Internal Audit Briefing 
Presented to the Port of Seattle 
Audit Committee and Tay Yoshitani, CEO 
Joyce Kirangi, CPA 
Director, Internal Audit 
September 07, 2011

Agenda 
Audit Report 
Comprehensive Operational Audit 
None 
Third-Party Arrangements Operational Audit 
Club International Lounge 
Limited Operational Audit 
Port of Seattle Fleet Maintenance  Aviation and Marine 
Concession and Lease Audits 
Bill & Nick 
Enterprise Rent-A-Car 
2011 Work Plan Status Update and Initial 2012 Work Plan Discussion 
2012 Quality Control and Assurance Review  GAGAS Requirement

Third Party Management Operational Audit 
Club International Lounge 
Background 
A three-year management agreement was entered into between the Port and VIP
Hospitality, LLC in March 2010 for operations of lounge services at South Satellite
of the airport. The agreement provides that the contractor will operate, manage
and maintain lounge services on a per-flight basis for designated airline
passengers for a management fee. The lounge currently services two airlines - 
Asiana and Condor Airlines - with plans to expand in near future. 
The total revenues and expenses from 2010 are as follows: 
2010       2011 
thru July 
Revenue           105,500      92,320
Operating Expenses     114,188      46,108
Management Fee      42,672      36,847
Net Income/(loss)      (51,360)        9,365
Source: PeopleSoft

Third Party Management Operational Audit 
Club International Lounge 
Audit Objectives 
The objective was to determine if management implemented adequate
controls to assure: 
1.Compliance with the management agreement 
2.Monitoring of the operating expenses was adequate 
We reviewed information related to the period from March 5, 2010 to 
present.

Third Party Management Operational Audit 
Club International Lounge 
Audit Result 
One Finding 
Payroll Monitoring: Payroll reimbursement to the contractor was
based on budget estimates rather than actual expenses incurred.
No true-up reconciliation was conducted at year-end.

Limited Operational Audit 
Fleet Maintenance  Aviation and Marine 
Background 
The Port of Seattle maintains a large and diverse fleet of 1,335 items, as of
August 2011, including but not limited to the following: 
38 take-home vehicles 
71 assigned vehicles 
118 pool vehicles 
11 boats 
The total annual expenses for fleet maintenance for 2008  2010: 
Year     Aviation        Marine        Total 
Maintenance     Maintenance 
2008    $3,099,762      $1,259,184    $4,358,947 
2009    $2,961,162      $1,117,294    $4,078,456 
2010    $2,910,563       $972,782     $3,883,346 
Source: PeopleSoft

Limited Operational Audit 
Fleet Maintenance  Aviation and Marine 
Audit Objectives 
The purpose of the audit was to determine whether management has implemented
adequate controls to ensure: 
1.Compliance with internal policies and procedures Executive Policy 17 (EX-17); 
Assigned take-home vehicles justified and authorized 
Utilization requirements for assigned and pooled vehicles are met 
2. Corrective maintenance occurs as needed and appears reasonable 
3. Performance measures are available, utilized, and assisting management in
achieving its goals (e.g., preventive maintenance time allocation estimates are
monitored against actual) 
4. Benchmarks are available and can be used to help improve Port fleet operations 
We reviewed information for the period of January 1, 2008, through December 31,
2010, including activity through the end of fieldwork in July 2011.

Limited Operational Audit 
Fleet Maintenance  Aviation and Marine 
Audit Result 
Two Findings 
Maximo Software (IBM) for Fleet Maintenance Is Not Used At
Optimal Capacity 
Certain Requirements of the Fleet Management Policy (EX-17)
Are Not Being Met

Concession and Lease Audit 
Bill & Nick, Inc. 
Background 
Bill & Nick, Inc. (d/b/a Bay Caf) is a private company that has operated a diner
on Fisherman's Terminal since 1987. Based in Seattle, Washington, this
establishment has been serving visiting and local patrons food items, beverage
items, and other business related services just feet from the wharf. 
The agreement requires a fixed monthly minimum rent to be adjusted annually
based on a 3 prior year average. Additionally, the agreement requires a
percentage fee of 6%, provided the fee exceeds the fixed monthly minimum rent. 
Below are Bill & Nick, Inc. financial highlights for the last two years: 
Reported     Total Rent
Year    Gross Revenue     Paid 
2009         $766,313     45,979 
2010         $795,754     47,745 
Source: PeopleSoft

Concession and Lease Audit 
Bill & Nick, Inc. 
Audit Objectives 
The purpose of the audit was to determine the following: 
1.Reported concession was complete and properly calculated. 
2.The lessee complied with provisions of the Lease and Concession
Agreement. 
The scope of the audit covered a two-year period from January 1, 2009 to
December 31, 2010

Concession and Lease Audit 
Bill & Nick, Inc. 
Audit Result 
Clean Audit Report

Concession and Lease Audit 
Enterprise Rent-A-Car 
Background 
Enterprise Rent-A-Car (ERAC) currently has two locations at/around the airport that could be
subject to concession as defined in the agreement: a counter at the Airport and another offairport
location within a three (3) mile radius of the Airport's boundary. 
The terms of the agreement provide for: 
Minimum Annual Guarantee (MAG) of 80% of the total amount paid or payable in the
previous agreement year 
Percentage Fee of 10% of gross revenues to the extent the fee is higher than the MAG. 
Below are ERAC financial highlights for the last three agreement years: 
Fiscal       Reported        Paid 
Year     Gross Revenue   Concession 
2007-2008      $18,888,053    $1,888,807 
2008-2009       19,881,323     1,988,131 
2009-2010       21,672,584     2,167,258 
Total            $60,441,960     $6,044,196 
Source: PeopleSoft

Concession and Lease Audit 
Enterprise Rent-A-Car 
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.Port and the lessee complied with provisions of the Lease and
Concession Agreement, as amended. 
3.Customer Facility Charges (CFC) were properly collected and remitted
timely to the Port. 
The scope of the audit covered the period of November 1, 2007, through
October 31, 2010.

Concession and Lease Audit 
Enterprise Rent-A-Car 
Audit Result 
Clean Audit Report

2011 Work Plan Status Update 
and 
Initial 2012 Work Plan Discussion 
2011 Work Plan Status 
audit progress attached 
2012 Work Plan Preparation Timeline 
Preliminary 2012 department budget due on 9/2/2011 
No additional FTEs 
Approx. $10,000 to $50,000 for peer review 
Approx. $100,000 for initial IT risk assessment and
recommendations for areas of audit focus 
Identified 20+ Key Port Leaders to start initial discussion 
To date, met with approx. 15 senior leaders 
In Sept., begin financial analysis 
By Oct., compile risk assessment document 
By Nov., preliminary discussion with the Committee 
By either Dec. or Jan., approved 2012 Work Plan

2012 Quality Control and Assurance Review 
Department Readiness Self-Assessment 
Implemented TeamMate in 2011 
TeamMate training 
Refining/formalizing department policies/procedures 
Self-comparison with peer internal shops in the region (e.g.,
City of Seattle and King County) 
Informal 3rd party peer review readiness assessment and
training 
Formal Peer Review in 2012 
Tentatively scheduled for the 2nd quarter 
Conducted by ALGA (Association of Local Government
Auditors) in accordance with government auditing standards
or Committee recommendation