Port of Seattle 
2009 Audit Engagement Service Plan 
Presented to the Audit Committee on December 1, 2009 






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, 2009 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 

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

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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 
Conduct brainstorming risk brainstorming meeting with our own staff as well as meetings
with Port Commissioners, executives, management, and other personnel 
Based on the results 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 

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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. 
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 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: 

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Obtain and assess the Port's entity-level controls including information technology
environment and the effect on the internal control structure 
Identify significant accounts and processes 
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 it's 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 
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 
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 

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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 in the form of a formal management letter
of recommendations to the Port. 
AUDIT, ACCOUNTING, AND REPORTING ISSUES 
We have highlighted certain accounting issues pertinent to the Port, along with an overview of
our planned response. 
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 


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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 
The Port is in the process of acquiring the eastside rail corridor from Burlington Northern.
Capital Assets issues surrounding this transaction will include valuation of this parcel of land and
proper recording of acquired assets. Another issue is the closing of the remaining charges
comprising the 3rd runway project at Sea-Tac airport. 
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 AND FUTURE ACCOUNTING PRONOUNCEMENTS 
GASB Statement No. 55, "The Hierarchy of Generally Accepted Accounting Principles for State
and Local Governments", effective for the Port in 2009, specifies the hierarchy of GAAP as
applied to governmental entities. Application of this standard should have no impact on the
Port's operations or financial statements. 
GASB Statement No. 56, "Codification of Accounting and Financial Reporting Guidance
Contained in the AICPA Statements on Auditing Standards", effective for the Port in 2009,
codifies accounting and financial reporting guidance. Application of this standard should have no
impact on the Port's operations or financial statements. 
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. 










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AUDIT TIMING 
AUDIT SCHEDULE                                   TIMING 
Audit Planning 
Meet with your accounting staff to set up the year-end audit timeline,      September - October 2009 
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 2009 
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 planned     December 2009 
scope and timing of the audit in our engagement 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 2009 
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 2009 to December
accordance with Federal Circular OMB A-133                           2009 and March to April 2010 
Perform the year-end audit fieldwork of the Port's account balances       February to March 2010 
(financial statement audits and testing of Schedule of Federal Awards) 
Perform the audit on PFC receipts and expenditures and related internal   March to April 2010 
controls 
Report Preparation 
Issue our opinion on the financial statements and schedule of Net         On or before April 30, 2010 
Revenues Available for Revenue Bond Debt Service 
Issue Single Audit reports and PFC program audit report                  On or before June 30, 2010 
Issue the draft management letter of recommendations.                   On or before June 30, 2010 
Meet with the Port Commission and management to present audit        As requested 
results. 

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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 has 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 direct our audit procedures covering
the Port's IT systems, including general computer controls. 

Nancy Young, Business Assurance Senior Manager 
Nancy is an audit senior manager specializing in serving governmental and not-forprofit
entities for the past 13 years. She has conducted and supervised governmental
financial statement audits and Federal Circular OMB A-133 audits of large, complex
entities at the state, city and county level as well as special-purpose government
clients. Nancy will serve as a manager over each of the audits for the Port. Nancy is
also  an  adjunct  professor  at  Portland  State  University  where  she  teaches
Governmental Accounting. 
Alison Sellers, Business Assurance Manager 
Alison has eight 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 manager for the audit of the enterprise fund. 

Kevin Villanueva, IT Consulting Manager 
Kevin Villanueva is a Manager with the Information Technology Consulting Group
and leads the firm's information security and infrastructure practice. Kevin has over
13 years of experience in information technology with industry specialization in notfor-profit
entities and healthcare. Kevin will serve as project manager for the Port's IT
general controls audit. 

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In addition, the following individuals will serve the Port of Seattle: 
Eric Corcoro, IT Consulting Manager: Eric  is a manager with the Information
Technology Consulting Group and 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 five  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 fourth year serving the Port.
Sun will oversee the audit of the Port's federal awards. 
Timothy Lange, Business Assurance Senior: Tim has over three 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 fourth year serving the
Port. Tim will serve as the senior on the financial statement audit. 
Elaine Parry, Business Assurance Staff: Elaine has four years of experience in serving
governmental entities and not-for-profit entities. This is Elaine's fourth year serving the
Port. Elaine will serve on both the financial statement audits and the audit of the federal
awards. 
Harn Yeh, Business Assurance Staff: Harn has three years of public accounting and will
work on both the Passenger Facility Charge audit and the audit of federal awards. 
Jeff Miller, Business Assurance Staff:   Jeff has over one year 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 second year serving the Port. 
Tad Jacroux, Business Assurance Staff:  Tad  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 audits 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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