Committee Briefing

Internal Audit Briefing

Presented to the Port of Seattle
Audit Committee and Tay Yoshitani, CEO

Joyce Kirangi, CPA, Internal Audit Manager
January 6, 2009
Agenda

I.     Prior Audit Highlights and
Accomplishments
II.    Forward Thinking  2009 and beyond
III.   Annual Risk Assessment and 2009
Work Plan
I. Prior Audit Highlights and Accomplishments
Over $2 Millions in concession recovery to date.
3 additional audit staff hired during 2008.
Completed a number of department operational audits, including
ID/Badge, Public Parking, Ground Transportation, two maintenance
departments, and the Real Estate Recreational Boating. Internal
Audit issued a number of recommendations to help management
enhance department operations and controls.
Completed three concession audits of RAC (Rent-A-Car), including
Enterprise, Dollar, and Advantage. In the past years, Internal Audit
has recovered more than $1 million in in RAC concession
underreporting.
I. Prior Audit Highlights and Accomplishments
Completed an audit of all the in-flight kitchens leases, including
Gate Gourmet, Flying Food, and Sky Chefs.
Completed a number of lease audits, including Odyssey.
Completed a follow-up audit of six selected recommendations from
the Washington State Auditor's Office 2007 performance audit.
Internal Audit confirmed some of the SAO findings, including the
PCS altering of contractor's invoices.
Completed two employee investigations and the CEO issued
appropriate disciplinary actions.
I. Prior Audit Highlights and Accomplishments
The following third-party agreements, concessions, and leases are
currently underway: World Trade Center, Bell Harbor Conference
Center, Cruise Terminal of America (CTA), Host, Airport
Management Services Inc., Seattle Restaurant Associates, and a
review of operational effectiveness of the Port procurement system.
The following Rent-A-Car (RAC) reviews have recently been
completed and exited with management.
9Advantage  Suggested Recovery $16,516
9Dollar-- Suggested Recovery $741
9Enterprise -- Suggested Recovery $1,076.
II. Forward Thinking
Performance Audits: based on the Audit Committee long-term
goals and objective, the Committee has tasked Internal Audit to
incorporate performance audits in its audits. In the next five years,
the goal is to have 50 percent of the Internal Audit projects focus
on performance audits. Implementation of performance audit will
start in 2009.
Enterprise-Risk-Management (ERM): the Audit Committee has
requested Port management to implement a port-wide ERM
system. Internal Audit will conduct a performance audit of the Port
ERM system(s) and provide assurance and consulting services
related to the ERM efficiency and effectiveness.
III. Annual Risk Assessment and 2009 Work Plan
Risk Analysis & Exposure
Central Processing        Dept. Internal Control
Systems *                      Reviews
Lease and Concession      Federal Assistance
3rd Party Mgmt.          Performance/Operational
Effectiveness
Financial Reporting/GL      Enterprise Risk Mgmt.
Special Investigations      Capital Improvement Pgm.
III. Annual Risk Assessment and 2009 Work Plan
Assessment Process (example)
Risk Factors
Inherent   Control   Performance   Complianc
Risk       Auditable     2007                                                 Tot
Risk      Risk        Risk        e Risk
Exposure      Unit                                                        al
Central
Processing
Systems    Payroll       110 M
Accounts
Payable      628M
Billing / AR     345M
Procurement
III. Annual Risk Assessment and 2009 Work Plan
Assessment Process (example)
Risk Factors
Risk       Auditable   2007   Inherent  Control  Performance   Compliance
Exposure      Unit     Exp    Risk     Risk       Risk         Risk      Total
Dept.
Accountability
/Compliance   Av. Maint.  51M
Police      19M
SeaTec
Uility          13M
Air Term
Op      11M
Marine
Maint       10M
III. Annual Risk Assessment and 2009 Work Plan
2009 Work Plan
9 Central Processing Systems (15%)
9 Organizational operations/Internal Control Reviews
(23%)
9 Lease and Concession (35%)
9 Revenue Confirmation
9 Management Monitoring Efficiency and Effectiveness
9 Performance Aspects  new in 2009
9 3rd Party Management (3%)
9 Performance (10%)
9 ERM Performance Audits
III. Annual Risk Assessment and 2009 Work Plan

2009 Work Plan -- continued
9 Contingency (14%)
9 McKay Investigation per Commission motion of 12/9/2008 (i.e.,
11 uncooperative contractors and subs for performance and
legal compliance)
9 Internal Special Investigations

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