Attachment supp for Audit Meeting held Feb 10, 2015 1:00PM at Pier 69

supp

INTERNAL AUDIT BRIEFING
PRESENTED TO THE PORT OF
SEATTLE AUDIT COMMITTEE AND
MR. TED FICK, CEO
JOYCE KIRANGI, CPA, CGMA
DIRECTOR, INTERNAL AUDIT
TUESDAY, FEBRUARY 10, 2015

AGENDA INTERNAL AUDIT
Audit Report
1. Lease and Concession Audits
Gate Gourmet, Inc.
Thrifty Rent-A-Car
2. Operational Audits
Comprehensive Operational Audit/Departmental Audit
None
Limited Operational Audit
SLOA III Compliance with Calculation of Rates and Charges
Examination of Management's Assertions Related Airport Dining and
Retail (ADR) Program at the Sea-Tac International Airport
3. Third-Party Audit
None
Briefing/Update
Proposed Internal Audit 2015 Work Plan
Required Annual Communication to the Audit Committee

LEASE AND CONCESSION AUDIT
INTERNAL AUDIT
THRIFY RENT-A-CAR
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.
FINANCIAL HIGHLIGHTS

KEY FINANCIAL RESULTS FOR DTG/THRIFTY CAR RENTAL AGREEMENT
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

LEASE AND CONCESSION AUDIT
INTERNAL AUDIT
THRIFY RENT-A-CAR
AUDIT OBJECTIVES AND SCOPE
The purpose of the audit was to determine whether:
The reported concession fees were complete, properly calculated, and remitted timely to the
Port.
The Port and Lessee complied with provisions of the Rental Car Lease and Concession
Agreement, as amended.
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.

LEASE AND CONCESSION AUDIT
INTERNAL AUDIT
THRIFY RENT-A-CAR
AUDIT RESULT
Thrifty Car Rental materially complied with the terms of the Rental Car Lease and Concession
Agreement. However, the audit determined that certain gross receipts and CFC were
underreported. We recommend the Port management seek recovery of $40,397 in additional
concession fees and CFC charges. We also recommend Port management assess applicability
the one-time late fee and accrued interest, and seek recovery from the tenant as appropriate.
There were two reportable findings:
1. Certain gross revenues were underreported
2. Customer Facility Charge (CFC) was underreported

LIMITED OPERATIONAL AUDIT
INTERNAL AUDIT
SLOA III Airline Agreement
Compliance with Calculation of Rates and Charges
BACKGROUND
The Signatory Lease and Operating Agreement (SLOA III) is a five-year agreement between the Port
and the airlines. The agreement defines the rights and privileges of occupancy and use of the
airport. It was the result of long and complex negotiations with the airlines, starting in early 2011,
and culminating in final approval and acceptance in late 2013. The terms of the agreement were
retroactive to January 1, 2013.
FINANCIAL HIGHLIGHTS
SLOA III REVENUE (in thousands)
2013 2014
% of
Actual % of Total Budget
Total
Landing Fees $69,679 32% $74,590 31%
Ramp Tower Fees 1,006 0.50% 1,119 0.50%
Apron Fees 6,158 3% 8,000 3%
Terminal Rentals 134,821 61% 144,392 61%
Federal Inspection Services (FIS) Fees 7,525 3% 8,618 4%
Remaining Overnight (RON) Fees 745 0.50% 1,095 0.50%
Open Storage Space Rents 189 0% 249 0%
Total $220,123 $238,063
OTHER ADJUSTMENTS
Revenue Sharing -9,773 -6,136
Leasehold Tax 274
NET REVENUE $210,624 $231,927
Data Source: Aviation F&B

LIMITED OPERATIONAL AUDIT
INTERNAL AUDIT
SLOA III Airline Agreement
Compliance with Calculation of Rates and Charges
HIGHLIGHTS AND ACCOMPLISHMENTS

During the course of the audit, we noted the following highlights and accomplishments. The
Department:
Implemented numerous complex rate calculations.
Performed year-end settlement on schedule.
Accomplished myriad tasks within a compressed time frame.
HIGHLIGHTS AND ACCOMPLISHMENTS

LIMITED OPERATIONAL AUDIT
SLOA III Airline Agreement INTERNAL AUDIT
Compliance with Calculation of Rates and Charges
AUDIT OBJECTIVES AND SCOPE
The purpose of the audit was to determine whether management controls are adequate to ensure:
Rates charged are accurate and in accordance with the agreement terms and conditions (2013
actual and 2014 budget).
The 2013 year-end airline reconciliation and settlement, including revenue sharing, was
accurate and in accordance with the agreement terms and conditions.
We reviewed information for the period January 1, 2013 December 31, 2014.

LIMITED OPERATIONAL AUDIT
SLOA III Airline Agreement INTERNAL AUDIT
Compliance with Calculation of Rates and Charges
AUDIT RESULT
Management controls are adequate to ensure that the rates charged for 2013 actual and 2014
budget and the 2013 year-end airline reconciliation and settlement, including revenue sharing,
were accurate and in accordance with the agreement terms and conditions.
No Reportable Findings.

LIMITED OPERATIONAL AUDIT
INTERNAL AUDIT
Examination of Port Management's Assertions Related to
The Airport Dining and Retail (ADR) Program At the Sea-
Tac International Airport
BACKGROUND

On February 14, 2012, the Port of Seattle Commission directed the CEO and staff to create a
"Concession Master Plan" to guide the successful redevelopment of the Seattle-Tacoma
International Airport (STIA) concessions program for 2015 2017.
On May 27, 2014, the Airport Dining and Retail (ADR) program staff briefed the Commission on the
Master Plan, which was built on the foundations of the Port's Century Agenda.
On November 4, 2014, the staff of the Airport Dining and Retail Program provided the Commission
with more information and a "Fact Sheet" about the ADR program.
On December 15, 2014, on behalf of the Commission and the CEO, the Director of the Office of the
Social Responsibility engaged the Internal Audit Department to examine and validate the accuracy
of certain assertions made by Port management related to the ADR program.

The purpose of the audit was to examined management's assertions related to the Airport Dining
and Retail (ADR) Program at the Seattle-Tacoma International Airport (STIA), for the period
October 1, 2012 September 30, 2013, and other periods as stated in the assertions (Exhibit A).
The Aviation Business Development Department management is responsible for the assertions. Our
responsibility is to express an opinion on the assertions based on our examination.

LIMITED OPERATIONAL AUDIT
INTERNAL AUDIT
Examination of Port Management's Assertions Related to
The Airport Dining and Retail (ADR) Program At the Sea-
Tac International Airport
EXAMINATION RESULT
In our opinion, management's assertions are fairly stated, in all material respects, for the period
October 1, 2012 September 30, 2013, and other periods, as stated in the assertions.

BRIEFING/UPDATE INTERNAL AUDIT

Proposed Internal Audit 2015 Work Plan
Required Annual Communication to the Audit Committee

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