INTERNAL AUDIT 
COMPLETED AUDITS - 2017 AUDIT PLAN CARRYOVER 
Audit Title                        Type          Jan    Feb    Mar    Apr   May    Jun    Jul    Aug    Sep    Oct    Nov    Dec 
Host International, Inc.                      Limited Compliance 
Delta Lounge                             Operational 
P66 Norwegian Cruise Line Partnership     Operational 
Employee Parking                        Operational 
Transportation Network Companies       Operational 
Terminal 91 Dockage                      Operational 
2018 AUDIT PLAN STATUS 
Audit Title                        Type          Jan    Feb    Mar    Apr   May    Jun    Jul    Aug    Sep    Oct    Nov    Dec 
Beecher's Handmade Cheese              Limited Compliance 
Disbursements / Accounts Payable         Operational 
Sky Chef's Inc.                                 Limited Compliance 
Capital - N. Satellite                           Operational 
Dollar Rent a Car                            Limited Compliance 
TNC's Rematch (EKPI's)                     Operational 
Thrifty Car Rental                            Limited Compliance 
Fox Rent-A-Car                            Limited Compliance 
Marine Maintenance Shops               Operational 
Capital - W. Fire STA                         Operational 
Parking Soft System (Protiviti)               IT 
Change Management - AVM (Point B)      IT 
Northwest Seaport Alliance                Operational 
Data Centers - AVM                       IT 
Cruise Related Investments                Operational 
SeaTac Utilities                               Operational 
Capital - IAF                                    Operational 
Taxi Cabs (Eastside for Hire)                 Operational 
Key:        Complete 
In Process 
Not Started

INTERNAL AUDIT 
UPDATES / NEW INITIATIVES 
I.    ISSUE FOLLOW-UP PROCESS 
II.   INTERNAL SELF ASSESSMENT 
III.  STREAMLINE LIMITED CONTRACT COMPLIANCE REPORT 





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INTERNAL AUDIT 
ISSUE FOLLOW-UP PROCESS 
Monitoring of prior internal audit issues 
Internal  Audit  Standards  require  a  system  to  monitor  that 
management actions have been effectively implemented 





Generally audit issues are being addressed, "Red" issues have 
explainable business reasons. 

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INTERNAL AUDIT 
INTERNAL SELF-ASSESSMENT 
SCOPE OF REVIEW 
Aligned Generally Accepted Government Auditing Standards (GAGAS) and 
International Professional Practices Framework (IPPF) to the Port's Internal 
Audit Department Policies and Operating Procedures. 
Reviewed work papers of three audits from the 2017 audit plan to evaluate 
compliance with GAGAS and IPPF. 
Provided recommendations to audit management. 
RESULTS 
The  Port  of  Seattle  Internal  Audit  Department  complied  with  applicable 
GAGAS  and  IPPF  Standards  and  has  adequate  internal  quality  control 
processes in place to facilitate compliance. 


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INTERNAL AUDIT 
INTERNAL SELF-ASSESSMENT 
RECOMMENDATIONS 
Implement an annual formal internal self-assessment process that includes 
a summary of results and recommendations for corrective action - (GAGAS 
3.93 / IPPF 1320). 
Update procedures to reflect that the audit program for each engagement is 
approved prior to the start of fieldwork by audit management  (IPPF 
2240.A1). 
Update procedures to reflect that each auditor is required to complete at 
least 20 hours annually of Continuing Professional Education and retain 
course outlines / materials - (GAGAS 3.76). 
Identified opportunities to streamline the internal audit process. 


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NEW LIMITED CONTRACT COMPLIANCE REPORT 
INTERNAL AUDIT REPORT 
LIMITED CONTRACT COMPLIANCE
CONCESSION NAME 

JANUARY 2015  DECEMBER 2017 

ISSUE DATE: JUNE 25, 2018 
REPORT NO. 2018-09

Limited Contract Compliance                                                                          INTERNAL AUDIT 
January 2015  December 2017 
EXECUTIVE SUMMARY 
Internal Audit (IA) completed an audit of the Lease and Concession Agreement between XXX and the Port of Seattle (Port). 
No exceptions were identified or we identified the following exception(s): 
AUDIT SCOPE AND METHODOLOGY 
We conducted this 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 2015 through December 2017 and included the following audit procedures: 
Revenue Completeness and Accuracy 
Verified the mathematical accuracy of concession fees. 
Traced concession payments to Port records to verify payments were received by Agreement dates. 
Agreed revenue reported to the Port to the Concessionaire's general ledger, revenue reports, and z-tapes
(source data). 
This audit did not include an evaluation of internal controls. 

Glenn Fernandes, CPA 
Director, Internal Audit 

RESPONSIBLE MANAGEMENT TEAM 
Name, Title 
Name, Title 
Name, Title 

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OPERATIONAL AUDITS 
1) North Satellite Airport Renovation and Expansion Project (NSAT) 
2) TNC Re-match: Environmental Key Performance Indicator (E-KPI) 
3) Disbursements / Accounts Payable 





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INTERNAL AUDIT 
NORTH SATELLITE RENOVATION AND EXPANSION PROJECT 
BACKGROUND 
The Port and Alaska Airlines are partnering to create an efficient "Curb to 
Gate" operation at the north end of the Airport. As of January 2018, total Port 
costs were $98.3 million from a Commission approved budget of $658.3 
million. The project is expected to be complete in the spring of 2021. 
RESULTS 
1. (High) A letter of understanding (LOA) that the Port issued to Alaska, to 
assure alignment, was not legally binding, but nonetheless had the ability to 
materially impact the project's cost and timeline.  Failure to adhere to this 
LOA  resulted  in  changes  that  increased  the  cost  of  the  project  by 
approximately $31.8 million and delayed the schedule by approximately 39 
weeks. 
2. (Medium) The process utilized to reimburse Alaska for work performed, did 
not adequately involve key stakeholders to assure that what was reimbursed, 
was aligned with the value received by the Port. 
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INTERNAL AUDIT 
NORTH SATELLITE RENOVATION AND EXPANSION PROJECT 
MANAGEMENT ACTION PLAN (IN PART) 
1. For future projects, we will: 
Require tenants to possess or provide a strong technical team 
sufficient to meet the needs of the project. 
Develop an improved change management process into the Tenant 
Reimbursement Agreement to better control scope changes and to 
determine responsibilities for cost increases. 
Changes to design, scope, and schedule, will not be pursued without 
a written agreement. 
We will prepare a written letter and request reimbursement of $1.2 million 
from Alaska for the dual passenger doors. 
2. Since 2017, Aviation performs all concept development for Port owned 
facilities  through  the  On  Call  Planning  consultants.  This  will  make  it 
unnecessary  for  tenants  to  develop  concepts  with  the  expectation  of 
reimbursement from the Port. 

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INTERNAL AUDIT 
TNC RE-MATCH - ENVIRONMENTAL KEY PERFORMACE INDICATOR 
BACKGROUND 
Re-match was introduced at the airport on December 5, 2017. The program 
allows TNCs, including those that don't meet the miles per gallon restriction, 
who complete an airport drop-off, to immediately receive a pick-up request, 
without having to wait in the holding lot. Under Re-match, vehicles that don't 
meet the 45 MPG restriction are permitted to pick-up passengers, only if they 
receive a matched trip, after completing an airport drop-off. 
The Port uses the Environmental Key Performance (E-KPI) metric as a tool 
that  was  designed  to  demonstrate  equivalency  with  the  environmental 
performance of outbound, on-demand taxis at Sea-Tac Airport. It is expressed 
in units of lbs. of CO  per typical passenger-trip and the formula sums the 
2
Airport  drop-off  trip  fuel  consumption  with  the  Airport  pick-up  trip  fuel 
consumption multiplied by the carbon emissions per fuel consumed. 

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INTERNAL AUDIT 
TNC RE-MATCH - ENVIRONMENTAL KEY PERFORMACE INDICATOR 
RESULTS 
(High) The Re-match program is an innovative solution that reduces deadheading 
and greenhouse gases, while also having the potential to ease congestion at 
airport drives. However, the E-KPI in its current form could result in TNCs serving 
the airport with a fleet of vehicles that are not considered "green" vehicles. 
The graph below reflects a decline in deadheading but also a decline of the 
average  MPG.  The  decrease  in  deadheading  also  lowers  the  average  MPG 
allowed to comply with the current 10.82 E-KPI requirement. 
Deadheading % and MPG 
80% 
49
75% 
47
70%
45
65%
43        Deadheading %
60%                                                           41       Avg Pickup MPG
55%                                                                  39       Min Avg Pickup MPG
50%                                                           37
45%                                                           35
40%                                                           33
Oct-17    Nov-17    Dec-17    Jan-18    Feb-18    Mar-18    Apr-18

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INTERNAL AUDIT 
TNC RE-MATCH - ENVIRONMENTAL KEY PERFORMACE INDICATOR 
MANAGEMENT ACTION PLAN (IN PART) 
When the contract is renewed, or before any long term agreement is signed, 
we will review the overall TNC performance under the E-KPI approach to 
assure we continue to reduce emissions through highly efficient operations and 
service providers at the Airport. Additionally, assumptions made in the E-KPI 
equation  will  be  more  clearly  described  in  the  contract  to  eliminate  any 
possible confusion about how the equation is applied. 




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INTERNAL AUDIT 
DISBURSEMENTS / ACCOUNTS PAYABLE 
BACKGROUND 
The disbursements function within the Accounting and Financial Reporting 
Department (AFR) reviews supporting documentation, general ledger coding, 
and enters invoice data into PeopleSoft. 
In early 2017, AFR began using COR360, a third party software designed to 
streamline  and  control  invoice  payments.  COR360  gives  employees, 
including  those  outside  AFR,  approval  authority  to  request  payment  for 
invoices. 
The  table  below  reflects  disbursements  for  January  1,  2017  through 
December 31, 2017: 
2017 DISBURSEMENTS BY TYPE 

METHOD                       AMOUNT   % BY AMOUNT     COUNT          % BY COUNT 
Check                                      $76,467,068                 11%          6,174                          43% 
Electronic Payments*                        598,010,956                 89%           8,137                           57% 
TOTAL                                 $674,478,024              100%        14,311                       100% 
* Includes ACH, wire, and EFT 

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INTERNAL AUDIT 
DISBURSEMENTS / ACCOUNTS PAYABLE 
RESULTS 
1. (Medium) A Port wide delegation of authority for approving invoice 
payments should be reviewed and approved by Executive Management 
and memorialized into Executive Policy (EX-2) guidance. Delegations of 
authority  establish  approval  limits  that  generally  correlate  to  the 
individual's level and responsibility within the organization. 
2. (Medium) Opportunities were identified to improve internal controls. 
These  opportunities  include,  implementing  controls  to  disable  user 
access  when no longer needed, validating the accuracy of invoices 
entered into PeopleSoft, and segregating the responsibility of adding and 
approving vendors. These changes to internal controls align to best 
practices and would further refine processes. 


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INTERNAL AUDIT 
DISBURSEMENTS / ACCOUNTS PAYABLE 
MANAGEMENT ACTION PLAN (IN PART) 
1. We acknowledge that the auditor recommendation enhances visibility in 
the control environment. As recommended, a higher Executive-level review 
and affirmation of payment authorization delegations will be implemented, to 
augment department management authorized delegations. AFR will extract 
the payment delegations currently contained in COR360 and incorporate 
them into the executive level EX-2 delegation schedules. 
2. As recommended: 
Quarterly user access reviews will be put in place to identify and remove 
access when an employee transfers departments or the need is no 
longer necessary. AFR has put in place a review of COR360 payment 
delegations, each time a termination notice is received from HR. 
We  will  institute  batch  total  controls  between  COR360  output  and 
PeopleSoft  Financials  accounts  payable  system  input,  to  validate 
completeness. 
AFR will work in partnership with CPO to assess this change. 
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LIMITED CONTRACT COMPLIANCE AUDITS 
1) Sky Chefs, Inc. 
2) CMC Investments, Inc. dba Dollar Rent-A-Car 
3) Beecher's Handmade Cheese 





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INTERNAL AUDIT 
SKY CHEFS, INC. 
BACKGROUND 
Sky Chefs provides in-flight catering service, including the preparation and 
distribution of in-flight foods. 
Sky Chefs pays a monthly concession fee and land/building rent based on 
square footage (see table below). 
SKY CHEFS, INC. 
FISCAL YEAR                     GROSS REVENUES     CONCESSION REVENUE    LAND & BUILDING RENT 
2015                                          $49,032,636                   $3,428,844                     $483,268 
2016                                           51,612,608                    3,611,374                      483,268 
TOTAL                                    $100,645,244                 $7,040,218                   $966,536 
* Data Source: PeopleSoft Financials 
RESULTS 
We concluded that the Lessee materially complied with the significant terms 
in the Agreement. 

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INTERNAL AUDIT 
DOLLAR RENT-A-CAR 
BACKGROUND 
CMC Investments, Inc. is a private company and operates under the name 
Dollar-Rent-A-Car. 
The  agreement  requires  a  Minimum  Annual  Guarantee  (MAG)  and  a 
Percentage Fee equal to 10% of Concessionaire's gross revenues, provided 
the fee is higher than the monthly MAG. The agreement also requires the 
Concessionaire to collect a Customer Facility Charge (CFC) of $6 per rental 
day. The table below reflects total gross revenue, concession fees, and CFC 
fees: 
REPORTED GROSS REVENUE AND CONCESSION CALCULATION            CUSTOMER FACILITY CHARGE 
AGREEMENT YEAR      REPORTED GROSS REVENUES         CONCESSION FEES           REPORTED CFC FEES 
2014 - 2015                                $16,093,271                   $1,609,327                        $1,943,754 
2015 - 2016                                 16,071,679                    1,607,168                         2,042,244 
2016 - 2017                                 16,555,626                    1,655,563                         2,207,856 
TOTAL                                $48,720,576                $4,872,058                     $6,193,854 
Data Source: PeopleSoft Financials and Propworks 


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INTERNAL AUDIT 
DOLLAR RENT-A-CAR 
RESULTS 
1. (Medium) The Concessionaire did not report $343,326 in incidental 
gross revenues to the Port, resulting in $34,333 in Percentage Fees 
owed to the Port. 
2. (Medium) The CFC was over-reported to the Port, by $19,596 for the 
audit period. This was primarily due to a mistake by Concessionaire in 
November 2015, which resulted in an overpayment of that month's CFC 
to the Port. 



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INTERNAL AUDIT 
DOLLAR RENT-A-CAR 
MANAGEMENT RESPONSE 
1.  Aviation Commercial Management (ACM) will seek to recover the 
underpaid Percentage Fees, together with any applicable late fees 
and interest charges. ACM will also communicate both verbally and in 
writing   that   the   revenues   identified   above,   are   not   permitted 
exclusions from revenue according to the Agreement. 
2.  Aviation Commercial Management will refund the overpaid CFC's. 




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INTERNAL AUDIT 
BEECHER'S HANDMADE CHEESE 
BACKGROUND 
Beecher's Handmade Cheese (Beecher's) is headquartered in Seattle 
and operates four cafs offering an assortment of fresh sandwiches, 
soups, salads, and cheeses. 
Beecher's pays the Port a Minimum Annual Guarantee (MAG) equal to 
eighty-five percent (85%) of the total amount paid by the Lessee for the 
previous year. In addition to the MAG, Beecher's pays a twelve percent 
(12%) concession fee, to the extent the percentage fee was higher than 
the monthly MAG payment. 
The table below reflects the concession revenue earned by the Port: 
BEECHER'S HANDMADE CHEESE 
YEAR                                               GROSS SALES     CONCESSION REVENUE 
2014                                                                     $3,712,924                         $445,551 
2015                                                                      4,461,175                          535,341 
2016                                                                      5,748,587                          689,831 
2017                                                                      6,903,741                          828,449 
TOTAL                                                             $20,826,427                     $2,499,172 
* Data Source: PROPworks 

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INTERNAL AUDIT 
BEECHER'S HANDMADE CHEESE 
RESULTS 
(Medium)  The  Agreement  requires  the  Lessee,  in  part,  to  maintain 
records for a period of three years. However, the daily point of sale data 
was not provided to Internal Audit in its original format; rather, an excel 
document was provided. Cash register z-tapes, in their original format, 
are  necessary  to  obtain  reasonable  assurance  to  conclude  on  the 
accuracy of concession revenue. 
MANAGEMENT RESPONSE 
Due to unusual circumstances, Beecher's was unable to provide original 
documentation to support their reported sales. Airport Dining and Retail 
staff has communicated with Beecher's senior management about the 
requirement in their lease to provide sales documentation in its original 
format and have requested that they provide that documentation along 
with their 2018 certified annual sales report. 

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