Internal Audit Briefing 

Presented to the Port of Seattle 
Audit Committee and Tay Yoshitani, CEO 

Joyce Kirangi, CPA 
Director, Internal Audit 
November 13, 2012

Agenda 
Audit Report 
1.  Lease and Concession Audits 
Avis Rent-A-Car 
Budget Rent-A-Car 
2.  Operational Audits 
Central Processing System 
None 
Comprehensive Operational Audit 
Real Estate Portfolio Management Department 
Limited Operational Audit 
None 
3rd Party Audit 
None 
Briefing/Updates 
1.  Proposed Charter for the Internal Audit Department 
2.  Preliminary 2013 Internal Audit Budget 
3.  Preliminary Discussion of the 2013 Internal Audit Work Plan

Lease and Concession Audit 
Avis Rent-A-Car 

Background 
The Avis retail location around the airport is wholly owned by Avis Budget 
Group, LLC. In 2008, Avis entered into a 30-year agreement with the Port to 
operate from the consolidated rental car facility. 
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. 
An additionally Percentage Fee equal to 10% of gross revenues is required, if 
the fee is higher than the MAG. 
Fiscal              Reported                Paid 
Year          Gross Revenue         Concession 
2008  2009                $40,271,615          $4,225,757 
2009  2010*                 38,181,518          4,058,000 
2010  2011*                  42,257,572           4,058,000 
Total                     $120,710,705          $12,341,757 
* MAG is greater than concession for the Agreement Year

Lease and Concession Audit 
Avis Rent-A-Car 

Audit Objectives 
The purpose of the audit was to determine whether: 
1.   The reported concession fees were complete, properly calculated, and
remitted timely to the Port. 
2.  The Port and the lessee complied with provisions of the Lease and
Concession Agreement, as amended. 
3.  Customer Facility Charges (CFC) were properly collected and remitted
timely to the Port. 
We examined a three-year period from November 1, 2008, through October
31, 2011.

Lease and Concession Audit 
Avis Rent-A-Car 

Audit Result 
Two Finding 
o Noncompliance with record retention requirements related to certain
key records 
o Underreporting of concession revenues

Lease and Concession Audit 
Budget Rent-A-Car 

Background 
The Avis retail location around the airport is wholly owned by Avis Budget 
Group, LLC. In 2008, Avis entered into a 30-year agreement with the Port to 
operate from the consolidated rental car facility. 
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. 
An additionally Percentage Fee equal to 10% of gross revenues is required, if 
the fee is higher than the MAG. 
Fiscal              Reported                 Paid 
Year          Gross Revenue           Concession 
2008  2009*              $24,626,865            $3,500,400 
2009  2010*                 21,527,526              2,452,727 
2010  2011                   26,263,513               2,626,085 
Total                      $72,417,904              $8,579,212 
* MAG is greater than concession for the Agreement Year

Lease and Concession Audit 
Budget Rent-A-Car 

Audit Objectives 
The purpose of the audit was to determine whether: 
1.   The reported concession fees were complete, properly calculated, and
remitted timely to the Port. 
2.  The Port and the lessee complied with provisions of the Lease and
Concession Agreement, as amended. 
3.  Customer Facility Charges (CFC) were properly collected and remitted
timely to the Port. 
We examined a three-year period from November 1, 2008, through October
31, 2011.

Lease and Concession Audit 
Budget Rent-A-Car 

Audit Result 
Two Finding 
o Noncompliance with record retention requirements related to certain
key records 
o Underreporting of concession revenues

Comprehensive Operational Audit 
Real Estate Portfolio Management 

Background 
The Real Estate Portfolio Department (REP) is a department of 14 FTEs with
an annual operating budget of approximately $1.3 million. REP is responsible
for developing and managing business agreements for the Real Estate
Division's properties including commercial office space, maritime industrial,
and retail locations. To manage these agreements, the department uses
PROPWorks, which is a Port's system for managing real estate agreements. 
Real Estate Portfolio Department Expenses 
Expense Category                 2011 Expenditures   % of 2011 Expenditures 
Salaries & Benefits                           $1,118,097.00                84.84% 
General Expenses                          $100,121.00               7.60% 
Outside Services                            $42,367.00                3.21% 
Travel & Other Employee Expenses               $17,329.00                1.31% 
Wages & Benefits                          $15,835.00               1.20% 
Other Expenses                             $24,096               1.83% 
Grand Total                              $1,317,844.00              100.00%

Comprehensive Operational Audit 
Real Estate Portfolio Management 

Audit Objectives 
The purpose of the audit was to determine whether the Real Estate
Portfolio Department has sufficient controls to reasonably ensure: 
1. Real Estate Division lease agreements comply with the Port's Real
Estate Policies 1 and 2. 
2.  Real Estate and Seaport Division agreements are effectively managed
within PROPWorks. 
We reviewed information for the period January 1, 2011  June 30, 2012.

Comprehensive Operational Audit 
Real Estate Portfolio Management 

Audit Result 
One Finding 
o The Department's controls for its Real Estate agreement
development process were inconsistently applied to ensure
compliance with the Port's Real Estate 1 Policy.

Briefing/Updates 


Proposed Charter for the Internal Audit Department 
Preliminary 2013 Internal Audit Budget 
Preliminary Discussion of the 2013 Internal Audit Work Plan 
See Attached