Audit Report Human Resources and Deve

Port of Seattle 

Internal Audit Report 

Human Resources and Development 
Department Audit

Audit Period January 1, 2007 through December 31, 2008 




Issue Date: November 3, 2009 
Report No.: 2009-16

Internal Audit Report 
Human Resources and Development 
Audit Period: January 1, 2007  December 31, 2008 

Table of Contents Audit Audit 

Internal Auditor's Report .............................................................................................................................................. 3 Compliance Audit 
Executive Summary ....................................................................................................................................................... 4 Compliance Audit 
Background ...................................................................................................................................................................... 5 
Audit Objective ................................................................................................................................................................ 6 
Scope of the Audit .......................................................................................................................................................... 6 
Audit Approach ............................................................................................................................................................... 6 
Conclusion ....................................................................................................................................................................... 6 















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Internal Audit Report 
Human Resources and Development 
Audit Period: January 1, 2007  December 31, 2008 

Audit Audit 
Internal Auditor's Report 
We have completed an audit of the Human Resources and Development department. The purpose of 
the audit was to determine if Human Resources and Development: Compliance Audit 
Compliance Audit 
1. Performs a regular risk assessment that adequately addresses the risks impacting their 
department, as well as the controls necessary to mitigate those risks to an acceptable level. 
2. Effectively monitors and maintains data relied upon for the proper calculation and disclosure of 
other post-employment benefits in accordance with GASB 45 - Accounting and Financial
Reporting by Employers for Postemployment Benefits Other Than Pensions. 
3. Effectively monitors Pier 69 Flex Passes in accordance with the Port's Commute Trip Reduction
policy and procedures. 
Management has the primary responsibility to establish and implement effective controls. Our audit
objective was to assess and test those controls in order to establish whether the controls were
adequate and operating effectively. 
We conducted the audit using due professional care. We planned and performed the audit to obtain
reasonable assurance that department controls relating to risks, postemployment benefits, and Flex
Passes are adequate and operating as intended. 
We found no significant issues during the review; however, we identified opportunities to strengthen
existing controls over the department's risk assessment process, OPEB eligibility list, and Pier 69
Flex Passes, which have been communicated to management in a separate letter. 
We extend our appreciation to the Human Resources and Development department for their assistance 
and cooperation during the audit. 


Joyce Kirangi, CPA 
Director, Internal Audit 




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Internal Audit Report 
Human Resources and Development 
Audit Period: January 1, 2007  December 31, 2008 
Executive Summary 
Audit Audit 
Audit Scope and Objective The purpose of the audit was to determine if Human Resources and 
Development:                         Compliance Audit 
Compliance Audit 
Performs a regular risk assessment that adequately addresses the risks impacting their
department, as well as the controls necessary to mitigate those risks to an acceptable level. 
Effectively monitors and maintains data relied upon for the proper calculation and disclosure of
other post-employment benefits in accordance with GASB 45 - Accounting and Financial
Reporting by Employers for Postemployment Benefits Other Than Pensions. 
Effectively monitors Pier 69 Flex Passes in accordance with the Port's Commute Trip Reduction
policy and procedures. 
We reviewed information relating to fiscal years 2007 and 2008. 
Background  HRD is part of the Port's Corporate Division and has offices located at both Pier 69 and
the airport. Like any other organization HRD is primarily responsible for hiring employees. However,
the Port's HRD department is rather large and responsible for many other functions at the Port
including benefits and compensation, consulting, diversity, training, and communication. In respect to
communication, HRD is responsible for educating employees on numerous issues affecting the Port
and its staff; including changes to health insurance plans and wellness programs, furlough
requirements and rules, the voluntary separation program, the telecommuting pilot program, the
implementation of a new Human Capital Management System, and the creation of the Resource Center
in response to the Port's reduction in workforce. 
Audit Result Summary  We found no significant issues during the review; however, we identified
opportunities to strengthen existing controls over the department's risk assessment process, OPEB
eligibility list, and Pier 69 Flex Passes, which have been communicated to management in a separate
letter. 







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Internal Audit Report 
Human Resources and Development 
Audit Period: January 1, 2007  December 31, 2008 

Audit Audit 
Background 
The Human Resources & Development department engages and equips employees to achieve
exceptional results thus sustaining the Port of SeattleCompliance Audit as a vital, high performing organization. With
offices located both at the airport and Pier 69, this large department consists of 30 full time employeesCompliance Audit 
operating with a wide spectrum of responsibilities. Aside from HRD's primary responsibility of hiring
employees, the department is also responsible for benefits and compensation, consulting, diversity,
training, and communication. In regards to communication, HRD is responsible for educating employees 
on numerous issues affecting the Port and its staff such as changes to health insurance plans and
wellness programs, furlough requirements and rules, the voluntary separation program, the
telecommuting pilot program, the implementation of a new Human Capital Management System, and
the creation of the Resource Center in response to the Port's reduction in workforce. 
The department does not generate revenue but is responsible for collecting funds from employees who
choose to purchase Flex Passes. 
Department expenses for 2006 through 2008 are as follows: 
(in thousands)                   2006              2007               2008 
GL Category              Expense    %     Expense     %     Expense     % 
Salaries, Wages & Benefits       $ 1,537    67%      $ 2,652    73%      $ 2,255    74% 
General Expenses               138    6%        161     4%        149     5% 
Outside Services                 230    10%        510    14%        348    12% 
Supplies & Stock                 48    2%         27     1%         31     1% 
Equipment Expense              69    3%        32     1%        25     1% 
Worker's Compensation             4    0%         6     0%         5     0% 
Telecommunications              9    0%         9     0%         9     0% 
Travel & Other Employee          266   12%        246     7%        209     7% 
Promotional Expense              1    0%         9     0%         1     0% 
Property Rentals                   7    0%          0     0%          0     0% 
Grand Total                 $ 2,309   100%      $ 3,652   100%      $ 3,032   100% 
Source: PeopleSoft 
The department's top expense accounts at fiscal year-end (excluding those expenses associated with
salaries and benefits) are as follows: 
Expense Account                     2006         2007         2008 
Non-Architectural & Engineering Services     $ 121,133.70     $ 337,789.37     $ 206,668.70 
Registration Fees/Tuition                  148,310.52      124,133.79      102,819.04 
Metro/Ferry Pass Expense *                61,647.76       56,472.10       77,459.74 
Advertising                            69,247.45       93,314.78       73,841.01 
Source: PeopleSoft 
The year-end balance of the Metro/Ferry Pass Expense account is net of any adjustments and Flex Pass sales. The actual
amount of Flex Pass Purchases was $77,406, $80,995 and $94,423for 2006, 2007 and 2008, respectively. 
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Internal Audit Report 
Human Resources and Development 
Audit Period: January 1, 2007  December 31, 2008 

One of the department's employee benefit related responsibility involves compiling and maintaining aAudit Audit 
list of Other Post-Employment Benefits (OPEB) eligible employees. The Port is required by 
Government Accounting Standards Board (GASB) under statement 45 to compute and disclose 
financial liability associated with OPEB. Based on the list by Human Resources and Development,Compliance Audit 
Accounting and Financial Reporting (AFR) calculates and discloses the liability on its annual financialCompliance Audit 
statements. Below is the Port's OPEB liability as of December 31, 2008. 
Net OPEB    # of Plan
GASB 45 Plan Name           Obligation    Participants 
LEOFF Plan 1 Members' Medical Services Plan     $ 6,919,000     33 
Retiree Medical Insurance Plan                 $ 5,624,000     229 
Retiree Life Insurance Plan                    $ 593,000      346 
Source: Comprehensive Annual Financial Report for the Year Ended December 31, 2008 
Audit Objective 
The audit objective was to determine if Human Resources and Development: 
1)  Performs a regular risk assessment that adequately addresses the risks impacting their
department, as well as the controls necessary to mitigate those risks to an acceptable level, 
2)  Effectively monitors and maintains data relied upon for the proper calculation and disclosure of
other post-employment benefits in accordance with GASB 45 - Accounting and Financial
Reporting by Employers for Postemployment Benefits Other Than Pensions, and 
3)  Effectively monitors Pier 69 Flex Passes in accordance with the Port's Commute Trip Reduction
policy and procedures. 
Scope of the Audit 
The scope of this audit included information relating to fiscal years 2007 and 2008. 
Audit Approach 
To achieve the audit objective, we performed the following procedures: 
Obtained an understanding of the department's operations and the significant compliance
requirements. 
Reviewed department controls related to the audit areas. 
Obtained and analyzed relevant financial and non-financial data. 
Performed audit procedures to achieve the audit objective. 
Conclusion 
We found no significant issues during the review; however, we identified opportunities to strengthen
existing controls over the department's risk assessment process, OPEB eligibility list, and Pier 69
Flex Passes, which have been communicated to management in a separate letter. 
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