Internal Audit Briefing 

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

Joyce Kirangi, CPA, CGMA 
Director, Internal Audit 
June 11, 2013

Agenda 
Audit Report 
1.  Lease and Concession Audits 
Hertz Rent-A-Car 
2.  Operational Audits 
Central Processing System 
None 
Comprehensive Operational Audit /Departmental Audit 
Airport Transit Operations/ Rental Car Facility 
Fishermen's Terminal 
Limited Operational Audit 
Code of Conduct 
Debt Service 
Ports Jobs Contract 
Small Contractor and Supplier Program (SCS) 
3rd Party Audit 
None 
Briefing/Updates 
None

Lease and Concession Audit 
Hertz Rent-A-Car 

Background 
Hertz is one of two brands offering rental cars, trucks, and equipment within
the Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc. 
Hertz operates five locations under the agreement at and in the vicinity of
the airport. 
Under the terms of the agreement, Hertz agreed to pay either a Minimum
Annual Guarantee (MAG) or percentage fees of 10% on their gross receipts,
whichever is higher. 
Fiscal Year   Reported Gross Revenue  Paid Concession 
2009 - 2010             55,919,197          5,591,920
2010 - 2011             54,769,892          5,476,889 
Grand Total          $ 110,689,089       $ 11,068,809
Data Source: Hertz Rent-A-Car Annual Report and PeopleSoft General Ledger

Lease and Concession Audit 
Hertz Rent-A-Car 

Audit Objectives 
The purpose of the audit was to determine whether: 
1.   The reported concession fees were complete, properly calculated, and
remitted timely to the Port. 
2.  The Port and the lessee complied with provisions of the Lease and
Concession Agreement, as amended. 
3.  Customer Facility Charges (CFC) were properly collected and remitted
timely to the Port. 
The scope of our audit covered a two-year period from November 1, 2009
through October 31, 2011.

Lease and Concession Audit 
Hertz Rent-A-Car 

Audit Result 
Hertz materially complied with the terms of the Rental Car Lease and
Concession agreement. However, the audit determined that certain
gross receipts were underreported. 
One Finding 
One concession location was not reported, resulting in $7,720 in
additional concession to the Port. 
Certain concession items were not included, resulting in $13,298 in
additional concession to the Port.
For a total of $21,018 ( $7,720+$13,298)

Comprehensive Operational Audit 
Airport Transit Operations  Rental Car Facility 

Background 
The newly-constructed Rental Car Facility (RCF) opened in May 2012; however, Airport
Transit Operations (ATO) initiated activation in January 2012. The RCF houses 13 rental
car companies. 
The ATO operates a 24/7 shuttle service for arriving and departing passengers who
plan to rent and drop off a vehicle, which is estimated to be 4.5 million passengers
annually. The program owns 29 Gillig buses and employs 72 staff. 
Description              2012        2013* 
Salaries, Wages, & Benefits     3,284,400     1,022,567 
Equipment Expenses          29,997      10,966 
Supplies/Stock               71,216       5,904 
Outside Services             280,196      21,890 
Travel & Other Expenses        15,922         - 
Telecommunication            4,710        617 
General Expenses             6,213       (230) 
Grand Total              3,692,654    1,061,713*
Note: *Expenses as of March 31, 2013

Comprehensive Operational Audit 
Airport Transit Operations  Rental Car Facility 

Audit Objectives 
The purpose of the audit was to determine whether Port management is
effectively and efficiently monitoring : 
1.   Payroll 
2.  Operating Expenses 
3.  Safety Training 
The scope of our audit covered the period from inception in January 2012
through March 31, 2013.

Comprehensive Operational Audit 
Airport Transit Operations  Rental Car Facility 

Audit Result 
Port management is effectively monitoring Airport Transit Operations
related to payroll, expenses, and safety training. 
No Findings

Comprehensive Operational Audit 
Fishermen's Terminal 

Background 
Located on Seattle's Ship Canal, which links Lake Washington to the Puget
Sound, Fishermen's Terminal has been the traditional home port for the
North Pacific Fishing Fleet for almost 100 years. Fishermen's Terminal
provides freshwater moorage and other services (e.g., power and water) for
a variety of boats and ships. 
2010     2011     2012
Revenue         $2,740    $2,544    $2,538
Berthage & Moorage     $1,752     $1,554     $1,542
Lockers             $587      $587      $593
Other Revenue         $401      $403      $403
Expenses         $1,731    $1,573    $1,621
Salaries & Benefits        $999       $897       $958
Utilities                   $488        $488        $497
Other Expenses         $244      $188      $166
Less: Depreciation       1,858      1,936      1,601
Net Income/(Loss)      ($849)     ($965)     ($683)

Comprehensive Operational Audit 
Fishermen's Terminal 

Audit Objectives 
The purpose of the audit was to determine whether: 
Department controls are adequate to provide reasonable assurance that
moorage revenue is accurate and complete in compliance with
Department policies and procedures, including the Port-wide moorage
tariff. 
The Department has implemented sufficient corrective action to address
issues identified in prior audits. 
The scope of our audit covered the period from January 1, 2011, through
April 30, 2013.

Comprehensive Operational Audit 
Fishermen's Terminal 

Audit Result 
The Department's controls are adequate to provide reasonable
assurance that moorage revenue is accurate and complete in compliance
with Department policies and procedures. Management has
implemented sufficient corrective action to address issues identified in
prior audits. 
No Findings

Limited Operational Audit 
Code of Conduct 

Background 
In 2010, Senior Port leaders led the development of the Port's Code of
Conduct Handbook , which is composed of Policies CC-1, through CC-14. 
All new employees are asked to certify that they have read and are familiar
with the Handbook within a short time after their hire date. 
The Port created Workplace Responsibility, to provide overall leadership and
coordination of the Port's ethics and compliance program, and hired its first
Workplace Responsibility Officer (WRO) in February 2010. The WRO guides,
supports, and reinforces the Port of Seattle's efforts to advance the Port's
mission, while upholding the highest standards of business ethics and
workplace behavior.

Limited Operational Audit 
Code of Conduct 

Audit Objectives 
The purpose of the audit was to : 
1.   Determine whether management controls are adequate to ensure: 
Awareness/visibility of Helpline/Hotline. 
Training in Code of Conduct is provided timely to all new employees. 
Training is reinforced with employees and management. 
Code of Conduct policies are enforced Port wide. 
Investigations are conducted timely and properly. 
Access to the SharePoint site that houses reports (WRITS) is controlled. 

Audit Objectives continued next page

Limited Operational Audit 
Code of Conduct 

Information in WRITS is maintained confidential. 
Management reporting is timely and accurate. 
State Auditor's reports, in accordance with RCW 43.09.185, under the
purview of the Workplace Responsibility Officer, are complete, timely, and
accurate. 
2.  Develop maturity models for: 
Training. 
Investigation. 
3.  Benchmark organizational structure against similar entities. 
The scope of our audit covered the period from April 1, 2010, through
March 18, 2013.

Limited Operational Audit 
Code of Conduct 

Audit Result 
Given the relative youth of this program, it is operating at a reasonable
level of maturity, and management controls are adequate.
Organizational placement of Workplace Responsibility is comparable to
the majority of similar entities. 
No Findings

Limited Operational Audit 
Debt Service 

Background 
The Port, under the authority of RCW 53.40 and RCW 53.44, issues municipal bonds
(short- and long-term obligations) to invest in necessary Port's operations including
long-term infrastructure projects. These obligations contribute towards Port's
initiatives to promote economic vitality, to maintain optimum operations' at the Port
facilities, and to meet future demand. 
The Port of Seattle, as of December 31, 2012, had a total debt balance of $3.3 billion
dollars, which consisted of the following: 
(in thousands) 
Tax
Bond Types     Exempt    Taxable 
General Obligation       281,790     30,215 
Revenue          2,329,085   404,600 
PFC Special          157,150       0
Fuel Hydrant Special     100,175        0
Total   $ 2,868,200  $ 434,815 
Source: SymPro, as of 5/01/2013

Limited Operational Audit 
Debt Service 

Audit Objectives 
The purpose of the audit was to determine whether management has
implemented adequate controls to ensure: 
Timely utilization of refinancing (i.e., refunding) opportunities to reduce
overall borrowing costs. 
Compliance with applicable IRS, State, and Port requirements. 
Proper debt service cost allocation among divisions, funds, and accounts. 
The scope of our audit covered the period January 1, 2011, through
December 31, 2012.

Limited Operational Audit 
Debt Service 

Audit Result 
Management has implemented adequate controls to ensure timely
utilization of refunding opportunities, compliance with applicable
requirements, and proper debt service cost allocation among divisions,
funds, and accounts. 
No Findings

Limited Operational Audit 
Port Jobs Contract 

Background 
Port Jobs is a 501 c (3) non-profit agency that was created in 1993, following the Commission's acceptance of The
Working in King County Task Force Report. The Port committed to serve as a catalyst to create new job
opportunities and provide a highly skilled workforce for the port-related economy and to identify potential
sources of additional public or private funding to assist in providing training and support services to project
participants. 
The Commission authorized the CEO in 2009 to enter into the current three-year contract (with optional two 1-
year extensions) to contribute funding towards the following three programs: 1) AOP - Apprenticeship
Opportunities Project, 2) Airport Jobs, and 3) Airport University. 




Source: Port Jobs Annual Report 
*funders include King County, City of Seattle, and State of Washington

Limited Operational Audit 
Port Jobs Contract 

Audit Objectives 
The purpose of the audit was to determine whether management has
implemented adequate controls to ensure: 
Port Jobs met the deliverables of the contract. 
Port funding met the terms of the agreement and supports the Port's
goals and objectives. 
The scope of our audit covered the period from December 1, 2011 through
December 31, 2012, including current activities.

Limited Operational Audit 
Port Jobs Contract 

Audit Result 
Management has implemented adequate controls to ensure that Port
Jobs met the deliverables of the contract and Port funding met the
terms of the agreement and supports the Port's goals and objectives as
specified in the contract. 
No Findings

Limited Operational Audit 
Small Contractor and Supplier Program 

Background 
In January 2010, the Port Commission approved Resolution 3618 establishing the
Small Contractor and Supplier Program (SCS Program). The SCS Program's primary
purpose is to develop beneficial opportunities for the Port and for the regional
community of small and disadvantaged businesses. 
The Office of Social Responsibility (OSR) is charged with implementing the program.

Limited Operational Audit 
Small Contractor and Supplier Program 

Audit Objectives 
The purpose of the audit was to determine whether Port management has
completely implemented the Small Contractor and Supplier Program (SCS
Program) to meet the following five specific goals under Commission Resolution
3618: 
Provide SCS firms additional opportunities for utilization in Port
procurements. 
Identify and reduce barriers to SCS firms' equal opportunity and participation. 
Develop comprehensive outreach and communication strategies. 
Engage with public and private partners for additional resources and best
practices. 
Develop and utilize data monitoring and evaluation resources. 
The scope of our audit covered the period from January 1, 2012, through
December 31, 2012.

Limited Operational Audit 
Small Contractor and Supplier Program 

Audit Result 
Port management has materially implemented the Small Contractor and
Supplier Program goals required under Resolution 3618, except as
discussed below: 
One Finding 
Port management did not implement the 5% pricing incentive for the
Small Contractor and Supplier Program (SCS). This pricing incentive is
required by Port Commission Resolution 3618.