10. Lenlyn Limited Audit Report

INTERNAL AUDIT REPORT 



Limited Contract Compliance Audit 
Lenlyn Limited 

April 1, 2017  March 31, 2020 
Issue Date: May 28, 2021 
Report No. 2021-09

Lenlyn Limited 

TABLE OF CONTENTS 

Executive Summary ........................................................................................................................................... 3 
Background ....................................................................................................................................................... 5 
Audit Scope and Methodology .......................................................................................................................... 6 
Schedule of Findings and Recommendations ................................................................................................... 7 
Appendix A: Risk Ratings ................................................................................................................................... 9 













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Lenlyn Limited 
Executive Summary 
Internal Audit (IA) completed an audit of the Lease Agreement (Agreement) between Lenlyn Limited
(dba International Currency Services) and the Port of Seattle (Port) for the period April 2017 through
March 2020. The audit was performed to determine whether Lenlyn Limited complied with significant
provisions of the Agreement, including whether reported revenues and percentage fees, were
complete and accurate. 
In June 2020, in order to promote financial stability of dining and retail (ADR) tenants during COVID-19
pandemic, the Port Commission authorized the temporary suspension (elimination) of Minimum
Annual Guarantee (MAG) payments, for ADR tenants, from March through December 2020. The MAG
amount that Lenlyn Limited had paid for the month of March 2020, was retroactively credited to its
account. 
The foreign currency exchange business is unique in nature and, therefore, for a successful lease
agreement, it is critical to fully understand the mechanism as to the types of revenues and how they 
are recognized. As reflected in Lenlyn Limited's revenue accounting policies, revenue is measured at
the fair value of the consideration received or receivable. Revenue arises from the following, key
components of the business: 
Sale and purchase of foreign currency: The margin between the sale of one currency against
the currency purchased over the counter is recognized as revenue at the point in time of
sale/purchase. 
Sales and purchase commission receivable:  Commission-based fees  earned on abovementioned
currency trades are also recognized at the point in time of the delivery of currency. 
Other ancillary services and income: Revenue arises from the sale of goods (e.g., SIM card
sales) and the rendering of services. 
Our audit identified the following issue related to revenue reporting and associated payments: 
1.  (Medium) Lenlyn Limited underreported $324,836 in foreign currency and other service gross
revenues, which resulted in approximately $12,023 in additional percentage fees owed to the Port.
Furthermore, the Lease Agreement did not specify the customary five percent late fee, resulting in
$4,260 in potential lost revenue to the Port. 
This issue is discussed in more detail on page seven. 
In addition, we noted inconsistencies among the current surety on hand, the Agreement, and the
Port's RE-2 Policy (RE-2). RE-2 was last updated on October 20, 1995, and is currently under
management review, as a result of an Internal Audit report on Concourse Concessions LLC, published
in September of 2020.
We extend our appreciation to management and staff of Airport Dining and Retail, Aviation Finance
and Budget, Accounting and Financial Reporting, and Lenlyn Limited  for their assistance and
cooperation during the audit. 

Glenn Fernandes, CPA 
Director, Internal Audit 

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Lenlyn Limited 

Responsible Management Team 
Rudy Caluza, Director, Accounting and Financial Reporting 
Dawn Hunter, Director, Aviation Commercial Management 
Tami Kuiken, Business Manager, Airport Dining and Retail 
Lisa Lam, Assistant Director, Financial Reporting Revenue Services 
Khalia Moore, Senior Business Manager, Airport Dining and Retail 
Linda Nelson, Senior Manager, Aviation Finance and Budget 

















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Lenlyn Limited 
Background 
The Port entered into a seven-year Lease Agreement  (Agreement Number AIR001788), dated
January 27, 2014, with Lenlyn Limited (dba International Currency Services USA or ICE) for a foreign
currency exchange concession at the Seattle-Tacoma International Airport (SEA). Lenlyn Limited is a
United Kingdom corporation and operates worldwide, with over 320 branches in 20 countries, and in
more than 65 airports, including SEA. ICE is headquartered in Los Angeles, California. The Agreement
Year is set for April - March, which started the first full month on or after the Rent Commencement
Date. Following the contract termination in March 2021, Lenlyn Limited has been operating in a monthto-month
arrangement, at four locations at SEA: Concourse A, Baggage Claim 6, South Esplanade,
and South Satellite. Currently, the Port and Lenlyn Limited are negotiating a contract renewal. 
Per the Agreement, Lenlyn Limited is required to pay a minimum Annual Guarantee (MAG) in equal
monthly payments payable on or before the first of each month. In addition to the MAG, Lenlyn Limited
agreed to pay a percentage fee based on gross sales on or before the 15th of the following month,
according to the following table: 
Agreement Year                                      MAG 
First Year                                  $880,000 
Second & Third Years                  Equal to the amount (whether by MAG or Percentage Fees) paid to
the Port for the First Year 
Fourth Year                            $1,000,000 
Fifth through Seventh Years             Equal to the amount paid for the Fourth Year 
Annual Gross Revenue                   Percentage (%) Fees of Gross Revenue 
Foreign Currency Exchange (FCE): 
Equal or less than $13,000,000         7.25% 
Greater than $13,000,000             10.00% 
Other Services                          20.00% 
The table below reflects Gross Revenues as reported by Lenlyn Limited, and the MAG and percentage 
fees as billed by the Port: 
Agreement Year
(April  March)         Gross Revenue                  MAG     Percentage Fees            Total Rent 
2017/2018              $16,752,045           $1,000,000             $317,763           $1,317,763 
2018/2019               16,658,466            1,317,763               70,302            1,388,065 
2019/2020               14,907,553            1,317,763               15,334            1,333,097 
Total                 $48,318,064          $3,635,526              $403,399            $4,038,925

Source: Lenlyn Limited Monthly Revenue Reports; PeopleSoft Financials, and AFR Concession documents 




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Lenlyn Limited 
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 April 1, 2017 through March 31, 2020 (three Agreement Years) and included
the following audit procedures: 
Concession Fees Completeness, Accuracy, and Timeliness 
Tested the tenant's billing and payments for all months in the audit period to determine whether
the MAG payments and percentage fees were billed and paid accurately, completely, and
timely. 
Reconciled revenues reported to the Port, to the tenant's General Ledger (GL), Profit and Loss
(P&L) reports, independently audited revenue schedules, and tenant's Wiami Point of Sales
(POS) daily activity data. 
Analyzed deductions to determine whether they were properly classified and correctly
deducted from the gross revenues, as provided in the Lease Agreement. 
Surety and Insurance Compliance 
Reviewed the tenant's rent security amount bonded by an insurance company for compliance
with  the  lease  agreement,  Port  Policy  (Port  RE-2)  and  Washington  State  Law  (RCW
53.08.085). 
Reviewed the tenant's Certificates of Insurance for compliance with the Lease Agreement
terms. 









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Lenlyn Limited 
Schedule of Findings and Recommendations 
1) Rating: Medium 
Lenlyn Limited underreported $324,836 in foreign currency and other service gross revenues,
which resulted in approximately $12,023 in additional percentage fees owed to the Port. 
Furthermore, the Lease Agreement did not specify  the customary five  percent late fee,
resulting in $4,260 in potential lost revenue to the Port. 
Under-reported Gross Revenue 
A.  Purchase Commission 
An error in the foreign currency gross revenue calculation formula resulted in Purchase Commission
being subtracted from the amounts reported to the Port. Per Lenlyn Limited's recalculations, underreported
percentage fees due to this Purchase Commission subtraction of $305,839 for the audit
scope (Agreement Years four to six), was estimated as $12,023. The credit balance Lenlyn Limited
has with the Port (currently approximately $155,000) will cover the under -payments. Due to the
accounting record retention time limit, set for three years after the end of each Agreement Year,
Internal Audit limited the audit scope to Agreement Years four through six. 
Agreement Year               Purchase Commission                      Under Payment 
April 2017 - March 2018 (Four)                       $109,304                               $10,930*1 
April 2018 - March 2019 (Five)                         105,096                                  1,093*1 
April 2019 - March 2020 (Six)                           91,439                                    N/A*2 
Total                                     $305,839                                $12,023*1 
Source: Lenlyn Limited's recalculation worksheets supported by its original monthly rent calculation worksheets, P&L and GL 
reports, etc. 
*1 Under payments subject to recovery. 
*2 For Agreement Year Six, MAG, which was greater than the total percentage fees, was used for annual true-up, to
determine the under/over-payments per the Agreement (Section 4.2). Therefore, the additional Purchase Commission per
recalculation did not have any impact on the annual under-/over-payment determination. 
Gross revenue does not seem to be clearly defined in the Agreement (Section 1.9), to reflect the
unique nature of the foreign currency exchange business. It is unknown how the foreign currency
gross revenue calculation formula/method in use, was chosen when the Agreement was entered upon.
Per Lenlyn Limited's Accountant, the gross revenue definition differs by airport and some others use
Gross Profit instead, which reflects revenues net of all costs. The Gross Revenue section in the
Agreement indicates the inclusion of "wholesale sales" but it is irrelevant to the current gross revenue
calculation. Wholesale sales, as well as wholesale purchases, sales interbranch, stock movements,
etc.,  which  are  not  part  of  the  gross  revenue  calculation,  may  need  to  be  reflected  in  the 
Agreement (Section 1.9.6 - 1.9.8) related to gross revenue exclusions. The section currently specifies 
only refunds, discounts, and sales/excise tax on service/product sale. 




7

Lenlyn Limited 
B.  Other Services (SIM Card Sales) 
Internal Audit's reconciliation of reported gross revenue, to Lenlyn Limited's Wiami Point of Sales
system data, noted that in Agreement Year six (April 2019 through March 2020), SIM card sales of
$18,997 had been omitted from the revenue reported to the Port. This resulted in an additional 20%
percentage fee of $3,799; however, the recovery is unnecessary (See Footnote*2 in the above Table).
We noted that Lenlyn Limited had recently detected the SIM card sales omission from revenue
reporting to the Port, and initiated corrections for Agreement Year seven (April 2020 through March
2021). 
Late Payment Fees 
Internal Audit reviewed the timeliness of payments and noted that Lenlyn Limited had paid the May
2018 MAG payment 25 days late and the January 2020 percentage fee 26 days late, after the 10-day
grace period. However, Lenlyn Limited was not assessed a five percent late fee of $4,260 in total,
because the Agreement did not specify the late fee language, which is customary in Port Lease
Agreements. 
Recommendations: 
Management should: 
1.  Pursue collection of the additional percentage fees of $12,023 (estimate). 
2.  Define and specify in a new Lease Agreement, the foreign currency gross revenue calculation
method/components,  and  gross  revenue  inclusion and exclusion  items  more  clearly  and
thoroughly. 
3.  Specify the five percent late fee in the Late Charges section of a new Lease Agreement. 
Management Response/Action Plan: 
Management has engaged the tenant to address the outstanding balance for the additional
percentage fees of $12,023. The tenant has a credit on their account, which covers the outstanding
balance, and they have requested that the outstanding balance be cleared via the application of the
credit.  In  the  preparation  of  the  new  Agreement,  Management  has  engaged  both  Lease
Administration, Accounting and Legal to ensure a clear understanding of the revenue reporting
language of the contract for ease of administrations, and the late fee charges have been reinstated
within the new Agreement as well. 

DUE DATE: 6/30/2021 





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Lenlyn Limited 
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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