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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