11. Report

Federal Grant Administration Audit

INTERNAL AUDIT REPORT 
Operational Audit 
Federal Grant Administration – Aviation Division 







January 2020 – September 2022 
Issue Date: November 16, 2022 
Report No. 2022 -14

           Federal Grant Administration – Aviation Division 


TABLE OF CONTENTS 

Executive Summary ................................................................................................................................................ 3 
Background............................................................................................................................................................. 4 
Audit Scope and Methodology ............................................................................................................................ 6 
Appendix A: Port of Seattle - Schedule of Expenditures of Federal Awards (SEFA) .................................... 7 
Appendix B: Risk Ratings ...................................................................................................................................... 8 













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           Federal Grant Administration – Aviation Division 
Executive Summary 
Internal Audit completed an audit of Federal Grant Administration within the Aviation (AV) Division for the
period January 2020 through September 2022. The audit was performed to evaluate if controls, to assure
compliance with grant requirements, were designed effectively and operating as intended. Additionally, we
assessed the awareness of grant requirements throughout the life of the grant, and in critical areas of the
grant administration. 
We also reviewed and leveraged the overall risk and control assessments, and audit work and related testing 
for certain areas (e.g., COVID-19 Relief grants) of the AIP grants, performed by Moss Adams, the Port of
Seattle’s (Port’s) Independent Auditor. This is required as part of the 2021 Annual Single Audit, and is 
submitted to the Federal Aviation Administration (FAA). 
Additionally, we performed a follow-up on our 2019 audit of the Noise Insulation Program; more specifically
on one issue related to inconsistent compliance with “Disadvantaged Business Enterprise” (DBE) and “Buy
American” requirements, by the Highline School District (HSD),a sub-recipient of AIP grants through the
Port. The Port has since strengthened monitoring controls and has provided reasonable assurance for
compliance by creating a pass-through agreement and a self-certification process with HSD, and taking some
other measures to address HSD’s accountability for those requirements. 
The Airport Improvement Program (AIP) is a major federal grant program, managed by the FAA, which
provides funds to public-use airports for planning and development. Improvement projects relate to runways,
taxiways, ramps, lighting, signage, weather stations, navigational aids, land acquisition, etc. Per the Port’s 
Schedule of Expenditures of Federal Awards (SEFA), as of December 31, 2021, FAA AIP funding was
$135,865,813, including COVID-19 Relief funding of $100,373,161. Such COVID-19 grants have been
administered and provided by the FAA to eligible airports, including Seattle-Tacoma International Airport,
through the existing AIP model, as a mechanism for expeditious fund distribution. 
Through relevant document review and inquiries with 16 business leaders and staff, we identified monitoring
controls that were important to the current processes. These controls included the FAA Airport District Office’s 
(ADO) involvement in all phases of grant administration, Port Commission’s review and approval of the
annual capital improvement plan, Port Legal’s agreement reviews, the Central Procurement Office’s (CPO) 
construction  contracting  and procurement processes and  protocols,  and business leaders’ ongoing
monitoring engagement and grant coordination meetings internally and with the FAA. Finally, quality review
and tracking of grants and claims, by AV Finance & Budget (F&B) and Accounting Financial Reporting (AFR),
further strengthened controls. 
Based on the work we performed, we concluded that controls were designed effectively and operating
as intended. We also concluded that key stakeholders were aware of federal grant requirements 
throughout the life cycle of the AIP grants, and in the critical areas of grant administration. 
We would like to thank AV F&B, AFR, CPO, AV Departments and other Departments that participated in
information gathering, for their cooperation and partnership during this audit. 


Glenn Fernandes, CPA 
Director, Internal Audit 

Responsible Management Team 
Borgan Anderson, Director, Aviation Finance & Budget             Rudy Caluza, Director, Accounting and Financial Reporting 
Eileen Francisco, Director, Aviation Project Management Group    Nora Huey, Director, Central Procurement Office 
Dawn Hunter, Director, Aviation Commercial Management 

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           Federal Grant Administration – Aviation Division 
Background 
The Airport Improvement Program (AIP) is a major federal grant program, managed by the FAA, which 
provides funds to public-use airports for planning and development. Improvement projects relate to
runways, taxiways, ramps, lighting, signage, weather stations, navigational aids, land acquisition, and
some areas of planning. Funding for the program is provided from the Airport and Airway Trust Fund,
which receives revenue from taxes on airplane tickets sold to the public and a tax on aviation fuel. The
federal grant may cover between 75 and 95 percent of the eligible costs, depending on the type of
improvement and the size of the airport. Both commercial and general aviation airports are eligible for
AIP grants. The FAA issues guidance on grant requirements and changes via various resources,
including the AIP Handbook, Advisory Circulars, grant FAQs on their website, and grant agreement
provisions. 
The Port of Seattle (Port) has typically used federal grants to fund construction projects. The AIP 
supports the following “Port Century Agenda” Strategic Goals: 
• Position the Puget Sound region as a premier international logistics hub. 
•    Advance this region as a leading tourism destination and business gateway. 
Per the Port's Schedule of Expenditures of Federal Awards (SEFA), as of December 31, 2021, FAA AIP
funding was $135,865,813, including COVID-19 Relief funding of $100,373,161 (See Appendix A). New 
federal laws and regulations for COVID-19 Relief grants emerged during the pandemic and impacted 
the Seattle-Tacoma International Airport’s (SEA) operations and concessionaires. 
The following economic relief grants have been administered and provided by the FAA to eligible
airports,  including  SEA, through  the existing AIP  model, as  a  mechanism for  expeditious  fund
distribution: 
Coronavirus Aid, Relief, and Economic Security (CARES) Act 
On March 27, 2020, U.S. Congress passed the CARES Act, which included $10 billion of funding to
support U.S. airports that experienced severe economic disruption caused by the COVID-19 public
health emergency. The funds were distributed to eligible airports to prevent, prepare for, and respond
to the impacts of this emergency. SEA was awarded a $192,133,000 federal grant to help lessen the
significant economic stress affecting the airport. SEA received $44,985,000 and $147,148,000 in
2021 and 2020, respectively, in awarded federal grants. 
Coronavirus Response and Relief Supplemental Appropriation (CRRSA) Act 
On December 27, 2020, the CRRSA Act was signed into law. It included nearly $2 billion of economic
relief for eligible U.S. airports and airport concessions. SEA received a $37,365,000 grant to lessen
the economic stress affecting the airport. SEA also received $5,355,000 of concession relief with
which it provided tenant relief from rent and other minimum annual guarantee payments to on-airport
car rental, on airport parking, and in terminal airport concessions. 
American Rescue Plan (ARP) Act 
On March 11, 2021, the ARP Act was signed into law providing additional relief for the pandemic. The
ARP included $8 billion of funding for U.S. airports to cover costs of operations, personnel, cleaning,
and also included additional rent relief and mitigation for other costs incurred by airport
concessionaires. SEA was granted $154,374,000 of ARP funding to lessen the economic stress
affecting the airport. SEA was also granted $21,419,000 of concession relief, which provide tenant
relief from rent and minimum annual guarantee payments to in-terminal airport concessions. As of
December 31, 2021, SEA applied and received $12,714,000 of the awarded grants with the remaining
amount allocated to 2022 and 2023. 
The AV Finance & Budget (F&B) team, staffed by a full-time, dedicated Grants Program Manager plays 
an integral role in the federal grant administration for the AV Division. The Accounting Financial

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           Federal Grant Administration – Aviation Division 
Reporting (AFR) General Accounting team is responsible for the grant reimbursement claim process, 
maintains/tracks federal grants summary, and prepares the year-end SEFA. Other key stakeholders in
the federal grant administration processes for the AIP include: AV Departments - Project Management
Group, Construction Management, and Commercial Management; AFR Revenue Services; Legal; 
Central Procurement Office (CPO); and External Relations – Government Affairs. 
Through relevant document review and inquiries with 16 business leaders and staff, Internal Audit
identified monitoring controls that are important to the current processes, including the following: 
• FAA Airport District Office’s (ADO’s) involvement in all phases of grant administration (i.e., annual
planning, application approval, progress reporting, claims/reimbursements, and close-out). 
• Port Commission’s review and approval of the annual capital investment plan, budget, and status
briefings. 
• Legal department’s agreement reviews. 
• CPO’s construction contracting and procurement processes and protocols. 
• Business leaders’ ongoing monitoring engagement and grant coordination meetings internally and
with FAA. 
• Quality review and tracking of grants and claims by AV F&B, and AFR, which respectively possess
subject matter expert knowledge. 













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           Federal Grant Administration – Aviation Division 
Audit Scope and Methodology 
We conducted the engagement in accordance with Generally Accepted Government Auditing Standards 
and the International Standards for the Professional Practice of Internal Auditing. Those standards
require that we plan and conduct an engagement to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our engagement objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and conclusions based on our
engagement objectives. The audit scope was for the Port of Seattle’s (Port’s) Aviation (AV) Division’s
administration of the grants under one major federal program – the Airport Improvement Program (AIP),
which included COVID-19 Relief funding. The AIP is administered by the Federal Aviation Administration
(FAA). 
In some cases, we used a judgmental method to determine the samples selected for our audit test work.
In those cases, the result of the work is not representative of the population of a whole, as we did not
select a statistical based random sample. 
We reviewed and leveraged the overall risk and control assessments, and audit work and testing, for
certain areas (e.g., COVID-19 Relief grants) of the AIP grants, performed by Moss Adams, the Port’s
Independent Auditor, as part of the 2021 Annual Single Audit. 
We reviewed key requirements from the Office of Management and Budget (OMB) Compliance
Supplement for Single Audits, the Government Finance Officers Association’s grant administration best
practices publication, and the Washington State Auditor Office’s grant administration risk assessment
checklists. We identified, through our research, the following critical processes: 
• Grant Programs Administration and Operation 
• Financial Management of Grants 
• Systems and Methods to Support Grants 
• Risk Assessment and Internal Control System 
• Sub-recipient Monitoring 
• Continuous Communications and Information Flows 
• Documentation, Reporting, and Auditing 
The period audited was January 2020 through September 2022 and included the following
procedures: 
Interviews & Process Walkthroughs 
Interviewed 16 Port managers and staff to gain an understanding of current processes and controls,
and opportunities for improvement in the above-noted, key areas. 
Document Review 
Reviewed the following key documents associated with the federal grant administration: 
• FAA and Single Audit Standards, Guidance, and Reports 
• Port Grant Administration Process, Policies, Procedures, and Tools 
• Port Commission Records and Budget Documentation 
• Grant Specific Documents and Forms 
In addition, we performed a follow-up on our 2019 operational audit of the Noise Insulation Program 
(Report No. 2019-04);  more specifically, on one issue related to  inconsistent compliance with
“DisadvantageBusiness Enterprise” (DBE) requirements ( 49 U.S. Codified Federal Regulations Part
26) and the “Buy American” requirements (49 U.S. Code, §50101), by the Highline School District, a
sub-recipient of AIP grants through the Port. 


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           Federal Grant Administration – Aviation Division 
Appendix A: Port of Seattle - Schedule of Expenditures of Federal Awards
(SEFA), as of December 31, 2021 











[Source: Port of Seattle Single Audit Report for FY2021.] 






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           Federal Grant Administration – Aviation Division 
Appendix B: Risk Ratings 
Findings identified during the audit are assigned a risk rating, as outlined in the table below. Only one
of the criteria needs to be met for a finding to be rated High, Medium, or Low. Findings rated Low will be
evaluated and may or may not be reflected in the final report. 
Financial      Internal                                               Commission/
Rating                                   Compliance      Public 
Stewardship  Controls                                         Management 
High probability
Non-compliance
Missing or not                       for external audit   Requires
with Laws, Port
High       Significant     followed                          issues and / or     immediate
Policies, 
negative public     attention 
Contracts 
perception 
Moderate
Partial
Partial controls                        probability for
compliance with
external audit       Requires
Medium   Moderate                  Laws, Port
Not functioning                      issues and / or      attention 
Policies 
effectively                               negative public
Contracts 
perception 
Low probability
Functioning as   Mostly complies                       Does not
for external audit
intended but     with Laws, Port                        require
Low      Minimal                                   issues and/or
could be        Policies,                             immediate
negative public
enhanced       Contracts                          attention 
perception 











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