Port of Seattle
2008 Interim
Fieldwork Results
February 27, 2009
Laurie Tish, Lilian Mramba and Kevin Villanueva

Agenda
Evaluation of Internal Controls
Port Systems and Significant Processes
Assessment of Controls
Compliance Testing
Results of our Interim Tests


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Evaluation of Internal Controls
COSO defines internal control as a process,
affected by an entity's board of directors,
management and other personnel, designed to
provide reasonable assurance regarding the
achievement of defined objectives
Effectiveness and efficiency of operations
Reliability of financial reporting
Compliance with applicable laws and regulations

3

Evaluation of Internal Controls
Five components of internal control
Control Environment
Risk Assessment
Control Activities
Information and Communication
Monitoring


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Evaluation of Internal Controls
ERM framework is designed to achieve these objectives
Strategic
Operations
Reporting
Compliance
Two additional components in addition to those of
COSO"s framework
Objective setting
Event identification

5

Moss Adams Approach
Top-down approach
Assess entity-level controls and information
technology (IT)
Identify significant accounts and processes
Obtain documentation of significant accounts and
processes
Assess design and implementation and perform
walkthroughs of significant controls
Identify "key controls" for testing
Perform test of controls and compliance

6

Entity-Level Controls and IT
Entity-level controls are the foundation for all other
controls (Control Environment)
Tone at the top
Delegation of authority
Policies and procedures
Audit committee
IT is comprised of general controls (ITGCs) and
application controls
We evaluate ITGCs using the COSO framework as well
We test application controls in conjunction with financial statement
controls

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IT General Controls Procedures
Review infrastructure controls and overall IT operations
Targeted application layer testing and general ledger
access
Inquiries, inspection, observation, and walkthroughs
Review emphasis on newly implemented Marina
Management System, ERP Gateway, and Clarity
Budgeting System
Assessed against impact on financial reporting process
Measured against industry-accepted best practices

8

Significant Accounts and Processes
Administration of federal grants and related administrative controls
Billings, cash receipts, and receivables
Signatory Lease and Operating Agreement
Procurement, cash disbursements, and payables
Payroll
Capital projects
Treasury and Investments
Debt and related accounts
Pollution remediation obligation and contingencies
Third party management
Financial close and reporting
Budget

9

Assessment of Controls
We perform the following procedures
Understand the design and implementation of key controls
surrounding all significant accounts and processes
"Walkthroughs" of transactions
Observation, inquiries and re-performance
Attribute testing of samples of transactions



10

Compliance Testing
Major programs for 2008 are Airport
Improvement Program and Transportation
Security Grant
Approximately $31 million in expenditures
Approximately 91% of total grant expenditures
Passenger Facility Charge (PFC) Program will
be tested in March

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Compliance Testing
We also performed test of controls and substantive
testing of compliance for all direct and material
compliance requirements. In March, we will perform
additional testing for grant claims filed in the fourth
quarter.
Allowable costs
Cash management
Davis-Bacon Act
Equipment management
Matching
Period of availability
Procurement
Real property acquisition
Reporting
Special tests and provisions
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Results of Interim Testing
We obtained the planned level of reliance on
internal controls
There were no material weaknesses noted as a
result of our tests of internal controls governing
accounting, IT general controls and
administrative systems that would indicate a
material weakness
There were no findings or instances of
noncompliance noted

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