Port of Seattle 

Internal Audit Report 

Port's Central Disbursements System Audit

Current Practices in 2009 




Issue Date: March 9, 2010 
Report No.: 2010-04

Internal Audit Report 
Port's Central Disbursements System Audit
Audit Period: Current Practices in 2009 

Table of Contents Audit Audit 

Internal Auditor's Report .............................................................................................................................................. 3 Compliance Audit 
Executive Summary ....................................................................................................................................................... 2 Compliance Audit 
Background ...................................................................................................................................................................... 2 
Audit Objective ................................................................................................................................................................ 2 
Scope of the Audit .......................................................................................................................................................... 3 
Audit Approach ............................................................................................................................................................... 3 
Conclusion ....................................................................................................................................................................... 3 















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Internal Audit Report 
Port's Central Disbursements System Audit
Audit Period: Current Practices in 2009 

Audit Audit 
Internal Auditor's Report 
We have completed an audit of the Port's disbursements process. The disbursements process involves 
every department at the Port; however, our audit focused on the functions performed by accountsCompliance Audit 
payable and payroll. The purpose of the audit was: Compliance Audit 
1. To determine if the risk assessment performed by Accounting and Financial Reporting 
adequately addresses the risks impacting disbursements, as well as the controls necessary to 
mitigate those risks to an acceptable level. 
2.  To identify internal controls related to disbursements, and to evaluate their effectiveness in
ensuring accuracy, efficiency, and accountability in the areas of: 
Requests for checks                 Concur (credit cards mainly for employee travel) 
Duplicate payments                 P-cards (credit cards for departmental expenses) 
Timeliness of payments               Payroll 
3. To determine if the computerized controls have been properly configured to a) prevent
payments against an invalid contract, b) prevent unauthorized access to incompatible
disbursement functions, c) prevent inappropriate changes to positive pay files, and d) ensure
proper authorization of wire transfers. 
Management has the primary responsibility to establish and implement effective controls. Our audit
objective was to assess and test those controls in order to establish whether the controls were
adequate and operating effectively. 
We conducted the audit using due professional care. We planned and performed the audit to obtain
reasonable assurance that the risks impacting disbursements were sufficiently mitigated through
effective internal controls. 
The Accounting and Financial Reporting department has established adequate and effective controls 
related to disbursements, and there were no significant issues noted during the audit. 
We extend our appreciation to the Accounting and Financial Reporting department for their assistance 
and cooperation during the audit. 


Joyce Kirangi, CPA 
Director, Internal Audit 

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Internal Audit Report 
Port's Central Disbursements System Audit
Audit Period: Current Practices in 2009 
Executive Summary 
Audit Audit 
Audit Scope and Objective The purpose of the audit was: 
Compliance Audit 
Compliance Audit 
To determine if the risk assessment performed by Accounting and Financial Reporting
adequately addresses the risks impacting disbursements, as well as the controls necessary to
mitigate those risks to an acceptable level. 
To identify internal controls related to disbursements, and to evaluate their effectiveness in
ensuring accuracy, efficiency, and accountability in the areas of: 
o Requests for checks             o Concur (credit cards mainly for employee travel) 
o Duplicate payments             o P-cards (credit cards for departmental expenses) 
o Timeliness of payments           o Payroll
To determine if the computerized controls have been properly configured to a) prevent
payments against an invalid contract, b) prevent unauthorized access to incompatible
disbursement functions, c) prevent inappropriate changes to positive pay files, and d) ensure
proper authorization of wire transfers. 
The scope of the audit included current disbursement practices in 2009. 
Background The responsibility for ensuring that disbursements are appropriate rests at the
department level, and not with accounts payable or payroll. Each individual department is accountable
for any disbursement against their budget, and they must ensure that their disbursements are legitimate
and properly approved. The main responsibility of the accounts payable and payroll functions is to
efficiently and accurately process the disbursement requests submitted by the individual departments.
However, there is also an expectation that the accounts payable and payroll functions monitor 
disbursement requests to provide additional assurance that the disbursements are appropriate. Our
audit is focused on accounts payable's and payroll's function of processing disbursementsaccurately 
and efficiently, as well as the expectation that they exercise due diligence when monitoring Port
disbursements for appropriateness. Essentially the audit will determine if accounts payable and payroll
are doing enough to monitor for inappropriate disbursements, or if they should implement additional
procedures. 
Audit Result Summary  The Accounting and Financial Reporting department has established
adequate and effective controls relating to disbursements, and there were no significant issues noted
during the audit. 



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Internal Audit Report 
Port's Central Disbursements System Audit
Audit Period: Current Practices in 2009 

Audit Audit 
Background 
The disbursement process for the Port of Seattle encompasses all Port departments. Each individual 
department is responsible for approving the payments charged against their respective budgets, as wellCompliance Audit 
as the approval of all time entered for their employee's payroll. However, this engagement is centeredCompliance Audit 
on the accounts payable and payroll functions within the Accounting and Financial Reporting 
department. All funds leaving the Port, whether for operations, construction, or payroll, must be 
processed by accounts payable or payroll. The only exceptions to this are the daily investment wire 
transfers, which we also audited, and immaterial petty cash funds totally $1,350, which we did not audit
during this engagement. The disbursements team has 13 FTEs including one Manager, six staff
members dedicated to accounts payable, five staff members dedicated to payroll, and one person
dedicated to Concur credit card administration (the credit cards issued to individual employees for
travel and business related expenses). In addition to accounts payable and payroll, Human Resources
and Development, the Central Procurement Office, the Treasurer, and other Accounting and Financial
Reporting staff members are instrumental in the overall disbursement process. 
As of October 2009, AP processed the following disbursements: (in thousands) 
Disbursement Type      2006        2007        2008     2009 (partial)     Total       % 
A-Type PO *            25,453       23,641       25,053       18,713      92,860     5% 
C-Type PO *            3,798       4,287       5,052        8,699      21,836     1% 
S-Type Contract *          41,151       38,135       39,243       18,972      137,501      6% 
Small Works             9,519       9,322       6,883        3,424      29,148      1% 
Service Agreement        114,250      103,413       83,148       38,921      339,732     15% 
Major Construction        314,509      267,387      215,091       121,656      918,643     41% 
Worker's Comp           1,108       1,144       1,470       1,200       4,922     0% 
Request for Check *        168,424      181,612      200,685       131,521      682,242     31% 
Concur                 317         325       1,361         796       2,799      0% 
Adjustments              (806)       (1,193)        (644)        (138)      (2,781)      0% 
Total                  677,723       628,073       577,342       343,764     2,226,902     100% 
Source: PeopleSoft 
* - Descriptions of Ambiguous Disbursement Types 
Disbursement Type     Description 
A-Type Purchase Order   A written document, stating the pre-established terms and conditions pertaining to a
one-time order to a supplier for purchase of specific goods and/or services. 
C-Type Purchase Order   A written document, stating the pre-established terms and conditions pertaining to a
recurring fixed price contract. (e.g., equipment rental, building or equipment
maintenance services, janitorial services, etc.) 
S-Type Contract        An agreement whose primary purpose is to manage the small-order problem and make
the acquisition of typically small-dollar-value goods and/or services more convenient
for customers. (Also called a Blanket Vendor Contract.) 
Request for Check       Payment mechanism for items not subject to the procurement process. (e.g.,
membership dues, subscriptions, training registrations, advertising, etc.) 


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Internal Audit Report 
Port's Central Disbursements System Audit
Audit Period: Current Practices in 2009 
Audit Objective 
Audit Audit 
The purpose of the audit was: 
1. To determine if the risk assessment performed by Accounting and Financial ReportingCompliance Audit 
adequately addresses the risks impacting disbursements, as well as the controls necessary toCompliance Audit 
mitigate those risks to an acceptable level. 
2.  To identify internal controls related to disbursements, and to evaluate their effectiveness in 
ensuring accuracy, efficiency, and accountability in the areas of: 
Requests for checks                 Concur (credit cards mainly for employee travel) 
Duplicate payments                 P-cards (credit cards for departmental expenses) 
Timeliness of payments               Payroll 
3. To determine if the computerized controls have been properly configured to a) prevent
payments against an invalid contract, b) prevent unauthorized access to incompatible 
disbursement functions, c) prevent inappropriate changes to positive pay files, and d) ensure
proper authorization of wire transfers. 
Scope of the Audit 
The scope of the audit included current disbursement practices in 2009. 
Audit Approach 
To achieve the audit objectives, we performed the following procedures: 
Obtained a detailed understanding of the disbursement process. 
Reviewed and tested internal controls related to accounts payable, payroll, and wire transfers. 
Obtained and analyzed relevant financial and non-financial data. 
Performed detailed tests of transactions to achieve the audit objectives. 
Conclusion 
The Accounting and Financial Reporting department has established adequate and effective controls 
relating to disbursements, and there were no significant issues noted during the audit. With respect to
our audit objectives: 
1. The Accounting and Financial Reporting department has been proactive with their approach
to risk, and their formal Risk Assessment effectively  identifies the risks specific to
disbursements as well as the action plans necessary to mitigate those risks to an acceptable
level. Their risk assessment process has set a standard for other departments to follow. 
2. The internal controls that the Accounting and Financial Reporting Department has
implemented for Requests for Checks, duplicate payments, timeliness of payments, Concur,
P-cards, and payroll are deemed effective, and we did not note any material concerns
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Internal Audit Report 
Port's Central Disbursements System Audit
Audit Period: Current Practices in 2009 
regarding accuracy, efficiency, or accountability. However, the ultimate responsibility rests
with the individual departments that actually request the payments. Audit Audit 
3. The computerized controls have been properly configured to a) prevent payments against an 
invalid contract, b) prevent unauthorized accessCompliance Audit to incompatible disbursement functions, c)
prevent inappropriateCompliance Audit changes to positive pay files, and d) ensure proper authorization of
wire transfers. 















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