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INTERNAL AUDIT REPORT

LIMITED OPERATIONAL AUDIT
PORT TRAVEL CREDIT CARD PROGRAM
JANUARY 1, 2015  FEBRUARY 28, 2017

ISSUE DATE: JULY 21, 2017
REPORT NO. 2017-12

PORT TRAVEL CREDIT CARD PROGRAM                                            INTERNAL AUDIT 
JANUARY 1, 2015  FEBRUARY 28, 2017 
TABLE OF CONTENTS 


TRANSMITTAL LETTER.................................................................................................................................................. 3
EXECUTIVE SUMMARY ................................................................................................................................................. 4
BACKGROUND............................................................................................................................................................... 5
FINANCIAL HIGHLIGHTS.............................................................................................................................................. 5
AUDIT SCOPE AND METHODOLOGY............................................................................................................................6
CONCLUSION ................................................................................................................................................................ 6
SCHEDULE OF FINDINGS AND RECOMMENDATIONS................................................................................................. 7












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PORT TRAVEL CREDIT CARD PROGRAM                                            INTERNAL AUDIT 
JANUARY 1, 2015  FEBRUARY 28, 2017 

TRANSMITTAL LETTER 
Audit Committee
Port of Seattle
Seattle, Washington

We have completed an audit of the Port Travel Credit Card Program. We reviewed information for the
period January 1, 2015  February 28, 2017.
We conducted this performance audit in accordance with Generally Accepted Government Auditing
Standards and the International Standards for the Professional Practice of Internal Auditing. Those
standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our findings and conclusions based on our
audit objectives.
We extend our appreciation to the management and staff for their assistance and cooperation during
the audit.


Joyce Kirangi, CPA, CGMA
Internal Audit, Director

AUDIT TEAM                              RESPONSIBLE MANAGEMENT TEAM
Roneel Prasad, Internal Auditor               Duane Hill, Senior Manager Disbursements
Dan Chase, CPA, Acting Audit Manager        Rudy Caluza, Director of Accounting and Financial Reporting






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PORT TRAVEL CREDIT CARD PROGRAM                                            INTERNAL AUDIT 
JANUARY 1, 2015  FEBRUARY 28, 2017 
EXECUTIVE SUMMARY 

AUDIT OBJECTIVES AND SCOPE
The purpose of the audit was:
To determine whether management internal controls were effective.
We reviewed information for the period January 2015 through February 2017.

BACKGROUND

The Port of Seattle (Port) issues credit cards to Port commissioners and employees who travel and/or
incur Port business expenses. Personal or non-Port charges on Port credit cards constitute a lending of
credit and are strictly prohibited.
The Accounting and Financial Reporting Department (AFR) administers the travel credit card program
which includes establishing and maintaining policies, determining credit limits, reviewing, and issuing
travel credit card requests.

AUDIT RESULT 
In general, internal controls were adequate. However, we identified instances where internal controls
were not always effective to ensure compliance with state laws and Port Policy (see schedule of
findings and recommendations).







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PORT TRAVEL CREDIT CARD PROGRAM                                            INTERNAL AUDIT 
JANUARY 1, 2015  FEBRUARY 28, 2017 

BACKGROUND BACKGROUND 
The Port of Seattle (Port) issues credit cards to Port commissioners and employees who travel and/or
incur Port business expenses. Personal or non-Port charges on Port credit cards constitute a lending of
credit and are strictly prohibited.
The Accounting and Financial Reporting Department administers the travel credit card program which
includes establishing and maintaining policies, determining credit limits, and reviewing and issuing
travel credit card requests.
The Port travel credit card program is governed by two Port policies. Accounting and Financial
Reporting (AFR) Policy 1 establishes protocols for authorizing and distributing credit cards. The Policy
also establishes timelines for validating charges.
AFR Policy 2 defines allowable Port business expenses and establishes protocols for incurring and
obtaining travel reimbursements.
FINANCIAL HIGHLIGHTS 
FINANCIAL HIGHLIGHTSFINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS 
Below reflects the travel and entertainment expenses of the top ten departments:
TRAVEL AND ENTERTAINMENT EXPENSE
TOP 10 DEPARTMENTS                               2015      2016     2017*      Total
Police Department                                                $135,829     $150,427      $36,112     $322,369
Public Affairs                                                           63,784       105,227        18,120       187,132
International Tourism                                                 81,103        87,503         8,366      176,972
Fire Department                                                   53,204       83,357       36,176      172,738
Commission Office                                                 48,180       89,878       10,552      148,610
Air Serivces Development                                            87,074       39,000        6,819      132,894
ICT Enterprise Infrastructure Svcs                                       56,093        68,259         4,975       129,327
Executive                                                            44,510       64,579          156      109,246
Aviation Director's Office                                               37,480        37,212        32,159       106,851
ICT Business Services                                                  53,529        43,848         5,917      103,295
TOTAL                                                $660,787    $769,291    $159,353   $1,589,431
Data Source: Concur Travel Expense Application
* As of February 28, 2017
The Ports travel and entertainment expenses are primarily recorded in the following five accounts:
TRAVEL AND ENTERTAINMENT EXPENSE
TOP 5 EXPENSE ACCOUNTS                           2015      2016     2017*      Total
Registration Fees/Seminars                                        $395,114     $466,303      $87,196     $948,614
Domestic Air Travel, Other                                            287,983      301,724        86,360      676,067
Hotel Tax                                                          300,771      316,300       27,264      644,336
Employee Food & Beverage                                        147,741      161,907       15,191      324,839
Lodging & Other Travel                                               119,399      126,792       19,234      265,424
TOTAL                                               $1,251,008   $1,373,027    $235,245   $2,859,280
Data Source: Concur Travel Expense Application
* As of February 28, 2017

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PORT TRAVEL CREDIT CARD PROGRAM                                            INTERNAL AUDIT 
JANUARY 1, 2015  FEBRUARY 28, 2017 

AUDIT SCOPE AND METHODOLOGY

We reviewed information for the period January 1, 2015  February 28, 2017. We utilized a risk-based
approach  from  planning  to  testing.  We  gathered  information  through  research,  interviews,
observations, and data analytical reviews, in order to obtain a complete understanding of the
department operations.
We applied additional audit procedures to areas with the highest likelihood of significant negative
impact as follows:
1)  Selected 20 credit cards issued within the scope period and verified that the application was
approved and an appropriate credit limit was established.
2)  Determined whether credit card transactions were approved within 30 days by calculating the
number of days between the transaction date, and the date the charges were filed online and
expensed. This procedure was performed on 100% of transactions charged during the 26 month
scope audit period.
3)  Selected over 150 transactions and verified that itemized receipts were included and the charge
was used for official Port business (Personal or non-Port charges are prohibited).
4)  Verified that all 869 outstanding travel credit cards were issued to port employees or officials and
did not have the ability to request a cash advance.
5)  Validated that individuals were not issued more than one credit card.

CONCLUSION 
CONCLUSION 
Management internal controls were generally effective.
In general, internal controls were adequate. However, we identified instances where internal controls
were not always effective to ensure compliance with state laws and Port Policy (see schedule of
findings and recommendations).





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PORT TRAVEL CREDIT CARD PROGRAM                                            INTERNAL AUDIT 
JANUARY 1, 2015  FEBRUARY 28, 2017 
SCHEDULE OF FINDINGS AND RECOMMENDATIONS
INTERNAL CONTROLS ARE NOT ALWAYS EFFECTIVE TO ENSURE COMPLIANCE WITH
STATE LAWS AND PORT POLICY
The Port of Seattle issues travel credit cards to commissioners and permanent employees for Port
business-related expenses such as transportation, lodging, meals, and conference registration fees.
The Accounting and Financial Reporting Policy (AC-1) clearly states that primary responsibility for
validating charges within 30 days resides with the cardholder. AFR has also implemented a process to
review submitted receipts in Concur to identify transactions that are not allowable. When unallowable
expenses are identified, AFR communicates these exceptions to the cardholder.
Concur also sends notifications to the cardholder within two days of incurring a transaction. A reminder
email is sent, to both the cardholder and the cardholder's manager, if the transaction was not
validated within 30 days from the billing statement date.
Accounting Policy 1- Port Travel Credit Cards, Travel Planning, Fund Advances, states (in part):
"Cardholders must validate all charges 'on-line using Concur' as soon as possible to substantiate
the Port business nature of the expenditure and validate appropriateness of the charges."
"Within 30 days of making charges on the credit card, the cardholder must validate the charges
and file an expense claim "on-line using Concur."
The Accounting and Financial Reporting Department (AFR) will suspend the ability to use credit
cards for any accounts having charges that are not validated, expensed and approved through
Concur after 60 days of the original billing statement date.
Revised Code of Washington section 42.24.115 states, in part:
"upon billing or no later than thirty days of the billing date, the officer or employee using a
charge card issued under this section shall submit a fully itemized travel expense voucher."
"The municipal corporation or political subdivision shall have unlimited authority to revoke use
of any charge card issued"
Of the total number of transactions from January 2015 through February 2017, 16% were not approved
within 30 days from the billing statement date.
Table 1 reflects the number of days between the transaction date and the date the transaction was
expensed for the period January 1, 2015 through February 28, 2017. Table 2 reflects the number of
days between the original statement billing date and the date the transaction was expensed.


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PORT TRAVEL CREDIT CARD PROGRAM                                            INTERNAL AUDIT 
JANUARY 1, 2015  FEBRUARY 28, 2017 


Table 1
CORPORATE TRAVEL CARD EXPENSE 
EXPENSE TIMELINE                TRANSACTIONS  PERCENTAGE  AMOUNT  PERCENTAGE 
1 - 30 days                                                  14,065                     69%  $2,120,944               63% 
31 - 60                                                       4,379                    22%     890,038                26 
61 - 90                                                       1,037                     5%     210,468                 6 
91 - 339                                                        868                   4%     158,745                 5 
TOTAL                                          20,349          100% $3,380,194          100%
Data Source: Concur Travel Expense Application 
* As of February 28, 2017

Table 2
CORPORATE TRAVEL CARD EXPENSE
DAYS FROM
BILLING STATEMENT      TRANSACTIONS       PERCENT        AMOUNT        PERCENT
0-30 days                                    17,096                  84%            $2,773,480                  82%
31-60 days                                    2,009                    10               365,916                    11
Greater than 60 days                           1,244                     6               240,799                     7
TOTAL                                 20,349               100%          $3,380,194               100%
Data Source: Concur Travel Expense Application
* As of February 28, 2017
To ensure compliance with Port Policy and state law, we recommend: 
1. Reminding card holders to validate charges within 30 days and the ramifications for not
complying.
2.  Suspending or reducing the credit limit to $1 for credit card holders that have not validated,
expensed, and approved transaction after 60 days of the original billing statement date, unless
there are non-reoccurring and valid business reasons why it is not practical for the card holder
to expense a transaction during the 60 day from billing date time frame.





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PORT TRAVEL CREDIT CARD PROGRAM                                            INTERNAL AUDIT 
JANUARY 1, 2015  FEBRUARY 28, 2017 

Management Response:
Management agrees with recommendation number 1, to continue to remind card holders to validate
card charges within 30 days. In support of this recommendation, the following statement is currently
highlighted and very visible in the Concur system "Per Port AC-1 and AC-2 Policy, please expense all
credit card charges within 30 days." 
Management agrees with recommendation number 2, to suspend /reduce the credit limit to $1 for
card holders who do not validate their expense transaction within 60 days of the billing date, unless
there are non-reoccurring and valid business reasons why it is not practical for the card holder to
expense a transaction during the 60 day from billing date time frame. 














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