INTERNAL AUDIT REPORT 
LIMITED CONTRACT COMPLIANCE 
AIRPORT TENANT MARKETING PROGRAM 

JANUARY 2016  DECEMBER 2018 


ISSUE DATE: FEBRUARY 22, 2019 
REPORT NO. 2019-01 
INTERNAL AUDIT

Airport Tenant Marketing Program 
January 2016  December 2018 

TABLE OF CONTENTS 

EXECUTIVE SUMMARY ................................................................................................................................................. 3 
BACKGROUND .............................................................................................................................................................. 4 
AUDIT SCOPE AND METHODOLOGY ........................................................................................................................... 5 
SCHEDULE OF FINDINGS AND RECOMMENDATIONS............................................................................................... 6 
APPENDIX A: RISK RATINGS ........................................................................................................................................ 7 













2

Airport Tenant Marketing Program 
January 2016  December 2018 
EXECUTIVE SUMMARY 
Internal Audit (IA) completed an audit of the Airport Tenant Marketing Program (Program) for the period
January 1, 2016 through December 31, 2018. The objective of the audit was to assess compliance with
provisions as reflected in the lease and concession agreements (Agreements). Specifically, the accuracy
and completeness of fund contributions, internal controls over disbursements, and the existence of
annual business plans. 
The objective of the Program, as reflected in the 2018 Marketing Plan, is "to increase awareness for the
Airport Dining and Retail (ADR) locations and promote brand identity for the entire ADR program." The
program is funded by the concessionaires at the Airport who contribute one half of one percent (0.5%) of
monthly gross sales, not to exceed $24,000 per agreement year. For leases signed in 2016 and beyond,
the marketing fee is capped at $30,000. 
We concluded that disbursements support the promotion of concessions and marketing-related staff
activities, as required per the Agreements. We also validated that fund assessments were materially
complete and accurate. However, we identified one medium rated issue, which if implemented, will
assure compliance with the Agreements, will improve how decisions are made, and will increase overall
governance of the Program (see below): 
1) The annual business plan outlining the objectives, budget, and evaluation methodology was not
created in 2017, as required per the Agreements. Furthermore, budget approvals and documentation of 
key decisions were not consistently performed. With almost $1.2 million in annual fund contributions,
formal processes should be established to facilitate effective oversight and management of the Program.
This issue is discussed in more detail beginning on page six. 
We extend our appreciation to Port management and staff for their assistance and cooperation during the
audit. 


Glenn Fernandes, CPA 
Director, Internal Audit 


Responsible Management Team 
Dawn Hunter, Senior Manager, Airport Dining and Retail 
Lance Lyttle, Managing Director Aviation 
Jim Schone, Director, Aviation Business Development 

3

Airport Tenant Marketing Program 
January 2016  December 2018 
BACKGROUND 

In 2005, the Port established a marketing program (Program) to promote the concessions at the Airport.
The goal of the Program is to "reach" the active traveler at the most effective moments and locations
throughout their travel window. The marketing approach is not designed to add clutter to an already
complex messaging environment, but to use a simple and visible strategy that is intuitive and highly
visible. 
Each calendar year, the Port develops the Program's annual business plan, objectives, evaluation
methodology, and budget for the year based in part on an analysis of the effectiveness of the previous
year's Program. 
The program is funded by the concessionaires at the Airport who contribute one half of one percent
(0.5%) of monthly gross sales not to exceed $24,000 per agreement year. The limit increased to $30,000
for leases signed subsequent to January 2016. As of January 2016, intermediate kiosks joined the
program contributing one quarter of one percent (0.25%) of monthly gross sales, but no more than
$15,000 per facility year.
All contributions to the Program may only be expended for the promotion of concessions and marketing
related staff activities at the Airport and for no other purposes. These expenditures may include
advertising, media placements, special events, promotional events, brochures, and catalogues. 
The table below reflects actual contributions and expenditures for the years ended 2016, 2017, and 2018. 

Description                                 2016               2017               2018 
Tenant Marketing Assessment      $1,151,978       $1,158,873        $1,145,614 
Advertising                            (327,185)          (323,144)          (547,449) 
Personal Services                    (163,013)         (192,934)          (211,253) 
Other Contracted Services            (110,621)           (57,697)          (116,904) 
Other                                 (25,118)           (29,195)           (22,179) 
Difference                             $526,041          $555,903          $247,829 
Data source: PeopleSoft Financials 





4

Airport Tenant Marketing Program 
January 2016  December 2018 
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 2016 through December 2018 and included the following procedures: 
Annual Business Plan 
Determined whether Port management had established an annual business plan that included an
objective, evaluation methodology, and a budget for the calendar year. 
Assessed the accuracy of information contained in the annual budget. 
Disbursements 
Selected 20  disbursements (5 in 2016; 5 in 2017; 10 in 2018) and performed the following
procedures: 
o   Determined whether they supported the promotion of concessions and marketing related 
activities 
o   Verified that they were coded correctly 
o   Validated that they were approved by an authorized individual 
o   Agreed the payments to the invoices 
Evaluated internal controls of the disbursements process. 
Contributions 
Judgmentally selected 12 concessionaires and validated that one half of one percent (0.5%) of gross
revenue was billed. 
Selected two kiosks and validated that one quarter of one percent (0.25%) of gross revenue was
billed. 
Validated that the marketing fee did not exceed the marketing cap. 






5

Airport Tenant Marketing Program 
January 2016  December 2018 
SCHEDULE OF FINDINGS AND RECOMMENDATIONS 
1) RATING: MEDIUM

The annual business plan outlining the objectives, budget, and evaluation methodology was not
created  in  2017,  as  required  per  the  Agreements.  Furthermore,  budget  approvals  and
documentation of key decisions were not consistently performed. With almost $1.2 million in
annual fund contributions, formal processes should be established to facilitate effective oversight
and management of the Program. 
1) The Port is required to develop and establish an annual business plan. The plan includes objectives,
evaluation methodology, and budget based in part on an analysis of the effectiveness of each year's
Program. The plan is designed to promote the concessions at the Airport. However, in 2017, a plan was
not developed. Additionally, the 2018 plan understated total commitments by $47,500. 
2) Although a Marketing Advisory Group (Group) had been organized, processes to facilitate agreed upon
and transparent decision making had not been established. For example, representatives from retail, food
and beverage, and kiosks had not been identified, the Group did not formally approve the budget or the
annual business plan, and minutes to evidence approval and other key decisions were not regularly 
documented. 
3) The 2018 Marketing Plan indicated that the contribution limit was increased from $24,000 to $30,000
for concession leases signed subsequent to January 2016 despite budget surpluses of $592,000 and 
$1.375 million in 2016 and 2018, respectively. 
Recommendations 
To facilitate effective oversight and use of marketing funds, we recommend formally establishing roles,
responsibilities, and protocols. These elements could be captured in a Marketing Program Charter as the
primary governing document that defines how frequently the Advisory group meets, how ideas are
explored and discussed, and who has authority to make key decisions. 
Management Response/Action 
Airport Dining and Retail (ADR) Program staff agrees with the findings that the Marketing Advisory Group
(Group) did not meet on a regular basis prior to 2018 and did not have an approved budget or a set of
agreed governing principles. In June 2018, ADR Staff met with all ADR tenants regarding the Tenant
Marketing Fund. The tenants decided that all tenants who pay into the Tenant Marketing Fund should
have a voice in the Group. The tenants were then provided with the draft budget and operating standards.
This Group met again on September 6, and October 11, 2018. After each meeting, ADR staff emailed the
meeting minutes to the members of the Group for their approval. In addition, some decisions were made
by the members of the Group via email as agreed upon in the initial meeting in June. In the future, all
meetings will follow the process agreed upon by the Group. 



6

Airport Tenant Marketing Program 
January 2016  December 2018 
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
impact                              Noncompliance
High probability        Important 
Missing, or        with applicable
for external audit
Remiss in      inadequate key      Federal, State,
HIGH                                                        issues and/or       Requires
responsibilities     internal controls       and Local Laws,
negative public        immediate
of being a                             or Port Policies 
perception           attention 
custodian of
public trust 
Partial controls                                                        Relatively
Inconsistent         Potential for          important 
Moderate      Not adequate to     compliance with     external audit
MEDIUM      financial         identify        Federal, State,     issues and/or    May or may not
impact        noncompliance or     and Local Laws,     negative public         require
misappropriation      or Port Policies        perception          immediate
timely                                                            attention 
Internal controls in
Generally
place but not                             Low probability
complies with                              Lower
consistently                             for external audit
Federal, State and                         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/enha                         perception 
minor                             immediate
ncing controls
discrepancies                            attention 
could prevent
exist 
future problems 
Efficiency      An efficiency opportunity is where controls are functioning as intended; however, a modification
Opportunity                              would make the process more efficient 







7