Internal Audit Report 

Lease & Concession Audit 
Taste, Inc. (dba Vino Volo) 

May 1, 2010  September 30, 2012 



Issue Date: December 3, 2013 
Report No. 2013-20

Internal Audit Report 
Taste, Inc. (dba Vino Volo) (Lease 839) 
May 1, 2010  September 30, 2012 

Table of Contents 
Transmittal Letter ................................................................................................................................. 3 
Executive Summary .............................................................................................................................. 4 
Background .......................................................................................................................................... 5 
Audit Scope and Methodology ............................................................................................................ 5 
Conclusion ............................................................................................................................................ 6 
Schedule of Findings and Recommendations .................................................................................... 7 
1.  VINO VOLO OVERSTATED GROSS RECEIPTS AND OVERPAID THE CONCESSION FEE.            7 















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Internal Audit Report 
Taste, Inc. (dba Vino Volo) (Lease 839) 
May 1, 2010  September 30, 2012 

Transmittal Letter 

Audit Committee 
Port of Seattle 
Seattle, Washington 

We have completed an audit of the lease and concession agreement with Taste, Inc. (dba Vino Volo). 
We reviewed information relating to the lease and concession agreement from May 1, 2010  
September 30, 2012.
We conducted the audit in accordance with Generally Accepted Government Auditing Standards and
the International Standards for the Professional Practice of Internal Auditing. Those standards require
that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. 
We extend our appreciation to the staff of Aviation Business Development and Accounting and
Financial Reporting for their assistance and cooperation during the audit. 



Joyce Kirangi, CPA, CGMA 
Director, Internal Audit 


Audit Team:                                  Responsible Management Team: 
Ruth Riddle, Sr. Internal Auditor                    Deanna Zachrisson, Mgr. Concessions Management 
Jack Hutchinson, Audit Manager                  James Schone, Dir. AV Business Development 



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Internal Audit Report 
Taste, Inc. (dba Vino Volo) (Lease 839) 
May 1, 2010  September 30, 2012 
Executive Summary 

Audit Scope and Objectives The purpose of the audit was to determine whether: 
1.  The reported concession revenue is complete, properly calculated, and remitted timely. 
2.  The lessee complied with significant provisions of the lease and concession agreement. 
The scope of our audit covered the period from May 1, 2010  September 30, 2012. 
Background  Taste, Inc. (dba Vino Volo) operates a location in the central terminal at the Sea-Tac
Airport. Its product line consists of wines from around the world, sold by the bottle, glass or tasting
flights; lunch, dinner, and small-plates; and wine-related merchandise, books, and magazines. 
Vino Volo entered into the current lease and concession agreement with the Port of Seattle on April 17,
2006, for a 10-year term ending April 30, 2016. 
The agreement provides for a specific concession based on gross receipts at the rate of 11%. There
are provisions for finance charges and interest if payments are not received within a ten-day grace
period. 
Audit Result Summary  Concession revenue reported by Vino Volo was complete, calculated
properly, and remitted timely, except for overpayment of the concession fee (Finding 1). Vino Volo 
complied with significant provisions of the lease and concession agreement. 









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Internal Audit Report 
Taste, Inc. (dba Vino Volo) (Lease 839) 
May 1, 2010  September 30, 2012 
Background 
Taste, Inc. (dba Vino Volo) was founded in 2004 in San Francisco, which continues to be the location of 
its headquarters. The first Vino Volo location was established in September 2005 at Washington, D.C.'s 
Dulles International Airport.  To date, Vino Volo has opened 22 locations           across North America,
primarily in 10 major airports.
The Vino Volo product line consists of wines from around the world, sold by the bottle, glass or tasting 
flights; lunch, dinner, and small-plates; and wine-related merchandise, books, and magazines.                                                                     At Sea-
Tac Airport, Vino Volo is located in the Central Terminal Marketplace. It is open daily from 7 a.m. to 11
p.m.
Vino Volo entered into its first lease and concession agreement with the Port of Seattle on April 17,
2006, for a 10-year term ending April 30, 2016. 
The lease and concession agreement states that the Minimum Annual Guarantee (MAG) payments are
due on the first of each month. The MAG is calculated on 90% of the prior agreement year's gross
receipts, at a concession rate of 11%. The monthly concession fee, based on the prior month's gross
receipts, is due on the 15th of the following month, along with a statement of actual gross receipts for
the previous month.  A late fee of 5% may be assessed if payments are not received within a ten-day
grace period. Interest of 18% may also be assessed on late payments. 
The table below summarizes the concession revenue received from Vino Volo for the period May 1,
2010 - September 30, 2012. 
Key Financials for Vino Volo
Lease & Concession Agreement
Audit Period May 1, 2010 - September 30, 2012
Gross Receipts            $ 3,976,695 
Concession Payments     $ 437,436 
Data Source: Vino Volo's CFO-Certified Annual Financial Reports
Audit Scope and Methodology 
We reviewed information for the period from May 1, 2010 to September 30, 2012. We utilized a riskbased
audit approach from planning to testing. We gathered information through research, interviews,
observations, and analytical reviews, in order to obtain a complete understanding of the Vino Volo lease
and concession agreement. 
We applied additional detailed audit procedures to areas with the highest likelihood of significant
negative impact as follows: 
1.  Reported concession revenue is complete, properly calculated, and remitted timely. 
We reviewed lessee's financial records including point-of-sale data, general ledger, bank 
records, and Washington State Combined Excise Tax Return records and the reported
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Internal Audit Report 
Taste, Inc. (dba Vino Volo) (Lease 839) 
May 1, 2010  September 30, 2012 
revenues to the Port. We selected sales from one          month for testing procedures. We
traced the revenue from the point-of-sale to the general ledger to deposit records to tax 
records and to the revenues Vino Volo reported to the Port. 
We reviewed the Port's records to determine whether the rent and concession payments 
were received on time. In the event that payments were received later than the ten-day 
grace period allowed in the agreement, we calculated the expected interest and finance 
charges, if not previously assessed. 
2.  The lessee complied with significant provisions of the lease and concession agreement. 
We identified the insurance coverage required by the agreement for the audit period and
determined whether the lessee had obtained sufficient coverage and submitted evidence
to the Port in accordance with the agreement. 
We identified the annual reports required by the agreement for the audit period and
determined whether the lessee had submitted the reports to the Port in accordance with
the agreement. 
We identified the security coverage required by the agreement for the audit period and
determined whether the lessee had obtained sufficient coverage and submitted evidence
to the Port in accordance with the agreement. 
Conclusion 
Concession revenue reported by Vino Volo was complete, calculated properly, and remitted timely,
except for overpayment of the concession fee (Finding 1). Vino Volo  complied with significant
provisions of the lease and concession agreement. 








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Internal Audit Report 
Taste, Inc. (dba Vino Volo) (Lease 839) 
May 1, 2010  September 30, 2012 
Schedule of Findings and Recommendations 

1. VINO VOLO OVERSTATED GROSS RECEIPTS AND OVERPAID THE CONCESSION FEE. 
Section 1.8 of the lease and concession agreement states: 
"Gross Receipts" shall not include the following when properly recorded and accounted for: 
1.8.3  Any discounts actually granted. 

For the audit period May 1, 2010  September 30, 2012, Vino Volo reported gross receipts of
$3,976,695. Based on its misinterpretation of the language in the lease and concession agreement,
Vino Volo did not reduce gross receipts by discounts of $41,348 granted to its customers.  The
following table shows the revised amounts and the overpayment. 
Schedule of Vino Volo Report of
Gross Receipts and Concession Payment
Audit Period May 1, 2010 - September 30, 2012
Audited Gross                  Revised Gross
Receipts and        Audited    Receipts and
Description                    Concession Fee      Discounts Concession Fee  Overpayment
Gross Receipts           $ 3,976,695            $ (41,348)         $ 3,935,347 
Concession Fee (@ 11%)  $ 437,436                       $ 432,888         $ 4,548 
Data Source: Vino Volo's CFO-Certified Annual Financial Reports
Recommendation 
We recommend Port management work with Vino Volo to resolve the overpayment and ensure future
gross receipts are reported in accordance with the terms of the agreement. 
Management Response 
The audit conducted of the Vino Volo was a very comprehensive look at this tenant, with a unique
concept for the airport.  While it is certainly more common that any misinterpretations of contractual
language tend to fall to the favor of the lessee, it is nonetheless possible for a tenant's interpretation to
result in an overpayment of concession fee. Management will work with the tenant to insure that they
interpret the language properly in the future, and reach an agreement regarding repayment of overpaid
concession fee. 


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