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Internal Audit Internal Audit Briefing Presented to the Port of Seattle Audit Committee and Tay Yoshitani, CEO Joyce Kirangi, CPA, CGMA Director, Internal Audit February 04, 2014 Agenda Audit Report 1. Lease and Concession Audits None 2. Operational Audits Central Processing System None Comprehensive Operational Audit /Departmental Audit Accountability for Tools and Equipment under $20,000 Port Construction Services (PCS) Close-Out Process Limited Operational Audit None 3rd Party Audit None Briefing/Updates Finalize Internal Audit 2014 Work Plan Required Annual Communication to the Audit Committee Limited Operational Audit Accountability for Tools and Equipment under $20,000 Background The Port's threshold to distinguish capital assets from personal property (expensed items) is $20,000. Accountability for the Port's personal property, which is the focus of this audit, is at management discretion. During 2011 and 2012, the Port expended $2.8 and $3.3 million, respectively, on tools and equipment. Many of these items are considered "small and attractive" and at risk of loss and misuse. Account Code Description 2011 2012 61600 Furniture/Equipment $ 847,104 $ 1,161,533 61650 Radios 166,890 310,980 61700 Shop Tools/Miscellaneous Equipment 230,242 305,090 61760 Computers/Telephones 1,525,306 1,522,911 TOTAL $2,769,542 $ 3,300,514 Data Source: PeopleSoft Limited Operational Audit Accountability for Tools and Equipment under $20,000 Audit Objectives The purpose of the audit was to determine whether Port management controls are adequate to ensure tools and equipment purchases under $20,000 are: 1. Accounted for and safeguarded. 2. In compliance with requirements governing surplus and disposal. We reviewed information for the period January 1, 2012 - April 30, 2013. Limited Operational Audit Accountability for Tools and Equipment under $20,000 Audit Result One Reportable Condition /Finding One Finding Port management controls are not adequate to ensure equipment purchases under $20,000 are accounted for and safeguarded and in compliance with requirements governing surplus and disposal. Limited Operational Audit Port Construction Services (PCS) Close-Out Process Background Port Construction Services (PCS) is a department in the Port's Capital Development division whose primary mission is to collaborate with other Port departments on the completion of smaller-scale projects/activities. projects/activities The Close-Out Process (COP) is a management control to ensure that all financial and regulatory requirements are satisfied. This includes finalizing records for submission, reconciling financial documents, and supplying critical maintenance and management information to Port customers. Annual Close-Out's by Port Construction Services By Fiscal Year, 2011-2013 2011 2012 2013 TOTAL Close-Outs 65 142 80 287 Data Source: Project Management Information Systems Reports Limited Operational Audit Port Construction Services (PCS) Close-Out Process Audit Objectives The purpose of the audit was to determine whether Port Construction Services' management has adequate controls to ensure: 1. The Close-Out Process complies with applicable Port policies and procedures. 2. The Close-Out Process sufficiently identifies, retains, or transmits all required records after project completion. We reviewed information for the period January 1, 2013 December 31, 2013 Limited Operational Audit Port Construction Services (PCS) Close-Out Process Audit Result Management has adequate controls to ensure that the Close-Out Process complies with Port policies and procedures, as well as sufficiently identify, retain, and transmit required records after project completion. No Reportable Findings/Conditions Briefing/Updates Finalize Internal Audit 2014 Work Plan Required Annual Communication to the Audit Committee
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