Committee Briefing
Internal Audit Briefing Presented to the Port of Seattle Audit Committee and Tay Yoshitani, CEO Joyce Kirangi, CPA, Internal Audit Manager January 6, 2009 Agenda I. Prior Audit Highlights and Accomplishments II. Forward Thinking 2009 and beyond III. Annual Risk Assessment and 2009 Work Plan I. Prior Audit Highlights and Accomplishments Over $2 Millions in concession recovery to date. 3 additional audit staff hired during 2008. Completed a number of department operational audits, including ID/Badge, Public Parking, Ground Transportation, two maintenance departments, and the Real Estate Recreational Boating. Internal Audit issued a number of recommendations to help management enhance department operations and controls. Completed three concession audits of RAC (Rent-A-Car), including Enterprise, Dollar, and Advantage. In the past years, Internal Audit has recovered more than $1 million in in RAC concession underreporting. I. Prior Audit Highlights and Accomplishments Completed an audit of all the in-flight kitchens leases, including Gate Gourmet, Flying Food, and Sky Chefs. Completed a number of lease audits, including Odyssey. Completed a follow-up audit of six selected recommendations from the Washington State Auditor's Office 2007 performance audit. Internal Audit confirmed some of the SAO findings, including the PCS altering of contractor's invoices. Completed two employee investigations and the CEO issued appropriate disciplinary actions. I. Prior Audit Highlights and Accomplishments The following third-party agreements, concessions, and leases are currently underway: World Trade Center, Bell Harbor Conference Center, Cruise Terminal of America (CTA), Host, Airport Management Services Inc., Seattle Restaurant Associates, and a review of operational effectiveness of the Port procurement system. The following Rent-A-Car (RAC) reviews have recently been completed and exited with management. 9Advantage Suggested Recovery $16,516 9Dollar-- Suggested Recovery $741 9Enterprise -- Suggested Recovery $1,076. II. Forward Thinking Performance Audits: based on the Audit Committee long-term goals and objective, the Committee has tasked Internal Audit to incorporate performance audits in its audits. In the next five years, the goal is to have 50 percent of the Internal Audit projects focus on performance audits. Implementation of performance audit will start in 2009. Enterprise-Risk-Management (ERM): the Audit Committee has requested Port management to implement a port-wide ERM system. Internal Audit will conduct a performance audit of the Port ERM system(s) and provide assurance and consulting services related to the ERM efficiency and effectiveness. III. Annual Risk Assessment and 2009 Work Plan Risk Analysis & Exposure Central Processing Dept. Internal Control Systems * Reviews Lease and Concession Federal Assistance 3rd Party Mgmt. Performance/Operational Effectiveness Financial Reporting/GL Enterprise Risk Mgmt. Special Investigations Capital Improvement Pgm. III. Annual Risk Assessment and 2009 Work Plan Assessment Process (example) Risk Factors Inherent Control Performance Complianc Risk Auditable 2007 Tot Risk Risk Risk e Risk Exposure Unit al Central Processing Systems Payroll 110 M Accounts Payable 628M Billing / AR 345M Procurement III. Annual Risk Assessment and 2009 Work Plan Assessment Process (example) Risk Factors Risk Auditable 2007 Inherent Control Performance Compliance Exposure Unit Exp Risk Risk Risk Risk Total Dept. Accountability /Compliance Av. Maint. 51M Police 19M SeaTec Uility 13M Air Term Op 11M Marine Maint 10M III. Annual Risk Assessment and 2009 Work Plan 2009 Work Plan 9 Central Processing Systems (15%) 9 Organizational operations/Internal Control Reviews (23%) 9 Lease and Concession (35%) 9 Revenue Confirmation 9 Management Monitoring Efficiency and Effectiveness 9 Performance Aspects new in 2009 9 3rd Party Management (3%) 9 Performance (10%) 9 ERM Performance Audits III. Annual Risk Assessment and 2009 Work Plan 2009 Work Plan -- continued 9 Contingency (14%) 9 McKay Investigation per Commission motion of 12/9/2008 (i.e., 11 uncooperative contractors and subs for performance and legal compliance) 9 Internal Special Investigations
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