Commissioners                                               Tay Yoshitani 
Chief Executive Officer 
Bill Bryant 
Chair and President 
Tom Albro                             P.O. Box 1209 
John Creighton                       Seattle, Washington 98111 
Rob Holland                           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 SPECIAL MEETING OCTOBER 5, 2010 
The Port of Seattle Commission Audit Committee met in a special meeting at 9:00 a.m., Tuesday,
October 5, 2010 in the Commission Chambers at Pier 69, 2711 Alaskan Way, Seattle, WA.
Committee members Albro, Tarleton and Miller were present, as well as CEO Tay Yoshitani and
Joyce Kirangi, Port Internal Audit Manager. 
CALL TO ORDER 
The committee special meeting was called to order at 9:07 a.m. by Commissioner Gael Tarleton.
APPROVAL OF MINUTES 
None. 
Moss Adams Engagement Service Plan for 2010 Audits 
Presentation documents: Computer slide presentation and copy of proposed Engagement Service
Plan from Moss Adams 
Presenter: Laurie Tish, Moss Adams 
In her opening remarks, Ms. Tish clarified that as the Moss Adams proposed contract is expected
to be formally approved later in the day at the meeting of the full Commission, her presentation is a
bit preliminary. She stated that it was decided to make the presentation at this point, as otherwise
it could not be provided to the Committee until their next meeting, the following month, and she
noted that Moss Adams is hoping to begin their preliminary work before that time. 
Commissioner Tarleton noted that due to Commission travel in September, there had not been
opportunity to approve the Moss Adams contract extension before this time. 
Ms. Tish commented on the purpose of the audit, noting the following three points: 

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The audit is conducted to form an opinion on the fairness of presentation of the financial
statements of the Port of Seattle, for both the enterprise fund and the warehousemen's
pension trust fund. 
It is also conducted to consider the effectiveness of the Port's internal control structure and
to examine the Port's compliance for the requirements of the Port's major federal awards
and the Passenger Facilities Charge program 
Audits will be conducted both in accordance with generally accepted auditing standards
and Government Auditing Standards. 
A list of reports Moss Adams plans to issue was reviewed for the Committee by Ms. Tish. 
Ms. Tish reviewed the phases of the audit, which begin with planning and risk assessment and
then move to assessment of internal controls, work on substantive audit procedures, and finally
report and present the audit results. 
Ms. Tish then elaborated more on the planning and risk assessment phases, commenting on
different factors which are reviewed and noting the following three categories of risk which are
considered: 
Inherent risk 
Control risk 
Detection risk 
She stated that the audit scope and approach is then determined based upon the results of risk
assessment. 
Discussion followed regarding the way in which 'materiality' plays a part in the audits conducted,
and it was noted that both quantitative and qualitative factors are considered 
Moving to the area of evaluating internal controls, Ms. Tish noted the following three objectives
used in this process: 
Effectiveness and efficiency of operations 
Reliability of financial reporting 
Compliance with applicable laws and regulations 
Ms. Tish stated that testing is designed around the following five components: 
Control environment 
Risk assessment 
Control activities 
Information and communication 
Monitoring 

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Commissioner Tarleton commented on potential risk of conducting audits at the same time
systems are in transition, as will be the case during the upcoming year. Ms. Tish agreed, and
noted that change management is one of the major areas looked at in detail each year, and during
years when there are changes in major systems, even more time is taken than in other years. 
Ms. Tish commented on a number of the Port's significant accounts and processes which have
been identified as areas that Moss Adams plans to review at some level, including: 
Administration of federal awards 
Signatory Lease and Operating Agreement 
Capital projects 
Payroll 
Pollution remediation 
Commissioner Tarleton suggested that perhaps another area Moss Adams could look at would be
that of the Port's self-financing of medical plans, which is new to the Port's internal management.
Ms. Tish agreed that this is something which could be added to the plan. 
Responding to a question from Mr. Miller regarding eligibility, which had not been mentioned, Ms.
Tish stated that this was not listed because it is not a direct and material requirement of the federal
programs that had been reviewed in the past by Moss Adams. She noted that this would be
brought back in, though, if there is a new major program this year that is applicable. 
Ms. Tish then stated that after year-end, after the books are closed and trial balances are finalized,
several types of substantive audit procedures are performed, which include tests of details and
analytical procedures. 
Ms. Tish commented on a new series of auditing standards which have recently been released and
stated that these will all be incorporated into the audit approach.
Mr. Miller said it would be helpful to touch on the play between inherent risk and control risk. Ms.
Tish replied that the audit work begins with the concept of inherent risk, and rates the risk as high,
medium or low. The next stage is control risk related to the area, which is also rated. At this point,
they are able to design a detailed set of tests that make the most sense in order to proceed.
Commissioner Tarleton commented on the importance of the Committee having a good
understanding of change management risk issues, and stated that how the changes are dealt with
is as important as the changes themselves.
Enterprise Risk Management  Pilot Study Results for Harbor Services Group 
Presentation document: Computer slide presentation 
Presenters: Dan Thomas, Chief Financial and Administrative Officer; Jeff Hollingsworth, Risk
Manager; and Lauren Smith, Manager, HR Information System 

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Mr. Thomas provided introductory remarks to the presentation, noting that it is a result of earlier
discussions with the Audit Committee and also the Executive team related to enterprise risk
management (ERM), an established framework commonly used by the private sector, but
becoming more common in the public sector as well. The framework is used for evaluating a broad
view of risk to an organization, rather than that of individual departments or systems. He stated
that the Harbor Services Group was selected for the pilot project, as the group is like a microcosm
of the larger Port organization.
Ms. Smith provided a brief overview of ERM, noting that it is a process applied across an
enterprise to identify potential risks and how significant they might be. She also commented on the
following key points of the ERM pilot project: 
It is a process implemented within the entity 
It is geared to supporting the strategic objectives of the entity 
It evaluates risks based on likelihood and impact 
It addresses governance, structure, audit and compliance 
It recognizes that risk has both an upside and a downside 
It creates a common risk assessment platform 
Ms. Smith noted that once the Harbor Services Group had been selected as the pilot group, the
Port selected, from a pool of 3 candidates, Aon Risk Services as the consultant to assist with the
study. The internal team assembled to run the project was made up of Mr. Hollingsworth, Ms.
Kirangi, and Ms. Smith. Interviews were conducted of Harbor Services management, after which
risks were identified. A facilitated workshop was then held to rank identified risks, based on impact
and likelihood. The Executive Team was then briefed on the results of the pilot study. 
Mr. Hollingsworth then reviewed the risks which had been identified in the study, and stated that
the risks were assessed on the following criteria: 
Estimated likelihood of a risk's occurrence within the next 18-24 months 
Estimated impact on finances, operations, the community, and the environment 
Responding to a question from Commissioner Tarleton regarding how the briefing was received by
the Executive Team, CEO Yoshitani commented that the team felt it was a resounding success;
well done, with good protocol and format established.
Commissioner Tarleton commented on the benefit of providing this information to not only the full
Commission, but also to tenants. 
Mr. Miller noted that this report provides pre-mitigation assessments, and that it will be important to
also see how things look after mitigation, reflecting residual risk. 
Mr. Miller also commented on the importance of objective setting, noting that it is a powerful tool of
ERM, which he feels should be included in the process being used.

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Internal Audit Department Reports 
Presentation documents: Computer slide presentation, and copies of individual reports, noted
below. 
Presenters: Ms. Kirangi; Jack Hutchinson, Manager, Internal Audit; Andy Medina, Senior Internal
Auditor 
Ms. Kirangi opened the presentation stating that two types of audits will be reviewed today  both
lease and concessions audits as well as a system audit. She noted that the lease and concessions
audits were completed for the period of 2008-2009. 
Lease and Concessions: Flying Food; Gate Gourmet; Sky Chefs; Qdoba; and Palino 
Mr. Hutchinson provided a brief history on the different types of lease and concessions
arrangements with the in-flight kitchens and with the concessionaires. He noted that issues which
resulted from similar audits in 2007 were reviewed in these recent audits. He stat ed that the issues
were related to some payments being received late, as well as issues related to proper
documentation of some revenues.
Mr. Hutchinson noted that financials were reviewed, as well as the agreements themselves, for
terms and compliance. He stated that they found basically the same issues of payment timing as
were found in the previous audits.
Responding to a question from Commissioner Albro regarding any related pursuit of recovery of
funds, Jim Schone, Director, Aviation Business Development, stated that audit findings had been
thoroughly reviewed; tenants will be contacted to discuss the findings; and staff would return in 90
days to the Audit Committee with further information on how issues are being resolved. He also
acknowledged the importance of the role that the Internal Audit team plays. 
System Audit  Central Billing and Accounts Receivable System Audit 
Mr. Medina stated that this system audit was concerned with how Revenue Services processes
bills and manages accounts receivable for the Port as a whole. He commented on the scope of the
audit was current practices and how things are working at this point in time, rather than a
backwards look.
Providing further clarification on the audit, Mr. Medina noted the audit objectives as follows: 
To determine if the Port has implemented effective controls to ensure that the Billing and Accounts
Receivable system is efficient, complete, and accurate with respect to: 
System access and segregation of duties 
Accounts receivable aging 
Credits and write-offs to customer account balances 
Pier 69 receipting and cash-handling procedures 

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Mr. Medina stated that the results of the audit conducted are that it was a clean audit, with no audit
findings and no management letter issued.
ADJOURNMENT 
There being no further business, the meeting was adjourned at 10:56 a.m. 
(A digital recording of the meeting is available on the Port's website.) 

Tom Albro 
Commissioner 














Oct 5 SCM Audit Min