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 July 11, 2011 

The Port of Seattle Commission Audit Committee met in a special meeting Monday, July 11, 2011, 
in  the  Commission  Chambers  at  Pier  69,  2711  Alaskan  Way,  Seattle,  Washington.    Committee 
members Commissioner Albro, Commissioner Holland, and Christina Gehrke were present, as well 
as Tay  Yoshitani,  Chief Executive Officer; Joyce  Kirangi, Internal  Audit  Department  Director; Bill 
Fovargue, Internal Auditor; Michele Fideler, Airport Facilities Manager; Darlene Robertson, Harbor 
Services  Director; Tom  Barnard,  Research  and  Policy  Analyst;  and  Paul  White, Commission 
Records Coordinator.  Commissioner Holland was present after 9:15 a.m. 

Call to Order: 
The committee special meeting was called to order at 9:04 a.m. by Commissioner Albro. 

Without objection, the Committee advanced to consideration of –  
Comprehensive Operational Audit – Airport Office Building (AOB): 
Ms.  Kirangi  introduced  Ms.  Ruth  Riddle,  of  Resources  Global  Professionals,  who  contracted  to 
perform  the  operational audit  of  the  AOB.    Ms.  Riddle  holds  credentials as  a  CPA  (certified  public 
accountant),  CIA  (certified  internal  auditor),  CICA  (certified  internal  control  auditor),  and  CFE 
(certified fraud examiner). 

Ms.  Kirangi stated  that  the  operating  revenue  of  the AOB Department  comes  primarily  from 
conference  center rental and  is about  $150,000  with  expenses  that  are  close  to  $1,000,000.    She 
described the audit goals of ensuring the following: 
 Revenue generated by the conference center is complete and accurate; 
 Expenditures are valid; 
 Contract compliance; 
 Compliance with applicable laws; and 
 Effective operations. 

Ms. Kirangi explained that the audit covered the period from January 2008 to the end of 2010.  She 
noted that there were no issues of significance. 

Commissioner Albro commented that while operating revenue increased approximately 20 percent 
from 2009 to 2010, operating expenses increased about 50 percent and asked whether the Port is 
Commissioners 
Bill Bryant 
Commission President 
Tom Albro 
John Creighton 
Rob Holland 
Gael Tarleton 
P.O. Box 1209 
Seattle, Washington  98111 
www.portseattle.org 
206.787.3000 
Tay Yoshitani 
Chief Executive Officer

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MONDAY, JULY 11, 2011 


obtaining  full  cost  recovery  from  conference  center  rental.   Ms.  Kirangi stated  that  the  original 
emphasis of  the  conference  center  was  for  internal use,  and  that  use  of  the  facility  for  community 
events is a recent development.  Mr. Yoshitani added that the shortfall between operating revenue 
and  expenses  is  covered  by  the  rate  base  and  should  be  considered  a  subsidized  expense.    He 
also  stated  that  the  operating  maintenance  expense  is  not  limited  to  the  conference  center,  but 
includes  the  entire  office  building.    Mr.  Yoshitani  commented  that  staff  is  hopeful  that  the  AOB 
conference center will eventually become a separate profit center. 

In  response  to  Commissioner  Albro,  Mr.  Yoshitani  confirmed  that  the  variable  expense  of  the 
conference  center  is  not  yet  being  recovered  by  its  variable  revenue.   Commissioner  Albro 
stressed the importance that the asset recover its own costs. 

Ms. Fideler explained that the increase in maintenance expense of about $350,000 between 2009 
and 2010 was due to transfer of contract responsibility, not an increase in variable expenses. 

Commissioner Holland was present after 9:15 a.m. 

In response to Ms. Gehrke’s question, Ms. Riddle confirmed that minor internal control weaknesses 
mentioned in the audit result summary were reported to management. 

Concession and Lease Audit – Shilshole Bay Fuel Dock: 
Mr.  Fovargue  described  the  Port’s  agreement  with  the  Shilshole  Bay  Fuel  Dock  to  provide  fueling 
services  to  the  public  and marina customers.    He  reported  that  there  were  no  findings  associated 
with the audit. 

Mr. Fovargue explained that there has been a decline in fuel docks in the area over the years and 
that there are many challenges to operating the facility, which he described as a service to marina 
tenants  and  the  boating  public.    Monthly  rent  for  the  fuel  dock  is  approximately  $3,000,  and  the 
Port collects a  one-cent-per-gallon  flowage  fee  on  all  fuel pumped  at  the fuel dock.    Mr. Fovargue 
noted that compliance with environmental standards was reviewed in the audit, as was compliance 
with insurance and indemnity provisions of the lease and concession agreement. 

Commissioner Albro asked whether the Port can justify reinvestment in the fueling facility when the 
lease  becomes  available  for  renewal.    Ms.  Robertson  stated  that  the  condition  of  the  dock  and 
fueling facility is under review and is being factored into further lease arrangements. 

In  response  to  Commissioner  Albro,  Ms.  Robertson explained  that  there  are  very  few alternatives 
to  fueling  at  the  Shilshole  Bay  fuel  dock  that  do  not  involve entering the  Lake  Washington  Ship 
Canal. 

Commissioner  Holland  asked  about  the  feasibility  of  investing  in  a  fuel  dock  at  the  Bell  Harbor 
Marina.   Mr.  Fovargue  commented  on  the  advantages  of  having  a  fuel  dock  at  Shilshole  Bay 
versus Bell Harbor. 

Ms.  Kirangi  addressed  a  previous  Committee  question  regarding  Airport  parking  access  cards.  
She stated that the number of parking access cards has been reduced from approximately 2,500 to 
about  1,700  since  the  last  Airport  parking  audit  and  described  the  groups  of  personnel  who

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typically  hold  parking  access  cards.    She  commented  that  Internal  Audit  is  satisfied  that  the 
issuance of the cards appears to be appropriate. 

Mr.  Yoshitani  added  that controlling  dispersal  of  Airport  parking  access  cards  among  VIPs  was  a 
priority early in his administration. 

Commissioner  Albro  asked  against  what  standard  usage  of  Airport  parking  access  cards  were 
audited  and  what  the  policy  is  for  determining  who  is  issued  a  card.    Ms.  Kirangi  responded  that 
there is a list of card holders and a policy.  She added that there are only 10 VIP cards, six of which 
are  issued  for Port Commissioner use,  including one  floater.  Further discussion  of  usage policies 
for  Airport  parking  access  cards  followed.    Commissioner  Albro  requested  that  the June  7,  2011, 
Airport  Parking  Comprehensive  Operational  Audit  report  be  amended  to  include  information 
regarding Airport parking access card policies.  He also asked that the standards against which the 
audit is being conducted be included in future audit reports in the summary or transmittal letter. 

Ms. Riddle responded to a previous Committee question about destruction of Airport lost and found 
items.    From  the  Lost  and  Found  internal  policy,  she  cited  several  items  that  are  destroyed, 
including  keys,  medication,  dangerous  metals,  memory  cards,  CDs  with  personal  information, 
weapons,  items  considered to  be  dangerous  or  a  health  hazard,  identification  cards,  birth 
certificates, travel paperwork, checks, checkbooks, credit cards, photos, and cell phones. 

The Committee returned to consideration of –  
Approval of Audit Committee Meeting Minutes of June 7, 2011: 
On motion by Commissioner Holland, seconded by Commissioner Albro, the minutes of the 
Audit Committee Special Meeting of June 7, 2011, were approved. 

Without objection, consideration of –  
Review of Port of Seattle Whistleblower Policy 
– was postponed to a subsequent Committee meeting. 

Further Recommendations for Audit Committee Improvements: 
Mr.  Barnard  presented  the  following  recommendations  arising  from Committee discussions  on 
June 7, 2011, and earlier related to improving the function of the Audit Committee: 
 Begin  regular  distribution  of  financial  information  to  the  Committee’s  public 
member,  including  quarterly  performance  and  project  reports,  Comprehensive 
Annual Financial Report (CAFR), and budget materials. 
 Recommend to the Port Commission and Chief Executive Officer a stronger role in 
deciding  the  budget  of  the  Port’s  auditing  function,  including  specific 
recommendations  for  Internal  Audit  Department  staffing  resources  and  external 
audit contracts.  This would be proposed to be effective immediately and would be 
confirmed by amendment of the Audit Committee charter. 
 Conform  the  Audit  Committee  charter with standards  of  the Institute  of  Internal 
Auditors (IIA) and applicable governmental auditing standards. 
 Obtain  the  services  of  an  outside  firm  to  assess  the  work  of  the  Internal  Audit 
Department,  especially  the  risk  assessment  methodology  used  in  preparing  the 
annual risk assessment plan and subsequent work plan.

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 Agree  within  the  Audit  Committee  on  the  kinds  of  auditing and  business risk  the 
Committee  wants itself and  the  Internal  Audit  Department  to  focus  on  and 
incorporate into the 2011-2013 Long Range Goals and Objectives Plan. 
 Periodically  review  within  the  Audit  Committee  the  performance  metrics  currently 
under  development  by  the  Port’s  organizational  units  in  order  to  improve  the 
Committee’s ability to assess internal performance. 

In  response  to  Commissioner  Albro,  Mr.  Barnard  explained  that  the  Audit  Committee  charter 
provides in general for sharing Port financial information with the Committee public member. 

In  preparation  for  a  September  outlining  of  a  budget  recommendation,  Ms.  Gehrke  requested  a 
briefing  at  the  August  Committee  meeting  on  staff’s  progress  developing  2012  budget 
recommendations  for  the  Internal  Audit  Department.  She asked  for  2010  budget  information  for 
Internal Audit and 2011 actual expenditure data, with the concurrence of Commissioner Holland. 

Ms.  Kirangi  described  the  process  of  obtaining  peer  review  of  the  work  of  the  Internal  Audit 
Department,  which  is required  to  be  conducted  every three  years in  accordance  with  Government 
Auditing  Standards.  She  stated  that  the  initial  review  would  not  be  a  complete  review,  but  would 
be  followed  in 2012 by a  complete quality  control  review.    In  response  to  Ms. Gehrke,  Ms.  Kirangi 
confirmed that the initial external review would be a readiness assessment and the services would 
be procured through a request for proposals (RFP) process. 

Ms.  Gehrke  requested  the  qualifications  of  the  external  auditor  for  the  readiness  assessment be 
provided  to  the  Committee.    In  response  to  Mr.  Barnard,  Ms.  Kirangi  stated  that  the  firm  that 
conducts  the  readiness  assessment  will  not  necessarily  be  procured  to  conduct  the  complete 
quality  control  audit.    In  response  to  Commissioner  Albro,  Ms.  Gehrke described  the  scope  of  a 
readiness assessment and the relationship of the readiness assessment to the Committee’s goal of 
procuring an outside assessment of Internal Audit’s risk assessment methodology.  Commissioner 
Albro  proposed  that  the  Audit  Committee  approve  the RFP  for the  readiness  assessment planned 
to be procured in 2011. 

Mr. Yoshitani stressed the importance that review of performance metrics be shared with the entire 
Commission.  Commissioner Albro stated the view that the Audit Committee’s role is to ensure that 
the  policies  of  the  Port  Commission  are  being  followed,  not  to  establish  policy  or  determine  the 
adequacy of the Commission’s policies. 

In response to Commissioner Holland, Ms. Kirangi stated that management of the AOB conference 
center  is  conducted  internally,  while  catering  is  procured  from  an  external  party.    She  also 
confirmed that the conference center is producing revenue that is expected to grow in the future.   

Adjournment: 
There being no further business, the special meeting was adjourned at 10:12 a.m. 



Rob Holland 
Secretary 
Minutes approved:  August 2, 2011.