Fox Rent-A-Car, Inc.

INTERNAL AUDIT REPORT 
LIMITED CONTRACT COMPLIANCE 
FOX RENT-A-CAR, INC. 

JUNE 2014  MAY 2017 

ISSUE DATE: AUGUST 7, 2018 
REPORT NO. 2018-07

FOX Rent-A-Car, Inc.                                                                           INTERNAL AUDIT 
June 2014  May 2017 
TABLE OF CONTENTS 

EXECUTIVE SUMMARY .......................................................................................................................................... 3 
BACKGROUND ....................................................................................................................................................... 4 
AUDIT SCOPE AND METHODOLOGY ...................................................................................................................... 5 
SCHEDULE OF FINDINGS AND RECOMMENDATIONS .......................................................................................... 6 
APPENDIX A: RISK RATINGS.................................................................................................................................. 8 














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FOX Rent-A-Car, Inc.                                                                           INTERNAL AUDIT 
June 2014  May 2017 

EXECUTIVE SUMMARY 
Internal Audit (IA) completed an audit of the Lease Agreement between FOX Rent-A-Car, INC. (FOX /
Operator) and the Port of Seattle (Port) for the period June 1, 2014 through May 31, 2017. The audit
objective was to determine whether the Operator complied with significant financial provisions of the
Agreement, including whether reported gross revenues and the Customer Facility Charges (CFC) paid to
the Port were complete and reasonable. 
We determined that the Operator underreported certain gross revenue items and the CFC. 
1)  FOX did not report $521,500 in incidental gross revenue, resulting in approximately $52,150 in 
additional Percentage Fees owed to the Port. 
2)   The Lease Agreement requires the Operator to remit the full amount of the CFC regardless of
whether or not the full amount is actually collected. In certain instances, FOX did not charge the
CFC and as a result, did not remit $10,578 to the Port. 
The two items resulted in an underpayment to the Port of approximately $63,000 for the three-year
period ending May 31, 2017. These issues are discussed in more detail beginning on page six and seven
of this report. 
We extend our appreciation to management and staff of the Aviation  Commercial Management
Department, the Operator, and the Accounting and Financial Reporting Department for their assistance
and cooperation during the audit. 


Glenn Fernandes, CPA 
Director, Internal Audit 



RESPONSIBLE MANAGEMENT TEAM 
Lance Lyttle, Managing Director Aviation 
Jim Schone, Director AV Commercial Management 
Jason Johnson, Aviation Property Manager 3 


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FOX Rent-A-Car, Inc.                                                                           INTERNAL AUDIT 
June 2014  May 2017 

BACKGROUND 

Fox Rent-A-Car, Inc. (FOX) is a California corporation that provides automobile rental services. The
company operates in 20 locations throughout the Western United States, including California,
Washington, Utah, Nevada, and Arizona. 
In July 2008, the Port entered into a Consolidate Rental Car Facility Lease Agreement (Agreement) with
FOX. The terms of the Agreement provide for a Minimum Annual Guarantee (MAG) of the higher of: (1)
85% of the total amount paid to the Port in the previous Agreement year, or (2) the Initial MAG, bid by the
Operator, of $501,000. Additionally, the Agreement requires a Percentage Fee equal to 10% of the
Operator's gross revenues, provided the fee is higher than the monthly MAG. 
The MAG is payable in advance, on or before the first day of each month, without notice from the Port.
The Percentage Fee, if applicable, is due on or before the 20th of the following month.
The Agreement states that the Operator must collect a Customer Facility Charge (CFC) of $6 per rental
day. 
The table below reflects total gross revenue, percentage fees, and CFC fees: 

REPORTED GROSS REVENUE / PERCENTAGE FEES / CFC FEES
REPORTED GROSS    CONCESSION
AGREEMENT YEAR        REVENUES          FEES REPORTED CFC FEES
2014-2015           $10,014,977          $1,001,498               $1,428,216
2015-2016            11,289,695           1,128,970                        1,589,052
2016-2017            11,661,478           1,166,148                        1,443,594
TOTAL          $32,966,150         $3,296,616             $4,460,862
Data Source: PeopleSoft Financials and Propworks 








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FOX Rent-A-Car, Inc.                                                                           INTERNAL AUDIT 
June 2014  May 2017 

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 June 2014 through May 2017. After identifying significant provisions in the
Agreement, we performed audit procedures that included: 
Revenue Completeness and Accuracy 
Traced concession payments to Port records to verify payments were received by Agreement 
dates.
Agreed revenue reported to the Port, to the Operator's general ledger, revenue reports, and to
FOX audited schedules. 
Customer Facility Charge 
Agreed Operator's audited CFC counts to database records. 
Reviewed checkout and return date records to assess the reasonableness of daily transactions. 
Insurance and Rent Security 
Determined whether commercial general liability insurance and rent security met Agreement 
requirements. 









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FOX Rent-A-Car, Inc.                                                                           INTERNAL AUDIT 
June 2014  May 2017 

SCHEDULE OF FINDINGS AND RECOMMENDATIONS 
1) RATING: MEDIUM 
FOX did not report $521,500 in incidental gross revenue, resulting in approximately $52,150 in additional 
Percentage Fees owed to the Port. 
Our analysis of the Operator's financial records and testing of transactions identified the following items
that were not included in Gross Revenues when reported to the Port: 
Time and Mileage Fees                          Energy Recovery Fee 
Customer / Business Rebates                     Early Charge 
Detailing Fee 
The Operator has acknowledged these items. The underreported revenue is reflected in the table below. 
ADDITIONAL PERCENTAGE FEE DUE TO THE PORT

AGREEMENT YEAR       REPORTED        AUDITED     DIFFERENCE
2014-2015         $10,014,977          $10,182,508             $167,531
2015-2016          11,289,695           11,469,324                        179,629
2016-2017          11,661,478           11,835,818                        174,340
Concession Revenue Underreported           $521,500
Concession Fee Due            $52,150
Data Source: PeopleSoft Financials, Propworks, FOX records 
Recommendations: 
1. Seek and recover $52,150 in underpaid Percentage Fees. 
2. Assess the applicability of a one-time late charge and any accrued interest. 
3. Communicate with the Operator, to assure that future reported Gross Revenues include the items
listed above. 
Management Response / Action Plan 
Aviation Commercial Management will seek to recover the underpaid Percentage Fees, together with any
applicable late fees and interest charges. Aviation Commercial Management will also communicate both
verbally and in writing that the revenues identified above, are not permitted exclusions from revenue
according to the Agreement. Therefore, effectively immediately, those revenue items are required to be
included in their monthly reports of gross revenues provided to the Port. Revised reports that include
these excluded gross revenues, as well as payment of any additional Percentage Fees, will be requested
for those months that have transpired since the end of the audit period. 
DUE DATE: 10/31/2018 


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Fox Rent-A-Car, Inc.                                                                               INTERNAL AUDIT 
June 2014  May 2017 

2) RATING: MEDIUM 
The Agreement requires the Operator to remit the full amount of the CFC regardless of whether or not the
full amount is actually collected. In certain instances, FOX did not charge the CFC and as a result, did not
remit $10,578 to the Port. 

The lease Agreement under Section 6.2.1 stipulates: 
"Each Operator must collect the Customer Facility Charge at the time the first payment is made for a
qualifying vehicle rental transaction, and must remit the full amount of the Customer Facility Charge to
the Port regardless of whether or not the full amount of such Customer Facility Charge is actually
collected by the Operator from the person who rented the automobile." 
The Operator acknowledged the differences in CFC, which are summarized in the table below: 
ADDITIONAL CFC DUE TO THE PORT

AGREEMENT YEAR   REPORTED       AUDITED   DIFFERENCE
2014-2015      $1,428,216          $1,439,304           $11,088
2015-2016       1,589,052           1,590,006                        954
2016-2017       1,443,594           1,442,130                     (1,464)
CFC Due         $10,578
Data Source: PeopleSoft Financials, Propworks, FOX records 
Recommendations 
1. Seek and recover the $10,578 in underpaid Percentage Fees. 
2. Assess the applicability of a one-time late charge and any accrued interest. 
3. Communicate with the Operator, to assure that future CFC's are remitted as required by the
Agreement. 
Management Response / Action Plan 
Aviation Commercial Management will seek to recover the underpaid CFC's, together with any applicable
late fees and interest charges. Aviation Commercial Management will also communicate both verbally
and in writing to remind the Operator of their obligations with respect to collection and remittance of the
CFC to the Port. 

DUE DATE: 10/31/2018 



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Fox Rent-A-Car, Inc.                                                                               INTERNAL AUDIT 
June 2014  May 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
Rating        Financial        Internal Controls       Compliance          Public         Commission/
Management 
Large financial                                                        High
Noncompliance
impact                                                    probability for       Important 
Missing, or         with applicable
external audit
inadequate key     Federal, State, and
HIGH        Remiss in                                          issues and/or      Requires
internal controls      Local Laws, or Port
responsibilities of                                                        negative           immediate
Policies 
being a custodian                                                  public            attention 
of public trust                                                          perception 
Partial controls 
Potential for         Relatively
Inconsistent
external audit        important 
Not adequate to      compliance with
Moderate                                            issues and/or
MEDIUM                       identify       Federal, State, and
financial impact                                                       negative        May or may not
noncompliance or    Local Laws, or Port
public       require immediate
misappropriation          Policies 
perception          attention 
timely 
Internal controls in                                  Low
place but not                             probability for
Generally complies
consistently efficient                            external audit    Lower significance 
with Federal, State
Low financial          or effective                               issues and/or
LOW/                                      and Local Laws or
impact                                                       negative       May not require
Exit Items                                               Port Policies, but
Implementing/enhan                          public          immediate
some minor
cing controls could                            perception          attention 
discrepancies exist 
prevent future
problems 








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