Internal Audit Report 

Lease & Concession Audit 
Dilettante Chocolates Inc. 

June 1, 2010  May 31, 2013 




Issue Date: August 6, 2013 
Report No. 2013-14

Internal Audit Report 
Dilettante Chocolates (#621) 
June 1, 2010  May 31, 2013 

Table of Contents 
Transmittal Letter ........................................................................................................................ 3 
Executive Summary .................................................................................................................... 4 
Background ................................................................................................................................ 5 
Audit Scope and Methodology .................................................................................................... 5 
Conclusion .................................................................................................................................. 6 













2 of 6

Internal Audit Report 
Dilettante Chocolates (#621) 
June 1, 2010  May 31, 2013 

Transmittal Letter 

Audit Committee 
Port of Seattle 
Seattle, Washington 

We have completed an audit of the lease and concession agreement with Dilettante Chocolates Inc. 
We reviewed information relating to the lease and concession agreement with Dilettante from June 1,
2010 through May 31, 2013.
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: 
Brian Nancekivell, Sr. Internal Auditor              Deanna Zachrisson, Mgr. Concessions Management 
Jack Hutchinson, Audit Manager                  James Schone, Dir. AV Business Development 




3 of 6

Internal Audit Report 
Dilettante Chocolates (#621) 
June 1, 2010  May 31, 2013 
Executive Summary 

Audit Scope and Objective 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 June 1, 2010 through May 31, 2013. 
Background  Dilettante Chocolates operates a location in the central terminal at the SeaTac
Airport. Their product line consists of crafted chocolates, blends of coffee, desserts, truffles and
confectionary gift items. 
Dilettante entered into the current lease and concession agreement with the Port of Seattle on March
2, 2004, for a 10-year term ending May 31, 2015. 
The agreement provides for a specific concession based on gross receipts at tiered rates, ranging
from 8% to 14%. There are provisions for finance charges and interest if the payment is not received
within a ten-day grace period. 
Audit Result Summary  Concession revenue reported by Dilettante was reported completely, 
calculated properly and remitted timely. Dilettante materially complied with significant provisions of the
lease and concession agreement. 









4 of 6

Internal Audit Report 
Dilettante Chocolates (#621) 
June 1, 2010  May 31, 2013 
Background 
Dilettante Chocolates was founded in 1976 in downtown Seattle. Their product line consists of crafted 
chocolates, blends of coffee, desserts, truffles and confectionary gift items. Including operations in the 
SeaTac Airport location at the central terminal, Dilettante has six (6) local retail locations in the region. 
Dilettante entered into the current lease and concession agreement with the Port of Seattle on March 
2, 2004 for a 10-year term ending May 31, 2015. 
The lease and concession agreement states that the Minimum Annual Guarantee (MAG) payments
are due on the first of each month. The percentage concession fee is due on the 15th of the following
month, along with a statement of gross receipts for the previous month according to the following
schedule: 
Concession Categories                     Gross Receipt % 
YTD* Gross Receipts less than $300,000                   8%
YTD* Gross Receipts $300,000 - $400,000                 12% 
YTD*  Gross  Receipts  greater  than            14%
$400,000 
Note*: Indicates Year-to-Date 
The agreement provides for finance charges and interest if a payment is not received within a ten-day
grace period. 
The table below summarizes the concession revenue received from Dilettante for the audit period. 
Gross       Concession 
Concession Term         Revenues          Paid 
June, 2010 to May, 2011       $1,528,049         $237,503
June, 2011 to May, 2012       $1,565,574         $243,777 
June, 2012 to May, 2013       $1,558,850         $237,626
Total                           $4,652,473         $718,906 
Source: PROPWorks 
Audit Scope and Methodology 
We reviewed information for the period from June 1, 2010 to May 31, 2013. We utilized a risk-based
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 Dilettante
lease and concession agreement. 
We applied additional detailed audit procedures to areas with the highest likelihood of significant
negative impact as follows: 
1.  Completeness of reported revenue 
We reviewed lessee's financial records including point-of-sale data, general ledger, bank 
records, and Washington State Business and Occupation tax (B&O tax) records along with the
5 of 6

Internal Audit Report 
Dilettante Chocolates (#621) 
June 1, 2010  May 31, 2013 
reported revenues to the Port. We selected sales from the month of August 2011and June
2012 for testing procedures. We traced the revenue from the point-of-sale to                            the general
ledger, to deposited records, to B&O tax records, and to the revenues                       Dilettante reported to
the Port. 
2.  Timely submission of rent and concession payments 
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. 
3.  Compliance with insurance requirements 
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. 
4.  Compliance with annual reporting requirements 
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. 
5.  Compliance with surety requirements 
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 Dilettante was reported completely, calculated properly and remitted
timely.  Dilettante  materially  complied  with  significant  provisions  of  the  lease  and  concession
agreement. 





6 of 6