INTERNAL AUDIT REPORT 
OPERATIONAL AUDIT 
Fishing & Commercial Operations - Maritime 

January 01, 2016  September 30, 2017 

ISSUE DATE: February 23, 2018 
REPORT NO. 2017-24

Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 
TABLE OF CONTENTS 


EXECUTIVE SUMMARY ................................................................................................................................................. 3 
BACKGROUND .............................................................................................................................................................. 4 
AUDIT SCOPE AND METHODOLOGY ........................................................................................................................... 5 
SCHEDULE OF FINDINGS AND RECOMMENDATIONS............................................................................................... 6 
APPENDIX A: RISK RATINGS ...................................................................................................................................... 11 
EXHIBIT A: PROCESS FLOW ....................................................................................................................................... 12 













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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 
EXECUTIVE SUMMARY 
Internal Audit (IA) completed an audit of Fishing & Commercial Operations (F&CO)  Maritime, at
Terminal 91, for the period January 01, 2016  September 30, 2017. The audit was performed to 
determine whether the billing process operated effectively and efficiently, and whether customer billing
was complete and accurate. 
Terminal 91 has gone through new management and staffing challenges in 2016 and 2017 respectively.
This has resulted in new management undertaking the significant challenge of stabilizing processes,
hiring replacement staff, and training them on incumbent processes.  By late 2017, the processes had
been stabilized, allowing us to focus on the existing process and provide appropriate recommendations. 
IA identified the following key issues during the course of our audit: 
1)  The Maritime Operations Team and outsourced security personnel are responsible for manually
observing, counting and measuring a constantly rotating clientele of marine vessels, land vehicles (i.e.
trucks, cranes, fishnets, etc.) and storage.  We observed this process to be manual, labor intensive
and occasionally prone to error. Revenue leakage can be exacerbated if an individual is sick or out of
the office, as limited observations/counts generally occur during that period. 

2)  Maritime  Operations  utilize  a  variety  of  internally  developed  Access  databases  and  Excel
spreadsheets to record billable activities.  The billing process is at risk of error due to, a manual
process and limited error checks.  The process is also inefficient, labor intensive, and includes
redundancies. 

We extend our appreciation to the management and staff of the Maritime Operations Department,
Seaport Finance and Budget Department, and Accounting and Financial Reporting Department for their
assistance and cooperation during the audit. 



Glenn Fernandes, CPA 
Director, Internal Audit 

RESPONSIBLE MANAGEMENT TEAM 
Stephanie Jones Stebbins, Managing Director, Maritime 
Kenneth Lyles, Director, Fishing & Commercial Ops 
Kelli Goodwin, Manager, Maritime Operations 
Kelly Zupan, Director, Seaport Finance & Budget 


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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 

BACKGROUND 

Maritime Operations manages Terminal 91, which includes: Pier 90, Pier 91, an upland area with leased
premises, and storage for trailers, containers, cranes, and fishing nets. The Terminal provides short-term
and long-term moorage for fishing and commercial vessels, including tugs, barges, ferries, research
vessels, and military and commercial vessels in lay-up or idle status; additionally, several leased buildings 
are housed at the Terminal. 
Customers with short-term moorage needs are subject to the Port of Seattle (Port) Terminal Tariff; while
those with long-term needs, who contract with the Port for a minimum number of berthing days in an
agreement year, generally have a Preferential Use Agreement (PUA) with reduced rates. Customers are 
mainly billed for dockage, wharfage, consumption of electricity and water, forklift rental, security services,
and yard use at the uplands of Terminal 91. Currently, there are approximately 150 customers. 
Maritime Operations also manages dockage at Terminals 18, 28, and 69, and Piers 34 and 46 which
provide additional commercial moorage. 
Maritime Operations records vessel and billing activities in various Access databases and Excel
spreadsheets; the Billing Specialist prepares the billing spreadsheet on a monthly basis, and manually
enters the prepared information into PeopleSoft for invoicing upon the completion of Superintendents'
review. 

FINANCIAL HIGHLIGHTS 

REVENUE GENERATED BY BILLING CATEGORY 
Billing Category          2015                   2016                    2017 
Dockage              $2,388,826            $2,246,035            $2,271,232 
Wharfage                405,963               509,262               432,283 
Electrical                   492,490                  520,754                  555,230 
Water                     52,347                53,453                 68,099 
Equipment Rental         211,635               181,070                252,515 
Security                    126,592                 106,136                  101,736 
Yard Use                  391,270                489,593                 658,331 
Miscellaneous               5,251                  6,644                   9,469 
Total Revenue          $4,074,375            $4,112,945             $4,348,895 
Data Source: PeopleSoft Financial 



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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 

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 that the
evidence obtained provides a reasonable basis for our findings and conclusions based on our audit
objectives. 
The period audited was January 2016  September 2017. 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  procedures.  Our  audit  included  the  following
procedures: 
Customer Billing 
Created flow charts to obtain a comprehensive understanding of the customer billing process 
Reviewed customer aging reports to identify material delinquent balances 
Performed analytical procedures to evaluate revenue trends and to identify billing periods to test 
Agreed charge rates to various sources (e.g. tariff, Preferential Use Agreements, and City of
Seattle electric and water rates) 
Validated charges had proper supporting documentation (e.g. electrical and water reading,
electrical hook-up request, forklift rental forms, and wharfage declaration forms) 
Re-calculated charges to identify discrepancies 
Reviewed revenue accounts to verify inappropriate revenue recording 

Reconciliation between Accrual Spreadsheet and PeopleSoft 
Created flow charts and identified reconciliations of spreadsheets to PeopleSoft 
Compared total billing in the monthly accrual worksheets with those in PeopleSoft 

Accuracy and Completeness of Accrual Spreadsheet 
Created flow charts and identified spreadsheets that management uses to perform billing 
Verified the monthly accrual worksheets captured all vessel movements and billing information
accurately 




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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 

SCHEDULE OF FINDINGS AND RECOMMENDATIONS 
1) RATING: HIGH 
INEFFICIENT PROCESSES WHICH LACK SEGREGATION OF DUTIES 
The Maritime Operations Superintendent normally counts inventories and nets in the uplands area once a
day during week days and measures storage usage at month end. Outsourced Security personnel 
observe vessel arrivals and departures on an hourly basis and their observations are periodically
recorded into an access database, which is then validated and updated with additional vessel activity, by
the superintendent. Dockage at Terminal 18, 28, 34, 46 and 69 is self-reported and dependent on
customers notifying the Maritime Operations Team; no validation mechanisms exist for this. The security
personnel also count cranes and nets in the uplands on an hourly basis. For the uplands, the highest
number from the counts, by inventory type, are billed to customers1. For further information refer to
Vessel Movement and Tariff Dockage process flows attached in Exhibit A. 
The Superintendent also works normal business hours, thereby placing reliance on contracted security to
perform hourly observations/counts during non-business hours. Security personnel are minimally trained 
employees with high turnover. 
The Superintendent collects and reviews the counts from the security personnel along with the selfreported
counts and measurement, prepares the monthly yard use billing, and reviews the invoicing once
the Billing Specialist enters the billing information into PeopleSoft. A lack of segregation in the functions
of collecting billing data, preparing billing, and authorizing billing can lead to manipulation and/or
unintentional errors. For further information refer to Tariff Yard Use process flow attached in Exhibit A. 
Observing/counting vessels and vehicles in a dynamic sea and land terminal, requires a solid process,
experience, and physical presence or an equivalent electronic control. The current methodology is prone
to mistakes, lacks segregation of duties, and is dependent on outsourced third parties. 

Recommendations: 
Assess options of redesigning the current process; consider options that Maritime Operations
deems reasonable and that would alleviate current burden/dependence on outsourced staff. 
Assess the appropriate staffing needs / roles and whether current staffing is adequate to perform
tasks. Assess the level of dependence on outsourced security. 
Separate job functions relating to billing data collection and review, and invoice review and
approval. (Segregation of Duties) 



1
Revenue loss from trailers parked in the uplands is inevitable because they are counted only once a day due to staffing
limitations. The security personnel are not required to count trailers because it is not cost effective to train them to count due
to their high turn-over rate. 

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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 
Management Response/Action Plan: 
Management agrees with the recommendations.
Redesigning the current process could help alleviate the current dependence on outsourced staff.
Management has been working with Security and Information Communications & Technology (ICT) 
departments on the "Maritime Cameras Project" to assess the cost and viability of upgrading a number of
existing cameras as well as installing new cameras in new locations. This discussion is underway and
site visits are planned for late February 2018 to identify the feasibility of locations.
Management also agrees that there is a need to assess staffing levels and related level of dependence
on outsourced security.  The current security contract outlines several tasks that are beneficial to
supplementing the existing Port staff of one manager and two superintendents.  We acknowledge that
there is risk should a future contract not include that same language.  Management will conduct a
cost/benefit analysis by end Q3 2018 to see if more FTEs on the Maritime Operations team make
business sense. Management is also teaming up with other Port staff and evaluating the current security
contract to see if changes need to be made. This evaluation should be complete by the end of Q3 2018. 
Regarding the Segregation of Duties concerns, management is in the process of hiring a new Maritime
Billing and Admin Specialist. Once this position is filled, procedures will be updated to implement the
Separation of Duties.











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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 

2) RATING: HIGH 
MANUAL BILLING PROCESS AT RISK OF ERROR 
Maritime Operations utilize a variety of internally developed Access databases and Excel spreadsheets to
record billable activities. Billing categories include: dockage, wharfage, electrical and water consumption,
forklift rental, and security services. The billing process is at risk of error due to: 
Billable data kept in the Vessel Activity Log Access database is copied via a "cut & paste function"
to the monthly Vessel Log, an Excel spreadsheet used as a starting point for the monthly billing.
This could lead to incorrect and/or missing billable data in the spreadsheet if the database is
edited (e.g. changes to existing data, and new data entries) after the data is copied, and if the
spreadsheet is not updated accordingly. For further information refer to the Tariff or PUA Dockage
process flow attached in Exhibit A. 
The process is inefficient and redundant in the following manner: 
The daily Activity Count Access database maintains daily information relating fish nets, forklift
rentals, and vessel moves, which is duplicated from the other existing documentation (i.e. yard
use log, forklift rental forms, and Vessel Activity Log Access database). 
Billing entries are manually entered into PeopleSoft for invoicing. In a given month, there can be
several hundred invoice lines. 
Billing documentations (e.g. Wharfage Tonnage Declaration forms, Electrical Hookup forms, and
customer invoices) are saved on a shared drive and on the department SharePoint site.  In
addition, each billing category from the monthly accrual spreadsheet is saved separately as an
individual spreadsheet in a SharePoint site. This increases the risk of inconsistent or incorrect
data and adds additional administration time to filing. 
Recommendations: 
Maritime Operations should continue with the planned implementation of new billing software. During this
implementation, we recommend that Maritime Operations: 
Build the billable data source in the software, and have it directly linked to the monthly customer
billing to avoid any miscommunication between the data source and actual billing. 
Enable an automated billing feed between the software and PeopleSoft to eliminate the manual
invoicing of entries to PeopleSoft. 
Utilize the software as a depository to maintain necessary billing documentation, to reduce the
administrative effort and time to archive documents. 
Depending on time frame for the above longer term solution, we recommend the following short-term
Opportunities: 
Explore the possibility of linking the Vessel Activity Log Access database to the monthly Vessel
Log spreadsheet, so that the spreadsheet can be automatically updated when the databased is
changed. 
Eliminate the Daily Activity Count Access database if the database is not used for any other
purpose. 
Work with the AFR Billing department to design a mechanism of loading billing entries to
PeopleSoft. 
Re-evaluate the archive process to determine what and where documents should be saved. 

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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 
Management Response/Action Plan: 
Management is working closely with the vendor, ICT and accounting in an effort to implement a holistic
new vessel management software system to replace our manual processes. The items identified above
in the recommendations will be highlighted to ensure every practical effort is made to incorporate the
recommendations into the new billing/software system. We are cautiously optimistic that the new system
will be implemented by Q1 2019. 
Prior to implementation of the new vessel management system: Management is currently working with
AFR to explore opportunities to reduce manual processing where possible. Possibilities may include
uploading of information directly into PeopleSoft. We expect to have testing of this process completed no
later than end of Q3 2018. 
Linking the Vessel Activity Log Access database to the monthly Vessel Log Spreadsheet for automatic
updating as the database is changed has been explored. The level of expertise required to change this
process is beyond the capabilities of on-site staff and would have to be outsourced. Management has
received an estimate that it would require months to create and test this link. No money has been
budgeted in 2018 to implement this change. With the promise of the new vessel management system
coming online within the next year, management has decided not to implement this recommendation. 
Our team is currently in the process of hiring a new Maritime Billing & Admin Specialist. Once this
position is filled and the employee is proficient in performing billing duties, this person will perform an
overhaul and streamlining of our archiving process. We expect this will be completed by the end of Q1
2019. 










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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 

3) RATING: MEDIUM

INCORRECT CUSTOMER BILLING 
We tested 28 invoices from 20 customers (5 customers per month) for the months of May 2016, July
2016, June 2017 and July 2017, to verify billing completeness and accuracy. The table below highlights
discrepancies found: 
Month        Customer        Billing Type   Under-Billed Amount          Cause 
May 2016  Foss Maritime          Dockage        $254.50               Incorrect berth days 
May 2016  Aleutian Spray Fishers  Dockage        $732.00               Incorrect tariff rate 
July 2016   Crowley Maritime        Dockage         $688.00                 Incorrect tariff rate 
July 2017   Crowley Maritime        Forklift Rental    $645.00                 Missed billing 
Although the results of the above testing were from a small sample, the high error rate (14% of invoices 
tested contained an error), indicated that an opportunity exists for a more effective review of data entered
by the Billing Specialist. 
In addition, from the 28 invoices tested, we identified four yard use charges and one electrical
consumption charge that had billing discrepancies that we could not tie to the underlying supporting
documentation (e.g. yard use spreadsheet, electrician reading). This indicated that someone made a 
mistake or a change without updating the source documents. 
Recommendations: 
Where reasonable and practical, seek recovery of the under-billed amounts. 
Design appropriate new-hire training, emphasizing mistake-prone areas (e.g. counting of berth
days by customer types, applying tariff rates between monthly and daily rates, etc.) and
periodically re-enforce the billing rules to all staff. 
Consider implementing billing software, which incorporates billing rules and houses supporting
documentation. 

Management Response/Action Plan: 
Management shall explore the viability of seeking recovery of the under-billed amounts. 
Billing Training documentation has been created over Q3 & Q4 2017. This documentation is currently
being tested and improvements are continuing to be included / added into newer revisions. Billing rule
reinforcement for staff will be incorporated into staff touch-base meetings twice a year following the hire of
our new Billing Specialist. 
As mentioned above, management is working closely with the vendor, ICT, and AFR in an effort to
implement a holistic new vessel management software system to replace our manual processes. Efforts
are being made to ensure every practical effort is made to incorporate the audit recommendations into the
new billing/software system. We are cautiously optimistic that the new system will be implemented by Q1
2019. 

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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 
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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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 
EXHIBIT A: PROCESS FLOW 

Daily Vessel Movement at Terminal 91


Security writes
down pier, berth,
type, vessel name, &        Daily Vessel
arrival or departure       Movement Log
time when
applicable in the
movement log
Superintendent fills in
Daily Security
Security takes the                                                                        LOA, Security, Offload,
Supervisor transfers
Daily Vessel                                                                            Hookup, billable
log info into the
Start         Movement Log &                                                                        customer, dockage rate
Vessel Activity Log
Patrol Log, & drives                                                                       type, & billing instruction
Access database
along P90 & P91*              Security notes P-LOA                                               throughout the week
or O-LOA for Foss
tugboats, & idle or        Daily Patrol Log
full/activity for IPC
fishing boats when
applicable in the
patrol log




Superintendent
signs off upon the          Vessel Activity
Dockage
completion of the          Log database
entries


* Dependent on Security







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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 


Tariff Moorage/dockage: applicable to customers needing spot moorage who don't have leases. This type of moorage is typically available at T18, T28, P34,
P46, T69, and T91.

Customer calls or                           Superintendent
emails Maritime Ops                        reaches out to other
Start                           Available?      No                            End
to check berth                             terminals for
availability*                              availability

Yes
Superintendent
completes the Berth                       Customer fills in any
Superintendent                              Superintendent
Reservation Form with                      missing info, verifies     Customer berths its
calculates the potential                             emails the                                              Vessel
available customer info,                       the reservation         vessel at the
dockage charge based                          reservation form to                                          Movement
pier/berth, stay, etc.                       form, and signs the     assigned pier/berth
on the length of stay                               customer
(including the calculated                          form
dockage)



Billing Specialist scans
Berth Reservation        Superintendent files
the form and saves it
Form            the form in the Berth
under Documentation           End
Reservation Forms
by company, month,
folder
and year


* Potential revenue loss if customer does not self-report.









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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 


Tariff Yard Use
Superintendent
prints off a copy of                                                          Superintendent marks
Superintendent     Superintendent counts
Marshalling Yard                                                           "LL"/Lease or leaves
drives to the        quantity by item #,         Are items in
Inventory                                                       Yes   "LL" from the previous
upland to count      company, and license        leased area?
spreadsheet with                                                           day  billed by term
inventories          plate & state
counts from the                                                               rates
previous day                                             No
On the last day of the
Superintendent enters
Daily Marshalling              month, Superintendent
new counts or leaves
Yard Inventory                                                                     Yard Inventory              totals daily trailer numbers
the counts from the
Spreadsheet              by customer # & name into
previous day  billed by
Yard Use Log (use type as
the tariff
Truck Storage)

Daily, Security
Supervisor enters net
count (highest number
Start                                   Daily Patrol
for a day) into the Daily
Logs
Activity Count Access
Security logs counts                  Database by company,       On the last day of    Superintendent totals
Superintendent
manually: fishing nets                   date, #s of nets, &          the month,        daily net & crane        The log
enter leasehold
Cranes &    Security     logged in Patrol Log by                      locations            Superintendent     numbers by customer     automatically
tax (LH: >=30 days
Fishing Nets   counts      number, company, &                                      validates the daily     # & name into Yard      calculates
or NLH: <30 days)
cranes and     light poles to indicate                                      entry to identify any    Use Log (use type as    monthly charge
Monthly, Security                                                      or sales tax (S) &
fishing nets     length; Cranes are                                       abnormal entries     Net Repairs & Truck     (units * rate)
logged in Crane Log by                 Supervisor enters crane                                                      sub class
(e.g. trending)         Storage)
number & company                  count (highest number
Daily Crane       for a day) into a
Logs       spreadsheet by dates &                                                     Monthly Yard
company, and emails the                                                       Use
screen print of the
Storage
monthly entries to
Maritime Ops
Billing Specialist
copies the entire
Yard Use to the Yard
On the last day of the                Superintendent drives                Superintendent                                        Use worksheet
month,                      to the upland to                 updates the Yard Use
Superintendent prints                  measure square                Log (use type as Open
off a copy of Yard Use                 footage by customer               Storage) based on the                                     Total billing by sub
Log with customer # &                using a measurement                measurements by                                       class is included in
name                         wheeler                   customer # & name                                      the monthly accrual
& invoicing

AFR Accrual
& Invoicing







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Fishing & Commercial Operations - Maritime                                                 INTERNAL AUDIT 
January 2016  September 2017 

Tariff or PUA Dockage  Manual Billing Process

Vsl Activity
Log

At the month -end, Billing               Billing Specialist
Billing Specialist fills
Specialist copies all vessels              enters LOA under         The worksheet
billable days (= days        The worksheet
left during the month or                corresponding          automatically
on berth, a           automatically
staying at the end of the               day(s) based on        calculates Days on   Rate type = P
minimum of 125       calculates billing rate
month from the log to vessel             arrival & departure         Berth (count
days required to get       (LOA * PUA rate)
log spreadsheet via a                date & time in the          function)
PUA rate)
PivotTable                       log
Billing Specialist compiles                                  Rate type = T
the PivotTable to include
customer name & #, LOA
Billing Specialist
( Length Overall ), pier/berth
calculates billable
by each vessel
days by 24 hour
clock

Vessel Log by month
Rate Type =
Billing Specialist fills out T (full
T/P
tariff), TI (idle tariff  no             The worksheet          The worksheet         Billing Specialist enters
activities), or TS (dolphins at             vlookups         automatically calculates       sub class and leasehold
T18 & 34  rate different from         corresponding billing      total dockage (billable       tax (NLH < 30 days, or
Billing Specialist copies the                             regular dockage) per billing         rate by LOA, T, TI, & TS       days * billing rate)           LH >= 30 days)
vessel log information to                                instruction in the log
Dockage worksheet

Billing Specialist fills out                                                                                                    Dockage
T(Tariff), P ( PUA), or O
(Other) for each line based
on rate type filled by
Superintendent in the log
Rate Type = O                                                                                                    Total billing by sub
class is included in
the monthly accrual
& invoicing
Term Leases  billed through
PropWrks

AFR Accrual
& Invoicing
End








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