INTERNAL AUDIT REPORT 
RENTAL CAR CONCESSION AGREEMENT AUDIT 
Avis Budget Group dba Avis Budget Car Rental 

June 01, 2013  May 31, 2016 

ISSUE DATE: December 12, 2017 
REPORT NO. 2017-15 



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Avis Budget Car Rental                                                INTERNAL AUDIT 
June 2013  May 2016 
TABLE OF CONTENTS 


EXECUTIVE SUMMARY ................................................................................................................................................. 3 
FINANCIAL HIGHLIGHTS .............................................................................................................................................. 4 
AUDIT SCOPE AND METHODOLOGY ........................................................................................................................... 4 
SCHEDULE OF FINDINGS AND RECOMMENDATIONS............................................................................................... 6 
APPENDIX A: RISK RATINGS ........................................................................................................................................ 8 














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Avis Budget Car Rental                                                INTERNAL AUDIT 
June 2013  May 2016 

EXECUTIVE SUMMARY 
Internal Audit (IA) completed a rental car concession audit of Avis Budget Car Rental (Avis Budget) for
the period June 01, 2013  May 31, 2016. The audit was performed to determine whether Port 
management monitoring controls were effective and to assure that: Avis Budget reported Concession
Fees were complete, properly calculated, and remitted timely to the Port; that Avis Budget complied
with significant financial provisions of the Concession Agreement (CA), as amended; and that the
Customer Facility Charge (CFC) was properly collected and remitted. 
We concluded that management controls were effective to assure the reported concession fees were
materially complete, properly calculated, and remitted timely to the Port of Seattle (Port). We also
concluded that Avis Budget materially complied with the terms of the CA with one exception: 
Avis Budget was unable to provide us with details regarding adjustments made to customer bills.
This led us to conclude that Avis Budget did not maintain the details of adjustments in their
recordkeeping systems. Certain adjustments to revenue could be disallowed resulting in an
understatement of revenue and the related concession fee paid to the Port. Additionally, this issue
was a repeat finding that was identified in a prior internal audit of Avis Budget Group, LLC Audit
(Report No. 2012-20). Internal Audit is therefore disallowing $94, 039 in adjustments that were
noted during the audit period and seeking reimbursement for this amount. 
We believe that the evidence obtained during the audit provides a reasonable basis for our findings and
conclusions based on our audit objectives. 
We extend our appreciation to the management and staff of the Aviation Commercial Management
Department, and Accounting and Financial Reporting Department for their assistance and cooperation
during the audit. 


Glenn Fernandes, CPA            Margaret Songtantaruk, CFE, CB    Dandan Wang, CPA, CIA 
Director, Internal Audit            Senior Auditor                 Senior Auditor 

RESPONSIBLE MANAGEMENT TEAM 
Jim Schone, Director AV Business Development 
James Jennings, Manager Aviation Properties 
Jason Johnson, Aviation Property Manager 3 
Linda Nelson, Manager, AV Finance & Budget 
Rudy Caluza, Director Accounting & Financial Reporting 


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Avis Budget Car Rental                                                INTERNAL AUDIT 
June 2013  May 2016 

Avis Budget Group, Inc., headquarter BACKGROUND 
Avis Budget, headquartered in Parsippany, N.J., provides vehicle and car sharing services, operating
four brands in the industry through Avis, Budget, Payless, and Zipcar. It possesses a local administrative
office to oversee these brands' operations, and a fleet of vehicles at the Consolidated Rental Car
Facility owned by the Port of Seattle (Port), and located at the Seattle-Tacoma International Airport.
The rental car concession agreement with Avis Budget became effective in May of 2012. 
The terms of the agreement require a Minimum Annual Guarantee (MAG) of 85% of the total amount
paid to the Port in the previous agreement year or the MAG for the first agreement year at
$5,950,000.00, whichever is greater. In addition, the agreement requires a Percentage Fee equal to
10% of gross revenues, provided the Percentage Fee is higher than the MAG payment. 
The agreement allows the following exclusions from gross revenues: 
Any federal, state, county or city sales tax or other similar taxes or surcharges that are levied on
rental cars or other ancillary business transactions, separately stated to and collected from the
customer of The Operator and paid in full by the Operator to the taxing authority. 
Any amounts received as insurance proceeds or otherwise for damage to vehicles or other property
of the Operator, or for loss, conversion or abandonment of such vehicles. 
Revenue from the wholesale transfer of salvage vehicles. 
All non-revenue rentals to employees of Operator. 
The Customer Facility Charge (CFC). 

FINANCIAL HIGHLIGHTS 

CUSTOMER 
REPORTED GROSS REVENUE AND CONCESSION CALCULATION     FACILITY CHARGE 
Agreement Year   Reported Gross Revenues   Paid Concession    Reported CFC 
2013 - 2014      $66,588,044            $6,658,804        $8,001,924 
2014 - 2015       69,606,505             6,960,651         8,159,694 
2015 - 2016       75,439,321             7,543,932         8,678,544 
Total           $211,633,870            $21,163,387        $24,840,162 
Data Source: PROPWorks and PeopleSoft Financial. 

AUDIT SCOPE AND METHODOLOGY 
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

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Avis Budget Car Rental                                                INTERNAL AUDIT 
June 2013  May 2016 
that the evidence obtained provides a reasonable basis for our findings and conclusions based on our
audit objectives.
We utilized a risk-based approach from the planning phase to the testing phase of our audit. We
gathered information through document requests, research, interviews, observations, and analytical
reviews.  We also obtained a complete understanding of the Avis Budget car rental concession
agreement. We applied the following audit procedures to assess whether Avis Budget was complying
with the key terms of the agreement: 

1.  Reviewed the agreement, and identified key agreement provisions. 
2.  Gained an understanding of and documented Port management internal controls over insurance,
surety, and AFR billing processes. 
3.  Tested effectiveness of the internal controls to verify: 
Monthly concession was reviewed for accuracy prior to billing. 
Annual concession reconciliation was performed to ensure accuracy of the reported gross
revenues. 
Surety and Insurance were in compliance with the agreement. 
4.  Analyzed the Port billing and payment records to determine timeliness of the MAGs, Percentage
Fees, and CFCs. 
5.  To determine whether the CFCs were collected properly, and remitted to the Port, we: 
Verified Avis and Budget at the facility were the only two locations at the airport that
were subject to the CFC. 
Calculated 100% of the CFCs independently. 
Compared the independent calculations with those reported to the Port. 
Tested the vehicle rental agreements to verify completeness and accuracy. 
6.  To determine whether the gross revenues were complete and accurate, we: 
Reviewed the concessionaire's Chart of Accounts to determine whether all applicable
revenue accounts were included in the gross revenues reported to the Port. 
Conducted three-way reconciliations by month, with the concessionaire's system rental
revenue reports, general ledgers, and revenue reported to the Port. 
Agreed the concessionaire's system rental revenue reports to the Avis Budget CPA
Independent certified gross revenues. 
Tested the vehicle rental agreements to validate legitimacy and accuracy. 




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Avis Budget Car Rental                                                INTERNAL AUDIT 
June 2013  May 2016 
SCHEDULE OF FINDINGS AND RECOMMENDATIONS 
1) RATING: HIGH 
NON-COMPLIANCE WITH THE RECORD RETENTION REQUIREMENT RELATED TO KEY ACCOUNTING
RECORDS  REPEAT FINDING 
This issue would normally be a "Medium Risk" issue, but since it is a repeat finding that has not been
resolved, we are elevating the risk rating to high. 
Section 8.1 of the agreement states, in part: 
"Operator shall maintain its records relating to the operation permitted by this Lease Agreement
for a period of at least three (3) years after the end of each Agreement Year (or until the close of
any ongoing audit thereof being conducted by, or on behalf of, the Port" ) 
The agreement also requires that sufficient detail be maintained: 
". and otherwise reasonably satisfactory to the Port for the determination of any Customer
Facility Charges or other computations, or both, which may be necessary or essential in carrying
out the terms of this Lease Agreement." 
Avis Budget was unable to provide supporting documentation to verify whether the customer
adjustments were legitimate and valid. These adjustments reduced gross revenue and the concession
fee paid to the Port. As of November 28, 2017 Avis has indicated that they do not maintain this
documentation. Therefore, these adjustments are not allowed. 
The following table demonstrates the financial impact of the unsupported adjustments: 
Agreement Year   Customer Adjustments  Percentage of Revenue  Total Due to Port 
2013 - 2014       $584,979             10%                $58,498 
2014 - 2015       470,126             10%                47,013 
2015 - 2016       470,262             10%                47,026 
Total  $152,537 

Recommendations: 
We recommend that management: 
Discuss retention of adjustment detail with Avis Budget and determine whether going
forward, they are able to maintain detail on said adjustments.  Document the
communication for future reference. 
Seek and recover the concession fee for the two years ended May 2015 and May 2016 during
which period, Avis Budget was required to maintain records relating to the operation
permitted by the lease agreement. This amounts to $94,039 due to the Port. The
agreement year ended May 2014 was more than three years from the commencement of the
audit, therefore, the amount of $58,498 cannot be pursued. 

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Avis Budget Car Rental                                                INTERNAL AUDIT 
June 2013  May 2016 
Assess the applicability of the one-time late charge and any accrued interest caused by the
underpaid concessions. Seek recovery if appropriate. 

Management Response/Action Plan: 
Aviation Commercial Management will pursue collection of concession fees from Avis Budget for the
adjustments, for which they were not able to provide supporting documentation, and the applicable
late fees and interest. Aviation Commercial Management will also clarify with Avis Budget the records
we expect them to retain in accordance with Article 8 of the Lease. The results of these discussions
will be documented in a letter from the Port to Avis Budget. 














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Avis Budget Car Rental                                                INTERNAL AUDIT 
June 2013  May 2016 
APPENDIX A: RISK RATINGS 
Findings identified during the course of the audit are assigned a risk rating, as outlined in the table below. The
risk rating is based on the financial, operational, compliance or reputational impact the issue identified has on
the Port. Items deemed "Low Risk" will be considered "Exit Items" and will not be brought to the final report. 
Port Commission/
Rating      Financial      Internal Controls      Compliance        Public 
Management 
Large financial
impact                        Noncompliance
High probability
with applicable                     Important 
Missing, or inadequate                 for external audit
Remiss in                      Federal, State,
HIGH               key internal controls                issues and/or
responsibilities                        and Local Laws,                  Requires immediate
negative public
of being a                        or Port Policies                     attention 
perception 
custodian of
public trust 
Partial controls         Inconsistent       Potential for    Relatively important 
compliance with    external audit
Moderate
MEDIUM            Not adequate to identify   Federal, State,   issues and/or   May or may not
financial impact 
noncompliance or     and Local Laws,   negative public   require immediate
misappropriation timely    or Port Policies      perception         attention 
Generally
Internal controls in place                   Low probability
complies with
but not consistently                   for external audit
Federal, State and                Lower significance 
Low financial     efficient or effective                    issues and/or
LOW/                            Local Laws or Port
impact                                      negative public
Exit Items                                  Policies, but some                 May not require
Implementing/enhancing                 perception 
minor                  immediate attention 
controls could prevent
discrepancies
future problems 
exist 
Efficiency   An efficiency opportunity is where controls are functioning as intended; however, a modification would make
Opportunity                           the process more efficient 








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