Port of Seattle 
2010 Audit Engagement Service Plan 
Presented to the Audit Committee on October 5, 2010 








999 Third Avenue, Suite 2800 
Seattle, WA 98104-4019 
206-302-6500

SCOPE OF WORK 
The purpose of our audit engagements is to form an opinion on the fairness of presentation of
the financial statements of the Port of Seattle for the year ended December 31, 2010 in
accordance with accounting principles generally accepted in the United States of America and
to audit and report on the administration of federal awards received by the Port in accordance
with Federal Circular OMB A-133. The audits will be performed in accordance with auditing
standards generally accepted in the United States of America and Government Auditing
Standards. 
The following summarizes the services to be provided: 
Audit and report on financial statements for both  the enterprise fund and the
warehousemen's pension trust fund included in the Port's Comprehensive Annual
Financial Report. 
Audit and report on internal control and compliance over financial reporting in
accordance with Government Auditing Standards. 
Audit and report on the Airport Improvement Program  and other major Federal
Financial  Assistance  Programs  and  related  internal  controls  and  compliance  in
accordance with Federal Circular OMB A-133 (Single Audit). 
Audit and report on the schedule of Passenger Facility Charges (PFC) receipts and
expenditures and related internal controls. 
Audit and report on the Schedule of Net Revenues Available for Revenue Bond
Debt Service. 
Issue a management letter of recommendations and observations. 







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OUR AUDIT APPROACH 
In accordance with generally accepted auditing standards and Government Auditing Standards,
our firm utilizes a risk based approach to conduct our audits. Moss Adams performs its audit
engagements using a risk-based approach that requires the auditor to obtain an in-depth
knowledge of the Port's operations and the industry as a whole. 
Audit risk involves the risk of material misstatement in the Port's financial statements and
arises because the audit is designed to provide reasonable (not absolute) assurance that the
financial statements are free of material misstatements. The audit risk model is composed of
three elements; inherent risk, control risk, and detection risk, which must be evaluated and
assessed separately, either quantitatively or qualitatively. We assess risk at the level of high,
medium, or low. 
Inherent risk represents the susceptibility of an account balance, class of transaction, or
disclosure to material misstatement based solely on their nature; this risk exists
independently of the audit. For example, due to the complexity of the estimate,
environmental liability is an inherently risky balance. Inherent risk includes fraud risk 
and the risk of material misstatement due to fraud. 
Control risk represents the risk that a material misstatement could occur in a system or
in an assertion that will not be prevented or detected on a timely basis by the Port's
structure of internal control. Although control risk exists independently of the audit and
is the responsibility of management, we will modify our audit procedures based upon
assessment of the risk. 
Detection risk represents the risk that the auditor will not detect a material
misstatement that exists in an assertion. It is a function of the effectiveness of applying
our audit procedures. 
We assess audit risk at the overall financial statement level, individual account balance,
transaction, or disclosure level during the planning phase of our audit (risk assessment
procedures). Our overall judgment about the level of the risks above will affect the scope of
the audit, including the nature, timing, and extent of our audit procedures. 
Phase I - Planning 
The following risk assessment activities are performed: 
Entrance meetings with relevant Port management and staff to discuss expectations,
the audit process and timelines, and to obtain key strategic, financial, and operational
information. 
Observation and inspection of documents. 
Identify Port-specific and industry developments that might require an expansion or
modification of audit tests. 

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Conduct risk brainstorming meeting with our own staff as well as meetings with Port
Commissioners, executives, management, and other personnel. 
Based on the results of the risk assessment procedures noted above, we conclude the planning
phase by performing the following: 
Define the scope of the engagement including  determination of  potential major
programs for the Federal Circular OMB A-133 audit procedures. 
Ascertain timing of conduct and completion of audit, reporting submission deadlines,
and nature of reports to be issued. 
Design an efficient audit approach and audit programs with sufficient risk coverage. 
Establish preliminary materiality and the non-posting threshold for trivial matters
noted during the audit 
Materiality 
Materiality is the maximum level of misstatement that can be tolerated in the financial
statements without causing a reasonable person's judgment about them to be significantly
changed or influenced. We determine materiality as follows: 
Conduct preliminary analysis of financial statements to make initial judgment of
materiality. 
Consider the needs and expectations of the readers of the financial statements. 
Consider both quantitative and qualitative factors. 
Major program determination is made using the guidance provided by Federal Circular
OMB A-133. 
Re-evaluate materiality level throughout the engagement and conclude on  final
materiality level upon completion of the audit. 
We identify all quantitative critical components to the financial statements such as total
assets, net assets, capital assets, revenue, and net income. We determine the most relevant
critical component to the users of the financial statement and using a benchmark percentage,
we calculate an overall materiality amount; for example a benchmark % multiplied by a
critical component such as total revenues. We also utilize planning materiality to determine
the extent of applying audit procedures; for example, it can be used in connection with
performing substantive analytical procedures and in determining sample size. 



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Non-Posting Threshold for Trivial Matters 
The trivial matters threshold establishes a level for which misstatements are considered to be
inconsequential to the financial statements. The trivial matters threshold is established at the
planning stage and is calculated as a percentage of planning materiality. We notify Port
management regarding all misstatements discovered in the audit and although we may
consider a misstatement inconsequential, management may elect to record an adjustment,
even if it is deemed to be trivial. All potential adjustment amounts above the trivial matters
threshold are analyzed individually and in aggregate to determine potential impact to the
financial statements. 
Phase II - Assessment of Internal Control 
Internal control is a process that is designed to provide reasonable assurance over the
achievement of the Port's objectives such as reliability of the Port's financial reporting,
effectiveness and efficiency of operations, and compliance with the laws and regulations. We
use the COSO framework in assessing the Port's internal control, which consists of five
interrelated  components;  control  environment,  risk  assessment,  control  activities,
information and technology, and monitoring. Our firm follows a top-down approach when
evaluating internal control starting with entity-level controls to controls that relate to specific
financial statement assertions as follows: 
Obtain and assess the Port'sentity-level controls including the information technology
environment and the effect on the internal control structure. 
Identify significant accounts and processes: 
Administration of federal awards 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 
Information technology (general computer controls) 
Budget 

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Obtain  copies  of  system,  policy,  and  procedure  documentation  from  various
departments. We retain these copies in our permanent working paper files and update
them annually. 
Obtain knowledge of design and implementation of controls relevant to financial
statement assertions and compliance with laws and regulations that have direct and
material effect on determination of financial statement amounts. After gathering this
information we perform "walkthroughs" to verify that our understanding of the system
and its controls is accurate and that key controls exist and are operating as designed. 
Perform tests of controls that relate to financial statement assertions and perform tests
of controls and compliance related to the Port's federal awards: 
Allowable costs 
Cash management 
Davis-Bacon Act 
Equipment management 
Matching 
Period of availability 
Procurement 
Real property acquisition 
Reporting 
Special tests and provisions 
Phase III - Substantive Audit Procedures 
We tailor our audit programs for each balance to obtain evidence from a combination of (1)
internal control testing, (2) analytical procedures, and (3) substantive testing. The balance of
evidence to be obtained from each of the three general types of procedures is determined
using an audit approach decision model taking into account the strength of the Port's system
of internal controls. 
Test of Details 
Directed testing and audit sampling are used to perform tests of certain financial
statement account balances. 
Directed testing utilizes judgment and expertise and selections are based on risk and
dollar value; we use directed testing approach for most financial statement balances
where efficient. 
Random  and judgmental  sampling methods are utilized  (method depends on
population). 
Compliance with requirements of the major federal award programs is tested. 
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Analytical Procedures 
In the planning phase, we perform a comparison of current and prior year results and
actual and budgetary information, as well as a comparison of industry benchmarks to
your results. 
During substantive testing, we perform an analysis of the detail of changes to certain
accounts such as capital asset, long-term debt, and investment accounts. For other
accounts, we frequently use predictive analytical tests such as using specific data to
develop expectations. 
At the conclusion of the audit, we do a holistic review of the financial statements in light
of the results of other auditing procedures and assess whether we have appropriately
addressed all critical areas. 
Conferences and Audit Progress Reports 
We will schedule both an entrance and exit conference with the Port's audit committee and
management. On a weekly basis during audit fieldwork we will provide management with a
status report of progress, unusual or significant accounting issues, proposed and passed audit 
adjustments, potential management letter comments, and difficulties encountered, if any. 
Phase IV - Completion of Audit and Presentation of the Audit Results 
Upon completion of substantive procedures, we assemble testing results to determine the
matters that are reportable to management and to the Port Commission. This process entails
assessing whether there are control deficiencies, whether individually or in aggregate, which
are severe enough to meet the definition of a significant deficiency or a material weakness. We
also conduct final engagement quality control reviews and prepare required deliverables. 
Finally, we are required by auditing standards to communicate, in writing, to management
and those charged with governance, all significant deficiencies and material weaknesses noted
as a result of our audit. For minor observations, we provide information on our observations
regarding controls and various other communications either verbally or in the form of a
formal management letter of recommendations to the Port. 





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AUDIT, ACCOUNTING, AND REPORTING ISSUES 
We have highlighted certain accounting issues pertinent to the Port: 
Bond Accounts 
The bond related accounts always provide challenging audit and accounting issues. Among
them are: 
New debt issuances 
Refunding, defeasances or extinguishment 
Compliance with covenants 
Capitalized interest 
Arbitrage liability 
Leases 
Leasing issues are complex and are prevalent in all the Port's lines of business. For instance,
we will devote audit effort and resources to the following: 
Real estate transactions within the Real Estate Division 
New and significant leases at the Airport and Seaport Divisions 
Review of Port's controls over ongoing accounting and monitoring of existing leases 
Revenue Recognition 
Revenue recognition complexities: 
Signatory Lease and Operating Agreement (SLOA) 
Other operating revenue 
Tax, PFC and federal grant receipts, and investment income 
Capital Assets 
Capital assets issues and related accounts: 
Capitalization policies and classification of work orders 
Asset retirements and demolition 
Project costs and overhead allocation 
Depreciation expense 
Impairment analysis 
Pollution Remediation Obligations 
Pollution remediation complexities include: 
Estimation by site of future liabilities and related expense 
Asbestos remediation efforts 
Capital vs. expense classification 



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NEW ACCOUNTING PRONOUNCEMENTS 
Government Accounting Standards Board Statement (GASB) No. 51, "Accounting and Financial
Reporting for Intangible Assets", effective for the Port in 2010, establishes guidance for
identifying and recognizing intangible assets on the statement of net assets. The standard also
provides specific guidance on internally generated intangible assets; including computer
software. 
GASB Statement No. 53, "Accounting and Financial Reporting for Derivative Instruments",
effective for the Port in 2010, addresses the recognition, measurement, and disclosure of
information regarding derivative instruments entered into by governments. The objectives,
terms, and risks of hedging derivative instruments are required disclosures. The standard will
require financial statement instruments or derivatives to be marked to market value on the
financial  statements.  Also,  footnote  disclosures  will  include  a  summary  of  derivative
instrument activity. 
GASB Statement No. 59, "Financial Instruments Omnibus", effectivefor the Port in 2010,
updates and improves existing standards regarding financial reporting and disclosure
requirements of certain financial instruments and external investment pools for which
significant issues have been identified in practice. The requirements are intended to improve
financial reporting by providing more complete information, by improving consistency of
measurements, and by providing clarifications of existing standards. 
Statement on Auditing Standards No. 117, "Compliance Audits", effective for the auditof the
Port in 2010, establishes standards and provides guidance on performing and reporting on an
audit of an entity's compliance with applicable compliance requirementsof a governmental
audit requirement. The statement reflects changes in the compliance audit environment and
incorporates the risk assessment standards. 
Statement on Auditing Standards No. 118, "Other Information in Documents Containing
Audited Financial Statements", effective for the audit of the Port in 2011, addresses the
auditor's responsibility in relation to other information in documents containing audited
financial statements and the auditor's report. While the auditor has no responsibilityfor
determining whether such information is properly stated, this statement establishes the
requirement for the auditor to read the other information because the credibility of the
audited financial statements may be undermined by material inconsistencies between the
audited financial statements and the other information. 
Statement on Auditing Standards No. 119, "SupplementaryInformation in Relation to the
Financial Statements as a Whole", effective for the audit of the Port in 2011, provides guidance
on the inclusion of an opinion as to whether supplementary information is fairly stated in
relation to the financial statements as a whole. 
Statement on Auditing Standards No. 120, "Required Supplementary Information", effective
for the audit of the Port in 2011, addresses the auditor's responsibility with respect to
information that a designated accounting standard setter requires to accompany an 
entity's basic financial statements. 

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AUDIT TIMING 
AUDIT SCHEDULE                                            TIMING 
Audit Planning 
Meet with your management and accounting staff to set up the       September - October 2010 
year-end audit timeline, identify and resolve pertinent issues,
perform  a  risk  assessment,  and  address  any  concerns  of
management or members of the audit committee or Port
Commission. 
Provide management with a detailed comprehensive list of account       October 2010 
analyses and other materials to prepare prior to the start of the
audit. Work closely with those involved in the audit process to
clearly identify roles and responsibilities during the audit. 
Meet with the Audit Committee to provide an overview of the      As requested; no later than
planned scope and timing of the audit in our engagement       December 2010 
service plan. 
Meet with Port management to discuss new Port transactions or      Quarterly 
activities and new or pending accounting and auditing guidance. 
Audit Fieldwork 
Perform interim field work to perform testing of the Port's internal        October to December 2010 
controls and to facilitate planning for year-end audit fieldwork.
Test  certain  accounts  such  as  revenue  recognition,  leases,
environmental liabilities, and construction in progress. 
Perform procedures related to administration of federal awards in      October 2010 to December
accordance with Federal Circular OMB A-133.                             2010 and March to April 2011 
Perform the year-end audit fieldwork of the Port's account      February to April 2011 
balances (financial statement audits and testing of Schedule of
Federal Awards). 
Perform the audit on PFC receipts and expenditures and related      March to April 2011 
internal controls. 
Report Preparation 
Issue our opinion on the financial statements and schedule of Net       On or before April 30, 2011 
Revenues Available for Revenue Bond Debt Service. 
Issue Single Audit reports and PFC program audit report.                   On or before June 30, 2011 
Issue the draft management letter of recommendations.                   On or before June 30, 2011 
Meet with the Audit Committee  and management to present      As requested; no later than
audit results.                                                                   June 30, 2011 

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MOSS ADAMS AUDIT TEAM 
The management team serving on our audits of the Port of Seattle is as follows: 
Laurie J. Tish, CPA, Business Assurance Partner 
Laurie is an audit partner in the Governmental Services Group. Laurie has
specialized in serving governmental entities since she began her career in public
accounting 27 years ago. Laurie will serve as your lead client service partner,
overseeing all projects we perform for the Port. 

Jim Lanzarotta, CPA, Business Assurance Partner 
Jim  is an audit partner in the Governmental Services Group. He h as significant
experience conducting audits in accordance with Government Auditing Standards and
Federal OMB Circular A-133. Jim will serve as the concurring review partner. The
concurring review partner serves as the second partner reviewer of the financial
statements and our reports and, as necessary, will consult on technical issues or key
elements of the audits. 

Chris Kradjan, CPA, Northwest Consulting Division Partner 
Chris is a member of our Governmental Services Group and specializes as an
Information Technology consultant. Chris will lead our audit procedures covering
the Port's IT systems, including general computer controls. 

Kory Hoggan, Business Assurance Senior Manager 
Kory is an audit senior manager in our Governmental Services Group. He specializes 
in audits of governmental entities and employee benefit plans. He will manage the
financial statement audit. 

Alison Sellers, Business Assurance Manager 
Alison has nine years of public accounting experience. She specializes in serving
construction and real estate clients. She has conducted and supervised financial
statement audits of large multi-tiered entities that hold and develop real estate. She
has also worked on not-for-profit engagements that have Federal Circular OMB
A-133 audits. Alison will serve as a resource to the audit team in relation to
construction and real estate transactions. 

Kevin Villanueva, IT Consulting Senior Manager 
Kevin Villanueva is a Senior Manager with the Information Technology Consulting
Group and leads the firm's information security and infrastructure practice. Kevin
has over 14  years  of experience  in information technology  with  industry
specialization in not-for-profit entities and healthcare. Kevin will serve as project
manager for the Port's IT general controls testing procedures. 
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In addition, the following individuals will serve the Port of Seattle: 
Eric Corcoro, IT Consulting Senior Manager:  Within the Information Technology
Consulting Group, Eric specializes in reviewing, assessing, and supporting technology
environments for government agencies, healthcare organizations, institutions of higher
education, and public companies. He has over 12  years of information systems
experience and is a Certified Public Accountant. Eric will assist Kevin in overseeing the
IT audit procedures. 
Sun Yoon, Business Assurance Senior:  Sun has six  years of public accounting
experience, specializing in serving governmental and not-for-profit entities. Sun has
conducted  and supervised governmental financial statements audits and Federal
Circular OMB A-133 audits of large complex entities. This is Sun's fifth year serving the
Port. Sun will manage the audit of the Port's federal awards, as well as providing
assistance in the conduct of the financial statement audit. 
Timothy Lange, Business Assurance Senior: Tim  has over four  years of public
accounting experience serving governmental entities and will work  on both the
financial statement audits and the audit of the federal awards. This is Tim's fifth year
serving the Port. Tim will serve as the senior in-charge on the financial statement audit. 
Elaine Parry, Business Assurance Senior: Elaine has  five years of experience in
serving governmental entities and not-for-profit entities. This is Elaine's fifth year
serving the Port. Elaine will serve on both the financial statement audit and the audit of
the federal awards. 
Jeff Miller, Business Assurance Staff:  Jeff has over two years of public accounting
experience and will be serving on both the financial statement audit and the audit of
the federal awards. This is Jeff's third year serving the Port. 
Tyler Reparuk, Business Assurance Staff: Tyler has two years of public accounting
experience and will spend most of his time performing procedures related to the
capital asset accounts. This is Tyler's second year serving the Port. 
Queenie Tai, Business Assurance Staff: Queenie has two years of public accounting
experience and will work on both the Passenger Facility Charge audit and the audit of
federal awards. This is Queenie's second year serving the Port. 
Erika Petersen, Business Assurance Staff:  Erika has one year of public accounting
experience and will be serving on both the financial statement audit and the audit of
the federal awards. 
Branch Richards & Co, Subcontractor: We have engaged Branch Richards & Co., a
small business and registered Minority Business Enterprise (MBE) firm, to serve as our
subcontractor. Derek Olson, manager, and Sefinat Araga, staff, are fully integrated
into our audit team in working on the financial statement audit and the audit of the
federal awards. 

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COMMUNICATIONS TO AUDIT COMMITTEE 
Auditing  standards require the auditor to communicate certain matters to the Audit
Committee  that  may  assist  in  overseeing  management's  financial  reporting  and
disclosure process. 
Auditor's responsibilities under generally accepted auditing standards 
Other documents containing audited financial statements 
Critical accounting policies and practices 
Difficulties encountered when performing the audit 
Unadjusted audit differences considered by management to be immaterial 
Significant audit adjustments 
Disagreements with management 
Representations requested of management 
Judgments about the quality of accounting and sensitive estimates 
Adoption of, or a change in an accounting principle 
Method of accounting for significant unusual transactions or controversial or
emerging areas 
Fraud and illegal acts 
Material weaknesses in internal control 
Major issues discussed with management prior to retention 
Ability to continue as a going concern 
Legal,  regulatory,  or  contractual  requirements  not  encompassed  in  the  current
engagement 
Consultation with other accountants 
Independence of Moss Adams 
At the conclusion of our audits, we will present our reports, the results of our audit and the
required communications noted above, to the Audit Committee. 


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