P.O. Box 1209 
Seattle, Washington 98111 
www.portseattle.org; 206.787.3000 
APPROVED MINUTES 
AUDIT COMMITTEE SPECIAL MEETING JUNE 17, 2021* 
The Port of Seattle Commission Audit Committee met in a special meeting Thursday, June 17, 2021. The 
meeting was held remotely in accordance with Senate Concurrent Resolution 8402 and Governor Inslee's
Proclamation  20-28.  Committee     members     present     included     Commissioner     Cho,
Commissioner Bowman, and Christina Gehrke. Commissioner Steinbrueck was also in attendance. Staff 
present were Glenn Fernandes, Director, Internal Audit; Lisa Lam, Assistant Director, Accounting and
Financial Reporting; Rudy Caluza, Director of Accounting and Financial Reporting; Dan Chase, Internal
Audit Manager; Spencer Bright, Internal Audit Manager; Aaron Pritchard, Commission Policy Manager; 
and Michelle Hart, Commission Clerk. 
1.    Call to Order: 
The committee special meeting was called to order at 2:30 p.m. by Commissioner Cho. Without objection,
Item No. 7, Art Program Operational Audit, was moved to the first item of business, and the agenda was
approved. 
7.    Art Program Operational Audit: (report) 
Presenters: 
Glenn Fernandes, Director, Internal Audit 
Dan Chase, Internal Audit Manager 
Spencer Bright, Internal Audit Manager - Capital 
The presentation addressed: 
Governance by the Port-Wide Arts and Culture Board (Board) and funding has not occurred as
required by the Arts and Cultural Program Policy Directive. Staffing levels and resources may also not
be sufficient to develop and sustain an art program at both the aviation and maritime divisions. 
The Board is comprised of nine members (two commissioners, four public members, and three
executive leadership team members or designees from Aviation, Economic Development, and
Maritime divisions). Due to complex scheduling requirements, governance meetings have not been
occurring consistently, as scheduled. 
Although internal resources and a contractor have recently been assigned, only one full-time aviation
employee manages the art function. 
For Aviation, a one-time increase of $1.223 million was made as a retroactive adjustment in 
January 2021. This adjustment was for projects with an effective date of January 2017. In 2021, a

*Commissioner Steinbrueck was in attendance and the meeting was advertised accordingly.

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THURSDAY, JUNE 17, 2021 
$1.453 million decrease occurred and represented a reconciling adjustment for a 2014 decrease to
the art budget (no funds were spent for art acquisitions). For the International Arrivals Facility and
North Satellite construction projects, the Aviation group procured art purchases directly out of the
project budgets and did not use the art pool. 
Recommendations; 
o Governance. To assure meetings occur as scheduled, the Board should consider revising the
requirements of who needs to be present for a meeting to proceed as scheduled. 
o Funding. To reduce administrative burden and accounting transactions, funding requirements
should be simplified to a one-time annual allocation based on a percentage of the capital budget. 
o Staffing. The Board should review the Five-Year Strategic Plan including the resource assessment,
performed by the Lumiere Group. Adjustments to the plan might be necessary based on committed
resources. 
Management Response; 
o Aviation Response. The Aviation Division agrees with the recommendations and will work with the
Executive Director and the Port-Wide Arts and Culture Board on the changes to the governance,
funding and staffing resources necessary to implement the recommendations. The Aviation
Division supports the recommended once a year art budget allocation to the Aviation Art Pool
rather than percent (%) allocation for each project when the construction budget is authorized. 
o Maritime and Economic Development Response.  The Maritime and Economic Development
Divisions agree with the finding and recommendation related to the governance. With respect to
funding, the Maritime Division agrees with the recommendation that funding and staffing/resources
be aligned, as well as simplified, however, the same solutions will not make sense to all divisions
across the Port. The department will work with the Executive Director and the Portwide Arts and
Culture Board on the changes to the governance, funding, and staffing resources necessary to
address the findings in ways appropriate to the facilities. 
Members of staff and the Committee discussed: 
composition and attendance of the Board; 
the art pool currently not being used for acquisition; 
overall management of the program; 
if funds from the art pool can be used for staffing; 
how other ports manage and function with their art programs; and 
extending the program beyond the airport to maritime. 
2.    Approval of Audit Committee Meeting Minutes of April 8, 2021: 
The minutes of the Audit Committee special meeting of April 8, 2021, were approved without 
objection. 
3.    External Audit  Moss Adams, 2020 Audit Results (presentation) 
Presenters: 
Olga Darlington, Audit Partner 
Anna Waldren, Manager 
The presentation addressed: 
Areas of audit emphasis;

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THURSDAY, JUNE 17, 2021 
o  Internal   control   environment   -   Capital  assets/project   management,   cash
receipts/receivables,  cash  disbursements/payables,  payroll,  bond  and  investment
transactions, and administration of federal awards. 
o  Management estimates - Allowance for doubtful accounts, environmental remediation
liability, legal contingencies and insurance recoveries, compensated absences, actuarial
valuations for pension and OPEB amounts. 
o  Northwest Seaport Alliance joint venture - Confirmed the Port of Seattle's share in
operating revenue through confirmation with component auditor and agreement to
NWSA audited financial statements 
o   Rent Deferral Payment Plan  -  Obtained an understanding of the Port's Deferral
Payment Plan and methodology for tracking and recording the deferrals.  Selected a
sample of tenants and obtained the signed deferral agreement and reviewed invoicing
and payment support for adherence to deferral payment plan. 
o  Capital assets - Consideration of capitalization policies, testing of additions, retirements,
overhead application, and depreciation; consideration of timely closing of CIP projects. 
o  Bond activity - Tested the three partial defeased bonds during 2020 which were
defeased using proceeds from the sale of commercial paper. 
o  Debt  repayments,  arbitrage  liability,  discounts  and  premiums,  compliance  with
covenants, and procedures over information presented in the net revenues schedule. 
o  Airline lease and operating agreement. Analysis of revenue requirement by cost center
category under the SLOA IV agreement, including landing fees, terminal rents, gate
fees, and baggage claim rates. Confirmations of amounts on an airline-by-airline basis. 
o  Fiduciary activities - Consideration of investment balances, plan contributions and
distributions for the Warehousemen's Pension Trust Fund.  Restatement of 2019 and
2018 reporting for 401(a) plans as a result of updated guidance. 
o  Revenue recognition - Operating revenue analysis using business indicators such as
landed weight, enplanements, gate usage, and boat counts. Ad valorem tax levy,
investment income, PFC, CFC, and federal grants. Consideration of the collectability of
related receivables. 
o  Information  technology  -  General  Computer  Controls.  Some  internal  control
recommendations were noted and provided to management. 
o  One major federal program identified and tested current year  Total federal awards
reported on schedule of expenditures of federal awards - $163.7M.  Major program  
FAA Airport Improvement Program -  $161.5M, including CARES Act funding of
$147.1M. 
Internal Control Matter; 
o  In April 2020, prior to issuance of the auditor's report on the 2019 financial statements,
Port project management staff identified several errors in classification of capital assets
totaling approximately $12M. The errors related to portions of capital projects that were
completed and placed in service during 2019, but not timely reported to central
accounting. 
o  In January 2021, Port staff identified additional projects that were completed during
2019 but were not timely communicated to be closed in the accounting system, resulting
in additional asset classification errors. Total errors of $31.2M were corrected in the
2020 financial statements for projects that should have been closed and  started
depreciating in 2019. 
o  Additional review and monitoring controls should be incorporated over construction
project activity to ensure that projects that meet the criteria for capitalization are timely
reported to central accounting to allow their timely closing and classification to capital

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THURSDAY, JUNE 17, 2021 
assets  and  for  start  of  depreciation.  These  reviews  should  include  enhanced
coordination between divisional capital project management and project managers,
divisional finance and central accounting to ensure timely updates to financial records
for assets placed in service throughout the year. 
o  Management response: Management provided a response that included corrective
action. 
Required Communications; and 
Upcoming Accounting Pronouncements. 
Members of staff and the Committee discussed: 
timely communication of capital projects to central accounting; and 
incorporating the women and minority business enterprises (WMBE) element in Moss Adams
audits. 
4.    APPROVAL of Request for Qualification (RFQ) of External Audit Services for 2022 to 2026
Operating Periods (memo) 

Presenters: 
Lisa Lam, Assistant Director, Accounting and Financial Reporting 
Rudy Caluza, Director, Accounting and Financial Reporting 
The presentation addressed: 
Annual independent audits required for the financial statements of the Port's Enterprise Fund
and the Warehousemen's Pension Trust Fund for purposes of obtaining an independent
auditors opinion as to the fairness in presentation of the financial results and position.
Independent audits are also required for the Port's administration of Federal grants and
Passenger Facility Charge (PFC) revenues in accordance with applicable regulations. The 
audits covered under the existing external audit services contract (P-00318441) are expiring in
May 2022 once the audit services for the Port's 2021 Financial Period are completed. 
The request of staff  to review the solicitation for external audit services and recommend to the
full Commission authorization for the Executive Director to initiate the procurement of external
audit services. 
Members of the Committee discussed scope of the external audit service and involvement of an internal
audit department representative in the process. 
The motion, made by Commissioner Bowman, to recommend approval of the RFQ for External
Audit Services for 2022 to 2026 carried by the following vote: In favor: Bowman and Cho. (2) 
Opposed: (0). 
5.     2021 Audit Plan Update (amended presentation) 
Presenters: 
Glenn Fernandes, Director, Internal Audit 
The presentation addressed:

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THURSDAY, JUNE 17, 2021 
Guiding Principles; 
Approved 2021 Audit Plan  limited contract compliance; operational; and information technology; 
Open Issues Follow-up Status  Aging Report as of June 17, 2021; and 
Completed Audits; 
o  Art Program 
o  Restroom Renovations Phase 3 Protoype 
o  Biometrics 
o  Lenlyn Limited. 
Members of the Committee and staff discussed the status of IT issues. 
8.   Restroom Renovations Phase 3 Prototype (report) 
Presenters: 
Glenn Fernandes, Director, Internal Audit 
Dan Chase, Internal Audit Manager 
Spencer Bright, Internal Audit Manager - Capital 
The presentation addressed: 
Overbilling of the Port by approximately $12,314 through force account change orders, which
occurred because of incorrect labor hours and billing rates submitted by PCL for COVID-19 
supervisors. 
Errors due to the Port being billed on a set rate for supervisors, instead of actual costs, and one
day where the Port was billed for eight hours while the supervisor worked six hours. 
Recommendation is that the Port seek and recover any amount due. 
Management's Response - A deductive change order has been executed to recoup the amount
that was overbilled by the Contractor and we are expecting repayment in June. Additional controls
have been added to the Standard Operating Procedures (SOP) for Force Account work to
specifically address verification of rates for non-labor (exempt) employees. The Port will reiterate
to all our contractors the importance of verifying their information before submitting to the Port. 
Members of the Committee and staff discussed change orders due to the pandemic and informing the
Commission know when there isn't more than one contractor for a project. 
10. Lenlyn Limited (report) 
Presenters: 
Glenn Fernandes, Director, Internal Audit 
Dan Chase, Internal Audit Manager 
Spencer Bright, Internal Audit Manager - Capital 
The presentation addressed: 
Underreported by Lenlyn Limited in the amount of $324,836 in foreign currency and other service
gross revenues, which resulted in approximately $12,023 in additional percentage fees owed to the
Port. The Lease Agreement did not specify the customary five percent late fee, resulting in $4,260 in
potential lost revenue to the Port. 
Recommendations;

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THURSDAY, JUNE 17, 2021 
o  Management should pursue collection of the additional percentage fees of $12,023 (estimate);
define and specify in a new Lease Agreement, the foreign currency gross revenue calculation
method/components, and gross revenue inclusion and exclusion items more clearly and
thoroughly reflecting the foreign currency exchange concession; and specify five percent late fees
in the Late Charges section of a new Lease Agreement. 
Management Response; 
o  Management has engaged the tenant to address the outstanding balance for the additional
percentage fees of $12,023. The tenant has a credit on their account, which covers the
outstanding balance. The tenant has requested that the outstanding balance be cleared via the
application of the credit. In the preparation of a new Agreement, Management has engaged
Lease Administration, Accounting, and Legal to ensure a clear understanding of the revenue
reporting language of the contract for ease of administrations, and the late fee charges have been
reinstated within the new Agreement as well. 
Members of staff overviewed that the error was purely a mistake and recommended the collection of fees
owed.
9.   Biometrics (redacted report) 
Presenters: 
Glenn Fernandes, Director, Internal Audit 
Bruce Klouzal, Internal Audit Manager 
The presentation addressed: 
The audit period from January 2020 through May 2021. 
The audit was performed to evaluate the adequacy of internal controls related to secure data
storage, privacy, and network security around the processes for creating, storing and transmitting
biometric data for the Biometric Air Exit (BAX) project. 
Internal Audit reviewed compliance with the 49 requirements of the Port of Seattle's EX-23
Biometric Air Exit Policy and the U.S. Customs and Border Protection's (CBP's) Biometric Air Exit
Business Requirements (v2.0). 
CBP is congressionally mandated to implement a biometric entry/exit system. 
The Port of Seattle (Port) Commission, on March 10, 2020, directed staff to implement new
policies governing the implementation of Biometric Air Exit at SEA. 
Based on the work we performed, and the information gathered, Internal Audit concluded that the
BAX program has achieved reasonable compliance with both CBP and Port policy requirements. 
By implementing BAX, the Port was able to control the training of airline personnel and require
that the training included sensitivity for dealing with passengers who might be concerned with
facial recognition. 
Additionally, the Port was able to receive approval from CBP to develop and use its own signage
at the departure gates to allow for considerably larger signs, with language that more clearly
explains the passengers' rights for accepting or declining to use facial recognition. 
Commissioner Bowman expressed appreciation for the transparency of opt in/opt out signage and audio
regarding biometrics. 
Commissioner Cho spoke regarding the Port's effort to enable its ability to control biometrics regulations
and policies inasmuch as it is able by getting ahead of the conversation.

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12. Adjournment 
There being no further business, the special meeting recessed at 4:26 p.m. and re-convened in a nonpublic
session to address security-sensitive information technology audit information related to Biometrics
for approximately 30 mins. The meeting adjourned immediately at the conclusion of the discussion.

Prepared:                                               Attest: 

__________________________________           __________________________________ 
Michelle M. Hart, MMC, Commission Clerk            Stephanie Bowman, Audit Committee Chair 
Minutes approved: September 9, 2021.