Internal Audit Briefing 
Presented to the Port of Seattle 
Audit Committee and Tay Yoshitani, CEO 
Joyce Kirangi, CPA 
Director, Internal Audit 
November 01, 2011

Agenda 
Audit Report 
Concession and Lease Audits 
Ex Offcio LLC 
Ivar's, Inc. 
Wendy's 
Maki of Japan 
Comprehensive Operational Audit- Central Accounting System 
Asset Management 
Third-Party Arrangements Operational Audit 
None 
Limited Operational Audit 
None 
Survey Results  Lease and Concession Audits 
2012 Proposed Internal Audit Budget and Preliminary Work Plan Discussion 
2011 Work Plan Status Update

Concession and Lease Audit 
Ex Officio LLC 
Background 
Ex Officio is an outdoor and travel clothing company founded in 1986 in Seattle, Washington
as De Sar, Inc. The company currently operates three locations in the region including the
location at Sea-Tac International Airport. 
The terms of the agreement provide for: 
Minimum Annual Guarantee (MAG) of 85% of the total amount paid or payable in the
previous agreement year 
Percentage Fee of 12% to 14% of gross revenues to the extent the fee is higher than the
MAG. 
Below are financial highlights for the last three agreement years: 
Fiscal      Reported        Paid 
Year    Gross Revenue   Concession 
2008-2009      $ 2,021,625   $ 242,269
2009-2010       1,991,847    239,022
2010-2011       2,355,361    289,751
Source: PeopleSoft

Concession and Lease Audit 
Ex Officio LLC 
Audit Objectives 
The purpose of the audit was to determine the following: 
1.Reported concession was complete, properly calculated, and remitted
timely to the Port. 
2.The lessee complied with significant provisions of the Lease and
Concession Agreement. 
The scope of the audit covered the period of June 1, 2008, through May
31, 2011.

Concession and Lease Audit 
Ex Officio LLC 
Audit Result 
Clean Audit Report

Concession and Lease Audit 
Ivar's, Inc. 
Background 
Ivar's Inc. is a private company founded on Pier 54 in Seattle in 1938. Since then, the
company has expanded to three full-service waterfront restaurants and 25 fast casual
Seafood Bars, including the location at Sea-Tac International Airport. 
The terms of the agreement provide for: 
Minimum Annual Guarantee (MAG) of 85% of the total amount paid or payable in the
previous agreement year 
Percentage Fee of 10% to 15% of gross revenues to the extent the fee is higher than the
MAG. 
Below are financial highlights for the last three agreement years: 
Year           Reported Gross Revenue   Total Rent Paid 
2007-08         $ 2,964,296.41       $ 397,644.46 
2008-09         $ 2,848,825.91       $ 387,681.50 
2009-10         $ 2,759,134.16       $ 373,025.16 
Source: PeopleSoft

Concession and Lease Audit 
Ivar's, Inc. 
Audit Objectives 
The purpose of the audit was to determine the following: 
1.The revenue reported was reasonable and complete. 
2.Rent payments were received in a timely manner. 
3.The lessee complied with provisions of the lease and concession
agreement. 
The scope of the audit covered the period of June 1, 2007 and May 31,
2010.

Concession and Lease Audit 
Ivar's, Inc. 
Audit Result 
Clean Audit Report

Concession and Lease Audit 
Latrelle's Express, Inc. (dba Wendy's) 
Background 
LaTrelle's Express, Inc. operates nearly two-dozen restaurants located in airports and
throughout major cities. LaTrelle's operates a portfolio of well-known restaurant brands, from
Wendy's and Subway to Peet's Coffee & Tea and Buffalo Wild Wings. 
The terms of the agreement provide for: 
Minimum Annual Guarantee (MAG) of 85% of the total amount paid or payable in the
previous agreement year, provided it is not less than $100,000. 
Percentage Fee of 10% to 13% of gross revenues to the extent the fee is higher than the
MAG. 
Below are financial highlights for the last three agreement years: 
Year           Reported Gross Revenue   Total Rent Paid 
2007-08                   $ 3,193,535        $ 380,159
2008-09                   $ 3,466,939        $ 415,702
2009-10                    $ 3,536,153        $ 424,699
Source: PeopleSoft

Concession and Lease Audit 
Latrelle's Express, Inc. (dba Wendy's) 
Audit Objectives 
The purpose of the audit was to determine the following: 
1.The concession revenue was complete, properly calculated and remitted
timely to the Port. 
2.The lessee complied with other significant provisions of the lease and
concession agreement. 
The scope of the audit covered the period of June 1, 2007 and May 31,
2010.

Concession and Lease Audit 
Latrelle's Express, Inc. (dba Wendy's) 
Audit Result 
Clean Audit Report

Concession and Lease Audit 
Food Systems Unlimited, Inc. (dba Maki of Japan) 
Background 
Food System Unlimited, Inc. is a concept restaurant that began its operations in Orlando,
Florida in 1991. The company operates in the food courts at the malls and airports around the
nation, including a location at the Seattle Tacoma International Airport. 
The terms of the agreement provide for: 
Minimum Annual Guarantee (MAG) of 85% of the total amount paid or payable in the
previous agreement year, provided it is not less than $165,000. 
Percentage Fee of 14% to 18% of gross revenues to the extent the fee is higher than the
MAG. 
Below are financial highlights for the last three agreement years: 
Year           Reported Gross Revenue   Total Rent Paid 

2008-2009                 $2,616,594        $418,153 
2009-2010                  2,551,050         415,987 
2010-2011                  2,656,797         404,189 
Source: PeopleSoft

Concession and Lease Audit 
Food Systems Unlimited, Inc. (dba Maki of Japan) 
Audit Objectives 
The purpose of the audit was to determine the following: 
1.The reported concession was complete, properly calculated, and
remitted timely to the Port. 
2.The lessee complied with provisions of the Lease and Concession
Agreement, as amended. 
The scope of the audit covered the period of June 1, 2008 and May 31,
2011.

Concession and Lease Audit 
Food Systems Unlimited, Inc. (dba Maki of Japan) 
Audit Result 
Clean Audit Report

Comprehensive Operational Audit- 
Central Accounting System 
Asset Management 
Background 
The Port of Seattle maintains large and diverse asset groups. 
As of July 28, 2011, the Port has 26,130 in-service capital assets with a historical
cost of $6.6 billion across several different categories as follows : 
Historical Cost 
Asset Category 
(in millions) 
Land                       $1,652
Building                         1,485
Utility and Other Systems             1,047
Structures                       1,046
Roads & Grounds                 584
Land and Air Rights                  306
Equipment                     260
Improvements                   125
Other                             120 
Source: PeopleSoft

Comprehensive Operational Audit- 
Central Accounting System 
Asset Management 
Audit Objectives 
The purpose of the audit was to determine whether management has implemented
adequate controls to ensure: 
1. Newly created assets are entered in the asset management system timely,
efficiently and are complete. 
2. Asset retirements are recorded in asset management in a timely, efficient and
complete manner. 
3. The capital asset list used for the physical inventory in all Divisions is accurate
and complete. 
4. Capital Services new asset creation and retirement processes are effective and
complete. 
We reviewed information for the period of January 1, 2010, through July 31, 2011.

Comprehensive Operational Audit- 
Central Accounting System 
Asset Management 
Audit Result 
Clean Audit Report

2012 Proposed Internal Audit Budget 
2012 Proposed Internal Audit Budget 
Regular Budget Items 
Salaries & Benefits                             $ 1,126,499
Supplies and General Expenses                        11,945
Outside Services                                   2,780
Cont. Prof. Education (CPE) and Prof. Membership            45,274
Telecommunications                               7,560
Worker's Compensation Expenses                      2,418
Total Regular Items     $ 1,196,476
One-Time 2012 Items 
IT Performance Review and Risk Assessment              250,000
Internal Audit Quality Assurance (peer review)                 50,000
Total One-Time Items      $ 300,000
2012 Proposed Budget                           $ 1,496,476

2012 Proposed Internal Audit Budget 
Internal Audit Budget 
Proposed
2008     2009     2010     2011     2012 
$848,958  $1,211,366  $1,109,049 $1,214,982 $1,496,476
Internal Audit FTEs 
2006  2007   2008   2009   2010   2011 
FTEs       1    3    5    7    7    8

Projected 2012 Internal Audit Resources 
Available audit resources --9,506 hours

Preliminary 2012 Work Plan Discussion 

Risk-Based Internal Audit Steps 
Understand Port businesses and objectives 
Discuss Port risks with Port leadership and Commissioners (see attached) 
Identify potential Port wide risks 
Link the risk to specific Port objectives that could be disrupted/impaired 
Determine and set the scale to be used in the risk assessment 
Assess and rank risk factors/drivers 
2012 project selection based on risk ranking

Preliminary 2012 Work Plan Discussion 
Risk-Based Internal Audit Universe 
Strategic/                          Accountability/ 
IT              Operational   Compliance                Reporting
Governance                    Transparency
Risk               Risk        Risk                    Risk 
Risk                             Risk 
Business Units/Departments                               X         X          X          X 

Lease and Concession                                   X 
Central Key Processing Systems                   X                    X 
3RD Party Mgmt.                                       X         X          X 
Federal Assistance                                        X                      X 
Financial Reporting                              X          X           X          X 
Capital Improvement Program                     X         X          X          X 
Commission Directives/Policies           X                                           X 
Information Technology (IT)      X 
Non-audit Services                              X         X           X

2011 Work Plan Status Update 

2011 Work Plan Status 
audit progress attached