Commission Meetings

INTERNAL AUDIT REPORT 
Operational Audit 
South King County Fund 

January 2020 – January 2021 


Issue Date: March 22, 2021 
Report No. 2021-01

          South King County Fund 

TABLE OF CONTENTS 

Executive Summary ................................................................................................................................................. 3 
Background ............................................................................................................................................................. 4 
Audit Scope and Methodology ............................................................................................................................... 5 
Schedule of Findings and Recommendations ....................................................................................................... 6 
Appendix A: Risk Ratings ......................................................................................................................................... 8 
Appendix B: South King County Fund Principles ................................................................................................... 9 














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          South King County Fund 
Executive Summary 
Internal Audit (IA) completed an audit of the South King County Fund (SKCF) program for the period
January 2020 through January 2021. The audit was performed to determine whether a process was
established and followed for selecting applicants and if a monitoring function was developed to
validate that funds were used for their intended purpose. 
The SKCF was created in November 2018 to provide up to $10 million between 2019 and 2023 to
address airport noise, environmental health, and sustainability in near-airport communities. The
awards were designated for South King County nonprofit organizations that support communities of
color and historically marginalized communities through environmental sustainability, small business
capacity building, and economic recovery strategies. Due to COVID-19, the Commission added
economic development as an approved use for the SKCF in April 2020. 
Between 2020 and the first quarter of 2021, the SKCF will award $1.5 million, allocated to the following
programs: 
New Economic Recovery and Workforce Development Grants     $1 million 
New Environmental Grants Program                           $250,000 
Port Gen (Overall Economic Recovery Strategy)                  $250,000 
In general, Port management’s compliance and monitoring aligned with policies and procedures.
However, our audit identified an opportunity where internal controls could be enhanced or developed.
This opportunity is listed below and discussed in more detail beginning on page six of this report. 
1. Medium - Ownership for the South King County Fund should be co-sponsored by two executive
leaders, each with a point person, to track funding and programs. The Port’s website states that 10
South King County organizations were recommended to receive funding through the first cycle of the
SKCF Economic Recovery Grants Program and were approved by Port Commission on December 15,
2020. However, three additional Economic Development projects have been awarded from the SKCF,
two of which did not receive commission approval. Organizing the program under two executive
leaders will facilitate effective governance by making sure approvals are obtained, organizations are
selected, and the use of awarded funds are monitored to assure that they are used for the intended
purpose. 
We extend our appreciation to Port management and staff for their assistance and cooperation during
this audit. 


Glenn Fernandes, CPA 
Director, Internal Audit 

Responsible Management Team 
Pearse Edwards, Senior Director External Relations 
Bookda Gheisar, Senior Director Equity, Diversity and Inclusion 
Dave McFadden, Managing Director, Economic Development 

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          South King County Fund 
Background 
The Revised Code of Washington (RCW) 53.08.245 authorizes port districts to engage in economic
development activity. The RCW states “it shall be in the public purpose for all port districts to engage
in economic development programs.” 
The South King County Fund (SKCF) was established and approved by Port Commission through
Motion 2018-14 on November 27, 2018. With an initial amount of $750,000 in 2019, $10 million was
budgeted  between 2019 and 2023. The program provides resources and support for Sea-Tac 
International  Airport  area  communities  specifically  benefiting   South  King  County  nonprofit
organizations that support communities of color and historically marginalized communities through
environmental sustainability, small business capacity building, and economic recovery strategies. 
Uses for the SKCF may include support for addressing airport noise and for other projects that support
environmental health and enhance sustainability. 
On June 25, 2019, Port Commission approved Motion 2019-10, which included eight guiding principles
of the SKCF (see Appendix B). The Motion also included an engagement strategy to ensure robust,
multi-cultural stakeholder involvement to support equitable implementation. In addition, Commission
included the following, in a statement of support of the Motion: “The Commission intends to review a
South King County Fund Policy Directive to guide the development of the SKCF program and a motion
to instruct the implementation of pilot projects. As part of the policy direction, the Commission intends
to retain review and approval authority for proposed projects and to retain the authority to approve
funding of projects recommended by Port staff, as well as projects recommended through community
input.” 
A subsequent motion (Motion 2020-10) was passed on April 28, 2020 to expand the use of the SKCF 
to include “Economic Development” to support the recovery for the region from the COVID-19
pandemic. 
As of March 1, 2021, the following contracts were awarded: 
Economic Development 
Find Ventures                                               $150,000 
Highline Community College: Soundside Alliance              160,000 
Economic Alliance Snohomish County                         50,000 
$360,000 
Economic Recovery 
African Chamber of Commerce - PNW                      $100,000 
African Community Housing & Development                   99,902 
Asian Counseling & Referral Services                          100,000 
Businesses Ending Slavery and Trafficking (BEST)             100,000 
CARES of Washington                                    91,160 
Chief Seattle Club's                                              100,000 
El Centro de la Raza                                           99,985 
Partners in Employment                                     100,000 
Puget Sound Welcome Back Center                          90,839 
WA Maritime Blue                                           99,995 
Total    $981,881 

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          South King County Fund 

Audit Scope and Methodology 
We conducted this  engagement 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 conduct an engagement to obtain sufficient, appropriate evidence
to provide a reasonable basis for our findings and conclusions based on our engagement objectives.
We believe that the evidence obtained provides a reasonable basis for our findings and conclusions
based on our engagement objectives. 
The period audited was January 2020 through January 2021 and included the following procedures: 
Process was established and followed for selecting awards 
• Determined the fund was allowable per state legislation (RCW 53.08.245). 
• Verified policies and procedures existed through review of Commission records and Central
Procurement Office policies. 
• Interviewed  key personnel and performed walkthroughs  on  awarded contracts, including
economic development and economic recovery contracts. 
• Reviewed Commission records to determine if all contracts were approved by Commissioners. 
• Obtained contract selection documentation and reviewed the process for awarding contracts. 
Funds disbursed were used for intended purpose 
• Interviewed key personnel and obtained awarded contracts to confirm a monitoring process is
in place and in compliance with RCW 53.08.245. 










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          South King County Fund 
Schedule of Findings and Recommendations 
1) Rating: Medium 
Ownership for the South King County Fund should be co-sponsored by two executive leaders,
each with a point person, to track funding and programs. The Port’s website states that 10 
South King County organizations were recommended to receive funding through the first cycle
of the SKCF Economic Recovery Grants Program and were approved by Port Commission on
December 15, 2020. However, three additional Economic Development projects have been
awarded from the SKCF, two of which did not receive commission approval. Organizing the
program under two executive leaders will facilitate effective governance by making sure
approvals are obtained, organizations are selected, and the use of awarded funds are
monitored to assure that they are used for the intended purpose. 
The South King County Fund (SKCF) was established to support broad outreach that will ensure deep
community engagement, leadership development, capacity-building and data collection in support of
the fair and equitable distribution of the SKCF to near-airport communities. 
Through Motion 2019-10, the Port of Seattle Commission (Commission) “intends to retain review and
approval authority for proposed projects and to retain the authority to approve funding of projects
recommended by Port staff, as well as projects recommended through community input.” In alignment
with the motion, on December 15, 2020, Commission approved the first cycle of 10 South King County
organizations to receive funding. This cycle focused on COVID -19 economic recovery, serving
communities most deeply impacted by the current economic crisis. The 10 organizations were
interviewed and selected using a panel with both internal and external representation. 
However, we identified two additional projects that didn’t receive commission approval as stated in the
motion: 
• Find Ventures ($150,000) 
• Economic Alliance Snohomish County ($50,000) 
Recommendations: 
Establish ownership of the SKCF under two co-sponsors so it is clear what projects need to be
provided to commission for approval. Aligning project ownership with two executives will facilitate
consistent oversight and requirements of the program. 
Management Response/Action Plan: 
External Relations and the Office of Equity, Diversity and Inclusion staff agrees with the report
findings. Moving forward, Pearse and Bookda continue as Executive Co-Sponsors of the South King
County Fund. This partnership is working well and draws upon the strengths of each department in
balancing the External Relations and Equity goals of the fund. Andy Gregory and Alison Beason
continue as co-project managers of the fund with weekly check-ins and clear working agreements. 


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South King County Fund 
To improve our internal process, the following actions are being adopted: 
• Budget allocation and tracking for SKCF will be overseen by Assistant to Sr. Director, ER. Co-
Project Managers will approve invoices and track on spending out of SKCF. All invoices will be
submitted to [email protected] which will be monitored by Assistant to Sr. Director,
ER and Co-Project Managers. 
• Director, CPO will be informed of annual funding allocation from SKCF and be given detailed
information for any contract and programs that will spend from it. Procurement checklist type
document has been updated to ask for notification of any procurement that will utilize SKCF. 
• Communications materials will be updated to reflect all program spending from SKCF and EDD
staff will be informed of regular project communications meetings. 

DUE DATE: Immediately 














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          South King County Fund 
Appendix A: Risk Ratings 
Findings identified during the audit are assigned a risk rating, as outlined in the table below. Only one
of the criteria needs to be met for a finding to be rated High, Medium, or Low. Findings rated Low will
be evaluated and may or may not be reflected in the final report. 
Financial      Internal                                               Commission/
Rating                                   Compliance      Public 
Stewardship  Controls                                         Management 
High probability
Non-compliance
Missing or not                       for external audit   Requires
with Laws, Port
High       Significant     followed                          issues and / or     immediate
Policies, 
negative public     attention 
Contracts 
perception 
Partial              Potential for
Partial controls 
compliance with   external audit
Requires
Medium   Moderate                  Laws, Port       issues and / or
Not functioning                                          attention 
Policies             negative public
effectively 
Contracts          perception 
Functioning as
Low probability
intended but     Mostly complies                       Does not
for external audit
could be        with Laws, Port                       require
Low      Minimal                                   issues and/or
enhanced to     Policies,                            immediate
negative public
improve        Contracts                           attention 
perception 
efficiency 











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          South King County Fund 
Appendix B: South King County Fund Principles 
The eight South King County Fund principles were adopted by the Port Commission on June 25, 2019 
through Motion 2019-10. 
1.  The SKCF will be used to fund projects in the South King County area: Defined as near-
airport communities, with other locations considered on a case-by-case basis, depending on
the merits and type of program or project. 
2.  The SKCF will prioritize community input to inform Port decision making: Recognizes the
importance of community participation and the Port governance role. 
3.  The  SCKF  will  support  Port  equity  policies  and  practices: Gives  underrepresented
communities access to opportunities, and uses equity policies to evaluate potential initiatives
and establish desired outcomes. 
4.  The SKCF will provide added benefit: Adds to current Port programs to address airport
noise, increased environmental health, and sustainability. 
5.  The SKCF will prioritize projects that are ready to proceed: Prioritizes measures that we
can implement now or within a short time frame. 
6.  The  SCKF  will  build  on  established  programs  and  commitments  to  fulfill  current
obligations: Sets priorities based on established programs and thresholds. 
7.  The  SKCF  will  promote  innovation: Provides  the  opportunity  to  explore  innovative
techniques that could lead to major longer-term benefits. 
8.  The SKCF will encourage matching funds where possible: In-kind or other funds to stretch
dollars and impact. 









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