Internal Audit Report 


Concession Audit 
Of 
Emerald Cove Enterprises 

September 23, 2009  September 30, 2011 



Issue Date: January 10, 2012 
Report No. 2012-03

Internal Audit Report 
Concession Audit  Emerald Cove Enterprises 
September 23, 2009, through September 30, 2011 

Table of Contents 

Transmittal Letter ....................................................................................................................................................... 3 
Executive Summary ................................................................................................................................................... 4 
Background ................................................................................................................................................................. 5 
Audit Objectives .......................................................................................................................................................... 6 
Audit Scope and Methodology ................................................................................................................................. 6 
Conclusion ................................................................................................................................................................... 6 













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Internal Audit Report 
Concession Audit  Emerald Cove Enterprises 
September 23, 2009, through September 30, 2011 

Transmittal Letter 

Audit Committee 
Port of Seattle 
Seattle, Washington 

We have completed an audit of the Concession Agreement between the Port of Seattle and
Emerald Cove Enterprises. The purpose of the audit was to determine whether: 
1) The revenue reported was complete, properly calculated, and remitted timely to the Port. 
2) The concessionaire complied with significant provisions of the concession agreement. 
We examined information related to a two-year period from contract inception on September
23, 2009, through September 30,2011. 
We conducted the auditin accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence
to provide a reasonable basis for our findings and conclusions based on our audit objectives. We
believe that the evidence obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives. 
Emerald Cove Enterprises reported revenue completely and accurately, and the percentage fee was
remitted timely to the Port. F urther, Emerald Cove Enterprises complied with the other significant
provisions of the agreement. 
We extend our appreciation to the management and staff of the Airport Office Building Department 
and Accounting & Financial Reporting at the Port for their assistance and cooperation during the 
audit.  We also thank  the management and staff of  Emerald Cove Enterprises for  their 
assistance during the audit. 


Joyce Kirangi, CPA
Director, Internal Audit Department 


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Internal Audit Report 
Concession Audit  Emerald Cove Enterprises 
September 23, 2009, through September 30, 2011 

Executive Summary 

Audit Scope and Objective The purpose of the audit was to determine whether: 
1)  The concession revenue was complete, properly calculated, and remitted timely to the Port. 
2)  The concessionaire complied with significant provisions of the concession agreement. 
This is our first audit of Emerald Cove Enterprises. We examined the books and records for a twoyear
period from September 23, 2009, through September 30, 2011. The Airport Office Building 
Department, in conjunction with  Accounting  and  Financial Reporting  (AFR),  has the  primary
responsibility  at  the Port  of  Seattle for  administering  and monitoring the agreement to ensure 
contractual compliance. 
Agreement Terms  The initial agreement term was for one year, through September 30, 2010, with
two one-year extension options. The current agreement is in its final one-year extension, which will
terminate on September 30, 2012.
The concession percentage per the agreement is 25% of gross revenues on food and beverage
sales to external customers of the Airport Conference Center. 
The agreement provides a basic set of exclusions from gross revenue including taxes, refunds to
customers, and revenue derived from expenses passed directly through to third parties. However, any
markup on such pass-through expenses is included in gross revenue. 
The percentage fee is payable within 15 days after the end of each calendar month with respect to
gross revenues realized during the month. 
For untimely payments, the agreement provides for a one-time late fee of 5% of the overdue amount
and finance charges to be accrued at the rate of 12% per annum from the due date until paid. 
Audit Result Summary  Emerald Cove Enterprises reported gross revenues in accordance with 
the concession agreement. Further, Emerald Cove Enterprises complied with the significant terms of
the agreement. 




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Internal Audit Report 
Concession Audit  Emerald Cove Enterprises 
September 23, 2009, through September 30, 2011 

Background 
In 2009, the Port of Seattle entered into its first agreement with a caterer for the exclusive rights to
cater events at the Airport Conference Center.  The concession agreement was awarded to
Emerald Cove Enterprises of Normandy Park, Washington. Emerald Cove is a full-service caterer,
founded in 1999. On its web site, Emerald Cove promotes the Airport Conference Center as follows: 
Book a party at our exclusive venue! 
The Conference Center at Seattle-Tacoma International Airport. 
Located at the Sea-Tac International Airport, the Conference Center is available
to accommodate small meetings or conferences up to 200 attendees. Offering
almost 9000 square feet of private, flexible meeting space, the conference center
can be the perfect venue for your next meeting, special event, or holiday party. 
The initial agreement term was for one year, through September 30, 2010, with two one-year
extension options. The current agreement is in its final one-year extension, which will terminate on
September 30, 2012.
This is our first audit of Emerald Cove Enterprises. We examined the books and records for a twoyear
period from September 23, 2009, through September 30, 2011. The Airport Office Building
Department, in conjunction with  Accounting  and  Financial Reporting  (AFR),  has the  primary
responsibility  at  the Port  of  Seattle for administering  and monitoring the agreement to ensure 
contractual compliance. 
The concession percentage per the agreement is 25% of gross revenues on food and beverage
sales to external customers of the Airport Conference Center. 
The agreement provides a basic set of exclusions from gross revenue including taxes, refunds to
customers, and revenue derived from expenses passed directly through to third parties. However, any
markup on such pass-through expenses is included in gross revenue. 
The percentage fee is payable within 15 days after the end of each calendar month with respect to
gross revenues realized during the month. 
For untimely payments, the agreement provides for a one-time late fee of 5% of the overdue amount
and finance charges to be accrued at the rate of 12% per annum from the due date until paid. 
Two-year Financial Highlights 
Reporting Period    Gross Sales   25% Commission 
9-1-09  9-30-10         $91,979          $22,995 
10-1-10  9-30-11        $125,335          $31,333 
TOTAL     $217,314        $54,328 

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Internal Audit Report 
Concession Audit  Emerald Cove Enterprises 
September 23, 2009, through September 30, 2011 
Audit Objectives 
The purpose of the audit was to determine whether: 
1)   The concession revenue was complete, properly calculated, and remitted timely to the Port. 
2)   The concessionaire complied with significant provisions of the lease and concession
agreement. 

Audit Scope and Methodology 
The scope of the audit covered the period September 23, 2009, through September 30, 2011. We 
conducted the audit to determine whether the concessionaire was in compliance with the concession 
agreement terms including, but not limited to, proper concession payments.The audit approach was 
risk-based from planning to test sampling. We focused on the following areas: 
Timely Payments 
We reviewed payment records to determine whether the lessee complied with the timely payment
requirement. 
Insurance Liability 
We determined whether insurance requirements had been met by reviewing the certificates of
insurance in force for the audit period. 
Certified Annual Report 
We reviewed the annual certifications for the audit period to determine whether the certifications
were submitted timely. 
Percentage/Concession Revenue 
We obtained the sales reports form the concessionaire's accounting records and agreed
them to the reports submitted monthly to the Port of Seattle. We determined whether the
calculation of the concession percentage was accurate. We verified whether the percentage
had been calculated on the food and beverage sales, in accordance with Section 1.10 of the
agreement.
Charges for Food and Beverage 
We obtained the approved menus and pricing schedules and sampled 46 invoices over the audit
period, to determine whether prices charged were in accordance with the approved pricing
schedules. We traced and agreed the invoices to the concessionaires' accounting records.

Conclusion 
Emerald Cove Enterprises  reported gross  revenues  in  accordance with  the  concession
agreement. F urther, Emerald Cove Enterprises complied with the significant terms of the agreement. 


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