INTERNAL AUDIT REPORT
Limited Contract Compliance Audit
BF Foods, LLC
January 2023 - June 2023
Issue Date: March 3, 2025
Report No. 2025-04
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BF Foods, LLC
TABLE OF CONTENTS
Executive Summary .............................................................................................................................................. 3
Responsible Management Team ........................................................................................................................ 3
Background ............................................................................................................................................................ 4
Audit Scope and Methodology ............................................................................................................................ 5
Schedule of Observations and Recommendations .......................................................................................... 6
Appendix A: Risk Ratings..................................................................................................................................... 6
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BF Foods, LLC
Executive Summary
Internal Audit (IA) completed a limited scope audit of the Lease and Concession Agreement (Agreement)
between BF Foods, LLC, and the Port of Seattle (Port). The period audited was January 1, 2023, through
June 30, 2023.
The audit was performed to determine whether concession fees were complete, properly calculated,
and remitted timely to the Port.
We concluded that BF Foods, LLC under-reported revenue and owes additional monies to the Port. This
issue is described below with more detail on page six.
(Medium) Revenue categories titled "bag fees" and "retail" were not reported and captured as
revenue. For the six-month period beginning January through June 2023, $12,963 in revenue
was underreported and $1,555 in percentage fees were underpaid.
We have requested "bag fees" and "retail" revenues for 2022 through 2024 and will calculate the total
amount due to the Port for the years allowable per the contract.
We extend our appreciation to management and staff of Aviation Commercial Management and the
Accounting & Financial Reporting Departments for their assistance and cooperation during the audit.
Glenn Fernandes, CPA
Director, Internal Audit
Responsible Management Team
Lisa Lam, Director, Accounting and Financial Reporting
Khalia Moore, Assistant Director, Aviation Commercial Management
Jeff Wolf, Director, Aviation Commercial Management
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BF Foods, LLC
Background
On August 1, 2017, the Port entered into a lease agreement (AIR002232) with BF Foods, LLC. The
lease has an expiration date of October 31, 2028. BF Foods, LLC, operates Poke to the Max.
According to, ExplorerSEA.org:
"Award winning chef, author, and proclaimed, 'God Father of Poke' Chef Sam Choy offers a true taste
of Hawai'i! All the menu dishes represent the various fusions that makes Hawai'i's food so ONO! Don't
be fooled by the name, because they serve more than just fresh poke. Stop in for Spam Musubi, Loco
Moco, their famous Garlic Chicken, and much more. Escape with Poke to the Max and enjoy local style
plate lunch, with a little Aloha in every bite."
The Minimum Annual Guarantee (MAG) is 85% of the total paid by the concessionaire to the Port, for
the previous calendar year. The annual MAG for 2023 was $519,922.94. At the end of the lease year,
a reconcilation is performed comparing the Percentage Fees due to the Port, to the Agreement Year's
MAG. Any amount of the Percentage Fees that fall below the MAG is due to the Port.
Percentage Fees are 12% of annual gross sales.
The table below reflects 2023's Gross Sales and Percentage Fees:
Period
January - June 2023
July - December 2023
Gross Sales
$2,444,034
2,527,151
$4,971,185
4
Percentage Fee
$293,284
303,258
$596,542
BF Foods, LLC
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 period audited was January 2023, through June 2023 and included the following procedures:
•
Validated that the percentage fees were calculated correctly and in accordance with the lease
revenue thresholds.
•
Agreed Concessionaire's monthly general ledger sales data to what was provided to the
Accounting & Financial Reporting Department.
•
Agreed point of sale summary reports to the general ledger.
•
Obtained the Annual Gross Sales Report prepared by BF Foods, and compared the report to
year-end gross sales data reported to AFR.
•
Reviewed the Profit & Loss statements for variances.
•
Reviewed a random sample of invoices to determine if they were paid on-time and for the full
amount billed.
•
Validated that concessionaire was certified through the Office of Minority and Women's Business
Enterprises (OMWBE) and confirmed with management that they are reflected as such on the
Airport Concessions Disadvantaged Business Enterprise (ACDBE) participation report submitted
to the Federal Aviation Administration (FAA).
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BF Foods, LLC
Schedule of Observations and Recommendations
1) Rating: Medium
Revenue categories titled "bag fees" and "retail" were not reported and captured as revenue.
For the six-month period beginning January through June 2023, $12,963 in revenue was
underreported and $1,555 in percentage fees were underpaid.
Section 1.18 of the Agreement states, gross sales include sales "from the sale or delivery of any food,
beverages, or merchandise or the performance of any services..." Below is a breakdown by month of
the bag and retail fees not reported as revenue.
Month
January
February
March
April
May
June
Retail
$1,214
1,229
1,354
846
1,167
2,052
Bag Fee
$633
706
803
862
956
1,141
Total
Total
$1,847
1,935
2,157
1,708
2,123
3,193
$12,963
Recommendations:
We recommend collecting monies owed, once we determine the additional amounts in bag and retail
fees after we are provided with the documents from the broader scope.
Management Response:
We agree with the audit finding and will pursue billing and collection of the additional monies related to
the bag and retail fees, including those amounts which may be due under the broader scope, no later
than September 30, 2025.
DUE DATE: 9/30/2025
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BF Foods, LLC
Appendix A: 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.
Rating
High
Financial
Internal
Stewardship Controls
Significant
Missing or not
followed
Partial controls
Medium
Low
Moderate
Minimal
Not functioning
effectively
Functioning as
intended but
could be
enhanced
Compliance
Non-compliance
with Laws, Port
Policies,
Contracts
Partial
compliance with
Laws, Port
Policies
Contracts
Mostly complies
with Laws, Port
Policies,
Contracts
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Public
High probability
for external audit
issues and / or
negative public
perception
Moderate
probability for
external audit
issues and / or
negative public
perception
Low probability
for external audit
issues and/or
negative public
perception
Commission/
Management
Requires
immediate
attention
Requires
attention
Does not
require
immediate
attention