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of Seattle
INTERNAL AUDIT DEPARTMENT CHARTER
I.   INTRODUCTION
The Port of Seattle maintains an active audit function that has a dual reporting responsibility.
This Charter defines the Internal Audit Department authority and accountability; mission and
scope; responsibility; independence; and commitment to outstanding audit service.

II.  AUTHORITY AND ACCOUNTABILITY
The Internal Audit Department derives its authority from the Port of Seattle Commission. The
Department was first established in 2002 in the Accounting and Financial Reporting (AFR),
and on December 11, 2007, the Port Commission passed a motion to change the reporting
structure of the Department. In discharging their duty, the Internal Audit Director and his or her
staff are accountable to the Audit Committee and to the Chief Executive Officer (CEO). The
Director reports functionally  to the Audit Committee  and administratively  to the CEO, and
serves at the pleasure of the full Commission. Two Port Commissioners serve as members of
the Audit Committee and the Committee is an arm of the Port Commission.
Internal Audit conducts audits of Port departments, programs, functions, systems, contracts
and activities based on the approved audit plan or specific requests that have been approved
by the Audit Committee.
The Director and his or her staff are authorized to:
Have unrestricted access to all Port functions, records, property staff and other relevant
materials necessary to accomplish their work.
Access information from contracted third parties and handle the information in accordance
with contractual terms.
Handle documents provided to Internal Audit in the same prudently manner as by those
employees normally accountable for them.
Have full access to the Audit Committee and to the Port Commission as needed.
Allocate  resources, set frequencies,  select subjects, determine  scope of work and apply
the techniques required to accomplish audit objectives.
Obtain the necessary assistance of personnel in units of the Port where they perform
audits, as well as other specialized services from within or outside the Port.

Report significant issues related to the processes for controlling the activities of the Port
and its tenants, customers and vendors, including potential improvements to those
processes, and provide information concerning such issues through resolution
Provide information periodically on the status and results of the annual audit plan and the
sufficiency of department resources
Coordinate with and provide oversight of other control and monitoring functions (e.g., risk
management (ERM), compliance, security, legal, ethics, environmental, external audit)

III. MISSION AND SCOPE OF WORK
The Internal Audit Department's (lAD) mission is to provide independent, objective assurance
and nonaudit or consulting services designed to add value and to improve Port's operations.
The lAD helps the Port accomplish its objectives by bringing a systematic, disciplined
approach to evaluate and improve the effectiveness  of risk management,  control and
governance processes.
The lAD scope of work is to determine whether the Port's network of risk management,
control,  accountability  and  governance  processes,  as  designed  and  represented  by
management, is adequate and functioning in a manner to ensure:
Risks are appropriately identified and managed.
Significant financial, managerial and operating information is accurate, reliable and timely.
Employee's actions are in compliance with policies, standards, procedures and applicable
laws and regulations.
Resources are acquired economically, used efficiently and adequately protected.
Programs, plans and objectives are achieved.
Quality and continuous improvement are fostered in the Port's control process.
Significant legislative or regulatory issues impacting the organization are recognized timely
and addressed properly.
Opportunities for improving management  control, streamlining  processes, and improving
public perception may be identified during audits. These will be communicated  to the
appropriate level of management.

IV. RESPONSIBILITY
A. The Director and His or Her Staff Have Responsibility To:
Develop a flexible annual audit plan using appropriate risk-based methodology, including
any risks or control concerns identified by management, and submit that plan to the Audit
Committee for review and approval.

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Implement  the  annual  audit  plan,  as approved  by the  Audit  Committee,  including  any
special tasks or projects requested by management and the Audit Committee
Maintain  a  professional  audit  staff  with  sufficient  knowledge,  skills,  experience  and
professional certifications to meet the requirements of this Charter
Establish  a quality  control  and  assurance  program  by which  the  Director  monitors  the
operation of internal auditing activities.
Provide non-audit and consulting services beyond internal audltinq's assurance services,
to assist management in meeting its objectives (e.g., facilitation, process design, training
and advisory services), provided the services do not impair auditor's independence.
Evaluate  and  assess  significant  functions  and  new  or  changing  services,  processes,
operations  and  control  processes  coincident  with  their  development,  implementation
and/or expansion.
Issue quarterly  reports  (or more frequently  as  requested)  to the Audit  Committee  and
management summarizing results of audit activities.
Keep  the  Audit  Committee  informed  of  emerging  trends  and  successful  practices  in
internal auditing.
Provide  a  list  of  significant  measurement  goals  and  results  of  the  lAD  to  the  Audit
Committee (e.g., the status of the work plan accomplished, budget hours used).
Assist  in the  investigation  of suspected  fraudulent  activities within the organization  and
notify management of the results.
Consider the scope of work of the external auditors and regulators, as appropriate, for the
purpose of providing optimal audit coverage to the organization at a reasonable overall
cost.
Follow  up  on  audits  to  ensure  agreed-upon  corrective  actions  have  been  taken  and
provide periodic follow up reports.
Exercise due professional  care in the conduct of the audits.
Obtain an external peer review at least once every three years.
In February of every year, the Director will provide to the Audit Committee the mandatory
annual communication required by the IIA standards specifically on the organizational
independence,  department  charter  review,  and  results  of  the  department  quality
assurance program.
B. Port Management is Responsible To:
Maintain an effective system of internal controls, document policy and procedures, and
ensure information is accurate and reliable.
Comply with laws and regulations including Port policies and procedures.

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Cooperate fully with auditors during discharge of their duties including making available
material or information requested by internal audit staff or any other external auditors
managed by the Internal Audit Department.
Provide timely response to audit findings and recommendations.
Assure timely implementation of agreed-upon corrective action(s) to audit
recommendations.
V.  INDEPENDENCE
Internal Audit is independent of the activities it reviews. Specifically, internal audit staff may not
review areas where they were responsible for the design or operation of the area. The audit
staff is responsible for maintaining their independence and integrity in all services they provide.
All Internal Audit activities shall remain free from interference relative to matters of audit
selection, scope, procedures, frequency, timing, or report content to maintain independence
and objectivity. The Director shall report any impairment to independence, or unjustified
restriction or limitation to audit selection, scope, procedures, frequency, timing or report
content promptly to the Audit Committee and to the CEO.
To provide for the independence of the Internal Audit Department, its staff reports to the
Internal Audit Director.  The Director reports administratively to the Chief Executive Officer
and functionally to the Audit Committee. This structure permits the rendering of impartial
and unbiased judgment essential to the proper conduct of audits.
The Audit Committee will regularly review Internal Audit Department's staffing needs including
its annual budget and recommend to the full Commission for approval.
The Audit Committee will review the appointment, replacement or dismissal of the Internal
Audit Director and recommend to the full Commission to take action.
To further ensure independence, the Director and staff of the Internal Audit Department are
not authorized to:
Perform any operational duties for the Port.
Initiate or approve accounting transactions external to the Internal Audit Department.
Direct the activities of any Port employee not employed by the Internal Audit Department,
except to the extent such employees have been appropriately assigned to the audit team
to assist the internal auditors.

VI. COMMITMENT   TO QUALITY   --  STANDARDS   OF AUDIT  PRACTICE
Internal Audit staff commits to providing outstanding audit service through timely, unbiased,
value-added assurance, and consulting services.

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We will work as a team with Port management to assist with process improvements aimed at
achievement of strategic goals and objectives.
We will enhance the services we provide by continuously improving our audit activities.

The Internal Audit Staff Will Adhere to the Following Professional Standards and
Codes:
Government  Auditing  Standards  promulgated by the Comptroller General of the United
States (Yellow Book).
The International   Standards  for the Professional   Practice of Internal  Auditing  (the
Standards)  of the Institute of Internal Auditors (Red Book).
Technology information systems auditing standards as appropriate.
The Port of Seattle Employee's Code of Conduct.
The Institute of Internal Auditors Code of Ethics.
The Port of Seattle Internal Audit's Handbook including its protocols, policies, and
procedures.

The Internal Audit Department Charter may be modified by a written document executed
by all of the participating parties. This Charter will be effective upon execution and will
continue indefinitely until it is modified.
IN WITNESS WHEREOF, the parties hereto have caused this Internal Audit Charter to be
executed by their proper officers thereunto duly authorized, and their official seals to be
affixed as of ~,                    2012.

Date
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Audit CommitteeChair;/<-2-'-Z-_-.c7"~-:-,              Date      I
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