will serve as your lead client service partner,
overseeing all projects we perform for the Port. 

Jim Lanzarotta, CPA, Business Assurance Partner 
Jim has significant experience conducting audits in accordance with Government
Auditing Standards and Federal OMB Circular A-133. Jim will serve as the concurring
review partner. The concurring review partner serves as the second partner reviewer
of the financial statements and our reports and, as necessary, will consult on technical
issues or key elements of the audits. 

Chris Kradjan, CPA, Moss Adams Advisory Services Partner 
Chris is a member of our Governmental Services Group and specializes as an
Information Technology consultant. Chris will lead our audit procedures covering
the Port's IT systems, including general computer controls. 

Kory Hoggan, CPA, Business Assurance Senior Manager 
Kory is an audit senior manager in our Governmental Services Group. Kory has over
15  years  of  public  accounting  experience  and  he  specializes  in  audits  of
governmental entities and employee benefit plans. 


Kevin Villanueva, IT Consulting Senior Manager 
Kevin Villanueva is a Senior Manager with the Information Technology Consulting
Group and leads the firm's information security and infrastructure practice. Kevin
has over 16  years  of experience  in information technology  with  industry
specialization in municipal enterprises. Kevin will serve as project manager for the
Port's IT general controls testing procedures. 



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In addition, the following individuals will serve the Port of Seattle: 
Tyler Reparuk, Business Assurance Senior:  Tyler has over four years of public
accounting experience and this will be his fifth year serving the Port of Seattle. Tyler
will serve as a senior accountant and will spend his time assisting with supervision of
staff in the field and managing each of the audits we perform for the Port. 
Lisa Dion, Business Assurance Senior: Lisa has over two years of public accounting
experience and this will be her third year serving the Port. Lisa has experience in
performing governmental financial statement audits and Federal Circular OMB A-133
audits of other entities. Lisa will serve as a senior accountant and will spend her time
assisting with the supervision of staff in the field and performing procedures related to
the financial statement accounts and the OMB A-133 audit. 
John Witt, Business Assurance Staff:  John has one year of public accounting
experience and this will be his second year serving the Port. John will primarily spend
time related to the financial statement accounts, and will be working under the
supervision of other members of our audit team. 
Dan Sievers, Business Assurance Staff: Dan is new to Moss Adams and will be working
under the supervision of other members of the audit team. Dan will primarily spend
time related to the financial statement accounts. 
Branch Richards & Co, Subcontractor: We have engaged Branch Richards & Co., a
small  business  initiative  firm,  to  serve  as  our  subcontractor.  Gabe  Rucker, 
experienced staff, will be fully integrated into our audit team in working on each of the
audits.  This will be his second year serving the Port. 
Raymond Yamka, IT Consulting Manager: Raymond has over twelve years of public
accounting experience and this will be his second year serving the Port. Ray will serve
as an IT consulting manager and will spend his time performing and assisting with
supervision of the testing of the general and application IT controls.






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COMMUNICATIONS TO AUDIT COMMITTEE 
Auditing  standards require the auditor to communicate certain matters to the Audit
Committee  that  may  assist  in  overseeing  management's  financial  reporting  and
disclosure process. 
Auditor's responsibilities under generally accepted auditing standards 
Other documents containing audited financial statements 
Critical accounting policies and practices 
Difficulties encountered when performing the audit 
Unadjusted audit differences considered by management to be immaterial 
Significant audit adjustments 
Disagreements with management, if any 
Representations requested of management 
Judgments about the quality of accounting and sensitive estimates 
Adoption of, or a change in an accounting principle 
Method of accounting for significant unusual transactions or controversial or
emerging areas 
Fraud and illegal acts 
Material weaknesses in internal control 
Major issues discussed with management prior to retention 
Ability to continue as a going concern 
Legal,  regulatory,  or  contractual  requirements  not  encompassed  in  the  current
engagement 
Consultation with other accountants 
Independence of Moss Adams 
At the conclusion of our audits, we will present our reports, the results of our audit and the
required communications noted above, to the Audit Committee. 


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