Commissioners                                               Tay Yoshitani 
Chief Executive Officer 
Bill Bryant 
Chair and President 
Tom Albro                             P.O. Box 1209 
John Creighton                       Seattle, Washington 98111 
Rob Holland                           www. portseattle.org 
Gael Tarleton                              206.728.3000 

An audio of the meeting proceedings and meeting materials are available on the Port of Seattle
web site - http://www.portseattle.org/about/organization/commission/commission.shtml 
APPROVED MINUTES 
AUDIT COMMITTEE SPECIAL MEETING MAY 4, 2010 
The Port of Seattle Commission Audit Committee met in a special meeting at 9:00 a.m., Tuesday,
May 4, 2010 in the Commission Chambers at Pier 69, 2711 Alaskan Way, Seattle, WA. Committee
members Albro, Tarleton and Miller were present, as well as CEO Tay Yoshitani and Joyce
Kirangi, Port Internal Audit Manager.
CALL TO ORDER 
The committee special meeting was called to order at 9:07 a.m. by Commissioner Gael Tarleton. 
Approval of Minutes 
Motion for approval of the minutes of the March 9, 2010 meeting  Albro 
Second - Tarleton 
Motion carried by the following vote: 
In Favor: Albro, Tarleton 
Mr. Miller participates as a non-voting member of the Committee. 
Moss Adams Exit Conference 
Commissioner Tarleton stated that the Moss Adams Exit Conference presentation which was
scheduled on the agenda would be postponed until the June meeting, allowing for more time to
review the final written report from staff regarding the audit.
Dan Thomas, Chief Financial Officer, confirmed that delaying this presentation until June would not
affect the meeting of any deadlines. 

Feb 2 SCM Audit Min



PORT COMMISSION MINUTES OF THE AUDIT COMMITTEE MEETING 
TUESDAY, MAY 4, 2010                              P. 2 
Internal Audit Report of Information and Technology Communications (ICT) Department 
Documents provided: Management letter to ICT Department and Internal Audit Report 
Presenters: Ms. Kirangi and Jack Hutchinson, Manager, Internal Audit 
Mr. Hutchinson noted that two groups within ICT had been audited for the period of January, 2007
through December, 2008  ICT Administration and ICT Service Delivery. He stated that the ICT
Department is comprised of four distinct operational units and noted that these two business units
account for the majority of expenses within the ICT Department. He provided brief background
information on the two units reviewed, noting that on an annual average basis, the Administration
unit has expenses of approximately $2 million and the Service Delivery unit of approximately $5
million.
He noted that the Service Delivery unit is comprised of the Desk Services unit, which provides
help-desk support by troubleshooting information technology issues over the phone, and Client
Service, which provides computer and desktop support such as installing software and set-up of
computers. 
Mr. Hutchinson stated that the Administration unit actually consists of the following 5 distinct and
unique work units: 
Business Analysis Team 
Project Management Unit 
Financial Services Unit 
Contract Management Unit 
Administration Unit 
He noted that the two groups reviewed are made up of approximately 50 FTE's, both in payroll
categories of exempt and non-exempt. 
Mr. Hutchinson stated as part of this departmental audit, all operations of the department were
under consideration for review, noting that it was a comprehensive, risk-based audit. He stated
that the audit was conducted from both a compliance and an operational perspective. 
For the period of 2007-2008 covered in the ICT audit, Mr. Hutchinson stated that no significant
issues were found to be included in the report. However, there were some weaknesses identified,
which were communicated to management in the management letter. The weaknesses identified 
included the areas of accountability of equipment; accountability of non-capitalized IT equipment;
and surplussing of equipment to the State. 
Peter Garlock, Chief Information Officer, clarified that two of the three issues included in the
management letter were actually related to functions outside of the ICT department. Mr.
Hutchinson agreed, noting that the issues had been brought forward to the ICT management for
value-added purposes.

May 4 SCM Audit Min


PORT COMMISSION MINUTES OF THE AUDIT COMMITTEE MEETING 
TUESDAY, MAY 4, 2010                              P. 3 
Responding to Commissioner Albro's question about possible next steps related to the issue of
surplus of equipment, Mr. Yoshitani commented that the State needs to be notified that might be a
problem with documentation of equipment received by them, and if there are weaknesses on their
part, they need to be corrected, as well as any weaknesses on the Port's part.
Commissioner Albro stated that he would like to hear back after that conversation. 
Commissioner Tarleton stated that she wants to have this as a specific follow-up action, noting a
concern about equipment possibly carrying private data. 
Mr. Garlock replied that before equipment goes through the surplus process, it goes through a
rigorous process, which scrubs all of the data residing there. He also noted that ICT is working on
ways to mitigate risks which exist when employees use their laptops while at home or travelling. 
Commissioner Tarleton stated that as an additional follow-up item to looking at surplussing, she
would like to have a review of the internal processes and controls for how effectively management
is being helped to understand what tools are available to them for the tracking of their equipment 
which is valued at less than $20,000.
Mr. Garlock noted that all equipment that is issued by ICT has a barcode tag, and that it should be
relatively simple to delegate that barcode tracking to individual departments. 
Internal Audit Report of Portside Caf Management Services Agreement 
Presentation document: Internal Audit Report 
Presenter: Joyce Kirangi 
Ms. Kirangi provided a brief background of the Portside Caf, the food management program at
Pier 69. She noted that the audit had been conducted as the result of a request from Real Estate
Division management, in preparation for a Request for Proposals (RFP) soon to be issued for a
new contract. The period of the audit was from January, 2008 through December, 2009. 
Ms. Kirangi reviewed the main objectives of this audit as determining whether Port management
has established a system of adequate monitoring to reasonably ensure compliance with the
agreement; whether financial transactions were Portside Caf-related and completely recorded
with proper supporting documentation; and, whether the management agreement, as amended,
complies with applicable state and Port rules and regulations. 
Ms. Kirangi noted that the original Third Party Management agreement was entered into in 1992,
and since that time it has had various vendors who have been in charge of the food service itself, 
and has been operated by Consolidated Food Management (CFM) since 1998. Ms. Kirangi noted
that the original agreement was a one-year agreement with options to renew for two one-year
terms. Based on that agreement, the entire agreement could have been for three years. She
noted, however, that since the year 2000, there has not been a valid agreement. 

May 4 SCM Audit Min

PORT COMMISSION MINUTES OF THE AUDIT COMMITTEE MEETING 
TUESDAY, MAY 4, 2010                              P. 4 
Regarding financial issues, Ms. Kirangi stated that the Caf has been operating at a loss of an
average of $150,000 for a number of years. She also clarified that as part of the agreement, the
vendor was to operate on a break-even basis. She stated that the opinion of the Port's legal
department is that it is improper for the Port to, in effect, subsidize the Caf for this amount.
Another issue raised as a result of the audit was the lack of inventory taken in order to ascertain
the true Cost of Goods Sold, spoiling, or loss. 
Ms. Kirangi also noted that payroll taxes and benefits were being paid on a fixed
percentage/amount rather than on actual costs incurred.
Over the entire area of ineffective monitoring, the audit resulted in suggested recoveries of
approximately $70,000 for the two-year audit period.
Ms. Kirangi then commented on the findings in the area of non-compliance with State regulations
as follows: 
Daily cash receipts were not deposited with the Port Treasurer 
Operating expenses were not subject to Port's certification or Commission approval 
The agreement, as written, does not comply with state records retention requirements 
No evidence found where Port management had consulted with Department of Services
for the Blind regarding the department's primary right to operate food services/cafeterias in
a public building 
Public funds were used to subsidize the Caf 
Ms. Kirangi commented on the importance of rethinking the current structure of the food services 
plan before issuing the upcoming RFP. 
CEO Yoshitani reiterated the value of having an internal audit team, and stated that he agrees with
all of the findings of this audit, and that as a result, he had made the decision to terminate the
operations of the Caf effective 3:00 p.m. on April 30, 2010. He noted that all inventory was
donated to shelters or other worthwhile causes. He also stated that he believes it appropriate to
pursue to the extent possible, the collecting of funds which were subsidized. 
Mr. Yoshitani commented on the value of having an operation similar to the Portside Caf within
the building, and noted he has asked the Corporate Facilities Manager, Nick Milos, to look into
other possible models for the future, and stated that he will be seeking an accelerated process in
order to replace this type of service as quickly as possible. 
Mr. Miller raised the question of the whether the revenues as reported were correct as it could
affect the correctness of the reported subsidy. Ms. Kirangi responded that she did not have an
issue with the revenues, so the amount of the subsidy was probably stated correctly. 
Mr. Miller also voiced concern about how the adequacy of revenues and how that could affect
vendors who might respond. 

May 4 SCM Audit Min

PORT COMMISSION MINUTES OF THE AUDIT COMMITTEE MEETING 
TUESDAY, MAY 4, 2010                              P. 5 
Commissioner Albro commented on the need to look at not only the model to be used going
forward, but also lessons learned and what got us here with this agreement, and the adequacy of
management and behavior of third party management. 
He stated that he would like to see management perform an exhaustive review of potential financial
recovery beyond just the two years which were looked at during this audit period; instead going to
what the statute of limitations allows. 
Commissioner Tarleton noted her concurrence with Commissioner Albro's request, stating that she
would also like to have a review of third party management agreements in general, noting that it
can be difficult to implement the terms and conditions of such agreements. 
Status Report of State Auditor's Office (SAO) Performance and Accountability Audits 
Presenter: Rudy Caluza, Director, Accounting and Financial Reporting 
Mr. Caluza noted that this audit had begun in the Spring of 2009, at which time the entrance
conference occurred. Field work occurred during Spring, Summer and early Fall of that year.
Preliminary observations were received from the SAO in October, 2009 and a response was
provided by the Port in December. He stated that staff is still waiting to hear what the draft findings
and recommendations will be. 
Mr. Caluza stated that a draft report will be provided to the report, after which the Port will have the
opportunity to respond before the final draft report is issued. At that time, the Port will be able to
respond once again before the final report is issued. He stated that the draft audit report is
expected to be received in mid- to late May, and a final draft report in late June or July. He thought
that perhaps the final report would be issued sometime in July. 
Commissioner Albro suggested the possibility of the Committee holding an Executive Session to
review the reports in advance of them being issued publicly; however, it was unclear as to whether
an Executive Session is legally allowed to be held by this Committee. 
Discussion of Audit Committee Issues 
Presenter: Tom Barnard, Research and Policy Analyst 
Mr. Barnard referred to the periodic review of work being done by the Audit Committee, a section
which is included within the current Audit Committee Charter as a report to be provided on a
quarterly basis to the Commission. He noted that this is perhaps not clear and/or necessary, and
should perhaps be amended in the charter to state there should be an annual report. 
Commissioner Albro stated he would like to take the suggestion under advisement and give it more
thought. 


May 4 SCM Audit Min

PORT COMMISSION MINUTES OF THE AUDIT COMMITTEE MEETING 
TUESDAY, MAY 4, 2010                              P. 6 
CEO Yoshitani raised the possibility of providing to all Commissioners a complete packet of
information related to Audit Committee meetings each month, thereby apprising them of all issues
being discussed at the Committee meetings. 
Commissioner Tarleton suggested making a final decision on this at next month's meeting, and
also stated that she would like to have a full report to the full Commission in the near future. 
Announcements 
Commissioner Albro noted that Mr. Steve Miller will be leaving the Committee as the public of the
Audit Committee, at the end of 2010, having fulfilled his commitment. He stated that there will be
an announcement made to the public in the near future regarding applications to be accepted for
this volunteer position on the Committee. 
ADJOURNMENT 
There being no further business, the meeting was adjourned at 10:57 a.m. 
(A digital recording of the meeting is available on the Port's website.) 

_________________________ 










May 4 SCM Audit Min