Audit Interim Presentation Moss Adams
Port of Seattle 2008 Interim Fieldwork Results February 27, 2009 Laurie Tish, Lilian Mramba and Kevin Villanueva Agenda Evaluation of Internal Controls Port Systems and Significant Processes Assessment of Controls Compliance Testing Results of our Interim Tests 2 Evaluation of Internal Controls COSO defines internal control as a process, affected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of defined objectives Effectiveness and efficiency of operations Reliability of financial reporting Compliance with applicable laws and regulations 3 Evaluation of Internal Controls Five components of internal control Control Environment Risk Assessment Control Activities Information and Communication Monitoring 4 Evaluation of Internal Controls ERM framework is designed to achieve these objectives Strategic Operations Reporting Compliance Two additional components in addition to those of COSO"s framework Objective setting Event identification 5 Moss Adams Approach Top-down approach Assess entity-level controls and information technology (IT) Identify significant accounts and processes Obtain documentation of significant accounts and processes Assess design and implementation and perform walkthroughs of significant controls Identify "key controls" for testing Perform test of controls and compliance 6 Entity-Level Controls and IT Entity-level controls are the foundation for all other controls (Control Environment) Tone at the top Delegation of authority Policies and procedures Audit committee IT is comprised of general controls (ITGCs) and application controls We evaluate ITGCs using the COSO framework as well We test application controls in conjunction with financial statement controls 7 IT General Controls Procedures Review infrastructure controls and overall IT operations Targeted application layer testing and general ledger access Inquiries, inspection, observation, and walkthroughs Review emphasis on newly implemented Marina Management System, ERP Gateway, and Clarity Budgeting System Assessed against impact on financial reporting process Measured against industry-accepted best practices 8 Significant Accounts and Processes Administration of federal grants and related administrative controls Billings, cash receipts, and receivables Signatory Lease and Operating Agreement Procurement, cash disbursements, and payables Payroll Capital projects Treasury and Investments Debt and related accounts Pollution remediation obligation and contingencies Third party management Financial close and reporting Budget 9 Assessment of Controls We perform the following procedures Understand the design and implementation of key controls surrounding all significant accounts and processes "Walkthroughs" of transactions Observation, inquiries and re-performance Attribute testing of samples of transactions 10 Compliance Testing Major programs for 2008 are Airport Improvement Program and Transportation Security Grant Approximately $31 million in expenditures Approximately 91% of total grant expenditures Passenger Facility Charge (PFC) Program will be tested in March 11 Compliance Testing We also performed test of controls and substantive testing of compliance for all direct and material compliance requirements. In March, we will perform additional testing for grant claims filed in the fourth quarter. Allowable costs Cash management Davis-Bacon Act Equipment management Matching Period of availability Procurement Real property acquisition Reporting Special tests and provisions 12 Results of Interim Testing We obtained the planned level of reliance on internal controls There were no material weaknesses noted as a result of our tests of internal controls governing accounting, IT general controls and administrative systems that would indicate a material weakness There were no findings or instances of noncompliance noted 13
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