PORT OF SEATTLE
MEMORANDUM 

DATE:    June 26, 2009 
TO:      Audit Committee 
FROM:    Melinda Miller, Director, Real Estate Portfolio & Asset Management 
SUBJECT:  Ninety-day follow-up to internal audit report of the Bell Harbor International
Conference Center management services agreement No.488, Audit Period 
January 1, 2005 through December 31, 2007 


Summary of Audit Findings and Management Actions: 

Finding:  a.  Lack of an Established Level of Monitoring Related to the Third-party Employee
Compensation Costs Paid by the Port 
Action:   As part of the annual budget review with CHI, Management will request details of the
bonus compensation plan and review the acceptability of the plan. 

Finding:  b.  Unsubstantiated Methodology or Support for Cost Allocation 
Action:   As part of the annual budget review and approval with CHI, Management will review
and approve the proposed allocation of CHI staff that is partially assigned to Bell
Harbor. Any significant changes during the year will be reported in the monthly
reporting package. 
As requested by the Audit Committee, we have reviewed the 2009 allocations and
found them reasonable. 

Finding:  c.  Improper Advance of Public Funds for Private Activities 
Action:   By the end of 2006, to tighten controls, BHICC had stopped paying any expenses on
behalf of CTA or other CHI-managed facilities (e.g. WTCSE). In all cases, these
expenses were properly reimbursed. CHI accounting personnel for BHICC and
WTCSE have been advised to pay only invoices directly related to those facilities. 


Page 1 of 2

Memorandum 
Page 2 of 2 

Finding:  d.  Improper Classification of Expenses 
Action:   As Management reviews the financial reports on a monthly basis, we will continue to
ask the questions necessary to ensure that CHI is booking accounting transactions in
accordance with Port policy. 
The specific issues identified in the audit have been corrected. BHICC is no longer
booking pass-through expenses on a net basis. Effective in 2008, revenue from passthough
transactions has been recorded on a gross basis and the related expenses have
been recorded as an operating expense. 

Finding:  e.  Ineffective Monitoring of Sales Activity to CHI and its Affiliates 
Action:   So that Port staff can better monitor related-party sales activity in the future, the
monthly reporting package has been expanded to include formal communications on
related-party activity including related-party use of the BHICC facility and services. 












Page 2 of 2