INTERNAL AUDIT REPORT 
Limited Contract Compliance Audit 
Fruit & Flower LLC d/b/a Floret 

January 2018  December 2020 


Issue Date: August 24, 2021 
Report No. 2021-13

Fruit & Flower LLC 


TABLE OF CONTENTS 

Executive Summary ........................................................................................................................................... 3 
Background ....................................................................................................................................................... 4 
Audit Scope and Methodology .......................................................................................................................... 5 
Appendix A: Risk Ratings ................................................................................................................................... 6 













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Fruit & Flower LLC 
Executive Summary 
Internal Audit (IA) completed an audit of the Seattle-Tacoma International Airport Lease and Concession
Agreement (Agreement) between Fruit & Flower LLC d/b/a Floret (Floret) and the Port of Seattle (Port).
Floret paid the Port approximately $620,000 in annual concession fees in 2019. However, the impact of 
COVID-19 decreased concession fees to about $157,000 in 2020. 
The period audited was January 2018 through December 2020. The audit was performed to determine
whether Floret complied with significant provisions in the Agreement including whether reported gross
revenues and percentage fees were complete and accurate. 
We concluded Floret materially complied with the significant terms of the Agreement. 
No issues were identified requiring a management response. 
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 Floret for their assistance and cooperation during the
audit. 



Glenn Fernandes, CPA 
Director, Internal Audit 





Responsible Management Team 
Rudy Caluza, Director, Accounting and Financial Reporting 
Dawn Hunter, Director, Aviation Commercial Management 
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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Fruit & Flower LLC 
Background 
In September of 2016, the Port entered into an Agreement with Fruit & Flower LLC d/b/a Floret (Floret)
to operate in the Central Terminal. The terms of the Agreement provide for a Minimum Annual Guarantee
(MAG) equal to 85% of the total amount paid to the Port from the previous agreement year. The MAG
is payable, in advance, on or before the first day of each month. Additionally, the Agreement requires
payment of a Percentage Fee equal to a percentage of gross revenue, provided the fee is higher than
the MAG. The Percentage Fee is equal to 8% of gross sales, due on or before the fifteenth day of each
succeeding month. 
By March 31 of each year, Floret is required to provide the Port an annual report reflecting the amount
of Gross Sales for the preceding Agreement Year. The annual report shall be accompanied by a signed
certificate by an independent Certified Public Accountant, Floret's Chief Financial Officer or Chief
Executive Officer. The certificate states: 
a)  he/she has examined the Annual Report, 
b)  his/her examination included such tests of Concessionaire's books and records as he/she
considered necessary or appropriate under the circumstances, 
c)  such report presents fairly the information reflected for the preceding calendar year, 
d)  the information reflected conforms with and is computed in compliance with the definitions set
forth in the Agreement, and 
e)  if the certificate is submitted by a CPA, the standards observed by the CPA in its audit are such
that it planned and performed the audit to obtain reasonable assurances that Concessionaire's
report is free from material misstatement. 
The table below reflects the gross concession revenue and percentage fees billed: 
Agreement Year                                Gross Revenue ($)        Percentage Fees ($) 
January 2018  December 2018                          5,282,553                   423,073 
January 2019  December 2019                          7,758,865                   620,709 
January 2020  December 2020                          1,972,496                  157,800 
Total                                                                  15,013,914                     1,201,582 
Data Source: PeopleSoft Financials, AFR YE documents 
Concessionaires at Seattle-Tacoma International Airport (SEA) have experienced a significant decrease
in business due to the COVID-19 pandemic. Floret temporarily closed their store in March 2020 and
reopened in June 2020. Port Commissioners approved the suspension of the MAG from March to
December 2020. The Marketing Fee was also suspended from April to December 2020. 




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Fruit & Flower LLC 
Audit Scope and Methodology 
We conducted the 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 2018 through December 2020. 
We performed the following procedures: 
Revenue Completeness, Accuracy, Timeliness 
Agreed monthly revenue reports provided to the Port, to Floret's general ledger. 
Validated that the annual report was submitted and signed by an independent CPA, Chief
Financial Officer or Chief Executive Officer from Floret. 
Reviewed the Agreement definition of gross sales, including exclusions, and reviewed Floret's 
records such as the chart of accounts, revenue reports, and general ledger, to determine the
completeness of prior years' reporting. 
Recalculated the MAG and concession fees to verify accuracy. 
Verified timeliness of payments for all months in the audit period. 
Obtained Commission records to review the change of requirements for MAG payments due to
COVID-19. 
Verified timeliness of MAG and concession fee payments for all months in the audit period. 
Surety and Insurance Compliance 
Reviewed Fruit & Flower's rent security deposit for compliance with the Lease Agreement, Port
Policy (Port RE-2) and Washington State Law (RCW 53.08.085). 
Obtained the insurance certificates to ensure the general liability insurance, liquor liability
insurance, and automobile liability insurance amounts are in place and meet the requirements
per the contract. 

We applied the following testing methods: 
100% Population Testing 
Compared the monthly gross revenue statements, Profit and Loss statements, and Sales
Summaries reports to the Certified Annual Report. 
Calculated the rent, excise tax, percentage fees, marketing fees and minimum annual guarantee
(MAG) and compared the amounts to the monthly invoices. 
Confirmed MAG payments and concession fees were paid timely. 
Verified surety bonds and insurance certificates were in place and met contract requirements. 
Sample Testing: Random Sampling 
Selected four months from each agreement year and compared daily sales for the month to the
monthly gross revenue statements. 



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Fruit & Flower LLC 
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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