11. Attachment
Stellar Bambuza Sea LLC Report
INTERNAL AUDIT REPORT Limited Contract Compliance Audit Stellar Bambuza SEA, LLC January 2023 – June 2023 Issue Date: June 5, 2024 Report No. 2024-07 This report is a matter of public record, and its distribution is not limited. Additionally, in accordance with the Americans with Disabilities Act, this document is available in alternative formats on our website. Stellar Bambuza SEA, LLC TABLE OF CONTENTS Executive Summary .............................................................................................................................................. 3 Responsible Management Team ........................................................................................................................ 3 Background ............................................................................................................................................................ 4 Audit Scope and Methodology ............................................................................................................................ 5 Appendix A: Risk Ratings..................................................................................................................................... 6 2 Stellar Bambuza SEA, LLC Executive Summary Internal Audit (IA) completed an audit of the Lease and Concession Agreement (Agreement) between Stellar Bambuza Sea, LLC and the Port of Seattle (Port). The period audited was January 1, 2023, through June 30, 2023. The audit was performed to determine whether concession fees were complete, properly calculated, and remitted timely to the Port. Stellar Bambuza Sea, LLC operates the Swarovski storefront, the Seattle Made storefront and the New Stand, a combined coffee, bakery, and convenience storefront. During our audit, we identified no exceptions to our performed procedures. We extend our appreciation to management and staff of the Airport Dining and Retail, and the Accounting & Financial Reporting (AFR) Departments for their assistance and cooperation during the audit. Glenn Fernandes, CPA Director, Internal Audit Responsible Management Team Lisa Lam, Acting Director, Accounting and Financial Reporting Khalia Moore, Senior Manager, Airport Dining and Retail Jeff Wolf, Director, Aviation Commercial Management 3 Stellar Bambuza SEA, LLC Background On October 4th, 2017, The Port of Seattle (Port) entered into a lease agreement (AIR002240) with Stellar Bambuza Sea, LLC. Percentage fees were due in arrears, to the extent the percentage fees were higher than the monthly MAG (Minimum Annual Guarantee) which is paid in advance. Effective January 1, 2023, only the percentage fee payments are made since MAG is not considered until the end of the lease year. The MAG in 2023 was $1,667,688.09. Percentage Fees are: 16% of annual gross sales less than $8,000,000 18% of annual gross sales between $8,000,000 - $9,000,000 20% of annual gross sales greater than $8,000,000 The table below reflects 2021, 2022, and 2023 Gross Sales and Percentage Fees: Year Gross Sales Percentage Fees 2021 $9,735,213 $1,607,043 2022 11,509,930 1,961,986 2023 9,955,545 1,651,109 4 Stellar Bambuza SEA, LLC Audit Scope and Methodology We conducted the engagement 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 conduct an engagement to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our engagement objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our engagement objectives. The period audited was January 2023 through July 2023 and included the following procedures: Concession Fees Completeness, Accuracy, and Timeliness • Validated that the percentage fees for non-specialty and specialty categories were calculated correctly and in accordance with the lease revenue thresholds. • Agreed Concessionaire’s monthly general ledger sales data to what was provided to the Accounting & Financial Reporting (AFR) Department. • Agreed point of sale summary reports to the general ledger. • Obtained the audited Schedules of Gross Sales Report, the Independent Certified Public Accountant, and compared the report to year-end gross sales data reported to AFR. • Reviewed the Profit & Loss statements for variances. • Reviewed a random sample of invoices to determine if they were paid on time and for the full amount charged. • Validated that concessionaire is certified through OMWBE WA and confirmed with management that they are reflected as such on the ACDBE participation report submitted to the FAA. 5 Stellar Bambuza SEA, LLC Appendix A: Risk Ratings Findings identified during the audit are assigned a risk rating, as outlined in the table below. Only one of the criteria needs to be met for a finding to be rated High, Medium, or Low. Findings rated Low will be evaluated and may or may not be reflected in the final report. Financial Internal Commission/ Rating Compliance Public Stewardship Controls Management High probability Non-compliance Missing or not for external audit Requires with Laws, Port High Significant followed issues and / or immediate Policies, negative public attention Contracts perception Moderate Partial Partial controls probability for compliance with external audit Requires Medium Moderate Laws, Port Not functioning issues and / or attention Policies effectively negative public Contracts perception Low probability Functioning as Mostly complies Does not for external audit intended but with Laws, Port require Low Minimal issues and/or could be Policies, immediate negative public enhanced Contracts attention perception 6
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