Operational Risk Assessment

Briefing to Commission Audit Committee

Risk Assessment & Mitigation
Accounting & Financial Reporting Department

April 14, 2009

Presenters
Rudy Caluza
Director of Accounting & Financial Reporting
Diane Jensen
Senior Manager  AFR Business Technology

Port's Fiscal Stewardship
$400-500 million annual revenues/expenditures

$600 million annual CIP program

$1 Billion in current & other assets

$5 Billion net capital assets

AFR Department - Core Operations
Billing, Receivables & Collection Enforcement

Disbursements & Payroll Administration

Cash, Debt, General Ledger, Capital Projects & Fixed
Assets Accounting
Financial Reporting & GAAP Compliance

Business Tax Administration
Grants Billing & Reporting
Corp Credit Card, P-Card & Expense Reimbursements

Our Drivers & Foundational Values
Accuracy
Integrity
Transparency

External Audit Scrutiny
Public Accountability (SAO)
Financial Statements (Moss Adams)
Performance  Effectiveness/Efficiency (SAO)
Single Audit  Federal Grants Compliance (Moss Adams)
Passenger Facility Charge (Moss Adams)
Regulatory Compliance (State/Federal Auditors)
Labor Contracts Administration (Contracted CPA firms)
Controls/Compliance/Performance (Internal Auditors)

Risk Assessment & Mitigation
Objectives

AFR Risk Mitigation
Legal  Regulatory
Policies  Procedures
Current
Comprehensive  clearly documented
Aligned  each key business process
Communicated  understood
Employees  trained & refreshed
Compliance

AFR Risk Mitigation
Organizational Structure
Control Centric
Resource Alignment
Staff Competency
Accountability - clear
Segregation of Duties
Review/Approval Points

AFR Risk Mitigation
Management Oversight
Awareness
Involvement
Control Points
Monitoring
Approvals

AFR Risk Mitigation
Records & Documentation
Content & Substance
Complete & Accurate
Justification for Actions
Approvals Documented
Managed & Safeguarded

AFR Risk Mitigation
Risk Management
Operational Risks Known
Exposure Mitigation in Place
Integrated into Business Processes
Periodic Comprehensive Reviews

Risk Assessment & Mitigation
Approach & Results

AFR Risk Mitigation
Project Approach
Broad Scope
All Key Operations Covered
Full AFR Leadership Engaged
Facilitated Assessment Sessions
Decisions Documented
Action Progress Tracked
SharePoint Collaboration site

AFR Risk Mitigation
Key Action Areas
Strengthen Control Points &
Confirm System Controls
Enhance Monitoring & Reviews
Refine Policies & Desk Procedures
Strengthen Organizational Training
& Communication

AFR Risk Mitigation
Strengthen Control Points
Confirm System Controls
Vendor Set-ups  independent of Purch & AP
Clear Lease Administration Resp.  Aviation vs AFR
CIP Planning & Closing  AFR involved/aware
Customer Set-ups  independent set up and
approval

AFR Risk Mitigation
Enhance Monitoring & Reviews
Dual employee & contractor status  HR vs. AP
GL-AP control acct. reconciliation  2nd sign-off
Duplicate vendor analysis  mitigate & clean up
Marina Mgmt System  audit reports
Capital Lease worksheet  review @ year-end
AFR "Project Year-End"  refinements
(contract dispute info from Legal, tariff rate changes
from field, etc.)
Mandatory minimum full week of PTO annually
Payroll staff

AFR Risk Mitigation
Refine Policies & Procedures
Revenue Recognition  Port wide policy
Capitalization of IT Project Costs  Port wide policy
Unclaimed Monies Reporting to DORev  procedure
AR Accounts Adjustments & Aging  procedure
P-Card Reconciliation of Wires to AP  procedure
GL Chartfield Additions/Changes  procedure

AFR Risk Mitigation
Policies & Procedures
SharePoint Collaboration "sites"
"AFR Risk Mitigation"
Interim Depository for Mgt Review
"Accounting & Financial Reporting main"
Final Depository for Port-Wide Visibility

AFR Risk Mitigation
Organizational Training & Communication
Financial Policies & Controls for Port
Managers
Port-wide Fiscal Year-End Training
Inter-Dept Project Closing Meetings
Port-wide Commitment Control Training
Additions to HRD's New Hire & Pay
Forums

AFR Risk Mitigation
Current Status
150 Action Items Identified
100 Completed
50 Assigned - Name & Due Date
Continue Monitoring with Action
Plan Updates

Briefing to Commission Audit Committee

Risk Assessment & Mitigation
Accounting & Financial Reporting Department

? Questions ?

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