Exhibit       \' ts"
\av
Port Commission liego
.
m   Meeting Of 3m
\\  2.0 \\
"
P0rt 3%"                      R0. Box 1209
:_   Seattle. WA 93111-1209
Tel: (208) 787-3000
of seattIe
www.p0rtseatile.org

November 22, 2010


Dear Auditor Sonntag,

The Port of Seattle Commission
wants to commend the hard work of
your staff on the near final State Auditor's
Office (SAO) Performance Audit of the
Port of Seattle, focusing
on the Port's real estate
practices.  The Port of
Seattle Commission shares with
you the goal of effective, transparent, and
highly performing government, and
have embraced this                                                                                    we
as our responsibility at the Port of Seattle.
We appreciate the outside
perspective, and take
seriously our obligation to review the audit and provide
a meaningful response.


Part in a manner that complies with
all State laws, including the
Open Public Meetings Act.
procedures require that 1)                                                                     Specifically, your
no public discussion take place before
you finalize the wording of the audit
make the audit public, and 2) the Port of                                                              report and
Seattle provides the SAO with
a formal response to the audit for
in the publication of the final draft.                                                                      inclusion

As the Port of Seattle Commission is an elected executive body and is ultimately responsible for the Port's
performance, the Commission
as a body must ultimately
approve the Port of Seattle's formal
and must do so in public.                                                                response to any audit
Unfortunately, we are unable to both fully discharge that duty and satisfy the SAO's
requests as stated above.





and its work
,
is now an integral part of the
Port of Seattle.  This
committee meets monthly, in public, and meetings are audio web-streamed. The Audit
Committee and the
Internal Auditor develop
an annual audit work plan
governing the Work of the internal Auditor and the
Audit
Committee, and, as your 2007 Performance Audit
Report recommended, the Port internal Auditor
Port Commission and the Port Chief                                                              reports to the
Executive Officer (CEO).

Given that the Port Commission's
Oversight authority regarding external audits is now well-dened through the
Audit Committee,
as described in the attached Audit
Committee Charter, we would like
to suggest some changes
to current practices relating to
your external performance audits.

Currently, our external audits
use the following process:

The external Auditor conducts
an entrance conference briefing to the Audit
Committee in public session, covering
scope, work schedule, and timing of the audit, which is
included in the annual internal Audit Work
Plan.
An in-progress update is given to the Audit Committee,
as stipulated in the Auditors' Work
schedule.
A draft final audit report is reviewed by Audit Committee members
and the CEO, and written
submitted for consideration by the                                                             responses are
external Auditors. This provides
an opportunity for the external
Auditors to
incorporate any changes to the final audit
report.

Finally, an Exit Conference briefing is given
to the Audit Committee
on the nal audit report in public
session for
comment and discussion.

We suggest a similar procedure for
wrapping up this audit and for all future SAO performance
audits, with some
modifications. The first draft of the audit could
be reviewed internally by individual
Commissioners and the CEO,
and the initial feedback to the SAC
would also be kept internal,
as is the current practice. The Auditor
would then
use those comments to make
any appropriate changes in the final draft
report. This would insure that the first
draft reviewed by the Commissioners
and CEO and the initial Commission/CEO
response back to the SAC would
not be released in public, and
give your office the opportunity to respond
to our initial comments in drafting the
final draft report. The Audit Committee
and the Port of Seattle Commission would
then respond publicly to that
draft external performance audit and
that, along with management's
comments, would constitute the Port's
formal response.

The Commission continues to
strengthen its oversight role and that of the Audit
Committee to ensure that the Port
of Seattle is effectively and efficiently
performing its core mission of creating jobs and economic vitality for King
County. Public discussion about performance audits
of our public agencies helps
our citizens develop greater
confidence in their government institutions.

We recognize that this is
a work in progress and that
you and your office may have other suggestions for
the process to enable the Commission                                                            improving
to both discharge its duties and support the SAO's effort.
We welcome
these and look forward to discussing them
with you at the earliest
opportunity so we can conclude this audit and
lay a more workable process for subsequent
ones.
Sincerely,
(6%.) }
"x
wage -at: (a w"
,
Gael Tarleton
Tom Albro
Chairperson
Member
Port of Seattle Commission Audit
Committee              Port of Seattle Commission Audit
Committee

CC:     Seattle Port Commission Members

Tay Yoshitani, CEO, Port of Seattle

PORT OF SEATTLE AUDIT COMMITTEE CHARTER

Purpose and Authority

The Audit Committee is a standing committee created by the Seattle Port Commission.
Its general purpose is to represent the Commission and have review and
oversight
authority on matters relating to the Port of Seattle auditing process and procedures. It will
assist the Port of Seattle Commission in fulfilling its oversight
responsibilities for:
> The integrity of the Port's financial statements,

> The effectiveness of the Port's internal control system
over financial
reporting, compliance and operations,
> The periodic performance audits to be conducted
on Port of Seattle operations
programs, activities and business processes,
> The independent auditor's qualications and independence, and

> The performance of the Port's internal audit function and independent
auditors.

In carrying out these responsibilities, the Audit Committee shall determine that
any
audits, which are required to be conducted under the United States Government
Accountability Office's Government Auditing Standards, are conducted in accordance
with those standards. The Audit Committee shall provide
opportunities for auditors to
discharge their responsibilities for communication with those charged with
governance as required under those standards.

The Audit Committee is empowered to seek
any information it requires from Port of
Seattle employees on departmental audit matters, all of whom
are directed to
cooperate with the Committee's requests. The Committee shall keep the CEO
apprised of all such requests.

If the committee determines that in order to meet its responsibilities it
requires the
independent services of an outside advisor or consultant having expertise in nancial
reporting, auditing and internal controls, it may propose the retention of such advisor
or consultant to the Commission for approval.

Dues

The Audit Committee will

0   Review and recommend to the Commission, based
on an open competitive process,
the independent auditors to be selected to audit the nancial
statements and the
federal grant and Passenger Facilities Charge
programs of the Port of Seattle and
other audit services.

o   Oversee the Director of Internal Audit's plans and activities and review with
the
Director the staffing, and organizational structure of the internal audit
function,
including coordination of audit effort with the external auditors...", including
coordination of audit effort with the external auditors.  Audit Committee
responsibilities will include:
0  Formally approve the Director of Internal Audits annual audit plan. The
annual plan will include which departments, vendors,
agreements, leases,
and other areas that to be audited by the Director of Internal Audit and
audit staff.

Review the findings and recommendations of internal audits conducted of
these areas at the Port of Seattle, in regards to financial
compliance,
internal controls, performance and efciency.

Monitor the progress of the internal audit function against its
long-term
goals and objectives.
Elicit any recommendations of the improvement of such internal controls
or particular areas where new or more detailed controls
or procedures are
desirable. Schedule and hear reviews of these improvements presented
by
Port of Seattle staff as deemed
necessary.
0   Review with the Port's External Auditors:

O  The independent auditors' annual audit of the Port's financial
statements,
as well as related notes and related notes and management's discussion
and
analysis.
The management letter and the schedule of unadjusted differences.

The independent auditors' judgments about the quality of the Port's
accounting principles as applied in its nancial reporting.
The independent auditors' single audit of the federal
grant awards
administered by the Port.
Any performance or accountability audits performed on the Port of
Seattle. This will include a review of final audit findings and
recommendations including management's response and analysis.

0   Review with performance auditors
any performance audits conducted on Port of
Seattle operations, programs, activities and business
processes. In carrying out these
responsibilities, the Audit Committee shall:
0  Encourage discussion between management, the Commission and other
stakeholders in order to identify future potential
areas of performance
audit focus.

Provide recommendations to the Commission regarding specic audit
areas for consideration, including suggested audit objectives,
scope and
evaluation criteria.


I")

o  If necessary, and only upon Commission approval, solicit proposals from
independent auditing firms based on the approved performance audit
objectives, scope and criteria, and recommend an independent auditing
firm for appointment by the Commission if, after consulting with the
Internal Audit Manager, it is determined that outside resources
are
necessary.
0  Report the results of such audits to the Commission when completed.

0   Discuss with management the Port's major policies with respect to risk assessment
and risk management.

0   Provide an annual report to the Commission that describes how the Audit
Committee has discharged its duties and met its responsibilities. Commissioners
who are Audit Committee members may make interim reports
as necessary.

Internal Responsibilities

The Audit Committee will:

0   Approve one and ve year goals and objectives for the Audit Committee and
monitor progress in achieving those goals and objectives.

0   Review and assess the Audit Committee charter annually, requesting Commission
approval for proposed changes.

Composition

The Audit Committee will consist of at least two (2) members of the Port of Seattle
Commission and one (1) public member approved by the Commission. Commission
members of the audit committee, as well as the committee chair, will be selected by the
Commission President at the beginning of each calendar year.

The public member will be recommended by the Audit Committee for appointment and
confirmation by the Commission. The public member may be removed during his
or her
term by the Commission President.

Each committee member will be independent of Port management and
any external audit
firm currently employed by the Port or subcontracted by any auditor employed by the
Port. The public member must have the following qualifications:

0   Experience with generally accepted accounting principles (GAAP) and generally
accepted auditing standards (GAAS).
0   Experience in the preparation or auditing of the financial statements of public
entities.

0   Experience in the application of GAAP in regards to estimates, accruals, and

reserves.
0   Experience in the assessment and evaluation of internal controls, including risk
assessment.
0   An understanding of, or experience with
a public sector Audit Committee.
An understanding of, or experience with, performance audits.
0   Can make a commitment to
serve a three year term.

The public member will serve
as an advisor to the audit committee and is not considered
a voting member of the committee for the
purposes of quorum determination or voting on
any official business of the committee.
Meetings

The committee will meet at least four times
a year, with authority to convene additional
meetings, as circumstances require.

All committee meeting
are open public meetings.

A quorum of the committee is required to conduct official committee business.
A
quorum is dened as a majority of voting members.

The committee will invite members of
management, auditors or others to attend meetings
and provide pertinent information,
as necessary.

Meeting agendas will be prepared and provided in advance to members, along with
appropriate briefing materials. Minutes will be prepared and approved by the Audit
Committee.