Commissioners                                               Tay Yoshitani 
Chief Executive Officer 
Bill Bryant 
Chair and President 
John Creighton                           P.O. Box 1209 
Patricia Davis                           Seattle, Washington 98111 
Lloyd Hara                             www. portseattle.org 
Gael Tarleton                              206.728.3000 

An audio of the meeting proceedings and meeting materials are available on the Port of
Seattle web site - 
http://www.portseattle.org/about/organization/commission/commission.shtml 
APPROVED MINUTES 
AUDIT COMMITTEE SECIAL MEETING SEPTEMBER 1, 2009 
The Port of Seattle Commission Audit Committee met in a special meeting at 9:00 a.m.,
Tuesday, September 1, 2009 in the Commission Chambers at Pier 69, 2711 Alaskan
Way, Seattle, WA. Committee members Creighton, Hara and Miller were present, as
well as Deputy CEO Linda Strout and Joyce Kirangi, Port Internal Audit Manager.
Commissioner Tarleton was also in attendance. 
CALL TO ORDER 
The committee special meeting was called to order at 9:00 a.m. by Commissioner Lloyd
Hara. 
Approval of Minutes 
Motion for approval of the Minutes of July 7, 2009 and August 4, 2009  Creighton 
Motion carried by the following vote: 
In Favor: Creighton, Hara (2) 
Mr. Miller participates as a non-voting member of the Committee. 
Internal Audit Report of Aviation Acquisitions and Relocation 
Presentation documents: Computer slide presentation from Jack Hutchinson, Manager,
Internal Audit Department and report titled, "Internal Audit Report  Acquisition and
Relocation Department Audit." 
Presenter: Mr. Hutchinson 

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TUESDAY, SEPTEMBER 1, 2009                        P. 2 
As background, Mr. Hutchinson stated that this department manages property acquisition
and subsequent relocations of tenants as part of the Airport"s noise remediation efforts.
The Port works with the tenants as a landlord. 
Mr. Hutchinson noted that the purpose of this audit was to identify and assess department
operations to determine whether management has established adequate controls,
specifically to 1) ensure that the Port"s assets are adequately safeguarded and are properly
accounted for at all times, and 2) promote and ensure compliance with Port policies in
disbursements and procurements. He clarified that the audit was not looked at from the
perspective of any Federal grants, as that is something covered by Moss Adams, and that
the internal auditor did not want to duplicate those efforts. 
Mr. Hutchinson stated that it was found that the department did not have adequate
controls in three specific areas: 
Incomplete accountability over rent collection 
Inadequate controls over cash collection 
Noncompliance with Port procurement and disbursement policies and procedures 
Regarding the rent collection, Mr. Hutchinson noted that although the department does
have a complete roster of tenants from whom they expect monthly rent payments, the
department does not actually bill those tenants and does not know what the total monthly
expected rent should be. Also noted was the fact that although the department did have
some level of controls, those controls were just not to the level that internal audit would
like to see. He also acknowledged that this is a difficult thing to do as tenants are
relocated on a continuous basis and the amounts change over time. 
Mr. Hutchinson stated that the department had been accounting for incoming payments
and processing those, but they were not certain of how much was supposed to be
collected. Responding to a question from Commissioner Hara, Mr. Hutchinson clarified
that the department had no real billing or accounts receivable system, however they did
have a structure for processing and depositing payments which included the use of an
armored car service. 
Deputy CEO Strout posed the question, and Mr. Hutchinson clarified that the information
discussed in the report were limited to the acquisition of the mobile home parks rather
than the commercial properties or the single family residences that have been a large part
of the acquisition program. 
Responding to a question from Committee member Miller as to whether or not there were
plans to acquire more mobile home parks, Mr. Hutchinson responded that he did not
believe so. 
Regarding inadequate controls over cash collection, Mr. Hutchinson clarified that the
definition of what was referred to as "cash" included personal checks, travelers checks,
and cashier"s checks, and stated that the department does not receive any "real cash." He

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TUESDAY, SEPTEMBER 1, 2009                        P. 3 
noted that the department did not really have good control surrounding cash payments,
partially due to the fact that payments were collected via a drop box, the slot of which
went into a department office which was accessible to all staff, allowing for a greater
possibility of errors. He stated that the audit found the department did not have a proper
segregation of duties and recommended strengthening this area. 
Regarding procurement and disbursement policies and procedures, Mr. Hutchinson
commented that no instances of misappropriation had been found during the period of
audit, but stated that a lot of this finding has to do with a lack of documentation retained
within the department. He reviewed recommendations made to the department as a result
of the audit findings, which included the need to ensure the entire department has the
necessary knowledge base necessary to comply with Port policies, procedures and
guidelines. 
The following staff members were then introduced to provide comments and answer any
questions that the Committee may have: Jim Schone, Director, Aviation Business
Development and Management; Allan Royal, Real Estate Development Manager; and
Jude Barrett, Manager, Aviation Property Acquisition. 
Mr. Schone expressed his appreciation for the work that the audit team had done in
reviewing the department, noting that it had been a collaborative process. He assured the
Committee that the department has begun implementing the recommendations made by
the audit team and also noted that the mobile home park acquisition program is one that is
now winding down. 
Responding to questions from Commissioner Hara about how many tenants are left to
relocate, staff noted that there are 30 remaining in the Town & Country Mobile Home
Park. Mr. Barrett also commented that there was one 16-unit building remaining for
acquisition. 
Mr. Royal assured the Committee that the accounting department had been highly
involved in the structuring of the rent collection process, and also spoke of the difficulties
in absorbing over 200 tenants that change monthly. 
Commissioner Hara stated that he would like the department to return to the Committee
in approximately 90 days to provide a follow-up on the implementation of audit
recommendations in order to bring closure to this area. 
Commissioner Tarleton asked that going forward, staff relationships with the property
managers be monitored more effectively, and stated that she would like to see monthly
invoice approvals of the property management fees, and she also reiterated the
importance of good documentation. 
Regarding the Port"s acquisition procedures, Commissioner Hara commented that they
should perhaps be examined in upcoming revisions to Port Resolution No. 3605. 

Sept 1 SCM Audit Min






PORT COMMISSION MINUTES OF THE AUDIT COMMITTEE MEETING 
TUESDAY, SEPTEMBER 1, 2009                        P. 4 
Internal Audit Report of Aviation Security Department 
Presentation documents: Computer slide presentation from Jack Hutchinson, Manager,
Internal Audit Department and report titled, "Internal Audit Report  Aviation Security
Department." 
Presenter: Mr. Hutchinson 
As introduction, Mr. Hutchinson stated that the Aviation Security Department, in addition
to the Port Police, is responsible for the security in general in the area surrounding the
Airport as well as within the perimeter of the Airport. 
Mr. Hutchinson stated that overall this was a clean audit and there were no findings that
resulted. He stated that the general areas of the audit covered procurement practices and
payroll activity. 
Commissioner Hara asked whether or not the audit team had looked at the function of the
Security Department as a part of the audit. Mr. Hutchinson responded that within this
audit, focus on risk management and performance were introduced, although that would
not be the primary focus. He stated that the audit team had not seen anything to suggest
that the operation of the department was not effective. 
Lease and Concession Audit: Fireworks Gallery 
Presentation documents: Computer slide presentation from Jack Hutchinson, Manager,
Internal Audit Department and report titled, "Internal Audit Report  Fireworks Lease
and Concession Compliance Audit." 
Presenter: Mr. Hutchinson 
Mr. Hutchinson stated that the primary focus of this audit was to determine compliance
with the provisions of the Lease and Concession Agreement for Fireworks. He noted that
the lessee materially complied with the terms and conditions of the agreement; however,
there were two instances of late payments that resulted in late charges and interest due to
the Port. The suggested financial recovery was $1,366.14. He commented that the audit
team recommendation was for Aviation Business Development to bill and collect the
suggested recovery amount, and he also noted that over the two year period which was
audited, this amount was not significant. 
Proposal for Moss Adams 2009 Audit Engagement Services 
Presentation document: Memorandum to Audit Committee dated August 27, 2009 from
Dan Thomas, Chief Financial Officer and Rudy Caluza, Director, Accounting and
Financial Reporting. 
Presenter: Mr. Caluza 

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PORT COMMISSION MINUTES OF THE AUDIT COMMITTEE MEETING 
TUESDAY, SEPTEMBER 1, 2009                        P. 5 

As introduction to Mr. Caluza"s briefing, he noted that annual independent audits are
required for the financial statements of the Port, federal regulatory grant compliance, as
well as the Passenger Facility Charge (PFC) at Sea-Tac Airport. He stated that the State
Auditor"s Office (SAO) conducts the Public Accountability/Legal Compliance and
Performance Audits, and a national/regional independent CPA firm conducts the three
audits previously mentioned. The CPA firm of Moss Adams was selected and awarded
the contract in 2006 to conduct the audit services for those three audits. He noted that the
briefing today was to provide information on the request to exercise the first of the twoyear
options to cover the 2009 audit period. 
Mr. Caluza stated that the Port has established a priority to have a contract cost reduction
initiative, which requires departments at the Port to negotiate with its contractors and
consultants to reduce the costs of contracts, and therefore the costs to the Port of Seattle
with regard to pursuing services. He noted that Moss Adams has agreed to meet the full
5% in contract cost reduction for the renewal, for a cost of $578,000 compared to the
2008 amount of $608,000. 
Commissioner Hara mentioned the fact that the Port has worked with Moss Adams for
the past three years, stating that it was up to the Port to decide whether or not to change
auditors at this point. Mr. Caluza affirmed that staff recommendation was to move
forward with a renewal of the contract with Moss Adams, and noted that Moss Adams is
a nationally recognized firm. 
Responding to questions from Commissioner Hara as to which other Seaports are
required to use nationally recognized CPA firms because they do not have a State
Auditor"s Office that would be able to do the same work, Mr. Caluza stated that he could
do some research and provide that information. 
Commissioner Creighton clarified that approval of a contract for the auditing services
would go before the full Commission approval. 
Commissioner Hara asked what the timing is in terms of the next audit. Mr. Caluza
stated that the field work, risk assessment, and audit scoping needs to begin next month
(October). 
Commissioner Creighton commented on the importance of rotation of auditors to
maintain independence, while on the other hand recognizing the value of having an
auditor that has developed expertise in an organization to continue on. He stated that he
was not prepared to make a recommendation at this time. 
Mr. Caluza clarified that there is nothing that requires audit firm rotation, but noted that
the Sarbanes-Oxley Act does speak to the rotation of audit partners. 


Sept 1 SCM Audit Min


PORT COMMISSION MINUTES OF THE AUDIT COMMITTEE MEETING 
TUESDAY, SEPTEMBER 1, 2009                        P. 6 
Committee member Miller commented on several issues, including that of the rotation of
audit firms vs. audit partners and stated his belief that it is good to have a rotation of the
audit partner in charge from time to time. 
Mr. Miller voiced a concern that during his time as a member of the Committee, he has
constantly heard problems related to procurement, and wondered since there have been so
many changes within the Port since 2006, whether or not the procurement policies in
place then would meet the standards of current procurement policies. He noted that to
consider that may help make the decision of how to proceed with the audit services
question. He also raised the question of whether or not current procurement would allow
a switch in auditing services without going out for bid. 
Mr. Miller also asked the question of both proposals (Moss Adams and the SAO) how
many hours of engagement were involved in coming up with the proposed prices. He
also requested information on whether or not both entities had completed their client
retention procedures. 
Laurie Tish, partner with Moss Adams, was invited to respond to Mr. Miller"s questions,
stating that the number of hours proposed for their 2009 audit services matches fairly
closely to what was incurred in 2008, that being a minimum of 3800 hours, with an
additional cushion of 200 hours in case any complications or unexpected items arise. She
stated that Moss Adams had completed their client retention. As a follow-up to an earlier
question about peer review reports, Ms. Tish noted that under government auditing
standards, they are required to provide their peer review reports along with their
engagement letter, and they do so each year. She stated that their most recent peer review
report was in 2008 and it was unqualified. 
Responding to Mr. Miller"s question about a deadline of April 30 for financial
statements, Mr. Caluza stated that it was a deadline that the Port of Seattle tries to hold
itself to. 
Commission Hara suggested that Ms. Tish might like to provide her thoughts as to why
Moss Adams should be retained for another year. Ms. Tish reiterated that Moss Adams
very much values their relationship with the Port of Seattle, and stated that the firm has a
thriving practice in serving the businesses of government. She also commented on the
unique training that the firm"s staff receives. 
State Auditor's Office (SAO) 2009 Engagement Offer 
Presentation document: A copy of a letter to Commissioner Hara dated July 21, 2009
from Carol Ehlinger of the State Auditor"s Office was provided regarding the proposed
cost of auditing services 
Presenters: Tony Martinez and Reid Richards, both of the State Auditor"s Office 


Sept 1 SCM Audit Min

PORT COMMISSION MINUTES OF THE AUDIT COMMITTEE MEETING 
TUESDAY, SEPTEMBER 1, 2009                        P. 7 
Mr. Martinez stated that the estimate of charges for the SAO to complete the Port"s 2009
Financial Statement Audit, Federal Single Audit, and Passenger Facility Charge Audit
would be approximately $298,680, and he clarified to the Committee that this amount
was based on 3800 hours of work. 
Commissioner Hara stated his concern of the timeliness of reporting, noting that the Port
has yet to receive the report on the last compliance audit which was done. He asked what
the intended timeframe would be for getting results to the Port for the proposed services.
Mr. Martinez responded that they would plan to meet the Port"s desired deadline of April
30. 
Responding to a question from Commissioner Tarleton as to whether or not the SAO had
completed their client retention procedures, it was clarified that this is not something the
SAO normally does, as they are the auditor of all public accounts and that technically
they do not have to offer letters of engagement. 
Commissioner Hara raised a question of what is happening at other port authorities in
terms of state auditors" offices. Mr. Martinez commented that he would make some
inquiries and provide the information to the Committee. 
Commissioner Hara then asked if there were further comments as to why the SAO should
be considered. Mr. Martinez stated they are independent auditors, and even though they
work in a political environment, the head of their agency is independently elected. He
stated that their audits are designed to comply with professional standards, and he noted
that they are a peer reviewed organization and that their last peer review was unqualified. 
Following the SAO presentation, Ms. Strout addressed a question which was raised
earlier by Mr. Miller. She commented that it might be useful for the Committee to have
both a short description of the 2006 procurement process as well as what the current
process would require in terms of the scope of participants. She stated that the
information could be provided quite quickly by memo. 
Commissioner Hara commented on the importance of quality and timeliness of work as
well as the cost factor. 
Commissioner Creighton stated that he believes the full Commission should review this
procedure on an annual basis, noting that he understood the value of continuity, but that
continuity vs. price vs. having a new set of eyes are all factors that need to be weighed. 
Mr. Miller commented on the difficulty of weighing quality vs. cost. 
Motion that the Committee allow both proposals to go before the full Commission
was made by Commissioner Creighton. 
Motion carried by the following vote: 

Sept 1 SCM Audit Min

PORT COMMISSION MINUTES OF THE AUDIT COMMITTEE MEETING 
TUESDAY, SEPTEMBER 1, 2009                        P. 8 
In Favor: Creighton, Hara (2) 
Mr. Miller participates as a non-voting member of the Committee. 

Review of updated tracking calendar 
Mr. Barnard, Commission Policy Analyst, stated that he would update the tracking
calendar on a monthly basis to reflect upcoming items, and would provide the calendar to
the Committee. 
A suggestion from Mr. Miller regarding the calendar was that a discussion of the 2010
Internal Audit Workplan be added to November, 2009. 
There was discussion as to whether the Committee is done receiving risk management
reports for the year. Mr. Miller stated that he just does not want to see the ball dropped
as far as receiving these reports. 
ADJOURNMENT 
There being no further business, the meeting was adjourned at 9:29 a.m. 
(A digital recording of the meeting is available on the Port"s website.) 

Lloyd Hara, Commissioner 









Sept 1 SCM Audit Min