Kirangi Presentation
Internal Audit Briefing Presented to the Port of Seattle Audit Committee and Tay Yoshitani, CEO Joyce Kirangi, CPA Director, Internal Audit February 1, 2011 Agenda Audit Report Performance audit Travel and Entertainment - Current Practices Lease and Concession Audits Rent-A-Car Audits Dollar RAC Fox RAC Internal Audit 2011 Work Plan Travel & Entertainment Background The Port's travel and entertainment expenses are primarily concentrated in the following accounts. T&E Account 2008 2009 2010 (as of Total December) Airfare $466,327 $195,504 $304,114 $965,946 Lodging 581,749 256,890 383,074 1,221,713 Food & Beverage 303,652 188,612 176,288 668,552 Registrations 977,056 520,826 988,322 2,486,204 Total 2,328,784 1,161,832 1,851,799 5,342,415 Travel & Entertainment Audit Objectives The purpose was to determine if: 1) The Port has implemented effective monitoring controls to ensure that travel and entertainment expenses are necessary and reasonable. 2) Port policies and procedures are adequate to ensure compliance with local, state, and federal laws and regulations. Travel & Entertainment Audit Result Clean Audit Report Management Letter Items Lease and Concession Audits Background Dollar Concession of 80% of the total amount paid to the Port in the previous agreement year. 2007 2008 2009 Reported Gross $12,157,119 $13,700,673 $15,371,427 Concession Paid $ 1,200,905 $ 1,428,315 $ 1,504,796 Fox 4% of the annual gross revenue over $480,000 which is to be adjusted annually by the Consumer Price Index (CPI). 2008 2009 Reported Gross $ 6,603,567 $ 5,976,073 Concession Paid $ 217,979 $ 234,926 Lease and Concession Audits Audit Objectives The purpose of the Lease and Concession audits was to determine whether: 1) Reported concession was complete, properly calculated and remitted timely to the Port. 2) Port and the lessee complied with provisions of the Lease and Concession Agreement. 3) Lease and Concession Agreement, as amended, complies with applicable state and Port requirements. 4) Customer Facility Charges (CFC) were properly collected and remitted timely to the Port. Lease and Concession Audits Audit Result Dollar Underreported Gross Revenue Untimely Payments Fox Underreported Gross Revenue Underreported Customer Facility Charge (CFC) Untimely Payments 2011 Work Plan Internal Audit 2011 Work Plan Risk Assessment Slides Proposed 2011 Audits (see attached) 2011 Work Plan 5-Year Operating Revenue Trend 600 Millions 500 400 300 200 100 0 2006 2007 2008 2009 2010 Space Rental Landing Fees Parking Revenue Car Rental Revenues Aviation Fees Other 2011 Work Plan Operating Revenue by Dept. Node (in millions) Node Description 2006 2007 2008 2009 2010 Aeronautical $179 $186 $195 $174 $193 Landside 96 102 105 93 87 Seaport Container Operations 50 49 53 56 57 Concessions 28 31 28 29 28 Seaport Container Support Properties 12 12 13 13 13 Cruise Services 5 7 9 11 11 Third Party Management 13 14 15 10 9 Airport Properties 17 12 13 13 9 Recreational Boating 6 6 8 9 9 Fuel Hydrant Special Facility 8 8 3 8 8 2011 Work Plan Top 10 Dept. Nodes in Operating Expenses (in millions) Node Description 2006 2007 2008 2009 2010 Aviation Maintenance $40 $41 $49 $46 $45 Aeronautical 20 22 24 22 24 Police Department 17 19 19 18 19 ICT 11 13 14 17 18 Aviation Exec/AVEX 13 15 20 13 13 Aviation Utilities 16 13 13 15 13 Marine Maintenance 9 10 12 11 12 Landside 10 10 10 8 8 Aviation Facilities 5 6 7 6 6 Third Party Management 10 10 10 7 6 2011 Work Plan Operating Expenses by Account Category (in millions) GL Category 2006 2007 2008 2009 2010 Salaries & Benefits $73 $79 $89 $96 $95 Wages & Benefits 51 63 69 57 65 Outside Services 50 48 64 42 39 Utilities 21 19 19 21 18 General Expenses 2 12 13 8 8 Equipment Expense 6 6 7 5 6 Supplies & Stock 9 6 8 7 6 Travel & Other Employee Exp 3 3 4 3 3 Telecommunications 1 1 1 2 1 other 4 4 6 4 3 2011 Work Plan Full Time Equivalent (FTE) Count by Division Division Description 2006 2007 2008 2009 2010 Aviation 827 876 879 838 781 Capital Development 256 227 313 264 257 Corporate 444 442 474 470 456 Real Estate 194 187 196 180 184 Seaport 55 60 71 66 64 2011 Work Plan Top 5 Vendors in Operating Expenses Ranking Vendors 2010 1 ABM JANITORIAL SERVICES $8,281,144 2 SEATTLE CITY LIGHT 6,262,744 3 BONNEVILLE POWER 4,908,962 4 KONE INC 3,259,386 5 KING COUNTY TREASURER 3,072,556 2011 Work Plan Agreement-driven Revenue (in millions) 2006 2007 2008 2009 2010 Total Operating Revenue (PeopleSoft G/L) $447 $461 $484 $444 $452 Agreement-driven Revenue (PROPWorks system) $264 $302 $302 $362 $366 % of Agmt-driven revenue to the Port Operating Revenue 59% 66% 62% 82% 81% 2011 Work Plan Top 20 Customers in Total Billings (in millions) No. Name 2009 2010 No. Name 2009 2010 1 ALASKA AIRLINES $62 $61 11 HERTZ $8 $8 2 SSA TERMINALS 26 29 12 AMERICAN AIR 8 8 3 DELTA AIR LINES 12 24 13 HOST INT'L 7 8 4 UNITED AIRLINES 20 20 14 AIRPORT MGMT 7 7 5 EAGLE MARINE 20 20 15 US AIRWAYS 7 6 6 HORIZON AIR 18 19 16 AVIS 6 6 7 SOUTHWEST AIR 12 12 17 LOUIS DREYFUS 6 6 8 CTA 11 12 18 NATIONAL RAC 5 4 9 SEATAC FUEL 9 9 19 CLEAR CHANNEL 4 4 10 CONTINENTAL AIR 8 8 20 ALAMO RAC 5 4
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