Internal Audit Briefing 

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

Joyce Kirangi, CPA, CGMA 
Director, Internal Audit 
April 2, 2013

Agenda 
Audit Report 
1.  Lease and Concession Audits 
None 
2.  Operational Audits 
Central Processing System 
None 
Comprehensive Operational Audit 
None 
Limited Operational Audit 
457 Deferred Compensation Plan and 401 (a) Plans 
3rd Party Audit 
Bell Harbor International Conference Center (BHICC) 
Briefing/Updates 
Commission Office  Audit Termination Memo

Limited Operational Audit 
457 and 401 (a) Employee Benefits Plans 

Background 
For eligible employees, the Port offers the following retirement benefits: 
457 Deferred Compensation Plan 
401(a) Plans for non-represented employees and Police & Firefighters 
Washington State Public Employee Retirement System (PERS) 
Union pension benefits 
The state , union plans and the executive 401(a) plan were outside the scope of
this audit. 
Asset Category for 457 Plan              Balance 
Stable Value/Cash Management             $15,820,573 
Bond                            10,805,602 
Balanced/Asset Allocation                   29,709,019 
US Stock                             40,541,635 
International Stock                         7,012,584 
Specialty                                1,891,769 
Total Asset Value                        $105,781,181 
Source: ICMA-RC

Limited Operational Audit 
457 and 401 (a) Employee Benefits Plans 

Audit Objectives 
The purpose of the audit was to determine whether: 
1.   The Plans comply with IRS requirements, such as: 
Contributions do not exceed annual contribution limits. 
Loans and unforeseen emergency withdrawals have been administered
in accordance with Plan regulations. 
2.  The Port's fiduciary responsibilities have been adequately met, such as: 
Sufficient information is provided so employees can make informed
investment decisions. 
A variety of investment choices are available with different risk and
reward characteristics. 
We examined the information for the period January 1, 2012, through December
31, 2012.

Limited Operational Audit 
457 and 401 (a) Employee Benefits Plans 

Audit Result 
No Findings

Operational Audit 
Third-Party Management Services Agreement for 
Bell Harbor Int'l Conference Center (BHICC) 
Background 
The Port of Seattle Port of Seattle owns and operates the Bell Harbor International Conference Center (BHICC)
as a trade and meeting place for local and international businesses to promote and foster international trade
and commerce. The Port has outsourced the day-to-day operations and management of BHICC to Columbia
Hospitality under a third-party management services agreement. The Facility has been in operation since 1995.
The agreement provides a 3% Base Management Fee, based on gross revenue, and an Incentive Management
Fee up to 27.5% of the Net Operating Profit. 
(in thousands)                  2011      2010 
Revenue 
Food & Beverage                         $2,770   $2,936 
Conference and Meeting Room                 2,729     1,841 
Audio Visual                                1,358     1,052 
Other                                  1,719     1,593 
Gross Revenue                            $8,576    $7,422 
Expense 
Cost of Sales                                 $1,272     $1,133 
Direct Expenses                            2,695     2,647 
Operating Expenses                         1,952     1,787 
Fixed Expenses                             261      234 
Management Fee                         257     222 
Incentive Management Fee                     351      142 
Maritime Event Center net income/(loss)              (2)      (2) 
Operating Expenses                         $6,790    $6,167 
Net Income/(Loss)                           $1,786    $1,255 
source: BHICC Consolidated Income Statement.

Operational Audit 
Third-Party Management Services Agreement for 
Bell Harbor Int'l Conference Center (BHICC) 
Audit Objectives 
The purpose of the audit was to determine whether: 
1.  Port management monitoring controls are working effectively to
ensure: 
Billings are complete and accurate. 
Expenses are proper and in accordance with the agreement
terms and conditions. 
2.  Determine whether Columbia Hospitality, Inc. complied with the
terms of the agreement. 
We reviewed information for the period January 1, 2010, through
December 31, 2011.

Operational Audit 
Third-Party Management Services Agreement for 
Bell Harbor Int'l Conference Center (BHICC) 
Highlights and Accomplishments 
Columbia Hospitality submits a detailed annual budget for the
Port's approval. The budget includes monthly budgeted amounts by
detailed categories of expense types and the details of assumptions
used in preparing the budgeted expenses. 
On a monthly basis, representatives from the Port's Real Estate and
Seaport Finance & Budget departments meet with Columbia
Hospitality management to review BHICC reports and activities,
which include the following items : 
Analyses of operating performance forecast for two quarters. 
A summary financial statement line item review including an
explanation for the variances.

Comprehensive Operational Audit 
Third-Party Administration of Self-Insured Medical and Dental 

Audit Result 
As outlined in the audit finding, Port management monitoring could be
strengthened. 
unreasonable employee cost allocated to the Port 
related-party transactions

Briefing/Updates 


Commission Office  Audit Termination Memo