Minutes

Commissioners                                               Tay Yoshitani 
Chief Executive Officer 
Bill Bryant 
Chair and President 
John Creighton                           P.O. Box 1209 
Patricia Davis                           Seattle, Washington 98111 
Lloyd Hara                             www. portseattle.org 
Gael Tarleton                              206.728.3000 

APPROVED MINUTES 
AUDIT COMMITTEE SPECIAL MEETING FEBRUARY 27, 2009 
The Port of Seattle Commission Audit Committee met in a special meeting at 9:00 a.m.,
Friday, February 27, 2009 in the Commission Chambers at Pier 69, 2711 Alaskan Way,
Seattle, WA. Commissioners Hara and Creighton were present, as well as citizen committee
member Steve Miller. Also in attendance were CEO Tay Yoshitani and Joyce Kirangi, Port
Internal Audit Manager. 
CALL TO ORDER 
The committee special meeting was called to order at 9:00 a.m. by Commissioner Lloyd
Hara.. 
Approval of Minutes 
Minutes of the Audit Committee Meetings of November 4, 2008; December 2, 2008; and
January 6, 2009 were approved by Commissioner Hara. Commissioner Creighton was not a
member of the Committee at the subject meetings and Citizen member Miller participates as
a non-voting member of the Committee. 
Discussion of Recent Internal Audits 
Presenters: Joyce Kirangi, Internal Audit Manager and Jack Hutchinson, Senior Internal
Auditor 
A computer slide presentation was given by Ms. Kirangi, addressing internal lease and
concession agreement audits which had been completed of the Cruise Terminals of America
(CTA), Host International, Inc. and Seattle Restaurant Associates (SRA) and the systems
audit of the Procurement System. Staff provided a summary of the reports which were
submitted for each of the three audits. 
CTA Audit Period January, 2004 through December, 2006 

Feb 27 SCM Audit Min



MINUTES OF AUDIT COMMITTEE MEETING 
FRIDAY, FEBRUARY 27, 2009                          P. 2 
Regarding the CTA audit, staff noted that there had been a finding of an inadequate
management monitoring system, and that management has responded to the findings and
most were considered as closed. Ms. Kirangi clarified that the findings were not major
issues. 
Responding to Commissioner Hara's question as to why the CTA lease was not publicly
advertised, CEO Yoshitani clarified that since it was a lease, as opposed to a contract, there is
no statute requiring the Port to do so. 
In response to Mr. Miller's question of the legal interpretation of the finding regarding
retroactive employee bonuses, Ms. Kirangi stated that the legal department is looking into the
question. 
Host International, Inc. and Seattle Restaurant Associates, Audit period January 2006
December 31, 2007 
Ms. Kirangi stated that there was not any recommendation for any financial recovery
resulting from this audit. 
Procurement System  Audit of current practices, 2008 
Mr. Hutchinson provided background on the procurement system audit, which included
auditing of Major Construction as well as Small Works contracts. He also identified the
differences in types of procurements/contracts, and issues related to them. Mr. Hutchinson
noted that since the Central Procurement Office was new to the Port, this department was
audited in order to review their new processes, and to see if there are any 'holes' within their
current practices, with the purpose being to identify risks. 
Mr. Hutchinson noted issues found within the audit, which included inadequate participation
in acquisition planning by construction contract services (Major Construction); inadequate
documentation (Small Works); and within the procurement system, issues related to
segregation of duties, inadequate documentation, and insufficient procedures to ensure
legitimate vendor creation. It was stated that the items should be considered as closed. 
Mr. Graves, Managing Director, Capital Development Division, spoke about current
legislation which would raise Small Works Contracts from $200,000 to $300,000; however,
the lowest bidder would still need to be selected. 
Ms, Kirangi spoke about the extensive training which has been created and is currently
available to Port staff regarding the new CPO-1 Policy, and the intent to help staff understand
the need to comply with the new Policy. 
Follow-up on Recreational Boating Department Audit 
Presenter: Sharon Briggs, General Manager, Recreational Boating 

Feb 27 SCM Audit Min






MINUTES OF AUDIT COMMITTEE MEETING 
FRIDAY, FEBRUARY 27, 2009                          P. 3 
Ms. Briggs provided a document for review and discussion as a follow-up to the previous
presentation to the Committee, which addressed outstanding issues. 
Ms. Briggs noted that at this point, all outstanding items which remained in the fall of 2008,
have been addressed. Ms. Briggs briefly mentioned the items and actions taken, which
included: 
Shilshole Bay Marina 
o  Segregation of duties 
o  Computer system weakness 
o  Guest Moorage Revenue Accountability 
Bell Harbor Marina 
o  Segregation of duties and accountability of funds 
o  Computer system weakness / discounts 
Updates to tariffs 
Commissioner Hara noted that he would like to see staff return in the future with a progress
report on the monitoring of changes made. 
Interim Report on Financial and Grant Regulatory Compliance Audits 
Presenters: Moss Adams staff members Laurie Tish, Lilian Mramba, Kevin Smythe, Eric
Corcoron. 
Ms. Tish commented that today's presentation was to provide results thus far on internal
controls tests. A letter of presentation was provided by Moss-Adams on the 2008 Interim
Fieldwork Results. Ms. Tish summarized details within the letter, referencing objectives and
components of internal control: 
Objectives 
o  Effectiveness and efficiency 
o  Reliability of financial reporting 
o  Compliance with applicable laws and regulations 
Components 
o  Control Environment 
o  Risk Assessment 
o  Control Activities 
o  Information and Communication 
o  Monitoring 
Ms. Tish also referenced the Enterprise Risk Management (ERM) framework, designed to
achieve following objectives and components: 
Objectives 
o  High level goals 
o  Effective and efficient use of resources 
o  Reliability of reporting 
o  Compliance with applicable laws and regulations 
Components 

Feb 27 SCM Audit Min


MINUTES OF AUDIT COMMITTEE MEETING 
FRIDAY, FEBRUARY 27, 2009                          P. 4 
o  Objective setting 
o  Event identification 
Moss-Adams staff spoke about their review of the Port's information technology (IT)
environment and responded to questions regarding whether the systems used by the Port are
'off the shelf programs' or customized, which raises the question of security. 
Moss-Adams staff commented on their review of significant accounts and processes, noting
following accounts and processes as significant to the Port: 
Administration of federal grants 
Billings, cash receipts and receivables 
Signatory Lease and Operating Agreement (SLOA) 
Procurement, cash disbursements and payables 
Payroll 
Capital projects 
Treasury and investments 
Debt and related accounts 
Pollution remediation obligation and contingencies 
Third party management 
Financial close and reporting 
Budget 
Ms. Mramba responded to Mr. Miller's questions about SLOA and about third party
management, stating that the SLOA is related to not only leasing systems, but also to the
budgeting system as well as to financial reporting closing. Regarding third party
management, Ms. Mramba commented that the controls are mostly related to cash
transactions between the Port and the third party. 
Moss-Adams staff noted that compliance testing had been done for the Airport Improvement
Program and also the TSA federal grants through 3rd quarter of 2008, and commented that
they would look at Passenger Facility Charge (PFC) grants in March 2009. 
Ms. Tish stated that Moss-Adams would return with final conclusions at the next Audit
Committee Meeting, and noted that at this point there were no findings of non-compliance or
material weaknesses, and commented that a management letter would be issued with final
conclusions. 
Review of proposed amendments to Audit Committee Charter 
Presenter: Tom Barnard, Research and Policy Analyst 
Mr. Barnard commented on the proposed amended version to the Audit Committee Charter,
which incorporated comments made by committee members at the previous meeting.
Discussion followed regarding the revisions proposed. CEO Yoshitani suggested that he
would like to see one additional revision, that being within the 'Composition' section, first

Feb 27 SCM Audit Min

MINUTES OF AUDIT COMMITTEE MEETING 
FRIDAY, FEBRUARY 27, 2009                          P. 5 
sentence, the words 'at least' (two members of) be deleted, which would add clarification.
The revised Charter was agreed upon by the Committee, and the motion was made to take to
the full Commission for approval: 
Motion to take amended Charter to full Commission for a vote  Creighton 
Motion carried by the following vote: 
In Favor: Creighton, Hara (2) 
Committee member Miller participates as a non-voting member of the committee. 
It was noted that the next Audit Committee meeting would take place on April 14, 2009. 
ADJOURNMENT 
There being no further business, the meeting was adjourned at 11:05 a.m. 

Commissioner Lloyd Hara 











Feb 27 SCM Audit Min

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