The Audit meeting scheduled for 2020-12-10 at Remote

Transcript

The Audit meeting scheduled for 2020-12-10 at Remote

I'M GOING TO KICK US OFF
THIS IS COMMISSIONER CALKINS CALLING TO ORDER THE PORT OF SEATTLE AUDIT COMMITTEE MEETING
TODAY IS THURSDAY, DECEMBER 10, 2020 AND THE TIME IS 1:31 P.M
WE ARE MEETING REMOTELY TODAY VIA THE TEAM'S PLATFORM TO COMPLY WITH THE GOVERNOR'S SAFE START STAY HEALTHY ORDER AND IN ACCORDANCE WITH PROCLAMATION 2028
PRESENT WITH ME TODAY ARE COMMITTEE MEMBERS COMMISSIONER STEPHANIE BOWMAN AND PUBLIC MEMBER CHRIS GERKE
WILL THE CLERK PLEASE CALL THE ROLE TO ENSURE ALL COMMITTEE MEMBERS ARE ON THE LINE? I WILL DO
I'M BEGINNING WITH COMMISSIONER BOWMAN
PRESENT
THANK YOU
PUBLIC MEMBER CHRISTINA GORKY
HELLO I'M HERE
THANK YOU
AND THEN OF COURSE, WE HAVE COMMISSIONER CALKINS
WE DO HAVE A FULL QUORUM
THANK YOU, CLERK HART
AS THIS IS A VIRTUAL MEETING WE HAVE MADE SPECIAL ARRANGEMENTS TO PROVIDE FOR REMOTE PARTICIPATION FOR ALL OF OUR STAFF, OUTSIDE, PRESENTERS, AND COMMITTEE MEMBERS
ALSO PLEASE NOTE THAT ALL VOTES, COMMENTS AND QUESTIONS TODAY WILL BE TAKEN BY A ROLL CALL METHOD AS A RESULT OF OUR VIRTUAL ENVIRONMENT
TO BE EQUITABLE WE'LL ASK ALL COMMITTEE MEMBERS TO SPEAK IN TURN AND WAIT TO BE RECOGNIZED BEFORE SPEAKING AS MUCH AS POSSIBLE
TO MAKE THIS MEETING MORE ACCESSIBLE TO THE PUBLIC THIS MEETING IS BEING LIVE STREAMED AND DIGITALLY RECORDED AND MAY BE VIEWED OR HEARD AT ANY TIME ON THE PORT'S WEBSITE
THE FIRST ORDER OF BUSINESS IS APPROVAL OF THE MINUTES FROM THE SEPTEMBER 24, 2020 AUDIT COMMITTEE MEETING
ARE THERE ANY CORRECTIONS TO THE MINUTES? ALL RIGHT, IS THERE A MOTION AND A SECOND TO APPROVE THE MINUTES? SO MOVED
AND I'LL SECOND, THAT COMMITTEE MEMBERS
THE QUESTION IS ON APPROVAL OF THE MINUTES
PLEASE SAY YES OR NO WHEN YOUR NAME IS CALLED
BEGINNING WITH COMMISSIONER BOWMAN
AYE
THANK YOU
COMMISSIONER CALKINS
AYE
THANK YOU
YOU HAVE TWO YESES AND ZERO NOES
ALRIGHT, THE MINUTES ARE APPROVED AS PRESENTED
OUR NEXT ITEM OF BUSINESS IS EXTERNAL AUDITS AND THE TOPIC IS 2020 AUDIT ENGAGEMENT SERVICE PLAN FROM MOSS ADAMS PRESENTERS, PLEASE UNMUTE YOURSELVES
COMMITTEE MEMBERS WILL REMAIN MUTED UNTIL THE PRESENTATION IS COMPLETE
AT THAT TIME, I WILL CALL ON EACH OF YOU TO ASK QUESTIONS OR MAKE COMMENTS
GLENN FERNANDEZ, WILL YOU PLEASE INTRODUCE THIS ITEM AND OUR PRESENTERS
YES, OUR SPEAKERS TODAY ARE OLGA DARLINGTON, THE AUDIT PARTNER AT MOSS ADAMS AND ANNA WALDRON, THE AUDIT MANAGER
THEY'LL BE PRESENTING THE 2020 AUDIT ENTRANCE PRESENTATION WHICH IS ESSENTIALLY THE OPENING MEETING
AND WITH THAT, OLGA AND ANNA I'LL HAND IT TO YOU
AND AS YOU NEED LAWRENCE TO SWITCH SLIDES, JUST SAY NEXT SLIDE, PLEASE
THANK YOU, GLENN
GOOD AFTERNOON COMMISSIONERS
IF WE COULD PLEASE GO AHEAD AND ADVANCE TO THE NEXT SLIDE
SO IT'S THAT TIME OF THE YEAR AGAIN
WE'RE BACK FOR ANNUAL AUDIT
WE STARTED OUR PLANNING PROCESS AND PERFORMANCE PROCEDURES A LITTLE BIT EARLIER LAST MONTH
SO I'M HERE TO ONCE AGAIN, PRESENT YOU WITH THE AUDIT SERVICE PLAN
THIS IS A SHORT PRESENTATION AND IS A SUMMARY OF A LENGTHIER DOCUMENT THAT PROBABLY IS INCLUDED IN YOUR AUDIT PACKETS THAT'S IN MUCH MORE DETAIL DESCRIBING THE PROCEDURES THAT WE'RE PLANNING TO PERFORM DURING THIS YEAR'S AUDIT
SO I'LL TALK REALLY QUICKLY ABOUT THE MOSS ADAMS TEAM, REINTRODUCE IT TO YOU IF YOU WILL
WE'LL TALK ABOUT THE SERVICES THAT WE WILL PROVIDE AND DELIVERABLES THAT WE'RE PLANNING ON PROVIDING AT THE END OF THE AUDIT, WE'LL TALK ABOUT RESPONSIBILITIES, DISCUSS THE TIMELINE, AND THE AUDIT PROCESS, AND TALK ABOUT SOME OF THE AREAS OF THE AUDIT FOR FOCUS FOR THIS PARTICULAR YEAR CONSIDERING HOW DIFFERENT IT IS
SO IF WE GO TO THE NEXT SLIDE WE'LL TALK ABOUT AS I MENTIONED REINTRODUCING THE CLIENT SERVICE TEAM TO YOU
MOST OF THESE FACES ARE FAMILIAR WITH MYSELF BEING THE LEAD PARTNER AND TAMMY ERICSON BEING THE PC PARTNER AND OF COURSE, ANNA WALDRON IS OUR MANAGER WHO IS REALLY THE STAR OF THE TEAM MAKING SURE THAT THINGS GO SMOOTHLY AS WE PERFORM THE AUDIT
THE NEW TEAM MEMBER THIS YEAR IS MAX JASPER
HE IS JOINING US ON THE IT TEAM
EVERY YEAR WE BRING NEW PEOPLE TO OUR TEAM JUST TO MAKE SURE WE KEEP THAT FRESH PERSPECTIVE FROM THE STANDPOINT OF AUDITING AND JUST COMMUNICATING WITH THE CLIENTS AND PERFORMING PROCEDURES
SO THIS YEAR ON THE IT TEAM, OUR LEADER HAS CHANGED AND IT'S NOW MAX
IF WE GO TO THE NEXT SLIDE, WE DIDN'T WANT TO STOP JUST SHOWING YOU THE LEADERSHIP
WE DO HAVE A MUCH BIGGER TEAM THAT MAKES THINGS HAPPEN AND REALLY DOES ALL OF THE HEAVY LIFTING WITH RESPECT TO THE AUDIT BUT THERE'S A PARTICULAR COUPLE OF PEOPLE ON THIS SLIDE THAT I WANTED TO HIGHLIGHT TO THE MEMBERS OF THE COMMITTEE AND THAT'S FIONA DANG WHO IS WITH BRANCH RICHARDSON COMPANY AND CARMELLE MARESCOT PALOMINO WHO IS WITH MARCO PALOMINO AND ASSOCIATES
THE REASON I WANT TO HIGHLIGHT THESE TWO INDIVIDUALS IS THAT WE ARE KEEPING OUR PROMISE TO THE PORT, TO MANAGEMENT, AND THE COMMISSIONERS WITH RESPECT TO PARTNERING WITH SMALLER BUSINESSES AND PROVIDE OPPORTUNITIES TO SMALLER BUSINESS INDIVIDUALS TO JOIN OUR AUDIT TEAM AND BE PART OF THE AUDIT AND PROVIDING SERVICES TO THE PORT
SO, FIONA DAN WITH BRANCH RICHARD HAS BEEN OUR PARTNER FOR ABOUT SEVEN YEARS
CARMELLE JOINED OUR TEAM LAST YEAR AND ONCE AGAIN, BOTH OF THEM WILL BE RETURNING TO BE PART OF OUR AUDIT TEAM THIS COMING YEAR
IF WE GO TO THE NEXT SLIDE
OKAY
THERE IS A WHOLE LOT, A LARGE NUMBER OF DELIVERABLES THAT WE PROVIDE AS A RESULT OF THE AUDIT
THE FIRST ONE OF COURSE IS THE REPORT ON THE FINANCIAL STATEMENTS OF THE PORT WHICH INCLUDES ENTERPRISE FUND AND FIDUCIARY FUNDS
FIDUCIARY FUND BEING JUST THE WAREHOUSEMEN'S PENSION TRUST FUND
IN ADDITION TO THAT, THERE ARE SEVERAL COMPLIANCE REPORTS AND ONE ON INTERNAL CONTROLS WHICH IS ISSUED UNDER GOVERNMENT AUDITING STANDARDS
ONE ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
THIS ONE IS FOR ALL OF THE GRANTS THE PORT RECEIVES FROM FEDERAL GOVERNMENT AND IT'S REPORTED UNDER UNIFORM AND GUIDANCE
THE BIGGER PART OF THE AUDIT THIS YEAR IN PARTICULAR UNDER UNIFORM GRANT GUIDANCE WILL BE WITH RESPECT TO THE CARES ACT FUNDING THAT THE PORT HAS RECEIVED EARLIER THIS YEAR
ADDITIONAL COMPLIANCE REPORT ON SCHEDULED PASSENGER FACILITY CHARGE PROGRAM RECEIVED AND EXPENDITURE
AND THERE'S TWO SEPARATES AGREED UPON PROCEDURES ENGAGEMENTS THAT WE PERFORM WITH RESPECT TO DEPARTMENT OF ECOLOGY AND ENVIRONMENTAL PROTECTION AGENCY
SO QUITE A FEW THINGS GOING ON
AS I MENTIONED, WE STARTED OUR AUDIT IN SEPTEMBER AND ALL OF THESE WILL BE COMPLETED AND DELIVERED BY THE END OF MAY
IF WE GO TO THE NEXT SLIDE
JUST A QUICK HIGHLIGHT ABOUT THE RESPONSIBILITIES OF THE AUDITOR AND MANAGEMENT
OF COURSE WE AS AUDITORS ARE REQUIRED TO ISSUE AN OPINION ON THE FINANCIAL STATEMENTS WHICH ARE MANAGEMENT'S RESPONSIBILITY
AS ALWAYS, MANAGEMENT HAS TAKEN THE RESPONSIBILITY VERY SERIOUSLY
SO WE REALLY JUST REALLY FOCUS ON PROVIDING THE AUDIT SERVICES RATHER THAN TAKING RESPONSIBILITY FOR ANY OF THE NUMBERS OR ANY OF THE REPORTING
WE WILL BE LOOKING AT INTERNAL CONTROLS AS PART OF OUR AUDIT, OF COURSE, AND PROVIDING ANY RECOMMENDATIONS OR ANY COMMENTS ON INTERNAL CONTROLS IF WE IDENTIFY ANYTHING
AND OF COURSE, AT THE END OF OUR AUDIT, WE WILL COME BACK TO YOU AND REPORT ON RESULTS OF THE AUDIT AND ANY FINDINGS IF WE HAVE ANY AT THAT TIME
IF WE ADVANCE TO THE NEXT SLIDE
I'M GOING TO PASS THE MICROPHONE IF YOU WILL TO ANNA WOLDEN, WHO WALK US THROUGH THE NEXT COUPLE OF SLIDES FOCUSING REALLY ON THE AUDIT EFFORT ITSELF
ANNA? THANKS OLGA SO, NEXT, WE HAVE A BRIEF OVERVIEW OF OUR TIMELINE FOR THE 2020 AUDIT
TIMING IS CONSISTENT WITH PRIOR YEAR
THE MAIN CHANGE IS REALLY THAT WE'LL BE PERFORMING OUR FIELD WORK, THE EXPECTATION IS 100% REMOTE THIS YEAR
DURING SEPTEMBER AND OCTOBER WE DID WORK WITH MANAGEMENT TO COMPLETE OUR AUDIT PLANNING AS WELL AS OUR INTERIM TESTING PROCEDURES WHICH MAINLY HAD TO FOCUS ON OUR ASSESSMENT OF INTERNAL CONTROLS
THEN DURING MARCH AND APRIL, WE'LL BE COMPLETING OUR FINAL AUDIT FIELD WORK FOR THE FINANCIAL STATEMENTS, THE SINGLE AUDIT TESTING, AS WELL AS THE PASSENGER FACILITY CHARGE AUDIT AND WE'LL BE ISSUING OUR OPINIONS FOR THOSE REPORTS NO LATER THAN APRIL 30TH
SUBSEQUENTLY IN MAY AND JUNE WE'LL BE COMPLETING OUR TWO AGREED UPON PROCEDURE ENGAGEMENTS REGARDING THE EPA AND DEPARTMENT OF ECOLOGY AND WE'LL REPORT BACK TO YOU A SUMMARY OF OUR AUDIT RESULTS
AND IF WE CAN GO TO THE NEXT SLIDE, PLEASE
SO, PRIOR TO THE START OF OUR AUDIT, WE ALWAYS PERFORM OUR PLANNING AND RISK ASSESSMENT PROCEDURES
WHEN ASSESSING FOR AUDIT RISK OUR MAIN FOCUS IS ON THE RISK OF MATERIAL MISSTATEMENT IN THE FINANCIAL STATEMENTS AND THIS INVOLVES AN ASSESSMENT OF INHERENT RISK, CONTROL RISK, AND DETECTION RISK, AS WELL AS A CONSIDERATION OF AREAS THAT COULD BE SUSCEPTIBLE TO FRAUD
OUR AUDIT IS DESIGNED TO PROVIDE REASONABLE RATHER THAN ABSOLUTE ASSURANCE THAT THE CONSOLIDATED FINANCIAL STATEMENTS ARE FREE FROM MATERIAL MISSTATEMENT THAT'S BECAUSE OUR PROCEDURES ARE PERFORMED ON A SAMPLE BASIS AND WE AREN'T TESTING 100% OF ACTIVITY FOR THE PORT
AND BASED ON THE RESULTS OF OUR RISK ASSESSMENT THAT'S REALLY HOW WE SET OUR AUDIT SCOPE AND APPROACH FOR THE YEAR
NEXT SLIDE, PLEASE
SO ONCE OUR PLANNING PROCESS IS COMPLETE, REALLY, THE BULK OF OUR TIME IS SPENT ON PERFORMING OUR TESTING PROCEDURES WHICH INVOLVES TESTING INTERNAL CONTROLS AS WELL AS PERFORMING BOTH ANALYTICAL AND SUBSTANTIVE TESTING PROCEDURES
SO OUR FOCUS ON INTERNAL CONTROLS IS REALLY AROUND THE BUSINESS PROCESS CYCLES THAT CARRY MORE INHERENT RISK
SO FOR THE PORT, OUR FOCUS IS ON IT GENERAL AND APPLICATION CONTROLS, REVENUE, DISBURSEMENTS, PAYROLL, FINANCIAL CLOSING REPORTING AND THEN OF COURSE COMPLIANCE WITH FEDERAL AWARDS AND THE PFC AUDIT GUIDE
OUR ANALYTICAL TESTING PROCEDURES INVOLVED THE USE OF HISTORICAL TRENDS, BUDGETS, OTHER PERTINENT INFORMATION WE CAN USE TO FORM IN AN INDEPENDENT EXPECTATION AND COMPARE THAT TO ACTUAL RESULTS
THE MAIN TESTING AREAS WHERE WE UTILIZE ANALYTICAL PROCEDURES ARE GOING TO BE IN REVENUE AND EXPENSES
HOWEVER, WE ALSO USE THEM TO GIVE A HOLISTIC LOOK AT OVERALL FINANCIAL ACTIVITY FOR THE YEAR
AND THEN OUR THIRD TESTING BUCKET IS SUBSTANTIVE TESTING PROCEDURES
THIS INCLUDES THINGS LIKE CONFIRMING ACCOUNT BALANCES WITH THIRD PARTIES, VOUCHING INFORMATION TO SUPPORTING DOCUMENTATION OR EXAMINING OBJECTIVE EVIDENCE, AS WELL AS OBTAINING REPRESENTATIONS FROM ATTORNEYS AND MANAGEMENT
AND OUR TEST OF DETAILS INVOLVE BOTH RANDOM AND JUDGMENTAL SAMPLING METHODOLOGIES
NEXT SLIDE, PLEASE
OKAY, DID YOU GO TO THE NEXT SLIDE
SORRY, IT MIGHT BE FROZEN FOR ME
BUT ON SLIDE 10 WE'VE CALLED OUT OUR MAIN AREAS OF EMPHASIS FOR OUR 2020 AUDIT
INTERNAL CONTROL TESTING IS GOING TO BE A CONTINUED AREA OF EMPHASIS FOR US EACH YEAR AS IT HELPS TO INFORM OUR OVERALL RISK ASSESSMENT OF THE ENTITY
AND THEN ADDITIONALLY JUST GIVEN THE ORGANIZATION TRANSITION TO A MOSTLY REMOTE WORK ENVIRONMENT DURING THE YEAR, AN IMPORTANT ASPECT OF OUR INTERNAL CONTROL ASSESSMENT THIS YEAR IS JUST DETERMINING IF THERE WAS ANY SIGNIFICANT DISRUPTION TO THE INTERNAL CONTROL ENVIRONMENT AS A RESULT OF THAT
AND THEN ADDITIONALLY NEW THIS YEAR WE'LL BE TESTING THE PORT'S COMPLIANCE WITH THE GRANT REQUIREMENTS OF THE CARES ACT FUNDS THAT WERE RECEIVED DURING THE YEAR
THIS WILL ROLL INTO OUR SINGLE AUDIT COMPLIANCE TESTING OF THE AIRPORT IMPROVEMENT FEDERAL PROGRAM WHICH WAS SELECTED AS A MAJOR PROGRAM THIS YEAR
AND NOW I'LL TURN IT BACK OVER TO OLGA
THANK YOU, ANNA
ONE ITEM I WANTED TO HIGHLIGHT WHEN WE ARE TALKING ABOUT FIELD WORK AND HOW WE WOULD BE PERFORMING AUDIT PROCEDURES IS WE HAVE STARTED AND PERFORMED OUR INTERIM WORK LAST MONTH ENTIRELY REMOTELY
THAT IS MOST LIKELY GOING TO BE PLANNED FOR FINAL FIELD WORK AS WELL
WE HAVE BEEN PERFORMING AUDITS REMOTELY FOR THE PAST 8 OR 9 MONTHS
SO IT'S WORKING OUT QUITE WELL WITH MANY OF OUR CLIENTS BUT NOT WITHOUT IT'S CHALLENGES CERTAINLY BUT WE'RE CONFIDENT THAT EVERYTHING IS GOING TO GO ACCORDING TO PLAN
DURING INTERIM WORK THE PORT STAFF WAS VERY HELPFUL AND VERY RESPONSIVE TO ANY AND ALL OF OUR QUESTIONS AND REQUESTS
SO WE DON'T ANTICIPATE TO HAVE ANY DELAYS AS A RESULT OF THIS NEW AND DIFFERENT WAY OF AUDITING
SO IF WE GO TO THE NEXT SLIDE, I THINK I JUST HAVE A LAST COUPLE OF REMINDERS THAT OUR RELATIONSHIP WITH THE AUDIT COMMITTEE IS THAT WE SEE YOU AS THOSE CHARGED WITH GOVERNANCE
AS I MENTIONED, WE WILL COME BACK AT THE END OF THE AUDIT TO REPORT THE FINDINGS OR ANY RESULTS OF THE AUDIT, WE DO HOPE THAT THIS COULD BE A TWO WAY COMMUNICATION SO IF YOU HAVE QUESTIONS OR CONCERNS OR ANYTHING ELSE BETWEEN NOW AND THE TIME THAT WE COME BACK TO REPORT ON THE AUDIT, YOU CAN FEEL FREE TO REACH OUT TO ANY ONE OF US ON THE AUDIT LEADERSHIP TEAM AND WE CAN ADDRESS THOSE CONCERNS OR QUESTIONS AS PART OF THE AUDIT
ALL RIGHT, SO IF WE GO TO THE NEXT SLIDE, I THINK THAT'S WHERE WE HAVE THE AUDIT LEADERS TEAM CONTACT INFORMATION SHOULD YOU REACH OUT OR DECIDE TO REACH OUT OR HAVE ANY QUESTIONS AFTER TODAY'S PRESENTATION
BUT AT THIS POINT I'M HAPPY TO TAKE ANY OTHER QUESTIONS FROM THE AUDIT COMMITTEE
THANK YOU, OLGA AND ANNA FOR YOUR
PRESENTATION COMMITTEE MEMBERS, CAN YOU PLEASE UNMUTE YOURSELVES FOR QUESTIONS AND COMMENTS, AND CLERK HART YOU PLEASE CALL THE ROLE? THANK YOU, AND WE ARE BEGINNING WITH COMMISSIONER BOWMAN
HI, I DON'T HAVE ANY QUESTIONS
I THINK YOU DID A REALLY EXCELLENT JOB OF SPECIFICALLY DESCRIBING THE AUDIT PROCESS AND WHAT YOU LOOK AT
OBVIOUSLY THOSE OF US ON THE COMMITTEE ARE FAMILIAR WITH THIS, BUT I THINK IT'S VERY HELPFUL FOR THE PUBLIC TO UNDERSTAND WHAT YOUR ROLE IS
SO LOOK FORWARD TO WORKING WITH YOU ALL
THANK YOU, COMMISSIONER BOWMAN
CHRISTINE GERKE
I JUST HAD A COUPLE OF QUESTIONS ON THE RISK ASSESSMENT
THE FIRST PART IS WITH 2020 IT SEEMS LIKE A MAJORITY OF THE YEAR IS GOING TO BE UNDER THIS NEW REMOTE ENVIRONMENT
DID THAT CHANGE THE INHERENT RISK ASSESSMENT ON THE PORT COMPARED TO PREVIOUS YEARS? IT DID
ANNA ALLUDED TO THE CHANGE IN OUR PROCESSES A LITTLE BIT IN A SENSE THAT WE'RE LOOKING A LOT MORE CLOSELY INTO INTERNAL CONTROLS AND PROCESSES IN GENERAL OF THE ORGANIZATION GIVEN THE FACT THAT A LOT OF EMPLOYEES ARE WORKING FROM HOME OR THERE'S JUST A DIFFERENT ENVIRONMENT
WE'RE LOOKING CLOSELY INTO THOSE INTERNAL CONTROLS TO MAKE SURE THAT THERE'S NO BREAKDOWN, AND THEN ON THE AUDIT SIDE, OF COURSE, WE WILL BE INTRODUCING ADDITIONAL SURPRISE PROCEDURES AND JUST ADDITIONAL TESTS JUST TO ADDRESS THAT RISK
SO IN YOUR INTERIM WORK, DID YOU SEE, I'M SURE YOU PROBABLY ALREADY STARTED LOOKING AT THE DIFFERENT CONTROLS THAT WERE PUT IN PLACE TO ADDRESS THE NEW ENVIRONMENT
I GUESS I JUST, WAS THERE A LOT THAT WOULD CHANGE OR WERE DIFFERENT FROM PREVIOUS YEARS? WE FOUND THAT CERTAINLY THERE WERE SOME CHANGES BUT NOTHING TO CHANGE THE STRUCTURE AND THE PROCESS IN A WAY THAT WOULD COMPROMISE THE CONTROL ITSELF OR CONTROL STRUCTURE
SO THERE'S A LOT OF ELECTRONIC CONTROLS THAT HAVE BEEN IMPLEMENTED AND JUST ARE COMPLEMENTARY, IF YOU WILL, CONTROLS
WE DID NOT IDENTIFY ANY, LIKE I SAID, ANY BREAKDOWN IN CONTROLS OR ANYTHING SIGNIFICANT TO REPORT TO YOU AS OF THE INTERIM WORK
AS OF NOW THERE'S A FEW RECOMMENDATIONS THAT WE HAD DISCUSSED WITH MANAGEMENT AND ARE FOLLOWING UP ON
THANK YOU
THANK YOU
MOVING TO COMMISSIONER CALKINS
JUST A COMMENT TO SAY OLGA I APPRECIATE YOUR MENTIONING THAT MAX IS NEW TO THE TEAM AND A FRESH SET OF EYES FOR IT
AND AT THE SAME TIME, I FEEL COMFORTED BY THE FACT THAT YOU AND ANNA ARE FAMILIAR FACES TO ME FROM PREVIOUS REPORTS AND HAVING THAT CONTINUITY UNDERSTANDING THE IDIOSYNCRASIES OF THE PORT, I THINK IS BENEFICIAL TOO
SO THAT'S A NICE BALANCE BETWEEN FRESH EYES AND FOLKS WHO HAVE BEEN AROUND THE BLOCK WITH US BEFORE
ANY FURTHER QUESTIONS OR COMMENTS BEFORE WE MOVE ON? THANK YOU SO MUCH, TEAM FROM MOSS ADAMS, FOR YOUR UPDATES AND WE LOOK FORWARD TO FUTURE COMMUNICATIONS
THANK YOU AND HAPPY HOLIDAYS TO ALL
YOU, TOO
MOVING TO UPDATES AND APPROVALS
OUR NEXT ITEM IS THE EXTERNAL AUDIT SERVICES CONTRACT EXTENSION FOR 2021
COMMITTEE MEMBERS WILL REMAIN MUTED UNTIL THE PRESENTATION IS COMPLETE
AT THAT TIME I WILL CALL ON EACH OF YOU TO ASK QUESTIONS OR OFFER COMMENTS
ACTION IS REQUESTED TODAY ON THIS ITEM
MR RUDY KALUZA I SEE YOU THERE
DIRECTOR OF ACCOUNTING AND FINANCIAL REPORTING IS PRESENTING
MR KALUZA YOU HAVE THE FLOOR
THANK YOU
I'M RUDY KALUZA, DIRECTOR OF ACCOUNTING AND FINANCIAL REPORTING
AND THANK YOU TO OUR AUDIT COMMITTEE FOR THE OPPORTUNITY TO PRESENT TO YOU THIS AFTERNOON
WE RESPECTFULLY REQUEST AUTHORIZATION FOR THE EXECUTIVE DIRECTOR TO EXTEND THE CURRENT EXTERNAL AUDIT SERVICE CONTRACT WITH MOSS ADAMS FOR ONE ADDITIONAL YEAR THROUGH MAY 2022
THIS WILL COVER THE AUDIT OF THE PORTS 2021 FINANCIAL PERIOD
THE CURRENT EXTERNAL AUDIT SERVICES CONTRACT COVERS FINANCIAL PERIODS 2016 THROUGH THIS YEAR, 2020
EXTENDING THE CONTRACT WILL ENABLE DEFERRING FOR ONE YEAR ISSUANCE OF A REQUEST FOR PROPOSAL TO ESTABLISH A NEW FIVE YEAR AUDITORS CONTRACT
AND THE REASON BEING IS THAT WE ARE IN A PANDEMIC SITUATION
WE EXPECT THE PANDEMIC AND ASSOCIATED CHALLENGES TO EXTEND WELL INTO 2021
THEN THIS ACTION SUPPORTS TO ENSURE WE HAVE A WELL VETTED DECISION PROCESS TO SELECT THE PORT'S INDEPENDENT EXTERNAL AUDITOR FOR THE NEXT FIVE YEAR CONTRACT
CHALLENGES, FOR EXAMPLE, WE'RE TRYING TO MITIGATE INCLUDE ONBOARDING NEW AUDITORS, ADMINISTERING THE SUBSTANTIAL FOCUS DURING THE INITIAL YEAR RAMP UP AND COORDINATION BETWEEN THE PORT AND THE AUDITORS, AND SUPPORTING THE DEPTH AND BREADTH OF THE AUDIT DURING THE COURSE OF THEIR FIELD WORK ALL IN A REMOTE ENVIRONMENT SHOULD A NEW CERTIFIED ACCOUNTING FIRM BE SELECTED
MOSS ADAMS WE WILL HAVE DEVELOPED A TRIED AND TRUE METHOD IN TERMS OF REMOTE WORK IN TERMS OF THE EXTERNAL AUDITOR AND PORT COLLABORATION
THAT WILL CONTINUE INTO THE EXTENDED PERIOD SHOULD BE AUDIT COMMITTEE SO APPROVE
THE PORT OF SEATTLE IS MULTIFACETED
WE HAVE A DIVERSE BUSINESS FOCUS
THIS ADDS COMPLEXITY TO OUR AUDITS AND IT IS IMPORTANT TO ENSURE THAT WE HAVE A WELL INFORMED INDEPENDENT AUDIT
AND I ALSO LIKE TO NOTE THAT TO SUPPORT THE PORT'S CURRENT FINANCIAL CHALLENGES EARLIER THIS YEAR FOR THE 2020 AUDIT, MOSS ADAMS OFFERED TO AND THE PORT GLADLY ACCEPTED NOT EXERCISING THEIR ANNUAL COST ESCALATION CLAUSE THAT THEY ARE ENTITLED TO PER THE CURRENT CONTRACT
IN ADDITION, THEY PROACTIVELY FOUND WAYS TO REDUCE CHARGES FOR VARIOUS AUDIT COMPONENTS
ALSO FOR THE EXTENSION, I PROPOSE FOR CONSIDERATION BY THE AUDIT COMMITTEE, MOSS ADAMS WILL AGREE TO KEEP THE AUDIT COST AS REDUCED FOR THIS YEAR FLAT FOR GOING INTO THE EXTENSION PERIOD
SO THEREFORE NO INCREASE
AND ALSO MOSS ADAMS COMMITTED TO CONTINUE THE WMBE WOMEN MINORITY BUSINESS ENTERPRISE PARTICIPATION IN AUDIT SERVICES CONTRACT THROUGH WHICH MUTUAL AGREEMENT WE RECENTLY UPPED TO 15%
THIS ENABLED ADDING THE OTHER WMBE FIRM AS WE SECURED THROUGH OUR PORT GEN PROGRAM, A PRIORITY OF THE PORT OF SEATTLE COMMISSION
IF THIS EXTENSION IS APPROVED BY THE AUDIT COMMITTEE, WE'LL PROCEED TO SEEK FOR COMMISSION APPROVAL OF THE CONTRACT EXTENSION IF THE CONTRACT EXTENSION VALUE REQUIRES COMMISSION ACTION
THANK YOU SO MUCH
RESPECTFULLY REQUEST YOUR FAVOABLE CONSIDERATION
THANK YOU FOR THE REPORT, RUDY
COMMITTEE MEMBERS, PLEASE UNMUTE YOURSELF FOR QUESTIONS AND COMMENTS
PRESENTERS, RUDY, YOU CAN REMAIN AUDIBLE
ANY ADDITIONAL QUESTIONS FROM COMMISSIONERS? I'LL LET CLERK HART GO THROUGH THE ROLE
THANK YOU
COMMISSIONER
BOWMAN, NO ADDITIONAL QUESTIONS
I SUPPORT THE STAFF'S RECOMMENDATION
IT SEEMS VERY REASONABLE
ONE YEAR EXTENSION SEEMS TO BE IN THE PORT'S BEST INTEREST, QUITE FRANKLY
AND I JUST WANT TO GIVE MY COMMENDATION TO THE STAFF AND OUR AUDITORS OF ALL OF THE WORK TO PERFORM AN AUDIT OFFSITE OR VIRTUALLY AS WE LIKE TO SAY THESE DAYS
VERY, VERY CHALLENGING
SO IT SEEMS LIKE THE MOST REASONABLE PATH FORWARD AND ABSOLUTELY SUPPORT IT
THANK YOU, RUDY
THANK YOU, COMMISSIONER
THANK YOU, COMMISSIONER
BOWMAN
MOVING TO MEMBER GERKE
WELL, I AGREE WITH THE MANAGEMENT'S RECOMMENDATION, I JUST WANT TO VERIFY, IS THERE ANY REGULATORY GUIDANCE THAT THIS EXTENSION COULD RESULT IN THE REGULATOR CRITICIZING THIS DECISION? THIS IS RUDY KALUZA, ACCOUNTING DIRECTOR, NO
THERE IS NO KNOWN
WE ARE FOLLOWING BEST PRACTICES WITH REGARDS TO CONTRACT WITH MOSS ADAMS AS IT IS WITH REGARD TO A ROTATION OF A PARTNER, MANAGING PARTNER, AS WELL AS NOW ROTATION OF THE IT MANAGER AS WELL
SO WITH REGARD TO INDEPENDENCE AND INFUSING THAT, AS EMPHASIZED BY COMMISSIONER CALKINS, WE ARE EXPERIENCING THAT
THERE'S NOTHING THAT WILL PRECLUDE THE ONE YEAR EXTENSION THAT WE'RE ASKING FOR CONSIDERATION AT THIS POINT
AND THEN CAN YOU JUST REMIND ME HOW LONG MOSS ADAMS HAS BEEN THE AUDITOR OF THE PORT? THIS IS ABOUT THE THIRD FIVE YEAR CONTRACT TERM THAT THEY'RE FINALIZING
BUT AGAIN THERE'S BEEN AUDIT PARTNER ROTATION
FOR EXAMPLE EVEN THE STAR BEINGS OXLEY ACT AS RELATES TO PUBLIC HEALTH COMPANIES DOES NOT REQUIRE ROTATION OF AUDIT FIRMS BASICALLY REQUIRES INDEPENDENCE, DUE DILIGENCE AND THAT'S HOW IT'S IMPLEMENTED WITH REGARD TO THE ROTATION OF MANAGING PARTNER AS WELL AS OTHER KEY MEMBERS AND MANAGEMENT TO ENSURE THAT THERE'S A FRESH SET OF EYES AS REFERENCED BY COMMISSIONER CALKINS
THANK YOU, RUDY
THANK YOU
THANK YOU
AND MOVING TO COMMISSIONER CALKINS
TWO THINGS
THE FIRST IS TO SAY I APPRECIATE THE UNILATERAL OFFER TO KEEP COSTS IN CONTROL BY OFFERING A CONTINUED RATE FOR 2021 AND THE DECREASED RATE IN 2020
IT'S MUCH APPRECIATED
AS WE DID A SOUP TO NUTS EXAMINATION OF OUR BUDGET THIS YEAR TO MAKE SURE WE LIMITED EXPENSES AS MUCH AS POSSIBLE IN A VERY CONSTRAINED REVENUE ENVIRONMENT
AND THEN SECOND TO JUST ASK OF RUDY AND GLENN TO HAVE A CONVERSATION WITH YOUR PEERS AT THE NORTHWEST SEAPORT ALLIANCE
COMMISSIONER BOWMAN AND I JUST JUST HAD OUR FINAL MEETING OF THE YEAR WITH THAT COMMITTEE AND THEY'RE CONSIDERING A SIMILAR ACTION AND I THINK THEY WOULD BENEFIT FROM THE EXPERIENCE YOU GUYS HAVE IN CONSIDERING THIS OPTION OF EXTENDING A CONTRACT FOR A YEAR
I THINK TO GET US THROUGH THE PANDEMIC
I CAN ANSWER THAT
THANK YOU, RUDY
GO AHEAD
IF I CAN BE RECOGNIZED PLEASE
THANK YOU
GO AHEAD
SO I HAVE BEEN IN DISCUSSION WITH THE ACCOUNTING DIRECTOR AT NORTHWEST SEAPORT ALLIANCE, PORT OF TACOMA AND I HAVE PROVIDED INSIGHT AS TO WHERE THE PORT OF SEATTLE IS LANDING
AND THEY ACKNOWLEDGE THE SAME RISK THAT THEY ARE TRYING TO MITIGATE
AND WHAT WE'RE TRYING TO DO IS BASICALLY ENSURE IN THIS SITUATION THAT'S VERY EXTREME TO US THAT WE'RE HAVING TO RELATE WITH EACH OTHER IN A REMOTE ENVIRONMENT
IT'S BETTER TO HAVE A WELL SEASONED KNOWLEDGEABLE TEAM OF OUR INSTITUTION THAT THEY WILL BE ABLE TO APPLY THIS YEAR SO THEY CAN GO INTO THE DEPTH AND BREADTH THAT'S NECESSARY AND EXPECTED OF OUR ELECTED OFFICIALS REGARDING THE SCRUTINY WE PROVIDE OVER OUR FINANCIAL AND ACCOUNTING OPERATIONS VERSUS SPENDING THAT EFFORT TRYING TO RAMP UP A GREEN SET OF EYES
WE'RE NOT GOING TO GET THE DEPTH THAT WE NEED
AND THAT'S THE BASIS ON WHICH I SUPPORTED AND RECOMMEND THAT THE ALLIANCE WOULD CONSIDER FOR THE COMMISSION AUDIT COMMITTEE, COMBINED MANAGING PARTNERS, COMBINED AUDIT COMMITTEE TO CONSIDER AS WELL
SO I HAVE BEEN IN DISCUSSION
I DEFINITELY VALUE GLEN'S VIEWPOINTS AND I DEFINITELY WILL FOLLOW YOUR ORDER TO PARTNER WITH GLEN TO HAVE THE DISCUSSION WITH THE ALLIANCE
THANK YOU
GREAT
IT DOES NOT SURPRISE ME AT ALL THAT YOU GUYS ARE OUT AHEAD OF US ON THIS
SO THAT'S GREAT
AND I SEE A QUESTION FROM DAN THOMAS ASKING HAVE WE CLARIFIED WHETHER THIS WILL REQUIRE COMMISSION ACTION
RUDY DO YOU WANT TO ANSWER THAT? MY UNDERSTANDING IS IT WOULD, BUT WE WOULD REFER TO THE JUDGMENT OF THE AUDIT COMMITTEE
ONLY BECAUSE THE DOLLAR VALUE IS 450,000 AND IT'S A CONTRACT EXTENSION
SO WE WOULD ASSESS THAT AND VALIDATE BACK TO THE AUDIT COMMITTEE
BUT IT WAS OUR INITIAL UNDERSTANDING THROUGH PROCUREMENT THAT IT WOULD REQUIRE THAT
AND HOW SOON WOULD THE COMMITTEE OR THE COMMISSION NEED TO PROVIDE A [INAUDIBLE] WELL AS TIMELY AS POSSIBLE OVER THE NEXT MONTH OR SO
WE RESPECT THAT DECEMBER AND JANUARY IS GOING TO BE A TOUGH MONTH BECAUSE WE ARE ASKING FOR YOUR CONSIDERATION OF MANY IMPORTANT ACTIONS
BUT DEFINITELY WE CAN PRIORITIZE ACCORDING TO YOUR GUIDANCE ON THIS
WELL, IF IT'S DEEMED, OBVIOUSLY WE HAVE OUR FINAL MEETING OF THE YEAR NEXT TUESDAY, THAT'S PROBABLY TOO QUICK TO TURN AROUND
[LAUGHTER] MAYBE IT COULD APPEAR ON THE CONSENT AGENDA IN JANUARY FOR CONSIDERATION, THE FIRST MEETING
IF IT'S NOT NEEDED SO WE WOULD NOTIFY YOU ACCORDINGLY, BUT WE WOULD VET IT FURTHER WITH THE PROCUREMENT IN THERE
COMMISSIONER CALKINS? YES
THERE MIGHT BE A POSSIBILITY YOU WOULD HAVE TO TELL US THAT IF YOU COULD JUST GET A MEMO IF WE COULD JUST PROVIDE AUTHORIZATION
I THINK THAT MIGHT GIVE YOU WHAT YOU NEED TO PROCEED, RIGHT? THAT WE MIGHT BE ABLE TO DO IT IN THE MEETING ON THE 15TH? UP TO YOU
OKAY, THANK YOU
THE MORE EXPEDITIOUS, MANNER AND LEAST IMPACTING TO THE COMMISSION, I THINK THAT WOULD BE THE BEST SOLUTION
THANK YOU FOR OFFERING THAT AS AN OPTION, COMMISSIONER BOWMAN
OKAY, AT THIS TIME, THE CHAIR WILL ENTERTAIN A MOTION TO APPROVE ITEM FOUR, THE EXTERNAL AUDIT SERVICES CONTRACT EXTENSION FOR 2021
SO MOVED
AND SECONDED
MEMBERS, PLEASE SAY YES OR NO WHEN YOUR NAME IS CALLED
THANK YOU
BEGINNING WITH COMMISSIONER BOWMAN
YES
THANK YOU
MEMBER GERKE
YES
THANK YOU
COMMISSIONER CALKINS
YES
THANK YOU
OH I'M SORRY, THERE ARE TWO YESES 0 NOES
I THINK THAT'S WHY THERE WAS A PAUSE
APOLOGIES I'M SO USED TO OUR NORMAL
[LAUGHTER] WITH THAT THE MOTION PASSES
TWO YESES
THANK YOU SO MUCH
THANK YOU, RUDY, THANK YOU
NEXT ON OUR AGENDA IS ITEM NUMBER 5-2020, AUDIT PLAN UPDATE, MR FERNANDEZ, YOU HAVE A REPORT? YES, WE DO
LAUREN IF YOU COULD PULL UP THE DECK
PERFECT, AND PERHAPS MOVE TO THE NEXT SLIDE
COMMISSIONERS, ON OUR 2020 AUDIT PLAN, HAPPY REPORT THAT EVERYTHING IN GREEN THAT YOU SEE OVER HERE IS COMPLETED
SO WE DID DEFER SEVERAL AUDITS THAT ARE IN RED TO 2021 AND WE WILL BE DOING THOSE AUDITS
WE DID JUST MOVE THEM OUT DUE TO THE PANDEMIC
I WILL NOTE THAT ALTHOUGH WE DID MOVE SOME OUT, WE DID PICK UP A FEW ADDITIONAL THINGS ALONG THE WAY THAT ARE REFLECTED IN THE GREEN
SO ALL IN ALL WE DID COVER A PRETTY COMPREHENSIVE AUDIT PLAN
NEXT SLIDE
OUR 2020 AUDIT PLAN, WE ISSUED 17 REPORTS, ONE ANALYSIS MEMO AND TWO SUMMARY REPORTS SHOWN HERE FOR A TOTAL OF 20 REPORTS
I THINK WE DID QUITE A FEW ON THE OPERATIONAL SIDE THIS YEAR PRIMARILY BECAUSE OF ALL THE CHANGES THAT ARE GOING ON THROUGH THE PANDEMIC I'LL TALK ABOUT PHEL IN A LITTLE BIT
AND THE FEMA WORK
CAPITAL SIDE, QE TRIMMED DOWN
WE NORMALLY TRY ABOUT FOUR PER YEAR THERE
JUST BECAUSE IT SLOWED DOWN TREMENDOUSLY WE EASED OFF THERE A BIT AND MOVED OUR RESOURCES TO OPERATION
AND ON THE IT SIDE, WE WERE NORMAL BUSINESS AS USUAL
WE WERE ABLE TO COMPLETE WHAT WE COMMITTED TO DOING
NOW THROUGH THE COURSE OF THESE AUDITS I WANT TO HIGHLIGHT THE BULK OF THE ISSUES ARE MEDIUM RISK
WE DID HAVE SOME HIGH RISK ISSUES THAT WE'LL TALK ABOUT TODAY
BUT FOR THE MOST PART, THEY WERE BASIC BLOCKING AND TACKLING ISSUES ON THE MEDIUM RISK SIDE WHICH WE NEED TO ADDRESS AND CONTINUE TO MAKE THE BUSINESS BETTER
ON AUDITS THAT WERE ADDED AND WORK THAT WAS ADDED, AT THE HUMAN RESOURCES DIRECTORS REQUEST, WE DID DO A TIME SENSITIVE PHEL AUDIT, AND THE PUBLIC HEALTH EMERGENCY LEAVE, THAT THE PORT OFFERED
ALSO AT THE TIME OF THE PANDEMIC WE TOOK ON SOME FEMA WORK, WHICH WE TALKED ABOUT AN EARLIER AUDIT COMMITTEE MEETING AND WE HELPED THE PORT IN CAPITALIZATION OF ASSETS
IT'S CALLED CONSTRUCTION WORKING PROCESS
BUT WHEN THESE AREN'T CAPITALIZED ON A TIMELY BASIS, THE ACCURACY OF THE FINANCIAL STATEMENTS CAN BE IMPACTED AND ACCORDINGLY THAT WOULD AFFECT WHAT MOSS ADAMS DOES AND IT COULD POTENTIALLY CREATE AN ISSUE THERE, SO VERY IMPORTANT TO HAVE ASSETS
ESPECIALLY BECAUSE OF THE SIZE AND SCALE OF THE ASSETS AND OUR CAPITAL PROGRAM, IT'S VERY IMPORTANT THAT WHEN THERE'S COMPLETE THAT WE CAPITALIZE THAT IN A TIMELY MANNER
WE WILL TALK MORE ABOUT THAT WHEN WE GO TO THE PLAN, OUR PROPOSED PLAN
AS ALWAYS, AS WITH ANY COMPANY OUT THERE, THE PORT CONTINUES TO HAVE OPPORTUNITIES TO STRENGTHEN INTERNAL CONTROLS AND ON THE CAPITAL FRONT IT'S CONTINUING JUST BECAUSE OF THE SCALE OF OUR PROGRAM THE OPPORTUNITY TO REDUCE COSTS TO CHANGE ORDERS AND SCHEDULE DELAYS
I THINK THE DESIGN WORK IN THE UPFRONT WORK LAYS THE FOUNDATION FOR A CAPITAL PROJECT AND OUR 2020 AUDIT PLAN CONTINUES TO SEE THAT
HOPEFULLY AS YEARS GO BY THESE WILL BE CHIPPED AT, REDUCED
NEXT SLIDE, PLEASE
A VERY QUICK HIGHLIGHT OF OUR SUGGESTED RECOVERIES FROM 2020 WHEN COMPARED TO 2019
ON THE CONCESSION FRONT, THESE ARE THE CONCESSION AREAS AT THE AIRPORT AND OCCASIONALLY IN THE SEAPORT AS WELL, WE IDENTIFIED UNDERREPORTED REVENUE, RELATIVELY SMALL BUT IT'S STILL 27,000 DOLLARS THAT WAS UNDERPAID TO THE PORT THAT WE RECOUPED
AND 2019 IT WAS A LITTLE BIT LARGER, PRIMARILY BECAUSE THE RENTAL CAR COMPANIES, SIXT BEING ONE OF THE LARGER ONES
AND WHEN WE FIND SOMETHING THERE, THE DOLLAR AMOUNTS ARE GENERALLY LARGER
SO WE WILL CYCLE THROUGH SOME LARGER ONES THIS COMING YEAR BUT THIS YEAR THEY WERE RELATIVELY SMALL
ON THE CAPITAL FRONT, YOU KNOW THERE'S ALWAYS MONEY LEFT ON THE TABLE AND SOMETIMES WE HIGHLIGHT THINGS THAT SUGGEST RECOVERIES ON THEM
MOSTLY BECAUSE DESIGN ISSUES AND YOU KNOW, SCHEDULE, NOT MEETING SCHEDULE WHICH RESULTS IN LIQUIDATED DAMAGES
SO ON 2020, WE RECOMMENDED RECOUPING 232,000 DOLLARS
AND IN 2019 QUITE A LARGER SUM BECAUSE OF THE THE CHECK BAGGAGE OPTIMIZATION
NEXT SLIDE, PLEASE
NOW, CONTROLLABLE COST OVERRUNS ON THE CAPITAL SIDE
IF THERE'S A MISTAKE MADE AND WE THINK BY DOING THINGS DIFFERENTLY THE PORT COULD HAVE AVOIDED SOME COSTS
WE HIGHLIGHT THOSE AS WELL
CLEARLY IN 2019 THE NOISE INSULATION PROGRAM IS SOMETHING WE HIGHLIGHTED
THAT MADE THE NUMBER HIGH
IN 2020 WE HIGHLIGHTED TWO ITEMS, THE SERVICE TUNNEL RENEWAL REPLACEMENT PRIMARILY BECAUSE OF THE TURN AROUND, BUS TURN AROUND THAT HAD TO BE BUILT BECAUSE CLARK WAS BEHIND ON THE IAF AND THE BUSES WEREN'T ABLE TO TURN AROUND SO THAT WAS AN ADDITIONAL COST NEEDED TO INCUR
AND THE A PERIMETER FENCE PROJECT THAT JUST HAD SOME DESIGN ISSUES THAT CAUSED IT TO BE OVER BUDGET
SO THAT'S SOMETHING I HIGHLIGHT THERE AS WELL
NEXT SLIDE, PLEASE
AND BEFORE I GO INTO OUR AUDIT UNIVERSE THIS IS THE FOUNDATION FOR OUR PLAN FOR 2021 I'LL STOP PAUSE AND COMMISSION CALKINS, COMMISSIONER BOWMAN, CHRIS GERKE, I'LL TAKE ANY QUESTIONS IF THERE ARE ANY
OTHERWISE I'M GONNA KEEP MOVING
WOULD YOU LIKE ME TO RUN THROUGH THE ROLE COMMISSIONER CALKINS? YES, PLEASE
BEGINNING WITH COMMISSIONER BOWMAN
NO QUESTIONS
THANK YOU, MEMBER GERKE
NO QUESTIONS, THANK YOU
COMMISSIONER CALKINS
NONE FOR ME AT THIS TIME
THANK YOU
VERY GOOD
I'LL CONTINUE
WHEN WE BUILD OUR AUDIT PLAN THE FIRST THING WE DO IS WE LOOK AT OUR AUDIT UNIVERSE, EVERYTHING AT THE PORT THAT WE AUDIT
WE TRY TO COMPREHENSIVELY CATCH EVERYTHING
ON THE OPERATIONAL SIDE WE LOOK AT ALL THE FUNCTIONAL DEPARTMENTS, WE LOOK AT STEVE, ALL HIS DIRECT REPORTS AND THE AREAS THAT THEY MANAGE AND THE SUB AREAS WITHIN THAT
AND WE COVER EVERYTHING
THEN WE, THIS IS MORE JUDGMENTAL, BUT THE COMPLIANCE REPUTATIONAL SAFETY FINANCIAL FRAUD RISK IS SOMETHING THAT WE BRAINSTORM ON IN HOUSE AND WE ASSIGN A SCORE TO THOSE
THOSE ARE ALSO INFLUENCED BY OUR RISK ASSESSMENT MEETINGS THAT WE HAVE
WE TALKED TO SENIOR STAFF, ALL OF STEVE'S DIRECT REPORTS, AND GET THEIR THOUGHTS AND THEIR CONCERNS AS WELL
AND THOSE PLAY INTO THESE NUMBERS A LITTLE BIT
ON THE SUBJECTIVE SIDE, THOSE MEETINGS REALLY AFFECT THE SUBJECTIVE SIDE MORE THAN THE OTHER ITEMS BUT ON THE SUBJECTIVE SIDE, WE ALSO TAKE WHAT WE'RE HEARING FROM COMMISSIONERS, WHAT WE'RE HEARING FROM OTHER SENIOR STAFF AND LINE STAFF, AND WE JUST LOOK AT PREVIOUS AUDITS AS WELL, AND INTEGRATE THAT INTO THIS
SO THIS BECOMES A FOUNDATION OF OUR PLAN
SOME OF THESE, YOU KNOW, THAT GET PICKED UP AND MOVED TO THE TOP ARE ALSO DRIVEN BY THE COMMISSION AND COMMISSION REQUESTS
WE'LL GET A LITTLE BIT MORE INTO THAT
NEXT SLIDE, PLEASE
ON THE CAPITAL FRONT
WE USE A VERY TEXTBOOK APPROACH WHERE WE LOOK AT SOME CRITERIA AND I'M GOING TO ASK SPENCER BRIGHT OUR CAPITAL AUDIT MANAGER ON MUTE
HE DID A BUNCH OF WORK HERE
THE BULK OF THE WORK AND HE'LL TALK A LITTLE BIT ABOUT THIS, ABOUT WHAT HE LOOKS AT
SPENCER, IF YOU COULD UNMUTE INTRODUCE YOURSELF FOR THE RECORD
THANK YOU, GLENN
GOOD AFTERNOON COMMITTEE MEMBERS
I'M SPENCER BRIGHT, THE CAPITAL PROJECTS AUDIT MANAGER FOR THE TEAM
FOR THE RISK ASSESSMENT APPROACH FOR CAPITAL PROJECTS
THERE ARE CURRENTLY MORE THAN 100 ACTIVE PROJECTS THROUGHOUT THE PORT
THE VALUE OF THESE PROJECTS RANGE BETWEEN 300,000 TO NEARLY 1,000,000,000 DOLLARS TOTALING IN TOTAL
1.7 BILLION IN AVIATION AND NON AVIATION CONTRACTS
FOR MY RISK ASSESSMENT APPROACH CONSIDERING THE COST OF STAFF TIME TO PERFORM AN AUDIT COMPARED TO THE POTENTIAL BENEFITS THAT WOULD RESULT FROM THAT AUDIT, I DETERMINED THE PROJECTS OF 1,000,000 DOLLARS OR MORE IS A REASONABLE BASELINE TO START MY RISK ASSESSMENT
I USE A NUMERICAL RATING METHODOLOGY OF ONE TO 5 FOR ATTRIBUTES THE COMMONLY POSE THE HIGHEST RISK IN CAPITAL PROJECTS
THESE ATTRIBUTES INCLUDED THE CONSTRUCTION COSTS, THE TOTAL DOLLAR VALUE OF CHANGE ORDERS COMPARED TO THE ORIGINAL CONTRACT, THE CONTRACT TYPE ASSOCIATED WITH THE PROJECT DELIVERY METHOD, AND THE STATUS OF WHETHER A PROJECT IS ON SCHEDULE AND WITHIN BUDGET
BECAUSE THE FIRST FIVE ATTRIBUTES I USE ARE OBJECTIVE, I ALSO USE A SUBJECTIVE ATTRIBUTE, JUST BASED ON MY OWN KNOWLEDGE OF HOW A PROJECT IS GOING
BY UTILIZING THAT PARTICULAR SUBJECTIVE ATTRIBUTE THAT HELPS IDENTIFY SMALLER PROJECTS OR LESS COMPLICATED PROJECTS THAT MAY NOT OTHERWISE SHOW UP AS RISKY
NEXT SLIDE, PLEASE, LAUREN
SO, BASED ON MY ASSESSMENT, I IDENTIFIED FOUR PROJECTS AND TWO CONTINGENCY PROJECTS THAT I'M RECOMMENDING FOR THE 21 AUDIT PLAN
THE CENTRAL TERMINAL INFRASTRUCTURE UPGRADE PROJECT IS GOING TO BE SEPARATED INTO TWO AUDITS SO THAT THE ENTIRE LIFE CYCLE OF THIS PROJECT WILL BE REVIEWED
THE FIRST AUDIT COVERED THE PRECONSTRUCTION PHASES, WHICH IS THE BIDDING AND DESIGN AND THE RESULTS OF THAT AUDIT WILL BE DISCUSSED TODAY
THE SECOND AUDIT WHICH I'M RECOMMENDING FOR 2021 WILL COVER THE CONSTRUCTION AND CLOSE OUT PHASES
THE REMAINING THREE PROJECTS ARE THE NORTH TERMINAL UTILITIES UPGRADE, CHECKED BAGGAGE OPTIMIZATION AND THE RESTROOM RENOVATIONS PROJECT
IN CONSIDERATION OF THE TWO CONTINGENCY PROJECTS THAT I HAVE LISTED NORTH SATELLITE RENOVATIONS BOTH THESE PROJECTS ARE DEFINITELY THE LARGEST CURRENTLY
THE NORTH SATELLITE RENOVATIONS THAT IS NEARING COMPLETION
DURING THE PROJECT, THE PORT'S PROJECT MANAGEMENT TEAM UTILIZED A THIRD PARTY CONSTRUCTION AUDIT CONSULTING FIRM TO ASSIST
THAT FIRM REVIEWED THE REASONABLENESS OF CHANGE ORDERS AND PERFORMED LIMITED REVIEWS OF THE MONTHLY PAY APPLICATIONS THROUGHOUT THE PROJECT
SO THAT GAVE ME SOME COMFORT IN HOW THAT PROJECT WENT
FOR THE IAF, THERE ARE A CONSIDERABLE NUMBER OF AREAS TO REVIEW
IT WAS DEFINITELY A MULTI YEAR
COMPLICATED PROJECT
WITH MY TEAM BEING DOWN ONE POSITION THAT WON'T BE FILLED UNTIL AT LEAST 2022, I DO FEEL MY RESOURCES ARE LIMITED
IN ORDER TO REVIEW THE ENTIRETY OF THE IAF PROJECT, CONTRACTING WITH A THIRD PARTY FIRM TO ASSIST WOULD BE THE BEST ROUTE TO GO
HOWEVER, GIVEN THE FINANCIAL CONSTRAINTS IN 2021 RECRUITING AN OUTSIDE FIRM JUST MAY NOT BE FEASIBLE
AND GLENN, BEFORE I I OPEN IT UP, DO YOU HAVE ANYTHING TO ADD? YES, THIS SHOULD PROBABLY BE
I KNOW COMMISSIONER BOWMAN AND I TALKED ABOUT THIS ON THE IAF MAYBE IN 2022 SO THE NEXT YEAR'S PLAN WHEN WE DO BUILD IT, A THOROUGH LOOK BACK AT THE IAF AND THERE'S PROBABLY GOING TO BE MONEY LEFT ON THE TABLE
COMMISSIONER BOWMAN, PLEASE
OH, THANK YOU
I WOULD AGREE, SPENCER IT'S GOING TO BE AN ENORMOUS UNDERTAKING
AND IN FACT, WHILE THE FIRST OPENING OF THE IAF WILL OCCUR THIS SPRING IN 2021 THERE'S OTHER PHASES OF THE PROJECT THAT ARE PART OF THE OVERALL PROGRAM THAT WON'T BE COMPLETED
SO I WOULD ABSOLUTELY SUPPORT WAITING UNTIL 2022 FOR THAT MORE COMPLETE AUDIT AND WE HAVE THE RESOURCES AVAILABLE BUT MOSTLY JUST TO LET THE PROJECT HOPEFULLY COME TO MORE COMPLETION
THANK YOU ANY OTHER QUESTIONS FROM COMMISSIONER CALKINS OR CHRISTINA GERKE FOR SPENCER? NO QUESTIONS
THANK YOU, SPENCER
THANK YOU, NONE FROM ME EITHER
I ALSO WOULD LIKE TO POINT OUT THAT IN ALL OF THESE SLIDES THAT IN THE APPENDIX OF THIS DECK IS OUR AUDIT UNIVERSE AND IT LISTS OUT ALL OF THE AUDITABLE PROJECTS FOR THE OPERATIONAL SIDE, THE OPERATIONAL ENTITIES AND THE DETAILS OF OUR SCORING
SO THERE'S A LOT OF DETAILS FOR THE PUBLIC IN THE APPENDIX ON THIS
MICHELLE NEXT SLIDE PLEASE
OR LAUREN
COMMISSIONERS, THE NEXT IMPORTANT ELEMENT OF OUR AUDIT PLAN IS THE IT AUDIT PLAN
I'M GOING TO ASK THE IT MANAGER TO UNMUTE AND TALK A LITTLE BIT ABOUT THIS SLIDE
HE'S THE SUBJECT MATTER EXPERT AND HE'LL TALK MORE SPECIFICALLY ABOUT THE CIS IN THAT SECURITY TOP 20 AND EVERYTHING ELSE HERE
BRUCE
GOOD AFTERNOON, EVERYONE
I'M BRUCE CLAUSE, THE IT AUDIT MANAGER FOR THE PORT
GLENN HIRED ME IN 2018 SPECIFICALLY TO DEVELOP AN IT AUDIT PROGRAM AND TO PERFORM IT AUDITS AND SINCE THE PORT HAS NOT HAD A COMPREHENSIVE IT AUDIT PROGRAM PRIOR TO THIS, WE DECIDED TO GO WITH AN OUTSIDE AGENCY CALLED THE CENTER FOR INTERNET SECURITY BECAUSE THEY HAVE SPENT A FAIR AMOUNT OF TIME OVER THE LAST DECADE DEVELOPING A SERIES OF 20 AUDITS THAT SPECIFICALLY LOOK AT HIGH RISK HIGH VALUE IT CONTROLS
AND SO IT'S OUR INTENTION IN THE FIRST TWO YEARS OF OUR PROGRAM TO EXECUTE THESE 20 AUDITS WHICH WILL GIVE US A GOOD BASELINE OF THE EFFECTIVENESS OF OUR HIGH RISK IT CONTROLS
IN ADDITION TO THESE 20 AUDITS WE'LL ALSO LOOK AT RECOMMENDATIONS BY MANAGEMENT OR THE COMMISSION IN AREAS THEY WANT US TO LOOK AT AND WE ALSO LOOK AT ANY KIND OF EMERGING THREAT THAT MIGHT POP UP, SOMETHING ON THE FRONT OF THE WALL STREET JOURNAL OR SOMETHING
ONCE WE CYCLE THROUGH THOSE 20 AUDIT IN THE FIRST TWO YEARS OF THE PROGRAM WE'LL THEN MOVE TO A MORE CLASSIC APPROACH OF LOOKING AT IT RISKS
ON THE NEXT SLIDE PLEASE
SO FOR 2021 OUR PROPOSED IT AUDIT SCHEDULE
WE HAVE TWO AUDITS AT THE VERY BEGINNING WHICH ARE BOTH MANAGEMENT REQUESTS
ONE IS THE T2 AIRPORT PARKING REVENUE SYSTEM REPLACEMENT THAT'S BEEN ON OUR SCHEDULE FOR LIKE THE LAST TWO YEARS
THE PROJECT HAS TAKEN A LITTLE BIT LONGER TO COMPLETE
SO WE'VE PUSHED IT OFF UNTIL THEY'VE COMPLETED IT
ANTICIPATE COMPLETING IT BY THE MIDDLE OF THIS YEAR
THE SECOND ONE IS SOMETHING THAT WAS REQUESTED LAST YEAR BY THE COMMISSION WAS TO HAVE US LOOK AT ANY IT CONTROL AREAS AROUND BIOMETRICS AND SPECIFICALLY IT LOOKS LIKE WE'RE PROBABLY GOING TO LOOK AT THE BIOMETRIC AIR EXIT PROGRAM
AS FAR AS I CAN TELL THAT STARTED TO GO INTO EFFECT IN DECEMBER
SO THERE'LL BE SOMETHING FOR US TO LOOK AT NEXT YEAR
IN ADDITION TO THAT, WE HAVE TWO CENTER FOR INTERNET SECURITY AUDITS
MALWARE DEFENSES AND CONTINUOUS VULNERABILITY MANAGEMENT
AND WE'LL ALSO BE DOING THE ANNUAL REVIEW THAT WE'RE REQUIRED TO DO CONTRACTUALLY ON OUR CREDIT CARD PROCESSING CALLED THE PAYMENT CARD INDUSTRY AUDIT
AND THIS YEAR AS A MATTER OF FACT, NEXT YEAR IN 2021, WE NOW HAVE ONE OF OUR STAFF MEMBERS WHO IS CERTIFIED TO BE ABLE TO PERFORM THAT AUDIT SO WE'LL BE DOING IT INTERNALLY INSTEAD OF HIRING AN OUTSIDE ASSESSOR TO PERFORM THAT FOR US
IN ADDITION WE'VE ADDED TWO CONTINGENCY AUDITS SO THAT IF SOMETHING HAPPENS LIKE THIS YEAR, WHEN THERE ARE SOME AUDITS THAT WE CAN'T PERFORM BECAUSE DIFFERENT DEPARTMENTS GET IMPACTED AND CAN'T CAN'T HELP US WITH THE AUDIT, WE'LL HAVE OTHER AUDITS THAT WILL BE APPROVED THAT WE CAN GO TO
THAT SHOULD BE IT GLEN
OKAY, THANK YOU
COMMISSIONERS, ANY QUESTIONS FOR BRUCE? COMMISSIONER CALKINS WOULD YOU LIKE ME TO RUN THROUGH THE ROLE? YES, PLEASE, THANK YOU
BEGINNING WITH COMMISSIONER BOWMAN
NO QUESTIONS RIGHT NOW
THANK YOU
THANK YOU
MEMBER GERKE
NO QUESTIONS
THANK YOU VERY MUCH
THANK YOU, AND THEN COMMISSIONER CALKINS
NONE AT THIS TIME
THANK YOU VERY GOOD
THE MOVING ALONG
NEXT SLIDE, PLEASE
SO WE HAVE ABOUT 129 LEASES IN OUR RISK UNIVERSE AND OUR LEASE POPULATION
THESE ARE CONCESSIONAIRES THAT PAY US PERCENTAGE REVENUE
IT IS AN HONOR SYSTEM TO SOME EXTENT WHERE THEY PROVIDE US THEIR FINANCIAL STATEMENTS AND SAY THIS IS WHAT WE OWE YOU AND THEY PAY BASED ON THAT
SO PERIODICALLY AS WITH MANY OTHER AIRPORTS IN THE UNITED STATES, MOST OF THEM HAVE PROGRAMS THAT GO LOOK AT THE CONCESSION REVENUE JUST TO MAKE SURE THAT WHAT'S BEING RECEIVED IS ACCURATE
SO WE WE CYCLE THROUGH THOSE, WE'VE BROKEN THEM OUT INTO HIGH, MEDIUM, AND LOW RISK
WELL RATINGS, NOT RISK
IT'S JUST RATING BASED ON REVENUE
AND THE HIGH REVENUE CONCESSIONAIRES GET LOOKED AT EVERY FIVE YEARS
THE MEDIUM, EVERY 10, AND THE SMALLER ONES AS NEEDED
WE'VE CREATED, BASED ON THIS POPULATION, WHICH CONCESSIONAIRES WE'RE GOING TO LOOK AT NEXT YEAR
NEXT SLIDE
THIS SLIDE ESSENTIALLY HIGHLIGHTS WHAT WE'LL BE LOOKING AT
SOME OF THESE ARE CARRY OVER, SOME THIS YEAR
PRIMARILY LENLYN WAS A BIG ONE THAT WE MOVED INTO 2021 FROM 2020 BUT THE KEY ITEM HERE IS UBER AND WE GOT A NEW CONTRACT WITH THEM
IT'S A LOT OF REVENUE AND THEY ARE GROWING SO IT'S SOMETHING THAT WE LOOK AT WHILE WE'RE DOING THAT
[INAUDIBLE] WE'LL REQUEST AND RECOMMEND WE PICK UP LYFT AS WELL
AND THEN THE SEATTLE TACOMA INTERNATIONAL LIMO ASSOCIATION
THE DILETTANTE CHOCLATE AND FRUIT AND FLOWER
THE CONTINGENCY AUDIT IS IN CASE SOMETHING CHANGES AND, YOU KNOW, WE CAN'T DO ONE FROM ABOVE OR WE JUST HAVE EXTRA TIME BECAUSE WE COVERED OUR AUDIT PLAN [INAUDIBLE] SOMETHING WE PICK UP AS A CONTINGENCY AUDIT
NEXT SLIDE, PLEASE
SO THIS SLIDE ESSENTIALLY SHOWS OUR TRENDING
IN 2020 WE DID ABOUT 20 AUDITS AND WE'RE PROPOSING 20 AUDITS IN 2021 AS WELL
THE DOWNTICK IN 2019 IT WAS PRIMARILY BECAUSE WE HAD SOME PRETTY BIG AUDITS IN 2019 THAT TOOK A LOT OF TIME
SO IT'S NOT ALWAYS ABOUT THE NUMBERS IT'S ABOUT THE LEVEL OF EFFORT THAT GOES INTO THE AUDITS
IN 2019 WE DID HAVE THE AD AUDIT, THE NOISE INSTALLATION PROGRAM THAT TOOK QUITE A BIT OF TIME
NEXT SLIDE, PLEASE
SO, COMMISSIONERS, THIS IS A SUMMARY OF OUR AUDIT PLAN
THERE IS AN ADDITIONAL SLIDE THAT TALKS ABOUT THE CONTINGENCY AUDITS THAT I TALKED ABOUT EARLIER
BUT THIS IS THE KEY AUDIT PLAN
THE LIMITED CONTRACT [INAUDIBLE] ON THAT I TALKED ABOUT, THE OPERATIONAL THAT ON THE FIRST SLIDE I TALKED ABOUT
IN THIS I WANT TO HIGHLIGHT THAT JUST THE NOISE MONITOR DATA ACCURACY WAS SOMETHING THAT COMMISSIONER BOWMAN REQUESTED AT ONE OF THE COMMISSION MEETINGS
WE CAPTURED THOSE AND [INAUDIBLE] IF WE HAVE THE RESOURCES
THE ART PROGRAM, PRIMARILY BECAUSE THIS IS A REQUEST FROM COMMISSIONER STEINBREUCK AND THE BIG ISSUE OR CONCERN HERE IS ARE WE FUNDING THE RIGHT PERCENTAGE TO THE ART PROGRAM? AND ARE WE MANAGING THE ASSETS? BECAUSE THERE'S QUITE A SIGNIFICANT CHUNK OF PARK OUT THERE THAT'S WORTH QUITE A BIT SO HOW ARE WE MANAGING THOSE AND TRACKING THOSE? CAPITAL SIDE, SPENCER TALKED ABOUT THAT
AND ON THE INFORMATION TECHNOLOGY SIDE, BRUCE TALKED ABOUT THOSE
THE NEXT SLIDE
LAUREN, COULD YOU JUMP TO THE NEXT SLIDE BEFORE? THESE ARE THE CONTINGENCY AUDITS THAT I TALKED ABOUT
AND I'LL PAUSE THERE
AND LAUREN IF YOU CAN GO BACK ONE SLIDE, I WILL PAUSE THERE AND ASK AND ENTERTAIN ANY QUESTIONS AT THIS POINT ON OUR 2021 AUDIT PLAN
BEGINNING WITH COMMISSIONER BOWMAN
I DON'T HAVE ANY QUESTIONS, ALTHOUGH I'M GLAD TO SEE
I JUST WANTED TO COMMENT I'M GLAD TO SEE THIS LIST PUT TOGETHER AND ESPECIALLY THE SOUTH KING COUNTY FUND JUST TO MAKE SURE THAT
I REALLY APPRECIATE A GOOD LOOK AT THAT PROGRAM AND IF THERE'S ANY IMPROVEMENTS THAT NEED TO BE MADE
IT'S A NEWER FUND FOR US
WE WANT TO MAKE SURE THAT WE ARE FOLLOWING THE LETTER OF THE LAW
SO THANK YOU FOR INCLUDING THAT
THANK YOU COMMISSIONER BOWMAN
MEMBER GERKE
YEAH, I JUST WANT TO MAKE SURE I UNDERSTOOD BECAUSE THERE WAS TWO AUDITS FROM 2020 THAT WAS APPROVED TO CARRY INTO 2021 BUT YOU DON'T HAVE THEM ON YOUR PROPOSED 2021 AUDIT PLAN
AND WHICH AUDITS? I THINK ONE IS THE OUTSIDE SERVICES PROFESSIONAL
YOU HAVE IT ON YOUR CONTINGENCY LIST
I THINK THE OTHER ONE IS CONCESSIONS INTERNATIONAL LLC
SO I JUST WANTED TO KIND OF CLOSE THE LOOP ON THAT
ON THE OUTSIDE SERVICES, THE REASON WE PUT IT ON THE CONTINGENCY WAS PRIMARILY BECAUSE WE DON'T HAVE THE RESOURCES TO DO IT RIGHT NOW
WE HAD IT ON THE PLAN
IF WE HAVE THE RESOURCES, WE WILL DO IT
THIS IS A REQUEST TO FOCUS
WE DID AN OUTSIDE SERVICES AUDIT IN 2019 LOOKING AT [INAUDIBLE] AND THEN WE WERE ASKED TO CAN LOOK AT LEGAL FEES AS A SEPARATE SUBSET OF OUTSIDE SERVICES
WE'VE GOT IT ON THE 2021 CONTINGENCY AUDITS RIGHT NOW
AND THE ONLY REASON I MOVED IT THERE IS BECAUSE WE FELT SOME OF THESE OTHER ITEMS WERE MORE CRITICAL BASED ON OUR RESOURCES AND WE'VE JUST GOT TO MANAGE THAT
SO WHEN IT CAME OUT ON THE RISK ASSESSMENT, DID THE RISK DECREASE FROM PRIOR ASSESSMENTS
IT'S PART OF CPO AND CPO IS ALWAYS AT THE TOP
SO IT'S ALWAYS GOT A HIGH RISK DEPARTMENT
AND ALL THESE CONTRACTS THAT FALL IN THERE ARE IMPORTANT
SO IT IS JUST AS IMPORTANT AS EVERYTHING ELSE, I DON'T DISAGREE
I JUST WANT TO KNOW IF WE'VE IDENTIFIED IT AS HIGH RISK AND WE SAID WE WERE GOING TO DO IT IN 2021, I JUST KIND OF WANT TO BE REALLY CLEAR ON WHY WE DECIDED IT'S NOT A PRIORITY TO BE DONE NOW IN 2021
AND I WANT TO ECHO THAT IT IS IMPORTANT
WE'RE NOT TAKING IT DOWN ON RISK IT'S JUST THAT WE DON'T HAVE THE RESOURCES TO DO IT
OKAY, SO IS THAT RESOURCES ON INTERNAL AUDIT SIDE OR MANAGEMENT RESOURCE SIDE? INTERNAL AUDIT SIDE RIGHT NOW
OKAY
WHAT ABOUT THE CONCESSION INTERNATIONAL LLC? THAT I AM GOING TO ASK DAN CHASE, IF YOU'RE ON THE LINE
IF YOU COULD UNMUTE AND GIVE SOME GUIDANCE ON THAT AND WHAT WE DID THERE
YEAH, CAN EVERYBODY HEAR ME? OKAY, YES, OKAY
I'M BROUGHT IN FOR THE TOUGH QUESTIONS RIGHT? CHRISTINA I'LL HAVE TO GO BACK AND LOOK
THERE WAS SOMETHING AROUND THAT CONTRACT ENDING AND IT MAY HAVE ENDED IN 2018 AND SO IT MIGHT HAVE PRECLUDED US FROM ACTUALLY PERFORMING AN AUDIT AT THIS POINT
THAT'S MY RECOLLECTION, BUT I'LL HAVE TO GO BACK AND DOUBLE CHECK TO MAKE SURE
SO IN THE CONTRACT IT USUALLY HAS LANGUAGE THAT SAYS THAT YOU CAN GO BACK THREE YEARS
AND SO IF THE CONTRACT, THESE CONTRACTS ARE STOPPING AND STARTING THROUGHOUT THE COURSE OF THE YEAR AND IF THE CONTRACT HAD ENDED IN EARLY 2018 THEN I THINK WE WOULD HAVE BEEN OUTSIDE OF THE ABILITY TO GO BACK AND AUDIT FOR THE PERIOD THAT WE WANTED TO AUDIT
I JUST WANT TO BE CLEAR BECAUSE EARLIER IN THE PRESENTATION WE SAY WE DEFERRED THESE TWO TO 2021 AND THEN WE GET TO THE 2021 AUDIT PLAN AND THEY'RE NOT ON THE PLAN
AND I JUST FEEL LIKE THAT NEEDS TO BE CLEAR
I AGREE AND WILL NOTE THAT
I WILL HIGHLIGHT THAT AND CORRECT THAT
I WILL ALSO VERIFY WITH DAN OFFLINE THAT WHAT HE SAID IS ACCURATE
BELIEVE IT IS
AND WE'LL SEND YOU A NOTE ON THAT AND WE'LL POST THAT AS WELL
OKAY, THANK YOU
MOVING TO COMMISSIONER CALKINS
NO FURTHER QUESTIONS FOR ME
I BELIEVE AT THIS TIME I WILL ENTERTAIN A MOTION TO APPROVE ITEM SIX, THE PROPOSED 2021 INTERNAL AUDIT PLAN
SO MOVED
AND SECONDED
THE MOTION WAS MADE AND SECONDED
MEMBERS PLEASE SAY YES OR NO WHEN YOUR NAME IS CALLED
COMMISSIONER BOWMAN
YES
THANK YOU
COMMISSIONER CALKINS
YES
THANK YOU
YOU HAVE TWO YESES AND ZERO NOES
ALRIGHT, THE MOTION PASSES
MOVING ON TO ITEM SEVEN, OPEN ISSUE FOLLOW UP UPDATE
MR FERNANDEZ
OKAY, NEXT
MORE SLIDE, PLEASE
SO, THIS IS A PROCESS WE INSTITUTED A COUPLE OF YEARS AGO ON FOLLOW UP
ESSENTIALLY FOLLOWING UP AT ALL OUR AUDITS AND GIVING TRANSPARENCY TO THE PUBLIC AND TO THE COMMISSION AND THE AUDIT COMMITTEE THAT THE ISSUES THAT WE IDENTIFY ARE BEING ADDRESSED
THIS PARTICULAR CHART AND REQUEST WAS FROM CHRISTINA GERKE THAT WE AGE THEM AND SHOW ALL THE OUTSTANDING ISSUES BOTH FROM THE DUE DATE AND FROM THE TIME OF THE REPORT ISSUANCE FROM THE TARGET DATE
THE STORY THAT THIS TELLS YOU HERE IS THAT THERE ARE SOME ISSUES THAT ARE OUTSTANDING
THE ONE ON THE OPERATIONAL SIDE IS THE FISHING AND COMMERCIAL OPERATIONS NEEDED TO BASICALLY BUILD A SYSTEM VESSEL MANAGEMENT SYSTEM AND PURCHASE ONE
AND THEY HAVE GONE PRETTY FAR IN PURCHASING THAT WHEN THEY HAD SOME ISSUES, THEY RAN TO SOME ISSUES
SO THEY DID GO BACK TO COMMISSION, THEY GOT APPROVAL TO DO IT IN HOUSE AND THAT SLOWED THE PROCESS A LITTLE BIT
SO THEY ARE ACTIVELY ADDRESSING THAT
THEY WILL BUILD THE SYSTEM IN HOUSE, IT'LL JUST TAKE A LITTLE BIT LONGER THAN GOING OUT AND PURCHASING IT, THE COVID PANDEMIC HAS MOVED THE BIG KIND OF BUBBLE YOU SEE IN THE ZERO TO 6 MONTHS
AND THE CHART TO THE RIGHT IS PRIMARILY FROM THE COVID PANDEMIC, A LOT OF THINGS ARE SLIPPING A LITTLE BIT
NOT TREMENDOUSLY, BUT IT'S JUST SOMETHING THAT WE'LL HAVE TO KEEP AN EYE ON
AND THEN FINALLY, THERE ARE SOME IT ISSUES THAT JUST BECAUSE PRIORITIES AND ALSO PARTIALLY THE COVID PANDEMIC HAVE SLIPPED A LITTLE BIT AND THOSE CAN BE DISCUSSED MORE AS NEEDING IN THE NON PUBLIC SESSION
THEY ARE SECURITY SENSITIVE
IF THERE ARE ANY QUESTIONS ON THIS I'LL ENTERTAIN THEM, OTHERWISE I'M GOING TO MOVE ON TO THE AUDIT
ALRIGHT LET'S QUICKLY GO THROUGH ROLL
OKAY, BEGINNING WITH COMMISSIONER BOWMAN
NO QUESTIONS, THANK YOU
THANK YOU, MEMBER GERKE, NO QUESTIONS AT THIS TIME
THANKS, THANK YOU, COMMISSIONER CALKINS
NONE FOR ME
NEXT SLIDE, PLEASE
SO, COMMISSIONERS WE'VE GOT FIVE AUDITS WE'VE COMPLETED FOR THIS QUARTER FOUR OF WHICH WE'RE GOING TO TALK ABOUT TODAY IN THE PUBLIC SESSION
THE LAST ONE INVENTORY CONTROL AS SOFTWARE ASSETS WE'LL TALK ABOUT LATER THIS AFTERNOON IN THE NON PUBLIC SESSION
NEXT SLIDE, PLEASE
THE FIRST AUDIT IS GROUND TRANSPORTATION TAXI CABS AND THIS AUDIT ESSENTIALLY IT WAS A NEW PILOT PROGRAM THAT THE PORT HAD IMPLEMENTED
THIS WAS FOR THE PREVIOUS EASTSIDE FOR HIRE PROGRAM AND AS THAT ENDED THE NEW PROGRAM WAS CREATED WITH THOSE DRIVERS AND SOME HIGHLIGHTS OF THAT PROGRAM ON THE SLIDE FEES OF SIX DOLLARS PER TRIP, THE 409 VEHICLES THAT ARE IN THE PROGRAM, AND THE PERIOD OF WHICH THEY WERE RETAINED
NOW ANOTHER THING IS DURING THE PANDEMIC ALSO FOR A BRIEF PERIOD OF TIME AND DURING THE PERIOD OF OUR AUDIT FOR A LITTLE WHILE, THE FEES FROM THE TRIPS WE DEFERRED
NOW, OUR AUDIT I ALSO WANT TO POINT OUT LOOKED AT 2019 FROM THE INCEPTION PROGRAM TO CURRENT PERIODS
ALTHOUGH THE PERIOD OF DEFERRAL WAS LOOKED AT TO THE COURSE OF THE AUDIT, THE ENTIRE TIME OF THE PROGRAM WAS WITHIN SCOPE
NEXT SLIDE, PLEASE
COMMISSIONERS
THE FIRST ISSUE IS WHEN DRIVERS INITIATE A TRIP OR HAVE A TRIP THERE'S AN APP THAT WAS DESIGNED AND THE APP BILLS THE DRIVERS FOR THE TRIPS
THE FIRM ABM THAT'S CONTRACTED WITH THE PORT SCANS THE CABS AS THEY COME THROUGH AND THAT INITIATES A RECORD ON THE APP THAT THEN ENDS UP BILLING THE DRIVER FOR THAT TRIP
NOW THERE'S ALSO AN AVI SYSTEM THAT WHEN THE CABS LEAVE THROUGH THE AIRPORT THERE'S A LITTLE SCANNER UP ON THE CEILING AND THERE'S A LITTLE CARD IN THE CAB AND THE ABI SYSTEM RECORDS THE TRAFFIC OF THE TAXIS AS THEY MOVE THROUGH
SO THERE'S TWO SYSTEMS NOW A VERY IMPORTANT CONCEPT IN ANY ACCOUNTING SYSTEM OR ANY PROCESS LIKE SO IS A RECONCILIATION
AND ON THIS, YOU KNOW, WE FOUND THAT RECONCILIATIONS WEREN'T BEING DONE IN A TIMELY MANNER
WE DID A COUPLE MONTHS AS A TEST AND WE FOUND SOME VARIANCES WHICH I THINK NEED TO BE RECONCILED AND UNDERSTOOD
AND NOT ONLY THAT, WE THINK THESE RECONCILIATIONS NEED TO BE DONE CONSISTENTLY ON A TIMELY BASIS AND EVERY MONTH NEEDS TO BE DONE
AND THAT ENSURES FAIRNESS BETWEEN THE PORT AND THE CAB DRIVERS
SO ALL PARTIES ARE
AND EITHER WAY, ONE SYSTEM IS DOWN, YOU NOTE THAT AND YOU CAN ADJUST FOR IT
THERE SHOULD BE RECONCILED
IT IS VERY IMPORTANT
WE DID FIND SOME VARIANCES EARLY ON WHEN WE WERE WRAPPING UP OUR AUDIT, THE APP WAS JUST TURNED BACK ON, I WANT TO POINT OUT THAT THE APP WAS TURNED OFF DURING THE DEFERMENT PERIOD BECAUSE OF COVID FROM THE PERIOD OF MARCH THROUGH EARLY AUGUST OR JULY
AND IN AUGUST WHEN THE APP WAS GOING BACK ON, WE DID NOTICE SOME IMPROVEMENTS
BUT THE VOLUMES ARE SO LOW THAT IT WASN'T REPRESENTATIVE
IT DOESN'T TAKE AWAY THE NEED TO DO THESE RECONCILIATIONS ON A TIMELY BASED AND ACCURATELY
SO I'M GOING TO GO THROUGH THE FIRST THREE ISSUES
AND THEN I'LL OPEN IT UP FOR QUESTIONS AND FOR MANAGEMENT RESPONSE
THE OTHER TWO ARE RELATIVELY MINOR
NEXT SLIDE, PLEASE
THAT WAS THE HIGH RATING ONE
THIS WAS JUS.T ON THE FIRST ISSUE JUST CONTINUING EVEN WHEN DURING THE DEFERRAL PERIOD WHEN THE APP WAS SHUT DOWN AND ABM WAS MANUALLY COUNTING THE CABS THERE WAS A DIFFERENCE
IN THIS CASE WHEN THE APP WAS SHUT DOWN THE DRIVERS WOULD BILL THE LOWER OF THE TWO, THE API OR THE AVM MANUAL COUNT
YOU KNOW THE MANUAL COUNT AS YOU CAN SEE HERE IN THIS CASE IS LOWER
SO THE DRIVERS WOULD BILL THE LOWER FROM THAT, WHICH IS FINE
BUT THE RECONCILIATION STILL NEEDS TO BE DONE AND THE DIFFERENCE EVEN ON THIS DEFERRAL PERIOD NEEDS TO BE UNDERSTOOD
NEXT SLIDE, PLEASE
I'M GOING TO JUMP BACK TO THIS
SO I'LL GO TO THE NEXT SLIDE
THE NEXT ISSUE WAS AN IT ISSUE
IT WAS IMPORTANT AND I WANT TO KIND OF HIGHLIGHT THE SKILL SET OF OUR IT TEAM THAT HELPED OUT THIS AUDIT
THEY JUST NOTICED A SMALL FLAW A BUG IN THE APP WHERE EVERYONE IN THE PORT HAD ACCESS, LIMITED ACCESS, TO THE APP
AND THE DAY WE IDENTIFIED THE ISSUE ICT FIXED IT
SO IT'S GOOD TO SOMETIMES HAVE A SECOND SET OF EYES AND WE CATCH THE IT ISSUES BEFORE THEY BECOME PROBLEMS THE THE CODING ERROR WASN'T EXPLOITED BUT WE NOTED IT AND DID GET IT ADDRESSED
NEXT SLIDE, PLEASE
AND THE LAST SLIDE TALKS ABOUT ESSENTIALLY IT'S A LOWER RISK ITEM BUT JUST HAVING A COMPREHENSIVE WAY TO REVIEW ALL THE TAXI CABS AS THEY COME THROUGH
IT'S JUST A QUALITY REVIEW PROGRAM
THIS ENSURES THAT THEY HAVE THE APPROPRIATE DETAILS AND SAFETY INSPECTIONS FOR KING COUNTY, WHICH I KNOW KING COUNTY DOES
BUT SINCE THEY COME THROUGH THE AIRPORT AND IT'S OUR PROGRAM MAKING SURE THAT THEY DO HAVE THOSE, THAT THEY HAVE THE CORRECT LICENSES, THAT THE CABS ARE RESPECTABLE AND CLEAN FOR A QUALITY PROGRAM
AND WE WERE DOING THIS, I WANT TO EMPHASIZE THAT WE WEREN'T JUST IN A RANDOM BASIS AND IN A STRUCTURED BASIS IS A SMALL IMPROVEMENT
SO IT'S A LOW RISK ISSUE
NEXT SLIDE, PLEASE
BEFORE I JUMP TO THE MANAGEMENT RESPONSE ON THIS, COMMISSIONERS DO YOU WANT TO COMMENT OR ASK QUESTIONS NOW? COMMISSIONER CALKINS? WHY DON'T WE RUN THROUGH THE MANAGEMENT RESPONSE THEN WE'LL RETURN TO QUESTIONS
SO WITH THIS, JEFF OBET OR LAUREL IF YOU GUYS WANT TO JUMP ON AND TALK ABOUT YOUR MANAGEMENT RESPONSE
SURE
THANK YOU, GLENN
AND GOOD AFTERNOON COMMISSIONERS BOWMAN AND CALKINS AND COMMITTEE MEMBER GERKE
JEFF JOVE, SENIOR MANAGER REPORT LANDSIDE OPERATIONS AND I WOULD LIKE TO THANK THE AUDIT COMMITTEE LED BY GLENN IN HELPING US LEARN MORE ABOUT THE PILOT PROGRAM AND THE PROCESSES IN PLACE TO BOTH CHARGE OF VEHICLES TO COME THROUGH AND THEN FOR THE QUALITY ASSURANCE MEASURES THEY'VE SUGGESTED
SO THE ISSUE THAT GLENN HAS UP ON THE SCREEN NOW AND ISSUE NUMBER ONE RELATED TO THE ACTIVITY AND THE DESIRE AND CERTAINLY THE NEED FOR US TO RECONCILE
THESE WERE KNOWN GAPS IN THE PROCESS FOR US AND THERE WERE A COUPLE OF THINGS THAT WE IDENTIFIED AND HAD BEEN WORKING ON AND THEN WITH THE ASSISTANCE OF THE AUDIT TEAM WERE ABLE TO PROGRESS EVEN FURTHER
THE CURRENT SYSTEM THAT WE HAVE IN THE PILOT PROGRAM ALLOWS FOR A DIRECT CONTRACTED METHODOLOGY WITH EACH ONE OF THE INDEPENDENT OWNER OPERATORS AND THE PORT OF SEATTLE AND THEY EFFECTIVELY PAY AS YOU GO PROGRAM FOR THEM TO OPERATE AT THE AIRPORT
THEY HAVE A SIX DOLLARS REVENUE PICKUP FEE AT THE AIRPORT AND WE USE A SYSTEM THAT WAS DEVELOPED BY OUR OWN ICT GROUP WHEREIN OUR CONTRACTED CURBSIDE MANAGEMENT TEAM AMERICAN BUILDING MAINTENANCE
THEY HAVE A SCAN THAT THEY DO OF EACH DRIVER THAT'S COMING INTO THE GARAGE
FIRST SCAN IS TO INDICATE WHETHER OR NOT THEY HAVE AN ACTIVE ACCOUNT AND THE SECOND SCAN IS THE ACTUAL DEBIT FROM THE ACCOUNT FOR THE SIX DOLLARS FEE
SO AS WE LEARNED DURING THE PILOT PROGRAM AT THE INCEPTION OF OCTOBER, 1, 2019 THAT WE WERE LOSING SOME SIGNAL OCCASIONALLY WITH THE SCANNERS WHICH WAS RECTIFIED AND ALSO WE'RE WORKING TO MATCH THOSE NUMBERS UP THE ACTIVITY NUMBERS WITH THE AUTOMATED VEHICLE IDENTIFICATION SYSTEM AND TRENDING THAT WAY
SO LEARNING AS WE GO AND STILL DOING THAT MANUALLY
AS GLENN MENTIONED, WE DID HAVE A DEFERMENT PERIOD
THE DEFERMENT PERIOD LEFT US A LITTLE BIT FLAT FOOTED, FRANKLY, BECAUSE WE WEREN'T PREPARED FOR IT BECAUSE WE DID HAVE ONLY ONE CHARGE MECHANISM
SO WE HAD TO PIVOT TO HAVE OUR CURBSIDE MANAGEMENT TEAM DO MANUAL COUNTS OF THE VEHICLES REVENUE TRIPS LEAVING THE GARAGE AND THEN MATCH THAT WITH OUR AVI SYSTEM, WHICH WE'VE BEEN DOING FOR SOME TIME
BECAUSE ABM IS A CONTRACTOR TO THE PORT AND EFFECTIVELY AN AGENT OF A PORT WHEN WE DID OUR RECONCILIATION, WE MADE THE DECISION TO CHARGE THE DRIVERS THE LOWER OF THOSE FIGURES WHETHER IT'S THE AVI AS COMPARED TO THE MANUAL PROCESS
SO WE ARE WORKING WITH OUR BUSINESS INTELLIGENCE GROUP
RIGHT NOW WE HAVE A SYSTEM WHERE WE USE EXCEL BASED ACCOUNTING
AND WE HAVE PIVOT TABLES THAT COMPARE THE ACTIVITY AND WE'RE VERY HOPEFUL THAT OUR BUSINESS INTELLIGENCE GROUP CAN HELP US BECOME A LITTLE MORE AUTOMATED WITH IT
AND AS YOU SAW FROM GLENN'S FIGURES IT'S RELATIVELY LOW IMPACT IN TERMS OF THE NUMBER OF TRIPS THAT THERE ARE DIFFERENCES HERE IN TERMS OF THE ACTUAL FINANCIAL IMPACT TO THE SYSTEM, BUT WE WANT TO MAKE IT RIGHT
SO WE REALLY ASPIRE TO BE 100% RECONCILIATION
HAPPY TO ANSWER ANY QUESTIONS
COMMISSIONER CALKINS WOULD YOU LIKE ME TO RUN TO THE ROLE? THAT WOULD BE GREAT
THANK YOU
BEGINNING WITH COMMISSIONER BOWMAN
THANK YOU FOR MORE DETAIL ON THIS
I GOT A LITTLE ADDITIONAL INFORMATION
I JUST WANTED TO VERIFY HOWEVER, THAT IS IT YOUR UNDERSTANDING, GLENN AND THE TEAM THAT THIS IS BASICALLY TWO COMPUTER SYSTEMS NOT QUITE TALKING TO EACH OTHER
THAT THERE'S NOT AS WE HAD BACK A FEW YEARS AGO AN ISSUE WITH THE DRIVERS UNDER REPORTING
IS THAT CORRECT? YES, IN THIS CASE THERE ARE INDEPENDENT SYSTEMS, RIGHT, SO THAT ONE IS THE APP, WHICH IS A NEW SYSTEM THAT'S BUILT THAT CHARGES THE DRIVER AND AND IT'S BASED ON IBM OR A BIT OF AMERICAN BUILDING MAINTENANCE, SCANNING AND CAB, A PROCESS THROUGH
IT'S A TOTALLY NEW PROCESS
AND THEN WHEN THE VEHICLES EXIT THERE'S A SCANNER THAT SCANS A CAB AND THAT'S AN ESTABLISHED OLDER PROCESS THAT TELLS YOU OKAY A TAXI CAB JUST WENT THROUGH, THIS CAB NUMBER
AND JUST CORRECT ME IF I'M WRONG
EXACTLY RIGHT, YEAH
SO THOSE ARE THE TWO DIFFERENT SYSTEMS NOW, WHAT WE FOUND THROUGH TESTING IS THAT THERE WAS A DIFFERENCE BETWEEN THE SYSTEM, ALTHOUGH, FINANCIALLY SMALL IN NOVEMBER, IT WAS STILL THE 3100 TRIPS THAT THE APP WAS HIGHER THAN THE ABM COUNTER
SO THE APP SAID THERE WERE 3100 TRIPS MORE OUT OF 40,000 SOMETHING TRIPS THAN WHAT THE ABM SYSTEM SAID
SO, OUR RECOMMENDATION IS WE NEED TO RECONCILE THAT EVERY MONTH AND UNDERSTAND WHAT THAT DIFFERENCE IS AND FIX THAT
MAKE THAT ADJUSTMENT AS NEEDED
OKAY, THANK YOU FOR THE ADDITIONAL INFORMATION
I JUST WANT TO CONFIRM THAT AGAIN IN THE PAST, WE HAD SEVERAL YEARS AGO, AN ISSUE WITH DRIVERS UNDER REPORTING
BUT TO CLARIFY AGAIN, THIS IS NOT A DRIVER ISSUE
THIS IS A SYSTEMS ISSUE
YES, THANK YOU
THANK YOU, COMMISSIONER BOWMAN
AND MOVING TO MEMBER GERKE
THAT ANSWERED MY QUESTION TOO SO I HAVE NO ADDITIONAL QUESTION
THANKS
THANK YOU
AND THEN COMMISSIONER CALKINS
YEAH, JUST A COMMENT TO SAY, AND CORRECT ME IF I'M WRONG, BUT WHAT I'M HEARING IS CURRENTLY IF THERE IS A DISCREPANCY, WE ERR ON THE SIDE OF CAUTION AND DO NOT CHARGE THE DRIVER, IS THAT ACCURATE GLENN
IT WAS ONLY DURING THE DEFERMENT PERIOD THAT THE DRIVER WAS CHARGED
THE LOWER OF THE TWO SYSTEMS, THE MANUAL COUNT OR THE ABM SYSTEM
OUTSIDE OF THE DEFERMENT PERIOD THE DRIVER IS CHARGED BASED ON THE APP
THE APP AND THE SCANNING
SO WE'RE BACK TO SCANNING, BILLING THE DRIVERS BASED ON THE APP, BUT WE HAVE THIS REDUNDANT SYSTEM, THE AVM
NOW NOW I DO WANT TO POINT OUT A COMMISSIONER AND THAT WE HAVE NOT SEEN THE RECONCILIATIONS THAT HAVE BEEN PERFORMED
I BELIEVE GROUND TRANSPORTATION HAS INDICATED THAT THOSE ARE BEING PERFORMED
WE HAVE NOT SEEN THOSE FOR THE MOST RECENT MONTHS
WE HAVE DONE TWO OURSELVES WHERE WE FOUND DISCREPANCIES, BUT WE DO NEED TO SEE ALL MONTHS AND ALL OF THE DIFFERENCES
AND WHAT ARE WE DOING TO ADDRESS THOSE AND WE HAVE NOT SEEN THOSE YET
OKAY, AND THE OTHER THING I WAS GOING TO SAY IS BASED ON THE TIMELINESS OF THIS AND THE GOAL TO HAVE COMPLETED THIS BY THE END OF THE YEAR
I THINK IT WOULD BE WORTHWHILE TO GET A MEMO TO THE COMMITTEE SHORTLY THEREAFTER WITH ANY CONCLUSIONS AS A RESULT OF THAT
YES
SO I WILL ASK JACK AND LAUREL FOR THAT
WE WE WILL BE WORKING WITH YOU IN THE NEXT COUPLE FEW WEEKS
PERHAPS A BETTER DAY, COMMISSIONER CALKINS WOULD BE GIVEN THE HOLIDAYS AND ALL IT WOULD BE MID JANUARY, BY THE END OF JANUARY TO GET ALL THE THE RECONCILIATIONS THAT ARE BEING DONE AND MAKE SURE THAT THOSE ARE BEING DONE COMPREHENSIVELY, IN FACT, ACCURATE AND THEN REPORT BACK TO THE COMMISSION
PERFECT, THAT SOUNDS GREAT
JEFF WOULD THAT BE OKAY? I COULD HARDLY SAY NO
SO GIVE US AN UPDATE BY MID JANUARY
THAT WOULD BE GREAT
WONDERFUL
WE HAVE ALL THOSE RECORDS AVAILABLE FOR AUDIT TEAM, SO IT SHOULD BE SOMETHING WE CAN MOVE AHEAD PRETTY QUICKLY WITH EVEN WITH THE HOLIDAYS AHEAD
GREAT, THANKS, OKAY
ON TO ITEM NUMBER NINE
YEAH, KEEP MOVING NEXT SLIDE, PLEASE
AND ONE MORE AND KEEP GOING THIS
OKAY
THE NEXT ON ITEM NUMBER IS THE PUBLIC HEALTH EMERGENCY LEAD PROGRAM
SO, COMMISSIONER, THIS WAS REQUESTED BY OUR DIRECTOR OF HUMAN RESOURCES TO POINT OUT THAT THE NEW PROGRAM THAT WAS LAUNCHED BECAUSE OF THE PANDEMIC INTERNAL OP WAS ASKED TO HELP OUT
WE WERE HAPPY TO STEP IN AND USE OUR EXPERTISE TO IDENTIFY SOME POTENTIAL RISKS AND FLAWS AND MAKE RECOMMENDATIONS APPROPRIATELY
JUST SOME HIGHLIGHTS THE PUBLIC HEALTH EMERGENCY LEAVE PROGRAM AUTHORIZED UP TO 240 HOURS FOR COVID RELATED CIRCUMSTANCES
AT THE TIME OF THE AUDIT WE SPENT ABOUT 7.7 MILLION DOLLARS ON THIS AND OUR WORK YOU KNOW, WE DID A LOT OF FIELD WORK BY LOOKING AT RAW DATA, INTERVIEWING STAFF AND AND JUST BUILDING AND TALKED TO OUTSIDE ESD AS WELL
OUTSIDE THE EMPLOYMENT SERVICES DIVISION OR THE ESD AS PART OF THE STATE OF WASHINGTON THAT HANDLES UNEMPLOYMENT
WE DID QUITE A LITTLE BIT OF WORK ON THIS
NEXT SLIDE, PLEASE
WE HAVE TWO ISSUES IN THIS
ONE WAS AN OPPORTUNITY BECAUSE IT WAS SO DECENTRALIZED AND A NEW PROGRAM THE POLICY WAS PUT TOGETHER RELATIVELY QUICKLY
JUST BECAUSE THE SITUATION, JUST DROVE THAT AND BECAUSE IT WAS PUT TOGETHER QUICKLY AND CERTAIN CONTROLS WERE MORE DIFFICULT TO PUT IN PLACE
IN A VERY RAPID TIME, THERE WERE SERIOUS RISKS THAT CAME OUT
ESSENTIALLY, BECAUSE MULTIPLE DEPARTMENTS WERE INVOLVED SO DATA DIDN'T GET TO THE RIGHT PEOPLE
AND, YOU KNOW, THE NEXT SLIDE WOULD AS WE GO TO THAT, LAUREN, THE NEXT LINE, PLEASE WE'LL SHOW THAT, YOU KNOW, IT WAS REALLY USED IN MANY CASES FOR WHAT IT WASN'T INTENDED TO BE USED FOR
SO FOR INSTANCE, IN SOME CASES, A POLICY SPECIFICALLY SAID A CERTAIN THING
AND PEOPLE JUST DIDN'T UNDERSTAND IT
DIDN'T FOLLOW IT IN THE SITUATION OF TAKING CARE OF EXTENDED FAMILY MEMBERS
IN THE POLICY THAT WASN'T ALLOWED BUT THE PEOPLE DID IT ANYWAY JUST BECAUSE DECENTRALIZED
CERTAIN EMPLOYEES DIDN'T NOTIFY HEALTH AND SAFETY WHEN THEY WERE SUPPOSED TO ALSO, WHEN THEY QUARANTINED AND THAT AGAIN WAS AN ISSUE DURING INTERVIEWS
AS EXPECTED WHEN YOU HAVE SUCH A DECENTRALIZED PROGRAM, PEOPLE SAID AND MANAGERS AS WELL OCCASIONALLY BE USED FOR SOMETHING THAT'S NOT SUPPOSED TO SUCH AS VACATIONS AND OTHER THINGS THAT IT'S REALLY HARD TO MANAGE
AND I'M SORT OF GOING THROUGH ALL THE BULLETS
YOU'RE ALLOWED US 240 HOURS AND THERE AREN'T ANY SYSTEM CONTROLS
IT NEEDS TO BE MANAGED BY PEOPLE AND SUPERVISORS
AND IT'S HARD TO TRACK WHEN SOMEONE'S EXHAUSTED THEIR 240 HOURS
SO THEY KEEP PUTTING PHEL AND THEY CAN EXCEED THE 240 HOURS SO LACK OF SYSTEM CONTROL THERE CAN CAUSE SOME ISSUES OF PEOPLE GOING OVER
THAT WAS THE FIRST ISSUE
THE SECOND ISSUE
NEXT SLIDE PLEASE LAUREN
ANOTHER HIGH RISK ISSUE IS A SMALL GROUP ON THIS ONE
BUT BECAUSE LOT OF RULES WERE CHANGED BECAUSE OF THIS AND THAT KIND OF CREATED A GAP AND SECONDLY, MOST EVERYONE'S FAMILIAR OR MANY SHOULD BE FAMILIAR WITH THE UNEMPLOYMENT FRAUD THAT HAPPENED AT THE STATE OF WASHINGTON
AND YOU KNOW, IT AFFECTED THE PORT AS WELL
WE HAD A LOT OF FALSE CLAIMS COME IN BUT, YEAH, MANY OF THOSE WERE CAUGHT
THERE WERE SOME WITH EMPLOYEES
IN THIS CASE WE HAD THREE EMPLOYEES THAT FILED FOR UNEMPLOYMENT AND COLLECTIVE PHEL AT THE SAME TIME, WHICH ISN'T ALLOWABLE AND THAT WOULD BE THAT WAS HANDED BACK TO THE ESD
AND KATIE AND HER STAFF ARE GOING TO TALK A LITTLE BIT MORE ABOUT THAT AND THE RESPONSE
SO, THE NEXT SLIDE, PLEASE
BELIEVE IT SHOULD BE THE MANAGEMENT RESPONSE
SO, WITH THAT I'LL ASK KATIE GERARD TO UNMUTE AND HER STAFF TO RESPOND AND TALK A LITTLE BIT ABOUT WHAT THEY'VE DONE
GREAT
THANK YOU, GLENN
YES, THIS IS KATIE, SENIOR DIRECTOR OF HUMAN RESOURCES
CERTAINLY THE PANDEMIC THIS YEAR CREATED ALL SORTS OF NEW THINGS FOR THE HUMAN RESOURCES TEAM TO DEAL WITH AS IT RELATED TO THE MANAGEMENT OF OUR WORKFORCE AND ONE OF THE THINGS WE VERY QUICKLY RECOGNIZED WAS THE NEED TO COME UP WITH AN ADDITIONAL LEAVE BENEFIT
AND SO WE CREATED THE PUBLIC HEALTH EMERGENCY LEAVE BENEFIT TO OFFER THAT TO OUR STAFF
CERTAINLY IT STARTED AS ONE THING AND THEN CHANGED SEVERAL TIMES OVER THE PRECEDING MONTHS
AND SO IT REALLY WAS SOMETHING THAT WE WERE TRACKING THE PUBLIC HEALTH GUIDANCE AS WELL AS TRYING TO FIGURE OUT WHAT WAS THE RIGHT THING TO DO TO KEEP OUR EMPLOYEES SAFE AS WELL AS CONTRIBUTE TO KEEPING THE COMMUNITY SAFE AS WELL
SO THIS WAS OUR PLAN THAT WE DEVELOPED
WE DID START WITH 80 HOURS AND GROW THAT TO UP TO 240 HOURS
AND I WILL SAY THROUGHOUT THE WHOLE TIME WE HAVE HAD A MEMBER OF THE TOTAL REWARDS TEAM REVIEWING EVERY PAYROLL RECORDS IN TERMS OF OF THOSE EMPLOYEES THAT WERE UTILIZING THIS BENEFIT
WE DID SET UP SEPARATE LEAD CODES SO THAT WE COULD TRACK IT AND HAVE GOOD INFORMATION TO BE ABLE TO DO SOME MONITORING
BUT CERTAINLY BECAUSE THERE WERE DIFFERENT CRITERIA AVAILABLE SOME OF THAT MONITORING WAS LEFT TO SUPERVISORS TO INTERPRET THAT INFORMATION
NOW GOING FORWARD WE'VE TIGHTENED UP THOSE CONTROLS AND DO HAVE A CENTRAL POINT OF CONTACT IN THE HR DEPARTMENT THAT IS RESPONSIBLE FOR MONITORING ANY NEW REQUESTS THAT COME THROUGH THE PAYROLL SYSTEM AND OUR TIME REPORTING AND SO THAT IS IN PLACE AT THIS TIME
WE DID QUITE A BIT OF OUTREACH BUT REALIZE THAT ADDITIONAL OUTREACH IS GOING TO BE NECESSARY SPECIFICALLY FOR OUR OFF SHIFT WORKERS AND THOSE THAT ARE ABLE TO PARTICIPATE IN SOME OF OUR REGULAR OUTREACH ACTIVITIES
WE DID RECORD A LEAVE HR BROADCAST SESSION TO EDUCATE PEOPLE
THE BEST THAT WE COULD BUT DO REALIZE THAT SEVERAL CHANGES HAPPENED AND SO I THINK WE'VE TAKEN THE APPROPRIATE STEPS TO DO WHAT WE CAN TO BETTER MONITOR AND MAKE SURE THAT THE USE IS BEING DONE IN THE APPROPRIATE WAYS
I WILL SAY CERTAINLY BACK IN MARCH AND APRIL, WE HAD A HIGH USAGE OF OVER 69,000 HOURS IN THE MONTH OF APRIL
AS OF THE LAST PAYROLL IN NOVEMBER WE'RE DOWN TO ABOUT 5,000 HOURS USED IN THAT MONTH TOTAL
SO CERTAINLY THE USE HAS COME DOWN, BUT WE CERTAINLY FEEL LIKE WE MADE THE RIGHT DECISION IN TERMS OF PROVIDING THIS BENEFIT TO OUR STAFF TO KEEP THEM EARNING THEIR PAYCHECKS
I WANT TO GO TO THE NEXT TWO AND THEN DO QUESTIONS
OKAY, THE SECOND ISSUE HAD TO DO WITH OUR UNEMPLOYMENT BENEFITS AND WE DO USE A THIRD PARTY ADMINISTRATOR TO MONITOR OUR UNEMPLOYMENT CLAIMS AND AS GLENN SAID, THERE WAS SUBSTANTIAL FRAUD AND OVER 100 OF OUR EMPLOYEES WERE IMPACTED WITH FRAUDULENT CLAIMS THERE'S ALSO JUST BEEN A REAL DRAIN ON THE EMPLOYMENT SECURITY DEPARTMENT, IN TERMS OF ALL THE INDIVIDUALS THAT WERE ABLE TO APPLY FOR UNEMPLOYMENT
AND IN THIS CASE IT'S BEEN A REALLY DIFFERENT YEAR
YOU COULD APPLY FOR UNEMPLOYMENT AND STILL BE EMPLOYED
SO THAT CREATED A NEW NUANCE THAT WE NEEDED TO DEAL WITH
AND CERTAINLY THOSE EMPLOYEES ARE IDENTIFIED AS HIGH RISK AND UNABLE TO WORK AS A RESULT WERE ELIGIBLE FOR UNEMPLOYMENT BENEFITS
SO THEY COULD BE ON OUR PAYROLL AND STILL CLAIM UNEMPLOYMENT
AND UNFORTUNATELY WE HAD A COUPLE OF EMPLOYEES THAT WERE ABLE TO PUT LEAVE IN AS WELL AS CLAIM UNEMPLOYMENT
AND CYNTHIA ALVAREZ OR SENIOR MANAGER OF EMPLOYEE RELATIONS OVERSEES THAT PROGRAM AND CAN ANSWER ANY ADDITIONAL QUESTIONS THAT YOU MIGHT HAVE ABOUT THAT PROGRAM
BUT CERTAINLY THERE'S CHALLENGES IN TERMS OF GETTING THE DATA THAT WE NEED FROM EMPLOYMENT SECURITY DURING THIS TIME BUT WE ARE ACTIVELY MONITORING THOSE MUCH MORE CLOSELY
AND I'M HAPPY TO TAKE ANY QUESTIONS YOU MIGHT HAVE
THANK YOU, KATIE
CLERK HART WILL YOU GO THROUGH THE ROLE? COMMISSIONER BOWMAN
THERE WE GO, SORRY ABOUT THAT
I THOUGHT I WAS
I THOUGHT IT WAS NOT MUTED APOLOGIES
NUMBER ONE
I REALLY APPRECIATE THE FACT THAT AN AUDIT WAS DONE ON THIS PROGRAM
LET ME START WITH THAT
AND KATIE, I REALIZED THAT YOU AND YOUR TEAM HAD AN ENORMOUS CHALLENGE IN A VERY SHORT AMOUNT OF TIME TO PULL TOGETHER THIS PROGRAM AND TRY AND UNDERSTAND WHAT IT MEANT
I GUESS AT THE END OF THE DAY, I FEEL BETTER THAT THERE IS NOW A MORE CONSOLIDATED PROGRAM THAT DEPARTMENT BY DEPARTMENT I THINK IT SEEMS OBVIOUS LOOKING BACK THAT THAT WAS NOT THE RIGHT THING TO DO OR THE MOST EFFICIENT WAY AND IT WOULD RESULT IN EXACTLY THE FINDINGS THAT WE'VE HAD
BUT THAT SAID I FEEL MORE CONFIDENT WITH YOUR RESPONSE TO THIS AND THAT THERE'S BETTER CONTROLS MOVING FORWARD
THANK YOU
THANK YOU, COMMISSIONER
THANK YOU COMMISSIONER
MOVING TO MEMBER GERKE
I DON'T HAVE ANY QUESTIONS
I TOTALLY AGREE WITH WHAT COMMISSIONER BOWMAN SAID
THANK YOU
AND COMMISSIONER CALKINS
NO MORE QUESTIONS FOR ME, THANK YOU
ALRIGHT
THANK YOU
OUR NEXT OPERATIONAL AUDIT IS ITEM NUMBER 10 WHICH IS CENTRAL TERMINAL INFRASTRUCTURE UPGRADE
I JUST WANT A SHOUT OUT OR SAY THANK YOU TO KATIE AND HER TEAM ON THAT ONE FOR, LOT OF PEOPLE WON'T ASK YOU FOR AN AUDIT ESPECIALLY WHEN THINGS ARE NOT GOING WELL
SO THE PARTNERSHIP IS IMPORTANT
AND I APPRECIATE HER FOR REACHING OUT TO US AND SAYING, HEY, CAN YOU HELP US REVIEW THIS? NEXT ON TO CENTRAL TERMINAL INFRASTRUCTURE UPGRADE
ESSENTIALLY, THIS SLIDE TALKS A LITTLE BIT ABOUT WHAT THE INFRASTRUCTURE UPGRADE PROJECT WAS
AND A BIG PART OF THIS WAS WE DECIDED TO BREAK THIS PROJECT INTO TWO PIECES PRIMARILY BECAUSE IT IS BEHIND SCHEDULE
WE WANTED TO LOOK AT THE DESIGN PHASE WHERE THERE WERE A LOT OF ISSUES AND THEN NEXT YEAR WE'LL LOOK AT THE CONSTRUCTION CLOSE OUT PHASES
OSBORN CONSTRUCTION WAS AWARD THE CONTRACT AND BEEN DOING THIS AUDIT AND I WANT TO HIGHLIGHT THAT KEY THEME HERE WAS CHANGE ORDERS
SO I'M GOING TO GO TO THE NEXT SLIDE
WE HAVE ONE MEDIUM RISK ISSUE HERE AND IT WAS IMPORTANT IN THAT WHEN WE DO THESE IT'S IMPORTANT THAT ALL STAKEHOLDERS COME TO THE TABLE AND PROVIDE THEIR FEEDBACK AT THE LAUNCH TIME
BECAUSE IF YOU DON'T DO THAT UPFRONT THEN YOU END UP WITH CHANGE ORDERS IN THE BACK END
YOU KNOW, CLEARLY, SOME CHANGE ORDERS ARE MANAGEMENT DECISIONS TO INCREASE REVENUE OR THIS WALL IS BUILT FOR INSTANCE
WE WON'T BE ABLE TO GET THIS REVENUE FROM THIS TENANT BUT THOSE THINGS CAN ALSO BE THOUGHT ABOUT UPFRONT IN THE DESIGN PHASE
SO THE BIGGEST ISSUE HERE THAT WE HAVE, THE BIGGEST RECOMMENDATION IS IT NEEDS TO BE IMPORTANT AND REQUIRES FOR EVERYBODY, ALL KEY STAKEHOLDERS IN THE DESIGN PHASE, UPFRONT TO PROVIDE THEIR FEEDBACK AND THEIR GUIDANCE AND THEIR REQUIREMENTS AND THEN PENCILS DOWN TO THE BEST EXTENT POSSIBLE
IT WON'T BE 100% POSSIBLE BUT WHERE POSSIBLE AND THAT WILL HELP REDUCE CHANGE ORDERS, PROJECT DELAYS, AND, YEAH, COST
SO, THE NEXT SLIDE, PLEASE
OUR RECOMMENDATION IS PRETTY MUCH WHAT MANAGEMENT RESPONSE IS SO I'M GOING TO ASK WAYNE HERE TO UNMUTE AND TO TALK A LITTLE BIT ABOUT HIS MANAGEMENT RESPONSE AND WHAT AVIATION HAS BEEN DOING? ARE YOU ON THE LINE BY ANY CHANCE? YES, I AM
THANK YOU, GLENN AND THANK YOU COMMISSIONERS AND COMMITTEE MEMBER GERKE
I'M WAYNE GROWTH HERE, I'M A DIRECTOR OF AVIATION PROJECT MANAGEMENT
AS GLENN NOTED, THE PROJECT HAD SIGNIFICANT CHALLENGES RESOLVING COMPETING CONSTRUCTION, OPERATIONAL, TENANT IMPACT, CUSTOMER SERVICE, AND FINANCIAL CONSIDERATIONS
THIS WAS A VERY DISRUPTIVE PROJECT IN THE VERY HEART OF THE AIRPORT
BASED ON THESE CHALLENGES, WE DID AN EXTENSIVE LESSONS LEARNED REVIEW OF THIS PROJECT NEARLY 18 MONTHS AGO AS NOTED BY INTERNAL AUDIT
AND SOME OF THE CHANGES I'LL TALK ABOUT ARE CHANGES MADE DIRECTLY AS A RESULT OF THAT LESSONS LEARNED PROCESS
FIRST, WE MADE PROCESS CHANGES EARLIER THIS YEAR THAT DIRECTLY ADDRESS SOME OF THESE PROBLEMS STRENGTHENING OUR PROJECT DEFINITION PROCESS, WHICH IS BEFORE WE GET INTO DO SOMETHING TO PUT ADDITIONAL FOCUS ON OPERATIONAL IMPACTS LIKE MAINTAINING PASSENGER FLOW, TEMPORARY FACILITIES
LIKE THE HOT FOOD LOCATIONS THAT WERE ADDED HERE, POST DESIGN, AND CUSTOMER SERVICE OPPORTUNITIES LIKE THE PROJECT COMMUNICATIONS THAT WERE ADDED TO THE MUCH LARGER WALL BUILT IN FRONT OF A CONSTRUCTION SITE BECAUSE OF ITS LOCATION
SECOND, AVIATION DIVISIONS INVOKED A CHANGE MANAGEMENT PROCESS
THIS BEGAN IN APRIL THIS YEAR TO PUT A MUCH STRONGER FOCUS ON PROJECT SCOPE CHANGES THAT REQUIRES A REVIEW BY PROJECT REVIEW BOARD OF THREE DIRECTORS: FINANCE AND BUDGET, CAPITAL PROGRAMS, AND PROJECT MANAGEMENT
AND IF IT'S ABOVE 500,000 DOLLARS TO THE CHIEF OPERATING OFFICER OF THE AIRPORT IF IT'S ABOVE A BILLION DOLLARS TO THE MANAGING DIRECTOR OF THE AIRPORT, THAT'S NOT WITHSTANDING THE PROCESSES FOR BUDGET INCREASES
BUT THIS IS IF WE ARE ADDING TO THE PROJECT YET STAYING WITHIN BUDGET, WE WANT TO PUT A STRONG FOCUS ON THAT
SO THAT WOULD HAVE CAUGHT SOME OF THESE ISSUES AS WELL
AS GLENN NOTED AND IT'S IN A SECOND BULLET HERE, THERE WERE SOME SIGNIFICANT CHANGES MADE AS CONSCIOUS BUSINESS DECISIONS AT THE HIGHEST LEVELS OF THE AIRPORT TO MEET CUSTOMER SERVICE NEEDS AND GAIN REVENUE
AND THAT WAS BOTH DELAYING THE CLOSURE OF THE ANTHONY'S RESTAURANT AND ADDING TEMPORARY HOT FOOD LOCATIONS
THOSE WERE EXPENSIVE BUT THE REVENUE OF IT WAS NEARLY TWICE THE COST OF MAKING THOSE CHANGES
AND FINALLY THE ADDITIONAL PROCESS CHANGES THAT WE HAVE UNDERWAY NOW WHICH WE TOUCHED ON WHICH IS MANDATORY PARTICIPATION OF KEY DESIGN REVIEWS
THESE DESIGN REVIEWERS ARE IN OTHER DEPARTMENTS
THESE ARE SPONSORS, OUR OWNERS, THOSE AFFECTED BY THE PROJECTS THAT WE'RE CONSTRUCTING
THESE STEPS REQUIRE RESOURCES, REQUIRE PRIORITY, AND THAT'S PARTICULARLY CHALLENGING IN COVID TIMES AND FINANCIAL CONSTRAINTS THERE
BUT THE INTENT HERE IS THAT PROJECTS WILL WAIT IF NEED BE FOR CRITICAL DESIGN REVIEW INPUT SO THAT WE CAN RESOLVE AS MANY ISSUES AS WE POSSIBLY CAN BEFORE WE GET INTO CONSTRUCTION WHERE IT GETS MUCH MORE EXPENSIVE TO RESOLVE THOSE ISSUES
WITH THAT IT'D BE GOOD TO ANSWER ANY QUESTIONS
YES, THANK YOU BEGINNING WITH COMMISSIONER BOWMAN
THANK YOU AGAIN
I DISCUSSED THIS BRIEFLY
WELL, ACTUALLY MORE IN DEPTH I SHOULD SAY, BUT ALSO BRIEFLY WITH GLENN AND I GUESS MY GREATEST CONCERN AND WAYNE THANK YOU VERY MUCH FOR YOUR RESPONSE
I THINK IT'S MORE OF JUST TAKING A BIG BACK STEP AND LOOKING AT THIS ISSUE OF NOT JUST ON THIS PROJECT BUT CHANGE ORDERS IN GENERAL
YOU KNOW, WE SEEM TO HAVE QUITE A FEW OF THEM, PARTICULARLY IN THE AVIATION DIVISION, BUT CERTAINLY NOT EXCLUSIVELY
AND SO ALL OF THE RECOMMENDATIONS MOVING FORWARD ARE GOOD, BUT THEY'RE NOT JUST ON THIS PROJECT
AND SO I WOULD JUST URGE MANAGEMENT TO CONSIDER WHAT CAN WE DO TO ENSURE THAT THESE PROBLEMS DON'T CONTINUE AND BY THAT, I MEAN, SPECIFICALLY WITH AN AUDIT WE'RE JUST LOOKING AT A PARTICULAR PROJECT LIKE THIS ONE
BUT OVER MY YEARS AT THE PORT I'VE SEEN THESE SAME ISSUES OVER AND OVER AND OVER AGAIN, WHERE WE DIDN'T GET EVERYBODY AT THE TABLE THE WAY WE SHOULD HAVE IN THE BEGINNING THAT RESULTED IN CHANGE ORDERS
WHAT GLENN SAID EARLIER ABOUT YOU KNOW, AT SOME POINT THERE'S A PENCILS DOWN THIS IS PROBABLY THE VERY BEST EXAMPLE OF HOW THAT PROJECT GREW IN SCOPE
AND WE REALLY, WE HAD TO BRING OUTSIDE EXPERTS TO GET TO PUT PENCILS DOWN ON THAT ONE
ALL THAT TO SAY THAT I'M URGING I GUESS OUR LEADERSHIP AT THE TOP OF THE ORGANIZATION TO EXPLORE WHAT WE CAN DO ON THE STAFF SIDE TO IMPLEMENT THESE RECOMMENDATIONS
BRINGING EVERYBODY TO THE TABLE
REALLY DEFINING THE PROJECT SCOPE
THINKING THROUGH AND SO THAT WE'RE NOT CONTINUING TO HAVE THESE ISSUES ON INDIVIDUAL PROJECTS
THANK YOU, COMMISSIONER BOWMAN
MOVING TO MEMBER GERKE
I DON'T HAVE ANY ADDITIONAL QUESTIONS
THANK YOU
COMMISSIONER CALKINS
I APPRECIATE BOTH THE FINDINGS AND THE MANAGEMENT RESPONSE
WHEN GLENN FIRST BRIEFED ME ON THIS IT CAUSED ME TO REFLECT ON THE PROCESS THAT I THINK WE'VE BEEN UNDERTAKING FOR THE LAST THREE YEARS
IN PART I THINK THAT STEMMED OUT OF TWO THINGS
ONE WAS THE HIRING OF A NEW EXECUTIVE DIRECTOR WHO HAD A DIFFERENT AND I THINK IN SOME WAYS, BENEFICIAL EXPERIENCE IN MANAGING BIG ORGANIZATIONAL BUDGETS
AND ALSO THE DECISION BY THE PROCEEDING COMMISSION THAT COMMISSIONER BOWMAN SERVED ON TO WHEN SOME CONCERNS AROUND SCHEDULING BUDGET ON THE IAF PROJECT FIRST CAME UP TO INITIATE AN OUTSIDE THIRD PARTY GROUP THAT WE REFER TO AS THE ERP TO EXAMINE SOME OF THAT FAIRLY UNIQUE BID PROCESS FOR US AND THAT OUTSIDE EXPERTISE AND THE OUTSIDE PERSPECTIVE THAT EXECUTIVE DIRECTOR METRUCK BROUGHT IN ALONG WITH, I THINK, FOR THE FIRST TIME, A WILLINGNESS TO REALLY LISTEN TO THE CONCERNS THAT PROFESSIONAL STAFF HAD BEEN MENTIONING FOR A LONG TIME ABOUT SOME OF THE SILOED NATURE OF OUR DIVISIONS HAS RESULTED IN REFORMS TOWARD WHAT I BELIEVE, GLENN, YOU ARE HOPING WILL BE THE OUTCOME OF THIS, WHICH IS TO SAY A MUCH CLEARER SENSE OF THE SCOPE AND SCALE OF A PROJECT AT THE OUTSET AND LESS OF A CHANCE OF THE SILO DEPARTMENTS COMING TO THE PLANNING PROCESS TOO LATE TO PROVIDE INSIGHT THAT WOULD HAVE AVOIDED CHANGE ORDERS OR IS FOR EXAMPLE, MISSED PERMITS, OTHER THINGS
AND I HAVE HAD THE OPPORTUNITY TO SEE HOW SOME OF THAT'S BEEN INSTITUTED
AND SO I THINK SOME OF THIS IS ALREADY HAPPENING ON AN INSTITUTIONAL SCALE
AND SO I DON'T FEEL LIKE WE'RE STARTING FROM SCRATCH HERE ON THIS ONE
I FEEL LIKE THIS REPRESENTS A REAL IMPROVEMENT
AND THIS IS THE NEXT STEP
AND THANK YOU TO WAYNE FOR THE PRESENTATION AS WELL
ANY FURTHER COMMENTS OR QUESTIONS ON THIS OR RESPONSE FROM EITHER WAYNE OR GLENN? COMMISSIONER BOWMAN, YOU ALSO WANTED DAVE SWANKY ON THE LINE
HE IS ON THE LINE
HE DID HEAR YOU
AND I BELIEVE AS FAR AS INSTITUTING THIS ACROSS THE ORGANIZATION OUTSIDE AVIATION
YUP, COMMISSIONER I THINK YOUR COMMENTS ARE WELL RECEIVED AND THOUGHTFUL
COMMISSION CALKINS I ALSO AGREE
I WILL SAY THAT WE DID BEGIN SOME EFFORTS THIS YEAR
I WILL ALSO SAY THAT COVID CHANGED OUR FOCUS ON MANY ISSUES AND WE PLAN TO GET RIGHT BACK TO IT IN OUR UPCOMING RETREAT
I THINK, STEVE, I NOTICE PERHAPS STARTED AND AS I PRESENTED TO YOU LAST JANUARY, TWO MONTHS BEFORE COVID REALLY GOT SERIOUS HERE, WE DO HAVE A PLAN MOVING FORWARD WHERE WE WORK WITH THE DIVISIONS WHO NOW HAVE RESPONSIBILITY FOR THE CAPITAL SCOPING AND PROJECT MANAGEMENT
AND THEREFORE THEY ARE ALL HANDS ON ABOUT HOW PROJECTS MAY CHANGE AND HOW THAT MIGHT AFFECT THEIR OPERATIONS
IT GIVES THEM A FULL CHANCE TO THINK AHEAD ABOUT PROJECT IMPLEMENTATION VERSUS THEIR OPERATIONS AND CONSIDERING AIRLINE CHANGES ET CETERA
SO THANK YOU FOR YOUR COMMENTS
THEY WERE RECEIVED
WE'LL CONSIDER THEM
WE'RE STILL MOVING AHEAD
THANK YOU, THANK YOU ALL LET'S MOVE ON TO ITEM 11
GO AHEAD, GO AHEAD
THE NEXT AUDIT IS THE DELEGATION AUTHORITY AUDIT AND THIS IS THE FINAL AUDIT WE ARE DISCUSSING TODAY HERE IN PUBLIC SESSION
THIS AUDIT WAS ON THE PLAN AND ESSENTIALLY FOCUSED ON BOTH DELEGATION FROM THE COMMISSION DOWN TO THE EXECUTIVE DIRECTOR AND FROM THE EXECUTIVE DIRECTOR DOWN TO STAFF
SO BOTH ELEMENTS WOULD TEST IT RIGOROUSLY TO ENSURE THAT WE WERE IN COMPLIANCE FROM THE COMMISSION DOWN TO STAFF
THE LIMIT IS 300,000 DOLLARS, LIMIT OF THE EXECUTIVE DIRECTOR IS 300,000 DOLLARS
ANYTHING ABOVE HAS TO GO TO COMMISSION FOR AUTHORIZATION
AND EVERYTHING ELSE FROM THE EXECUTIVE DIRECTOR DOWNWARDS CAPTURED IN POLICY EX TWO WHICH WE DID TEST IN THE COURSE OF THIS AUDIT
NEXT SLIDE, PLEASE
THIS WAS UNIQUE IN NATURE BECAUSE THERE WERE A LOT OF PROCESSES MOVING AND REVIEWS GOING ON WHEN WE INITIATED THIS PROJECT
ALSO, BECAUSE WE WORK WITH A PROCUREMENT DEPARTMENT EXTENSIVELY ON THE ED AUDIT AND WHEN WE WERE DONE, WE MOVE ON, WE STEP OUT
THEY ASKED IF STRATEGIC INITIATIVES COULD BE INVOLVED AND COULD PARTNER WITH US, SIT IN ON SOME OF THE MEETINGS SO IF THERE WERE RECOMMENDATIONS THEY COULD TAKE THEM FORWARD AND HELP THEM IMPLEMENT THE RECOMMENDATIONS
SO WE HAD A UNIQUE TEAM WITH THAT
WE HAD THE AUDIT TEAM
PRETTY COMPREHENSIVE AUDIT TEAM
WE HAD A REPRESENTATIVE OF STRATEGIC INITIATIVES
AND THEN WE ALSO HAVE MR OKAMOTO WHO'S ON THE EXPERT REVIEW PANEL WHO COULD TAKE ANY RECOMMENDATIONS AND ALSO HELP STRATEGIC INITIATIVES DRIVE THOSE FORWARD AND TAKE THOSE FORWARD
SO WITH THIS, WE HAD EXTENSIVE WEEKLY MEETINGS WHERE WE TALKED ABOUT THE WORK THAT WE WERE DOING AND WHAT WE WERE FINDING, WHAT WE'VE SEEN
I WANT TO HIGHLIGHT THAT THROUGH OUR TESTING NO INTERNAL CONTROL DEFICIENCIES WERE NOTED
SO IT WAS A CLEAN AUDIT
NEXT SLIDE, PLEASE
WE DID HOWEVER, NOTE AN OPPORTUNITY FOR IMPROVEMENT AND WE THOUGHT THIS WOULD BE A GOOD FOR HIM TO BRING IT OUT AND PLEASE PRESENT TO THE COMMISSION OUR THOUGHTS AND WHAT WE SAW
THE DELEGATION LIMIT IS 300,000 DOLLARS
AND WHAT WE SAW IS THAT ITEMS THAT WERE BELOW 300,000 DOLLARS WERE HIGH VISIBILITY SO MOST LIKELY SHOULD HAVE GONE TO COMMISSION OR COMMISSION SHOULD BE AWARE OF
AND THEN THERE'S SOME ITEMS THAT ARE, YOU KNOW, HIGHER THAN 300,000 DOLLARS THAT MAYBE THE EXECUTIVE DIRECTOR SHOULD HAVE THE ABILITY FOR STANDARD ITEMS TO PERHAPS FOR THE SAKE OF EFFICIENCY APPROVE OF
SO WE DIDN'T REALLY CONCLUDE ON ANYTHING SPECIFICALLY, BUT WE SAID THAT THIS SHOULD BE REVISITED
AND AND THE NEXT FEW SLIDES WILL SHOW YOU SOME DATA THAT WE GATHER THROUGH THE COURSE OF THIS
NEXT SLIDE, PLEASE
WE LOOKED AT THE CONTRACTS OVER THE 19 MONTH PERIOD AND WE FOUND THAT, YOU KNOW, 98% OF THEM ESPECIALLY IN THE MAJOR CONSTRUCTION SERVICE AGREEMENTS WILL GO INTO THE COMMISSION
SO PRETTY MUCH THE BULK OF THE DOLLAR SPEND AS FAR AS SPENDING GOES THROUGH THE COMMISSION
THERE ARE SOME THAT ARE SMALL THAT ARE UNDER 300,000 DOLLARS, BUT THEY'RE VERY SMALL PERCENTAGE
ALSO, WHAT WE DID WAS WE REBALANCED THAT
SAID WHAT IF YOU KNOW THINGS WERE CHANGED AND ANYTHING A MILLION DOLLARS OR ABOVE WENT TO THE COMMISSION
WE FOUND THAT STILL QUITE A SIGNIFICANT AMOUNT WOULD STILL BE GOING TO COMMISSION
ABOUT 480,000,000 AFTER 608
YEAH, THERE ARE SOME BALANCING OPPORTUNITIES THERE
NEXT SLIDE, PLEASE
WE LOOKED AT WE ALSO BENCHMARKED ACROSS DIFFERENT ORGANIZATIONS
WE WENT TO KING COUNTY, SOUND TRANSIT, THE CITY OF SEATTLE, AND WE LOOKED AT WHAT THEY WERE DOING YOU KNOW, JUST FOR MANAGEMENT BENEFIT
WE SAID OKAY IN KING COUNTY AND CITY OF SEATTLE THE COMMISSION OR THEIR COUNCIL APPROVES THE CIP OF CAPITAL IMPROVEMENT PLAN AND THEREAFTER AFTER THAT PLAN'S APPROVED, THE EXECUTIVE OR THE MAYOR THEN APPROVE ANYTHING THEREAFTER
SO CAPITAL PROJECTS DON'T HAVE TO GO UP
IT'S A DIFFERENT APPROACH
SO TRANSIT, WHICH IS PROBABLY A LITTLE BIT MORE SIMILAR TO US REVISITED THEIRS IN 2018 AND RAISE THEIR LIMIT TO 5,000,000 FOR CAPITAL PROJECTS AS A MARKED ON THEIR NEW CAPITAL GROWTH AND ANYTHING THAT'S NON CAPITAL I THINK THEY SAID IT ABOUT 2,000,000
SO THEY MADE SOME CHANGES
BUT IF IT'S NOT CAPITAL, IT'S 2,000,000; CAPITAL 5,000,000 THAT THE CHIEF EXECUTIVE APPROVES
AND THEN THE NORTHWEST SEAPORT ALLINCE, PORT OF TACOMA
VERY MUCH LIKE US
WE ALSO LOOKED AT CALIFORNIA AND SOME OTHER JURISDICTIONS BASED ON DATA THAT JOHN OKAMOTO PROVIDED US AND WE THOUGHT THERE MIGHT BE AN OPPORTUNITY FOR STEVE AND HIS TEAM TO LOOK AND BENCHMARK AND GO BACK TO THE COMMISSION AND AND PERHAPS WORK WITH THEM ON SOMETHING THAT MIGHT HELP SPEED UP WITH THE CAPITAL PLAN
OUR BIG GOAL HERE WAS TO SAY WE WANT TO BE ABLE TO HELP STEVEN'S TEAM ACCELERATE THEIR CAPITAL PLAN
WE'VE GOT 3.7 BILLION DOLLARS THAT WE NEED TO SPEND
AND WE WANT TO SPEND IT EFFICIENTLY IN THE RIGHT WAY BUT WE CAN LEVERAGE OFF A VARIETY OF THINGS
NEXT SLIDE, PLEASE
SO RECOMMENDATIONS WHICH ARE ON THIS SLIDE TALK ABOUT THAT
STEVE SHOULD WORK WITH THE COMMISSION TO ASSESS IF ANYTHING CAN BE CHANGED AND TO INCREASE TRANSPARENCY WHERE NEEDED
ONE OF THE THING SOUND TRANSIT DID IS THEY IMPROVED THEIR TRANSPARENCY AND THEIR REPORTING AND WE MIGHT HAVE AN OPTION TO DO THAT
AND JUST TO MAKE SURE THAT THE COMMISSION IS AWARE OF EVERYTHING THAT'S HAPPENING, NOT JUST AT THE 300,000 DOLLARS LIMIT
NOW, ONE OF THE THINGS SOUND TRANSIT WAS LEVERAGE THE STANDING COMMITTEES WHERE POSSIBLE
AND I THINK WE MIGHT HAVE AN OPTION TO DO THAT BECAUSE WE HAVE A LOT OF COMMITTEES
WE ALSO HAVE THIS THE AUDIT COMMITTEE WHICH HAS THE ABILITY TO LOOK AT A LOT OF THINGS THAT ESPECIALLY IN THE CAPITAL FRONT THAT MIGHT BE CONCERN TO THE COMMISSION AND REPORT BACK THERE
ALWAYS A RISK BASED APPROACH AND THERE ARE MANY RISK FACTORS AND THE COMMISSION SHOULD IF THEY DECIDE TO GO THAT ROUTE IS LOOK AT THE NON FINANCIAL FACTORS AS WELL SUCH AS ENVIRONMENTAL, IS IF THERE'S A LEGAL ISSUE, OBVIOUSLY IF THERE'S ENVIRONMENTAL ISSUES OR SOCIAL ISSUES
EVEN IF UNDER 300,000 DOLLARS, THOUGH, SHOULD PROBABLY BE REPORTED TO THE COMMISSION
SO WITH THAT I'LL GO TO THE NEXT SLIDE, WHICH IS DAVE SWANKY AND JOHN OKAMOTO'S RESPONSE AND I'LL ASK DAVE AND JOHN OKAMOTO TO UNMUTE AND USE THE NEXT 10 MINUTES TO PRESENT THIS TO THE COMMITTEE
I THANK YOU VERY MUCH AUDIT DIRECTOR FERNANDEZ, COMMITTEE MEMBERS, COMMISSIONERS
MY NAME IS JOHN OKAMOTO FOR THE RECORD
I WAS BROUGHT IN AS A MANAGEMENT CONSULTANT AND I REALLY TOOK A VIEW OF THIS EFFORT AS AN INDEPENDENT PERSON FROM MULTIPLE LENSES AS A FORMER ELECTED OFFICIAL
SO FOR A SHORT TIME AS A SENIOR EXECUTIVE RESPONSIBLE FOR THE DELIVERY OF MEGA PROJECTS WITH THE WASHINGTON STATE DEPARTMENT OF TRANSPORTATION AND MORE RECENTLY WORKING WITH THE PORT THROUGH THE ERP LOOKING AT THE INTERNATIONAL ARRIVALS FACILITY AS WELL AS ASSISTING THE EXECUTIVE DIRECTOR TO LOOK AT THE CAPITAL PROGRAM CAPACITY AND OTHER ISSUES
I THINK THE BIG NEWS THAT I WOULD HIGHLIGHT OUT OF THIS AUDIT THAT IT IS A CLEAN AUDIT AND THAT THE PORT WITH THE COMMISSIONS LEADERSHIP HAS CREATED REALLY A CULTURE OF COMPLIANCE SINCE 2007
BUT THE SECOND I THINK IMPORTANT MESSAGE OUT OF THIS IS THAT COMPLIANCE AND POLICIES AND PROCEDURES, ESPECIALLY THE LIMITATION OF THE 300,000 DOLLARS DELEGATION OF AUTHORITY HAS COME WITH SIGNIFICANT ADMINISTRATIVE INEFFICIENCIES AND I WOULD ALSO ADD AN OPPORTUNITY COST BORN BY THE COMMISSION BY FOCUSING IN AT A LEVEL THAT PROBABLY NEEDS TO BE REEXAMINED AND TO SEE IF THAT COULD BE LIFTED AND THE COMMISSION COULD FOCUS ON OTHER BIG ISSUES FACING THE PORT
THE AUDIT DOES HIGHLIGHT AS AUDIT DIRECTOR FERNANDEZ INDICATED THERE ARE EFFICIENCIES THAT COULD BE GAINED WHEN YOU COMPARE THE PORT TO OTHER PUBLIC AGENCIES
THAT IS A FINDING THAT'S CONSISTENT WITH THE AIRPORT PEER REVIEW WHEN THEY BROUGHT IN SEVERAL AIRPORTS AROUND THE COUNTRY AND IT'S ALSO CONSISTENT WITH A PERSPECTIVE OF THE ERP
WHEN THE EXECUTIVE DIRECTOR ASSETS TO EXAMINE ALL SYSTEMS AND PROCEDURES AND STRUCTURES TO ALLOW FOR THE PORT TO TAKE ON A MORE COMPLEX BIGGER CAPITAL PROGRAM
IN ANY CHANGE IN DELEGATION OF AUTHORITY I THINK IT COULD IMPOSE GREATER RISKS AND TRANSPARENCY ISSUES
BUT IT'S MY BELIEF THAT THOSE RISKS CAN BE MANAGED BY AFFIRMING EXISTING POLICY CONTROLS ADOPTED BY THE COMMISSION
AND LET ME JUST TAKE A LITTLE DETOUR TO EXPLAIN WHAT THAT REALLY MEANS
THE COMMISSION IN ITS NORMAL BUSINESS ACTIONS SETS SEVERAL BIG POLICY WHAT I CALL POLICY CONTROLS OR ENVELOPES THAT CREATES SIDE BOARDS FOR THE ORGANIZATION LIKE THE ADOPTION OF LONG RANGE PLANS, ADOPTION OF MASTER PLANS, STRATEGIC PLAN ADOPTIONS
YOU GO FURTHER THAN THAT
YOU ADOPT SEVERAL DIFFERENT FINANCIAL CONTROLS AND THINGS LIKE THE LEVY AMOUNTS, RATES AND FEES, YOU GO FURTHER THAN THAT YOU ADOPT MULTI YEAR CAPITAL PROGRAMS YOU ADOPT ANNUAL BUDGETS ANNUALLY
YOU ADOPT CAPITAL PROGRAMS ALL OF THE WHAT I CALL POLICY ENVELOPES OR UMBRELLAS OVER ACTUAL ADOPTION OF ANY KIND OF PROJECT ACTIONS WHETHER IT BE EXPENDITURE CONTROLS OR PROCUREMENT CONTROLS
SO I THINK IT'S IMPORTANT FOR THE PUBLIC AND THE COMMISSION TO UNDERSTAND THAT ONE DOES NOT CONTROL PROJECT EXPENDITURES MERELY BY THE DELEGATION AUTHORITY AMOUNTS
I ALSO THINK THAT RISK CAN BE MITIGATED BY ENHANCING YOUR PROJECT REPORTING AND THE COMMISSION'S OWN ACTIONS IN TERMS OF HOW THIS CAPITAL PROGRAM MONITORING IS ASSIGNED TO SUBCOMMITTEES AND EVEN GOING FURTHER AS IN THE CITY OF SEATTLE, THEY IDENTIFY WHICH ARE HIGH PRIORITY PROJECTS THAT THEY WOULD LIKE TO SEE ENHANCED PUBLIC REPORTING ON
SO THAT CONCLUDES MY OBSERVATIONS AND I'LL TURN IT OVER TO OTHERS FOR THE REST OF THE PRESENTATION
GOOD AFTERNOON COMMISSIONERS AND MEMBER GERKE
NEXT SLIDE IF WE COULD
THANK YOU COMMISSIONERS
THE AUDIT TEAM LOOKED AT DATA OVER A YEAR AND A HALF, WHICH IS A GOOD LONG TIME BECAUSE THERE HAVE BEEN MANY DELEGATED ITEMS MOVING THROUGH THE WHOLE PORT SYSTEM DURING THAT TIME AND DELEGATIONS CAN BE COMPLEX IT'S NOT JUST A SINGLE DOLLAR LEVEL PER PERSON BUT THE DELEGATIONS ARE MULTIFACETED FROM REAL ESTATE THROUGH SEVERAL TYPES OF CAPITAL PROJECTS
AND ACTUALLY I WANT TO THANK THE AUDIT TEAM
THEY WERE RECEPTIVE TO TRYING TO DO THIS NOT JUST AS THEIR OWN LOOK BUT AS A TEAM
THEY INVITED IN PROCUREMENT WHO MANAGES THE DELEGATIONS AND HAS SET THEM IN PAST YEARS
THEY INVITED IN MYSELF WHICH I VERY MUCH APPRECIATE
THEY INVITED IN STRATEGIC INITIATIVES, THE LEAN TEAM
IN OTHER WORDS WHEN WE HAVE AN OPPORTUNITY FOR A CHANGE IF NECESSARY AS A RESULT AT THE END OF THE AUDIT, THAT LEAN TEAM MEMBER'S ALREADY GOT HIS OR HER HANDS AND MIND ON THE SITUATION AND WE CAN GET STARTED RATHER QUICKLY
AND IT WAS ALSO GOOD FOR WE MULTIPLE DEPARTMENT MEMBERS TO SEE HOW THE AUDIT TEAM GOES ABOUT ITS WORK
IT TAKES AWAY SOME OF THE MYSTERY
YOU COULD SEE THE LOGIC TO WHAT THEY'RE THINKING AND IT GAVE A BUNCH OF DIALOGUE AND QUESTIONS WHERE WE WOULD PROVIDE INFORMATION
AND THEN WE'D BE ABLE TO COMMENT ON IT AND ANSWER QUESTIONS BACK AND FORTH
IT REALLY DEMYSTIFIED AND MADE THE VALUABLE FUNCTION OF AN INTERNAL AUDIT REALLY CLEAR TO US
IT WAS VERY POSITIVE
THANK YOU, GLENN AND TEAM
YES, AN EFFICIENCY WAS IDENTIFIED EVEN THOUGH THERE WERE NO, IT WAS A POSITIVE AUDIT
SO WE STARTED THINKING ABOUT HOW COULD WE ANALYZE HOW TO FIND THE BEST EFFICIENCY
NEXT SLIDE
THESE NEXT TWO SLIDES ARE JUST EXAMPLE OR ILLUSTRATIVE
WE TOOK SOME OF GLENN'S DATA A 300,000 DOLLAR LEVEL HE IDENTIFIED EARLIER AND THEN THE MILLION DOLLAR LEVEL
AND THEN WE JUST TOOK A SKY HIGH MAGNITUDE NUMBER DIFFERENCE ALL THE WAY TO 10,000,000 AND WE TOOK A LOOK AT FROM THE COMMISSION SEEING ALL THE ACTIONS WITH 300,000 THEY SEE 98%, A MILLION, THEY SEE 95% AND IF IT WAS AS HIGH AS 10,000,000 THEY WOULD SEE 69% ALMOST 70% BUT WE WONDERED ABOUT WHAT THE EFFICIENCY MIGHT BE FOR THE COMMISSION STANDPOINT, CERTAINLY THERE WOULD BE EFFICIENCIES FOR STAFF, ET CETERA, BUT WE'RE WONDERING MORE ABOUT THE ULTIMATE CUSTOMER WHICH IS YOU, AS REPRESENTATIVES THAT LEAD OUR AGENCY REPRESENTATIVES OF THE PUBLIC
AND IF YOU LOOK ALL THE WAY DOWN AT 10,000,000 IT MIGHT SAVE 68 ACTIONS A YEAR
AND IF AN ACTION TYPICALLY TAKES 20 MINUTES FOR PRESENTATION, Q&A ETC
AT A COMMISSION MEETING YOU MIGHT SAVE AN HOUR OUT OF EVERY COMMISSION MEETING THROUGH THE YEAR
COULD THAT HOUR BE BETTER POSITIVELY UTILIZED BY THE COMMISSION FOR A HIGHER LEVEL POLICY ITEMS MANY OF WHICH JOHN MENTIONED JUST NOW? POSSIBLY, BUT THAT'S NOT THE SINGLE ANSWER
NEXT SLIDE
GLENN ALSO IDENTIFIED SOME AGENCIES THAT HE LOOKED AT AND WE HAVE A SMALL TEAM SO FAR THAT WILL GROW
I'LL EXPLAIN THAT IN A MINUTE
BUT WE HAVE ALSO STARTED LOOKING A LITTLE FARTHER AND ADDED A COUPLE MORE
THE UNIVERSITY OF WASHINGTON
YOU CAN SEE THEIR DELEGATION LIMIT IS SURPRISINGLY HIGH IT'S EVEN OVER THE 10,000,000 THAT WE JUST MAGNITUDE GUESSED EARLIER
ALSO WE TALKED TO SAN FRANCISCO AND THEY DO MANY PROGRESSIVE DESIGN PROJECTS AND THEY HAVE BEEN TRAINING ON IT AND BIGGER AND BIGGER PROJECTS OVER TIME AND YOU CAN SEE THAT THEIR DELEGATION IS QUITE HIGH WHAT'S INTERESTING HERE AS I LOOK AT THE WHOLE PICTURE, YOU'LL SEE THE DELEGATION LEVELS FOR NWSA THAT IS OUR PARTNER AND THE PORT IS RELATIVELY LOW COMPARED TO THE CAPITAL BUDGETS THAT WE SEE ACROSS THE BOARD THESE ORGANIZATIONS
AND WHAT WE WILL BE DOING IS REACHING WITH AVIATION TO THE REST OF AVIATION'S PEER REVIEW, THAT WAS ACCOMPLISHED A LITTLE OVER A YEAR AGO OF ABOUT 10 AIRPORTS THEY INVITED INTO SEATTLE FOR A THREE DAY EFFORT TO TALK ABOUT CAPITAL AND HOW IT COULD BE RUN TO THE BEST POSSIBLE WAY
SO WE'LL BE REACHING TO SOME OF THOSE PEER AIRPORTS IN THE US AND ASKING ABOUT THEIR DELEGATIONS BUT WHAT'S DIFFERENT AND WHAT I FOUND IN SPEAKING TO SAN FRANCISCO IS THEIR DELEGATION MAY BE A DIFFERENT BUT THEIR REPORTING SYSTEM IS A DIFFERENT LEVEL
AND WHAT THEY'VE DONE WITH THEIR REPORTING SYSTEM IS HAVE AUTOMATED IT TO A CERTAIN SOFTWARE AND THEY HAVE TRAINED THEIR COMMISSIONER BOARD MEMBERS HOW TO READ THAT
BUT THE REAL QUESTION ISN'T WHAT'S THE DELEGATION LEVEL, WHAT'S THE TOTAL CAPITAL BUDGET
I THINK WE NEED TO TAKE A CLEAN SHEET OF PAPER TO THIS
NEXT SLIDE
FIRST, WE WANTED TO BE CLEAR WITH YOU AND WE WANTED TO ENGENDER SOME DISCUSSION ON THESE NEXT TWO SLIDES
FIRST WE WANTED TO CLARIFY OUR OBJECTIVE AND OUR VALUES
COMMISSIONER BOWMAN I'D BE HAPPY TO TAKE YOUR QUESTION NOW
NO, DAVE, I REALLY APOLOGIZE
BUT THE MEETING WAS SUPPOSED TO END AT 3:30 AND WE'RE GONNA HAVE TO
I'M GONNA HAVE TO LEAVE FOR A FEW MINUTES UNTIL WE GO INTO THE NON PUBLIC SESSION AT 3:45 SO I APOLOGIZE
I'M GOING TO HAVE TO JUMP OFF
SO I'M HOPING THAT I CAN MAYBE FIND ANOTHER OPPORTUNITY TO HEAR THE REST OF THE PRESENTATION
YOU BET AND I'LL SPEED UP WHAT I'M DOING NOW, THANK YOU
THANK YOU, COMMISSIONER CALKINS
I HATE TO JUMP IN
BEFORE COMMISSIONER BOWMAN LEAVES I'VE JUST PULLED UP IN THE CHARTER, THE QUORUM FOR THIS COMMITTEE IS THE VOTING MEMBERS
AND GLENN AND I DISCUSSED THIS BEFORE AND TOO
THIS IS AN EXTRAORDINARILY IMPORTANT TOPIC FOR US AND SO I WOULD BE HAPPY TO CONVENE A SPECIAL MEETING OF THE AUDIT COMMITTEE FOR THIS TOPIC IN PARTICULAR AS I THINK IT'S KICKING OFF A CONVERSATION
THAT IS GOING TO RUN OVER THE NEXT YEAR OR SO AND THAT IT IS VERY IMPORTANT FOR THE EFFICIENCY OF OUR ORGANIZATION
SO I WOULD PROPOSE THAT WE I GUESS THE TERM IS TABLE IT FOR AND TAKE THIS MATTER UP AGAIN IN A MEETING AS SOON AS POSSIBLE, RECOGNIZING WE'RE COMING UP ON THE END OF THE YEAR THAT MAY BE IN JANUARY, BUT ONE IN WHICH WE COULD FOCUS SPECIFICALLY ON THIS ISSUE AND DEVOTE SOME TIME TO IT
GLENN, WHAT ARE YOUR THOUGHTS ON THAT? I THINK THAT THAT WOULD BE FINE
YOU KNOW, I THINK WE CAN CONVENE JUST LIKE WE DID LAST YEAR WITH THE AD MEETING, AN AUDIT COMMITTEE MEETING THEN
WE WILL ALSO HAVE THE STATE AUDITORS WITH THEIR READOUT IN EARLY JANUARY SO WE CAN LEVERAGE OFF THAT AND PERHAPS LUMP THOSE TOGETHER
I THINK THAT'S A GREAT IDEA
COMMISSIONER CALKINS, WOULD YOU LIKE TO SET THIS FOR A TIME CERTAIN TO BRING IT BACK OR DO YOU JUST WANT TO TABLE IT FOR A FUTURE MEETING? LET'S AGREE ON THE JANUARY MEETING IN WHICH WILL GET THE REPORT BACK FROM THE STATE AUDIT AND ON THIS ONE
AND SO THAT WE HAVE IT ON THE AGENDA? OKAY, YOU WANT TO MAKE THAT A FORMAL MOTION? DO WE STILL HAVE COMMISSIONER BOWMAN? I STILL SEE HER IN THE MEETING
I'M NOT SURE
I THINK WE LOST HER
OKAY, ALRIGHT WE'LL JUST PLAN TO COORDINATE WITH STAFF FOR SCHEDULING OF A JANUARY MEETING, OKAY? AND WE WILL
THAT'S UNFORTUNATELY GOING TO CONCLUDE TODAY'S PUBLIC AGENDA
WE WILL RECESS INTO THE NON PUBLIC PORTION OF THE MEETING TO ADDRESS ITEM NUMBER 12 WHICH IS AN INFORMATION TECHNOLOGY
AN ITEM FOR INVENTORY AND CONTROL OF SOFTWARE ASSETS
ARE THERE ANY CLOSING COMMENTS FROM CHRISTINA GERKE? I WAS JUST GOING TO SAY THAT I LOVE THIS WORK ON THE DELEGATION OF AUTHORITY AND MANAGEMENT REALLY PARTNERING WITH THE INTERNAL AUDIT GROUP LOOKING AT THIS
I THINK IT SHOWS THE VALUE OF WORKING TOGETHER TO COME UP WITH WHAT'S BEST FOR THE ORGANIZATION
GREAT
I COULDN'T AGREE MORE
THIS IS JUST THE KIND OF THING THAT I THINK IS APPROPRIATE FOR THE AUDIT COMMITTEE AND THE COMMISSION TO GENERALLY TO BE THINKING ABOUT LARGE QUESTIONS OF GOVERNANCE AND HOW WE MAKE OUR ORGANIZATION MORE EFFICIENT WITHOUT TOO MUCH RISK
AND IT'S VERY TIMELY AND I'VE LEARNED A TON ALREADY FROM THE BRIEFINGS AND REPORTS LEADING UP TO THIS MEETING
OKAY, WE WILL ADJOURN AND THEN RECONVENE
SORRY, NOT ADJOURN, WE WILL GO INTO RECESS
SO HEARING NO FURTHER COMMENTS, WE WILL TAKE A BREAK AND RECESS INTO THE NON PUBLIC PORTION OF OUR MEETING AT 3:45 P M TO DISCUSS ONE MATTER RELATED TO SECURITY SENSITIVE INFORMATION
THE NON PUBLIC PORTION OF THE MEETING WILL LAST APPROXIMATELY 25 MINUTES AND WE'LL ADJOURN WITH NO FURTHER BUSINESS AFTER THAT TIME
PARTICIPANTS JOINING THE NON PUBLIC PORTION OF THE MEETING
PLEASE CLOSE OUT OF THIS MEETING LINK AND JOIN 3:45 TEAMS MEETING INVITATION, THE CURRENT TIME IS 3:37 P M
THANK YOU, THANKS, THANKS.

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