Commissioners                                             Tay Yoshitani 
Gael Tarleton 
Chief Executive Officer 
Commission President 
Tom Albro                          P.O. Box 1209 
Bill Bryant                           Seattle, Washington 98111 
John Creighton                      www.portseattle.org 
Rob Holland                          206.787.3000 
An audio recording of the meeting proceedings and meeting materials are available on the Port of Seattle
web site - www.portseattle.org. 
APPROVED MINUTES 
AUDIT COMMITTEE SPECIAL MEETING JUNE 12, 2012 
The Port of Seattle Commission Audit Committee met in a special meeting Tuesday, June 12, 2012, in the
Commission Chambers at Pier 69, 2711 Alaskan Way, Seattle, Washington. Committee members present
included Commissioner Albro, alternate member Commissioner Creighton, and Christina Gehrke. Also
present were Dan Thomas, Chief Financial Officer; Joyce Kirangi, Internal Audit Department Director; Jack
Hutchinson, Internal Audit Manager; Ben Wolfgram, Internal Auditor; Brian Nancekivell, Senior Internal
Auditor; Ralph Graves, Managing Director, Capital Development Division; Deanna Zachrisson, Manager,
Concessions Management; Tom Barnard, Research and Policy Analyst; and Katherine Blair, Commission
Records Specialist. 
Call to Order: 
The committee special meeting was called to order at 9:03 a.m. by Commissioner Albro. 
Approval of Audit Committee Meeting Minutes of May 15, 2012: 
On motion by Commissioner Creighton, seconded by Commissioner Albro, the minutes of the Audit
Committee special meeting of May 15, 2012, were approved. 
Lease and Concession Audit  Airport Management Services (Hudson News): 
Ms. Kirangi noted the purpose of the Airport Management Services lease and concession audit was to
determine compliance with the following: 
Complete reporting of sales subject to gross receipts; 
Complete reporting of retail display allowances (RDAs) in the report of gross receipts; and 
Compliance with significant provisions of the agreement including the certified CPA report. 
As stated in the report, the audit period covered May 1, 2008, through April 30, 2010. 
Ms. Kirangi reported there were three audit findings, which include the following: 
Underreported concession of RDAs in the amount of $297,679; 
Concession overpayment on certain specialty goods in the amount of $116,336; and 
Underreporting of receipts related to promotional and marketing in the amount of $74,916.


PORT COMMISSION AUDIT COMMITTEE MEETING MINUTES         Page 2 of 3 
TUESDAY, JUNE 12, 2012 
Ms. Kirangi noted that calculating the RDA allowance is complicated.  Ms. Zachrisson explained that RDA
is what the publishers pay for their items to be located in certain places, and is not part of gross sales. She
stated that staff cannot confirm proper payment unless there is an audit. In response to Commissioner
Albro, Ms. Zachrisson stated that the RDA underpayment was not intentional and not anticipated to be an
issue in the future. 
Limited Operational Audit  Delegation of Authority, Resolution No. 3605, as amended: 
Mr. Wolfgram noted that the purpose of the delegation of authority limited operational audit was to
determine the following: 
Whether the delegation of authority under Resolution No. 3605, as amended, is efficient and
effective; 
Whether management has adequate controls and has complied with the requirements of
Resolution No. 3605, as amended; 
Whether the requirements of Resolution No. 3605, as amended, continue to be commensurate
with the risks; and 
Whether there have been any unintended consequences due to Resolution No. 3605, as
amended. 
Mr. Wolfgram reported there were no audit findings. He noted that the perceived risks at the time the
resolution was adopted have been addressed and there is a dedicated effort among staff to comply.  He
noted that during the review period, over 90 percent of contract dollars expended were subject to 
Commission authorization. 
In response to Commissioner Creighton, Mr. Wolfgram stated that the $600,000 delegation of authority
benchmark was based on authorization thresholds for public works contracting from the benchmark survey 
of other airports and port districts conducted by Internal Audit staff. 
In response to Ms. Gehrke, Mr. Graves noted that all payment to entities outside the Port is covered under
Resolution No. 3605, as amended.  In response to Ms. Gehrke, Mr. Hutchinson noted that audit included 
an examination of contracts under $300,000 to see if contracts were split up to avoid Commission
authorization; however, the focus was on contracts with a high dollar value.  Ms. Gehrke commented that
the examination of contracts under $300,000 was not mentioned in the written audit report and the report 
would be more comprehensive if the information was included.  Commissioner Albro asked for an
addendum to the procedures and objectives section of the report to clarify the point. 
In response to Commissioner Creighton, Mr. Graves noted that most contracts with small businesses fall
under the threshold of Resolution No. 3605, as amended, and do not require Commission authorization. 
Mr. Graves stated that promptness with which payments are made is only one piece of what draws small
businesses.  He noted that bonding requirements, safety regulations, and the required use of unionized
contractors verses non-union contractors also affect the interest of small businesses in working with the
Port of Seattle. Mr. Thomas added that staff has been tracking the days to pay and on average it is
approximately 45 days.  He stated that staff is working to improve and get payment down to the 30-day
requirement reflected in most contracts.


PORT COMMISSION AUDIT COMMITTEE MEETING MINUTES         Page 3 of 3 
TUESDAY, JUNE 12, 2012 
Limited Operational Audit  Corporate Cost Allocation: 
Mr. Nancekivell stated the purpose of the corporate cost allocation limited operational audit was to
determine whether Port corporate costs are allocated to the operating divisions based on a reasonable and
cost-effective basis.  He reported there were no audit findings and noted the underlying risk of cost
allocations is revenue diversion, such as Airport funding going to a non-aviation division. He mentioned the
Federal Aviation Administration's concern over revenue being inappropriately diverted from the Airport to a
non-aviation division because the Airport receives federal money.  Commissioner Albro noted that the
Airport does not receive any funding from the Port's tax levy. 
Updated Look Ahead Calendar: 
Mr. Barnard noted the July 3, 2012, Audit Committee meeting has been cancelled. He stated that all items
from the July 3 meeting are now on the August agenda, which includes the peer review for the Internal
Audit department entrance conference.  He noted the exit conference for the peer review will be held in
September.  Commissioner Albro asked that all committee members look at the dates on the look-ahead
calendar and make sure the dates work with their schedules.  Commissioner Albro noted that meeting
every other month might be appropriate for the Audit Committee.  Commissioner Creighton noted his
support for meeting every other month. 
2012 Work Plan Status: 
Mr. Hutchinson responded to Commissioner Albro that audits on Port-wide activities take longer to
complete than lease and concession audits, but the Internal Audit department should be able to complete
the 25 audits planned for 2012 by the end of the year. 
New Business: 
Commissioner Albro asked about the timing of a briefing on the balance sheet as discussed at the May 15,
2012, Audit Committee meeting.  Mr. Barnard responded that staff is working on how to present the 
information to both the Audit Committee and the other members of Commission.  Mr. Thomas noted that
the balance sheets are not typically discussed in financial briefings, but staff is preparing a briefing to
discuss the different aspects of the balance sheet. 
Adjournment: 
There being no further business, the special meeting was adjourned at 10:15 a.m. 

Bill Bryant 
Minutes approved: August 7, 2012