PORT OF SEATTLE- ENTERPRISE RENT-A-CAR
INDEPENDENT ACCOUN'TANTS'REPORT ON
AGREED-LPON PROCEDURES RELATING TO EN'TERPRISE
RENT-A-CAR AGREEMENT ITORTHE TWO
TWELVE-MONTI-I I'EIUODS ENDED OC'I'OBEII 31,2006 AND 2005
BRANCH, RICHARDS & CO., P.S.
Incorpornrcd in 1972
CertifiedPublic Account~ats
155 NE 100rhSr.,Suite410
Fax*(206)729-3498
Seattle, WA 98125
INDEPENDENT ACCOUNTANTS' REPORT phone (206) 729411 14 (206) 624-4723
ON AGREED-UPON PROCEDURES
August 30, 2008
To: Applicable Management of Port of Seattle
We have performed procedures requested by you with respect to the calculation and payment of
concessionable revenue and audit requirements included in the Rental Car Lease and Concession
Agreement (the Agreement) dated November 1, 2004 between the Port of Seattle (POS) and
Enterprise Rent-A-Car (ERAC) for the two twelve month periods ended October 3 1, 2006 and
2005. This report is solely for your information and is not to be used for any other purpose. It is
intended to assist POS in evaluating compliance with the lease requirements. This agreed-upon
procedures engagement was performed in accordance with standards established by the American
Institute of Certified Public Accountants. The sufficiency of these procedures is solely the
responsibility of the specified users of the report. Following is a listing of the procedures that we
performed with respect to the above noted lease periods and the results and conclusions we
formed as a result of such procedures.
General Descriptiorl of Procedrrres Performed
The majority of our fieldwork was performed with the assistance of ERAC'saccounting
personnel in Seattle, Washington. ERAC has a counter location at the Airport which serves
customers and another location within a 3 mile radius of the Airp,ort'sboundary line which serves
airport and non-airport customers and is the main location for rental activity at the airport.
Customers are also able to rent from the off airport location without going to the airport counter
if they choose. Local customers also rent from both airport and off airport locations. Upon
arrival of a customer at the airport or off-airport location, an agent creates a rental agreement or
accesses a reservation from which a rental agreement is created. It excludes individual tickets
from concessionable revenue if the customer has not flown into the airport within 12 hours or has
a local address.
ERAC utilizes the Peoplesofl accounting program. At the end of each month a Tickets Charged
report and a Tickets Not Charged report are generated from the accounting system. These list the
income on tickets that had airport access fees on them and a listing of the tickets and totals for
tickets where airport access fees were waived for local customers. These two reports are used as
the basis for the ,calculationof concessionable revenues and remittance of concession fee to the
Port of Seattle.
The Tickets Charged and Tickets Not Charged reports list all rental agreements during the month
based on closing date. The reports are in order of numerical sequence and breaks down the
revenue by type. The Tickets Charged report list all customers that were assessed a concession
recovery fee. The Tickets Not Charged report supports revenue from non-airport customers.
The Tickets Not Charged report is reviewed in detail each month for customers that have a long
distance address outside of local Washington State. Each customer contract that has not been
charged a concession recovery fee needs to state in notes that customer did not come in through
the airport. If no notes are available, ERAC self assesses a concession recovery fee of 10% of
applicable income and applicable $4 /day for Customer Facility Charge (CFC) Tickets.
As discussed above, ERAC uses these two reports as a basis for the calculation of concessionable
revenues and remittance of concession fee to the Port of Seattle. These reports are in excel
format and are included in a file referred to as the Airport Access report (AA). Worksheets
included in the AA report reconcile the revenue amounts used to calculate the amount due to the
Port and the general ledger, from which revenue rolls into a detail spreadsheet that includes other
locations that airport customers have accessed to rent vehicles (see Exhibit B for an example of
the Revenue reconciliation for the Airport location) . The detailed spreadsheet shows revenue by
category and totals the revenues from each location (see Exhibit A for an example of the detailed
worksheet in the AA report). This detailed spreadsheet supports the amounts included in the
letter to the Port which shows revenue by category and calculates the amount due to the Port.
We obtained the Mreport for all of the months included in the two twelve-month periods ended
October 31,2006 and 2005.
Following is a listing of procedures performed during this engagement.
I . Detailed Sample selectio~lsfrom the 2005 and 2006 Tickets Charged and Tickets not
Charged report - We selected a total sample size of 87 closed rental agreement from the
months of December '04, June '05,March '06, September '06 and October '06 from the
Tickets Charged report and the Tickets Not Charged report. In selecting this sample, we
analyzed the revenue collected on each agreement, recalculated the concession recovery fee
and agreed supporting information per the agreements to the postings in the Tickets Charged
report and Tickets not Charged report. We noted no exceptions. Additionally, we were able
to summarize the totals of the Tickets Charged and Tickets not Charged report and agree the
totals to the amounts in the excel spreadsheets included in the AA report without exception.
2. Agreed Tickets Charged Report and Tickets not Charged Report to AAReport- The
Tickets Charged report and Tickets not Charged report shows revenue totals by the following
accounts; Time and Mileage, PAI, SLP, Drop, LDW, Fuel, GPS charges and Concession
Recovery Charges. For the months of December '04, June '05, March '06, September '06
and October '06, we agreed totals in the Tickets Charged and Tickets not Charged report to
the amounts in the excel spreadsheets included in the AA report without exception. For the
Tickets not Charged report, we selected individual tickets and checked to ensure that they
were adequately self assessed or adequately excluded based on proper documentation,
without exception.
The Agreement defines Gross Revenue as to what must be included and what is excluded
from concessionable revenue. Based on that definition, we reviewed all revenue sources and
deductions to determine whether ERAC was properly including or excluding all appropriate
revenue. The following are descriptions of the findings resulting from this analysis, which we
have included in our Schedule of Findings at the end of this report.
We noted unreported revenue totaling $2,509 for the twelve months ended October 31,
2006 and $8,252 for the twelve months ended October 31, 2005. Based on our testing
and discussions with ERAC personal, amounts were not included due to report set up
errors and manual input errors. Accordingly, we have included this difference as an
addilion to concessionable revenues in the Schedule of Findings.
Testing for Contract Compliance Items- Contract compliance items of the Agreement that we
tested included Article 5.1 Concession Fees; 5.2.4 Recovery of Percentage Fee; 5.2.2 Annual
Report and 5.25 Customer Facility Charges (CFC). The following are the results of our
compliance testing.
Concession Fee and Recovery of Percentage Fee - We agreed the total monthly
Concessionable Revenue for each month of the twelve-month periods ended October 31, 2006
and 2005 per the AA Report to the monthly concession payments received by the Port of Seattle.
We were able to verify that amounts paid were ten percent (10%) of total concessionable revenue
per the AA report for the months that concessionable revenues exceeded the monthly minimum
guarantee. In the months that concession revenue did not exceed the monthly minimum guarantee
amount, we noted that ERAC paid the minimum guarantee.
Annual Report - Based on the Agreement,"Concessionaire shall submit, for the approval of the
Port, an "Annual Report" for each Agreement year during the Term of this Agreement. Such
Annual Report shall be submitted no later than ninety (90) calendar days following the last day of
each Agreement Year. Concessionaire shall bear the entire cost of preparing and providing such
reports. The Annual Report shall be prepared by Concessionaire and signed by its chief
financial officer, or their designee, attesting to the amounts shown. The Annual Report shall also be
audited by an independent certified public accounting firm in accordance with generally accepted
auditing standards ("GAAS"), with a copy of the independent certified public accounting firm's
audit report sent to the Port stating that in its professional opinion, based on the audit, the
Concession Tickets paid by the Concessionaire during the previous Agreement Year were properly
calculated and paid in accordancewith the terms and conditions of the Agreement." Based on our
review of the audit reports for the twelve-monthperioh ended October 31, 2006 and 2005, it
appears that the audit reports were issued The audit report for October 31, 2005 was dated
after the 90 calendar days as required by the agreement, thus out of compliance with
requirements of the Agreement. The report for October 31, 2006 was dated within the 90 day
requirement and we were able to verlfy through review of an e-rnailfiorn Port of Seattle
personnel that the audit report was submitted to the Port of Seattle within the 90 day
requirement.
Customer Facility Charge- The Port required ERAC to collect a Customer Facility Charge
(CFC) of $4/day on all vehicle rental transactions originating at the Airport starting February 1,
2006. For the rental agreements selected for testing in the months of March and September 2006
we were able to verifjr that ERAC is charging customers on the rental agreements. We attemped
to agree the totals in the detailed CFC report to the amounts paid to the Port, but there were
differences between the total CFC due and the total paid to the Port. Per discussion with ERAC
personnel, they were unable to explain why the amounts differed. The differences were
immaterial and don't seem to be an issue, as the total amount of CFC paid to the Port in the
months tested was higher than the amounts supported in ERAC detail CFC report. Based on our
testing it appears that CFC'sare being collected andpaid to the Port as required in the
Agreement.
Conclusion
Based upon our detailed testing, nothing came to our attention that rental agreement revenue per
supporting rental agreements is not being captured by the systems summary reports used to report
revenue. The reporting errors that were found were due to set up errors in the manual process of
self assessing agreements that had not been charged a concession fee or accounting oversight.
Included on the next page is a Schedule of Findings that quantifies the revenue items that we have
added to total concessionable revenue. For the twelve months ended October 31, 2005,
unreported revenue totaled $8,252. For the twelve months ended October 3 1, 2006 unreported
revenue totaled $2,509. This is additional revenue that we believe is concessionable per terms of
the Agreement. These additional revenues results in $825 of additional concession rent for the
twelve months ended October 3 I, 2005 and $25 1 of additional concession rent for the twelve
months ended October 31 2006, due to the POS.
Because the above described procedures were not sufficient to constitute an audit made in
accordance with generally accepted auditing standards, we do not express an opinion on the
overall financial position of the Port of Seattle, or ERAC.
An agreed-upon procedures engagement is one in which a practitioner is engaged by a client to
issue a report of findings based on specific procedures performed on a subject matter. The
specified parties and the practitioner agree upon the procedures to be performed by the
practitioner that the specified parties believe are appropriate. In an engagement performed under
this section, the practitioner does not perform an examination or a review, and does not provide
an opinion or negative assurance. Instead, the practitioner'sreport on agreed-upon procedures is
in the form of procedures and findings.
Sincerely,
Certified Public Accountants
Seattle, Washington
Enterprise Rent-A-Car
SCHEDULE OF FINDINGS
FOR THE TWELVE MONTHS ENDED OCTOBER 31,2006
Nov-05 Dec-05 Jan46 FeM6 Mar-06 Apr-06 May-06 Jun-06 Jd-06 Aug-06 Sep-06 Ocl-06 Total
ERAC Reported Gross Revenue S 1,072,438 S 1,148,546 S 1,088,765 S 910,560 S 1,178,%5 S 1,161,620 S 1,146,695 S 1,250,063 S 1,603,210 S 1,708,828 S 1,313,301 S 1,309,750 % 14,897740
FIN?)II\TGS: ADD
Additional Driver Fee
Fuel
Damage Waiver
Time & Mileage
Xhc.
Tolal Additions
Audited Gross Revenues S 1,072,680 % 1,148,832 % 1,089,712 S 910,799 % 1,179,550 S 1,161,620 5 1,146,755 5 1,250,063 S 1,603,210 S 1,708,978 % 1,313,301 6 1,309,750 $ 14,895,249
Percentage underreported (see note below) 0.02%
Concession Fee Payable - 10% 107,268 114,883 108,971 91,080 117,955 116,162 114,675 125,006 160,321 170,898 131,330 130,975 1,489,525
Less Concession Fee Reported (107,244) (114.855) (108,877) (91,056) (117,896) (116,162) (114,669) (125,006) (160,321) (170,883) (131,330) (130,975) (1,489,274)
Addl Concession Payable 24 29 95 24 59 6 15 251
Customer Facility Charges (CFC)
Add'l Concession & CFC Payable % 24 S 29 % 95 S 24 S 59 S - S 6 S - S - S 15 S - % - 5 251
EXHIBIT A
DETAILED WORKSHEET IN THE AA REPORT
EXHIBIT B
REVENUE RECONCILIATION FOR THE AIRPORT
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