03 Thrifty%20RAC

INTERNAL AUDIT REPORT

HERTZ GLOBAL HOLDINGS, INC., DBA DTG  THRIFTY CAR
RENTAL
LEASE AND CONCESSION AGREEMENT

NOVEMBER 1, 2010 - MAY 16, 2012

ISSUE DATE: FEBRUARY 10, 2015
REPORT NO. 2015-03

HERTZ GLOBAL HOLDINGS INC.                                  INTERNAL AUDIT 
DBA DTG  THRIFTY CAR RENTAL
NOVEMBER 1, 2010 - MAY 16, 2012


TABLE OF CONTENTS 


TRANSMITTAL LETTER.................................................................................................................................................. 3
EXECUTIVE SUMMARY ................................................................................................................................................. 4
BACKGROUND............................................................................................................................................................... 5
FINANCIAL HIGHLIGHTS.............................................................................................................................................. 5
AUDIT SCOPE AND METHODLOGY.............................................................................................................................. 5
CONCLUSION ................................................................................................................................................................ 7
SCHEDULE OF FINDINGS AND RECOMMENDATIONS............................................................................................... 8
1. CERTAIN GROSS REVENUES WERE UNDERREPORTED.................................................................................. 8
2. CUSTOMER FACILITY CHARGE (CFC) WAS UNDERREPORTED .................................................................... 9









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HERTZ GLOBAL HOLDINGS INC.                                  INTERNAL AUDIT 
DBA DTG  THRIFTY CAR RENTAL
NOVEMBER 1, 2010 - MAY 16, 2012
TRANSMITTAL LETTER 


Audit Committee
Port of Seattle
Seattle, Washington
We have completed an audit of Hertz Global Holdings, Inc., DBA DTG - Thrifty Car Rental. We
reviewed information for the period November 1, 2010  May 16, 2012.
We conducted this performance audit 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 perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our findings and conclusions based on our
audit objectives.
We extend our appreciation to the management and staff of the Aviation Business Development
Department and the Accounting and Financial Reporting for their assistance and cooperation during the
audit.



Joyce Kirangi, CPA, CGMA
Internal Audit, Director

AUDIT TEAM                    RESPONSIBLE MANAGEMENT TEAM
Margaret Songtantaruk, Senior Auditor     Jim Schone, Director  Aviation Business Development
Jack Hutchinson, Audit Manager         James Jennings, Manager  Aviation Properties Group 
Rudy Caluza, Director, Accounting and Financial Reporting




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HERTZ GLOBAL HOLDINGS INC.                                  INTERNAL AUDIT 
DBA DTG  THRIFTY CAR RENTAL
NOVEMBER 1, 2010 - MAY 16, 2012
EXECUTIVE SUMMARY 

AUDIT OBJECTIVES AND SCOPE 
The purpose of the audit was to determine whether:
1.     The reported privilege fees were complete, properly calculated, and remitted timely to the
Port.
2.     The Port and lessee complied with provisions of the Rental Car Lease and Concession
Agreement, as amended.
3.     Customer Facility Charges (CFC) were properly collected and remitted timely to the Port.

We reviewed information for the period November 1, 2010 - May 16, 2012. Details of our audit's scope
and methodology are on page 5.

BACKGROUND 

DTG - Thrifty Car Rental (Thrifty) is a subsidiary of Hertz Global Holdings, Inc. Thrifty operated two 
locations during the period under audit. 
The lease and concession agreement with Thrifty became effective November 1, 2004. The terms of
the agreement provide for a Minimum Annual Guarantee (MAG) of 80% of the total amount paid to the
Port in the previous agreement year. Additionally, the agreement requires a Percentage Fee equal to
10% of gross revenues, provided the Percentage Fee is higher than the MAG payment.

AUDIT RESULT
Thrifty materially complied with the terms of the Lease and Concession Agreement, as amended.
However, the audit determined that certain gross receipts and Customer Facility charge (CFC) were
underreported. We recommend Port management seek recovery of $40,397 in additional concession fee
and CFC charges. See Findings 1 and 2 on the Schedule of Findings.




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HERTZ GLOBAL HOLDINGS INC.                                  INTERNAL AUDIT 
DBA DTG  THRIFTY CAR RENTAL
NOVEMBER 1, 2010 - MAY 16, 2012

BACKGROUND BACKGROUND 

Thrifty Car Rental is a franchise car rental. The Port of Seattle entered into an agreement with Pacific
Northwest Rental & Leasing, which assigned its obligation to DTG Operations. In November 2012, Hertz
Global Holdings acquired Dollar Thrifty Automotive Group.
The terms of the agreement provide for a Minimum Annual Guarantee (MAG) of 80% of the total amount
paid to the Port in the previous agreement year. Additionally, the agreement requires a Percentage
Fee equal to 10% of gross revenues, provided the Percentage Fee is higher than the MAG payment.
The following are the only agreed-upon deductions allowed in the agreement:
a. Any tax imposed or collected on behalf of a taxing authority.
b. Any amounts received as insurance proceeds or for damage to vehicles or other property, or for
loss, conversion or abandonment of such vehicles.
c. The wholesale transfer of salvage vehicles.
d. All non-revenue rentals to employees.
e. Fees paid to other government agencies (excluding the Port), relating to transactions at the
airport.
The MAG is payable in advance, on or before the first day of each month, without notice from the Port. 
The Percentage Fee, if applicable, is due on or before the 20th of the following month. For untimely
payments, the agreement provides for a one-time late fee of 5% of the overdue amount. Interest
accrues at 18% per year from the due date until paid.

FINANCIAL HIGHLIGHTS 
FINANCIAL HIGHLIGHTSFINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS 
KEY FINANCIAL RESULTS FOR DTG/THRIFTY CAR RENTAL 
AGREEMENT YEAR           REPORTED GROSS REVENUES          CONCESSION PAID 
2010-2011                             $11,984,110                $1,198,411 
2011-20121                              4,631,947                  463,195 
TOTAL                         $ 16,616,057             $ 1,661,606 
Data Source: PeopleSoft Financials 
Data Note: 1Ended 05/16/2012 

AUDIT SCOPE AND METHODLOGYAUDIT SCOPE AND METHODOLOGY 
We reviewed information for the period November 1, 2010  May 16, 2012. We utilized a risk-based
audit approach from planning to testing. We gathered information through document requests,
interviews, observation, and data analysis, in order to obtain a complete understanding of the financial
requirements of the agreement between the Port of Seattle and Thrifty Rent-A-Car.

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HERTZ GLOBAL HOLDINGS INC.                                  INTERNAL AUDIT 
DBA DTG  THRIFTY CAR RENTAL
NOVEMBER 1, 2010 - MAY 16, 2012

We applied additional audit procedures to areas with the highest likelihood of significant negative
impact as follows:
1) To determine whether the reported concession was complete, properly calculated, and remitted
timely to the Port.
Reviewed the lessee's chart of accounts to determine whether all revenue accounts were
included in the reported revenues to the Port.
Reconciled the reported revenues to:
o Detail Daily Business Reports (DBR) by revenue item. Additionally, the revenue items were
reviewed to determine whether all items subject to the concession fee were included in
the reported revenue.
o Certified Audit Statement of Gross Revenues, independently verified by a CPA.
Analyzed local rental deductions to determine whether local rentals were correctly classified
and properly deducted from gross concession revenue.
Tested a risk-based sample of 101 closed rental agreements to determine whether:
o All revenue items on the face of the rental agreement agreed to the amount posted to
the DBR.
o Disallowed local rentals reduced revenues subject to the concession fee.
Reviewed all payment records for the audit period to determine whether remitted by the
required due date.

2) To determine whether the Port and the lessee complied with provisions of the Lease and Concession
Agreement, as amended.
Reviewed the Certified Audited Statement of Gross Revenues for compliance with the timely
and complete submission requirements.
Reviewed required insurance coverage in force for the audit period.
Determined if the surety bond amount complied with the requirements in the agreement, as
amended.
Reviewed if the Minimum Annual Guarantee (MAG) was properly calculated and Port
management obtained Port Commission approval for Exception Relief of MAG, if applicable.
3) To determine whether Customer Facility Charges (CFC) were properly collected and remitted timely
to the Port.
Analyzed the methodology of CFC calculation and reporting.
Calculated the CFC based on the lessee's accounting records for all rental agreements in the
audit period, and reconciled the calculated result to the CFC amount reported to the Port.
Tested a risk-based sample of 36 closed rental agreements to determine whether the CFC
calculation was based on the correct check-out and return date and was accurate.
Reviewed all payment records for the audit period to determine whether remitted by the
required due date.

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HERTZ GLOBAL HOLDINGS INC.                                  INTERNAL AUDIT 
DBA DTG  THRIFTY CAR RENTAL
NOVEMBER 1, 2010 - MAY 16, 2012

CONCLUSION 
CONCLUSION 
Thrifty materially complied with the terms of the Lease and Concession Agreement, as amended.
However, the audit determined that certain gross receipts and CFC were underreported. We
recommend Port management seek recovery of $40,397 in additional concession fees and CFC charges.
See Findings 1 and 2 on the Schedule of Findings.
















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HERTZ GLOBAL HOLDINGS INC.                                  INTERNAL AUDIT 
DBA DTG  THRIFTY CAR RENTAL
NOVEMBER 1, 2010 - MAY 16, 2012
SCHEDULE OF FINDINGS AND RECOMMENDATIONS
1.  CERTAIN GROSS REVENUES WERE UNDERREPORTED
The lease agreement, Section 1.26, stipulates:
"Gross Revenues" shall mean and refer to all consideration of any kind-whether cash, credit or
in kind  received, derived and/or billed by the Concessionaire for: (a) all charges, including,
but not limited to, time and mileage charges and separately stated fees for rental of vehicles
and other related or incidental services or merchandise, and any other items or services, made
at or from Concessionaire's Rental Car Concession, regardless of where the vehicles or services
are delivered to or returned...
The analysis of the lessee's financial records and detailed transaction testing determined that the
lessee did not report the following two categories of gross concession revenues:
Administrative Fees
The lessee charges a fee to process such pass-through receipts as traffic tickets, tolls,
parking tickets, etc. The charged fee is considered incidental revenue subject to
concession, but the lessee did not include the fee in the reported revenues to the Port in
the amount of approximately $28,873.
Minor Misclassifications of concession rentals to nonconcession local rentals
Rental agreements at the off-airport location with either local residents or travelers 12
hours after arrival at the airport are not subject to concession. The lessee misclassified a
small number of nonlocal rentals as local rentals and did not include them in the reported
revenues to the Port in the amount of approximately $2,262.
As a result of the above items, concession fee was underreported as follows:
AGREEMENT YEAR         REPORTED  UNDER-REPORTED
GROSS REVENUES       REVENUES 
2010-2011                  $ 11,984,110          $ 1,806 
2011-2012*                    4,631,947            1,477 
**
CONCESSION FEE UNDERPAID - DUE TO PORT            $ 3,283 
Data Source: PeopleSoft Financials and PROPwork
*Period Ended 05/16/2012
** Includes over-credited amount
Recommendations:
We recommend management:
1. Seek recovery of $3,283 for the underpaid concession fees.
2. Assess applicability of the one-time late fee and accrued interest, and seek recovery as
appropriate.

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HERTZ GLOBAL HOLDINGS INC.                                  INTERNAL AUDIT 
DBA DTG  THRIFTY CAR RENTAL
NOVEMBER 1, 2010 - MAY 16, 2012

Management Response:
Management agrees with Internal Audit findings and will pursue collection of monies owed, including interest
and late fees of $3,041.43 

2.  CUSTOMER FACILITY CHARGE (CFC) WAS UNDERREPORTED 
The agreement, Section 5.25, stipulates:
"Concessionaire shall collect a daily CFC on all vehicle rental transactions originating at the
Airport... Each Concessionaire must collect the CFC at the time of the first payment is made
under a Rental Car Contract, and must remit the full amount of the CFC to the Port regardless
of whether or not the full amount of such CFC is actually collected by the Concessionaire from
the person who rented the Automobile under such Rental Car Contract."
The analysis of the lessee's financial records and detailed rental agreement testing determined
that the lessee did not report CFC completely as follows:
1. Based on the Daily Business Reports (DBR) vehicle check-out and return date, we
calculated CFC for the entire audit period. When compared to the reported CFC, we
determined that $33,722 was under-reported due to miscalculations.
2. The daily CFC rate changed from $5 to $6 per day in February 2012. There were a number
of rental agreements that started in January but did not close until February. The lessee
incorrectly assessed $5 to those rental agreements which resulted in underreporting of
$3,392. 
UNDERREPORTED CUSTOMER FACILITY CHARGE FOR THRIFTY CAR 
RENTAL 
REPORTED CFC  UNDERREPORTED
AGREEMENT YEAR  AUDITED CFC FEES          FEES       CFC FEES 
2010-2011               $1,362,360         $1,334,775          $ 27,585 
2011-20121                  642,590           633,061             9,529 
TOTAL                  $2,004,950         $1,967,836           $37,114 
TOTAL DUE TO PORT                                       $ 37,114 
Data Source: Thrifty Monthly Schedule Report, PeopleSoft Financials 
Data Note: 1 Periond Ended 04/30/2012 

Recommendations:
We recommend management:
1) Seek recovery of $37,114 for the underreported customer facility charge (CFC)

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HERTZ GLOBAL HOLDINGS INC.                                  INTERNAL AUDIT 
DBA DTG  THRIFTY CAR RENTAL
NOVEMBER 1, 2010 - MAY 16, 2012
2) Assess applicability of the one-time late fee and accrued interest, and seek recovery as
appropriate.

Management Response:
Management agrees with Internal Audit findings and will pursue collection of monies owed, including interest
and late fees of $3,041.43 

AUDIT SCOPE AND METHODOLOGY 














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