Internal Audit Report 

Smarte Carte, Inc. 

Lease and Concession Compliance Audit 

February 1, 2008 through January 31, 2010 




Issue Date: December 07, 2010 
Report No. 2010-18

Internal Audit 
Smarte Carte, Inc. (Agreement No. 629) 
Audit Period: February 1, 2008  January 31, 2010 

Audit Period: July 1, 2005  June 30, 2008 
Table of Contents 
Internal Auditor's Report .................................................................................................. 3 
Executive Summary .......................................................................................................... 4 
Background ....................................................................................................................... 5 
Audit Scope ....................................................................................................................... 5 
Audit Approach ................................................................................................................. 5 
Conclusion ......................................................................................................................... 6 












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Internal Audit 
Smarte Carte, Inc. (Agreement No. 629) 
Audit Period: February 1, 2008  January 31, 2010 

Audit Period: July 1, 2005  June 30, 2008 
Internal Auditor's Report 
We have completed an audit of the Lease and Concession Agreement, as amended, between
the Port of Seattle and Smarte Carte, Inc. The purpose of the audit 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. 
We examined information related to a two-year period from February 1, 2008, through January
31, 2010. 
We conducted our audit using due professional care. We planned and performed the audit to
obtain reasonable assurance as to compliance with significant provisions of the agreement. We
also audited completeness and timely reporting of concessionable revenues. 
Smarte Carte, Inc. materially complied with the terms of the Lease and Concession agreement. 
We noted no discrepancies with reported concession revenue, and the agreement itself is in
compliance with the applicable state and Port requirements. 
We extend our appreciation to the management and staff of Aviation Business Development,
and Accounting & Financial Reporting for their assistance and cooperation during the audit. 


Joyce Kirangi, CPA 
Director, Internal Audit 





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Internal Audit 
Smarte Carte, Inc. (Agreement No. 629) 
Audit Period: February 1, 2008  January 31, 2010 

Audit Period: July 1, 2005  June 30, 2008 Executive Summary 
Audit Scope and Objective         The purpose of the audit was to determine the following: 
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. 
We examined the books and records of Smarte Carte, Inc. for a two-year period from February 
1, 2008  through January  31, 2010. Aviation Business Development  in conjunction with
Accounting and Financial Reporting (AFR) has the primary responsibility for administering and
monitoring the agreement to ensure compliance with agreed-upon terms. 

Agreement Terms  Smarte Carte, Inc. operates approximately fifty-five luggage carts and
seven cell phone charging stations at the Seattle Tacoma International Airport. 
The terms of the agreement provide for a Minimum Annual Guarantee (MAG) of 90% of the total
amount paid to the Port in the previous agreement year. Additionally, the agreement requires a
Percentage Fee to be paid to the Port to the extent the fee exceeds the MAG in accordance
with the following structure: 
Gross Receipts from                    Percentage 
Carts ($2.00 rate)                      30% 
Carts ($3.00 rate)                      35% 
Advertising                          40% 
The MAG is payable in advance, on or before the first day of each month, without notice from
the Port, and without offset or deduction. The percentage fee, if applicable, is due on or before
the 15th of the following month. 
For untimely payments, the agreement provides a one-time late fee of 5% on the overdue
amount, and interest accrues at the rate of 18% per annum from the due date until paid. 

Audit Result Summary
Smarte Carte, Inc. materially complied with the terms of the Lease and Concession agreement. 
We noted no discrepancies with the reported concession revenue, and the agreement itself is
in compliance with the applicable state and Port requirements. 

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Internal Audit 
Smarte Carte, Inc. (Agreement No. 629) 
Audit Period: February 1, 2008  January 31, 2010 
Background 
Audit Period: July 1, 2005  June 30, 2008 
At Seattle-Tacoma International Airport, Smarte Carte, Inc. offers the traveling public with many 
services including self-serve luggage carts, electronic charging kiosks and massage chairs. 
The terms of the agreement provide for a Minimum Annual Guarantee (MAG) of 90% of the total
amount paid to the Port in the previous agreement year. 
Additionally, the agreement requires a percentage fee to be paid to the Port to the extent the 
Percentage Fee exceeds the MAG in accordance with the following structure: 
Gross Receipts from                    Percentage 
Carts ($2.00 rate)                      30% 
Carts ($3.00 rate)                      35% 
Advertising                          40% 
The MAG is payable in advance, on or before the first day of each month, without notice from
the Port, and without setoff or deduction. The Percentage Fee, if applicable, is due on or before
the 15th of the following month. 
For untimely payments, the agreement provides a one-time late fee of 5% on the overdue
amount, and interest accrues at the rate of 18% per annum from the due date until paid. 

Financial Highlights: 
Fiscal    Reported Gross     Paid
Year       Revenue      Concession 
2006-2007       $1,775,176     $599,996 
2007-2008       1,727,461      649,359 
2008-2009       1,517,078      602,036 
2009-2010       1,427,206      526,870 
Total           $6,446,921     $2,378,261 
Source: PROPworks and PeopleSoft 

Audit Scope 
The scope of the audit covered the period of February 1, 2008 through January 31, 2010. 

Audit Approach 
To achieve our audit objective, we performed the following procedures: 
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Internal Audit 
Smarte Carte, Inc. (Agreement No. 629) 
Audit Period: February 1, 2008  January 31, 2010 
Read and analyzed the lease agreement, as amended. 
Reviewed applicable state and local rules and regulations. Audit Period: July 1, 2005  June 30, 2008 
Identified significant provisions in the agreement. 
Obtained necessary financial and non-financial data from the lessee. 
Assessed relevant risks associate with the agreement. 
Designed and executed audit procedures based on risk. 
Analyzed data (internal & external) to determine completeness & compliance. This
included the following additional procedures: 
o  Reconciliation of the reported gross receipts to the lessee's accounting records to
ensure completeness and consistency. 
o  Verified that concession fees were paid timely and intact. 
o  Recalculated concession revenue and related fees to ensure completeness and
accuracy. 

Conclusion 
Smarte Carte, Inc. materially complied with the terms of the Lease and Concession agreement. 
We noted no discrepancies with reported concession revenue, and the agreement itself
complies with the applicable state and Port requirements. 











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