The Audit meeting scheduled for 2022-04-07 at Remote

Transcript

The Audit meeting scheduled for 2022-04-07 at Remote

THIS IS COMMISSIONER CHO CALLING TO ORDER THE PORT OF SEATTLE AUTO COMMUNITY SPECIAL MEETING TODAY IS THURSDAY, APRIL 7, 2022, AND THE TIME IS 230 03:00 P.M.
WE ARE MEETING REMOTELY TODAY VIA THE TEAM'S PLATFORM TO COMPLY WITH SENATE CONCURRENT RESOLUTION 8402 AND GOVERNOR INSLEE PROCLAMATION 20-28
PRESENT WITH ME TODAY IS COMMITTEE MEMBER COMMISSIONER HAMDI MOHAMED
ALL RIGHT
AS THIS IS A VIRTUAL MEETING, WE HAVE MADE SPECIAL ARRANGEMENTS TO PROVIDE FOR REMOTE PARTICIPATION FOR OUR STAFF AND ANY OUTSIDE PRESENTERS AND COMMITTEE MEMBERS TO MAKE THIS MEETING MORE ACCESSIBLE TO THE PUBLIC
THE MEETING IS BEING LIVE STREAMED AND DIGITALLY RECORDED AND MAY BE VIEWED OR HEARD AT ANY TIME ON THE PORT WEBSITE
HEADING OVER TO THE AGENDA
OUR FIRST ITEM OF BUSINESS IS APPROVAL OF OUR LAST MEETING MINUTES FROM DECEMBER 9
I GUESS HAMDI
IF WE COULD JUST REVIEW THE MINUTES AND I'LL ASK IF THERE ARE ANY CORRECTIONS TO THE MINUTES AND IF THERE ARE ANY OBJECTIONS TO THE APPROVAL MINUTES AS PRESENTED
NOPE
NO OBJECTION
HEARING? NONE
THE MINUTES ARE APPROVED
PERFECT
OUR NEXT ORDER OF BUSINESS IS EXTERNAL AUDITS
THE AUDIT REPORT TODAY IS PROVIDING THE ACCOUNTABILITY AUDIT RESULTS FOR 2020 FROM THE OFFICE OF THE WASHINGTON STATE AUDITOR
PRESENTERS, PLEASE UNMUTE YOURSELVES
COMMITTEE MEMBERS MAY USE THE HAND RAISING TOOL TO INDICATE THAT YOU WASH, DOT SPEAK OR ALSO CALL FOR QUESTIONS AT THE CONCLUSION OF THE PRESENTATION
MR FERNANDEZ, PLEASE INTRODUCE OUR FIRST SPEAKERS AND THE TOPIC INSURANCE
TODAY WE HAVE JOE SIMMONS AND ANGELA FUNAMORI FROM THE STATE AUDITOR'S OFFICE
AND THEY'VE DONE A LOT OF WORK OVER THE LAST FEW MONTHS, AND THEY'RE GOING TO PRESENT THE RESULTS OF THEIR REPORT, WHICH IS ALREADY PUBLIC, I BELIEVE
BUT ANGELA AND JOE, PLEASE, YOU HAVE THE FLOOR
THANK YOU, GLENN
AND THANK YOU FOR YOUR TIME TODAY
COMMISSIONERS, AS I'M SAID, WE'RE HERE FOR THE RESULTS OF OUR ACCOUNTABILITY AUDIT FOR 2020
MICHELLE, COULD YOU PULL THE DECK UP, PLEASE? SOUNDS GOOD
AND MADDIE, WHAT'S ON THE SIDE AS A SUPERVISOR? SHE IS OUT THIS WEEK, SO SHE WON'T BE HERE
ON THE NEXT SLIDE, WE HAVE OUR STATE AUDITOR, OUR DIRECTOR OF LOCAL AUDIT, AND ASSISTANT DIRECTOR OF LOCAL AUDIT
AND THEN ON THE THIRD SLIDE, JUST A BRIEF OVERVIEW THAT WE LOOK AT OURSELVES AS A STATE AUDITOR'S OFFICE AS AN INDEPENDENT, OBJECTIVE, OUTSIDE REVIEW OF LOCAL GOVERNMENT AND STATE GOVERNMENT, AND LOOK AT IT AS A ROLE OF WORKING IN PARTNERSHIP WITH GOVERNMENT TO PROVIDE INDEPENDENT AND TRANSPARENT EXAMINATIONS AND ALSO LOOK AT WAYS TO PROVIDE RECOMMENDATIONS THAT CAN HELP IMPROVE EFFICIENCY AND EFFECTIVENESS OF GOVERNMENT
AND I WILL GO AHEAD AND TURN IT OVER TO ANGELA TO TALK ABOUT THE RESULTS SPECIFIC TO YOUR ACCOUNTABILITY AUDIT
THANK YOU, JOE
SO AS JOE MENTIONED, WE CONDUCTED AN ACCOUNTABILITY AUDIT THAT COVERED THE PERIOD OF JANUARY THROUGH DECEMBER 31 OF 2020
AND THE PURPOSE OF THE ACCOUNTABILITY AUDIT IS TO DISCERN WHETHER THE PORT COMPLIED WITH STATE LAWS, REGULATIONS, CONTRACTS, GRANT AGREEMENTS, AND ITS OWN POLICIES AND PROCEDURES
IN ADDITION, THESE AUDITS ALSO LOOK AT WHETHER, IN GENERAL, THE PORT HAS ADEQUATE CONTROLS TO SAFEGUARD PUBLIC FUNDS AND IN THE NEXT SLIDE IN ORDER TO SELECT SPECIFIC AREAS TO REVIEW, WE CONDUCTED A NUMBER OF PLANNING PROCEDURES THAT INCORPORATED REVIEWING THE MEANING MINUTES OF THE GOVERNING BODY AND ANALYZING TRENDS IN FINANCIAL DATA
THIS INCLUDES PAYROLL, VENDOR INFORMATION, AND CREDIT CARDS
WE ALSO CONDUCTED RISK ASSESSMENTS WITH SEVERAL KEY STAFF AND A COMMISSIONER, AND FROM THE INFORMATION WE GATHERED, WE BRAINSTORMED THE VARIOUS AUDIT AREAS THAT INDICATED POTENTIAL RISK OF NON COMPLIANCE
AS A RESULT, INCLUDED ON THE SLIDE ARE THE AREAS THAT WE SELECTED FOR FURTHER TESTING, AND THE FIRST AREA THAT WE'D LIKE TO DISCUSS IS THE FINANCIAL CONDITION, WHERE WE PERFORMED A TREND OF KEY FINANCIAL INDICATORS, ASSESSED ADDITIONAL NON FINANCIAL INFORMATION TO IDENTIFY POTENTIAL IMPACTS, AND ANALYZED THE PORT'S RESPONSE TO COVID
THIS INCLUDES THE MONITORING PERFORMED BY MANAGEMENT IN OUR AUDIT DETERMINED THE PORT'S INTERNAL CONTROLS ARE WORKING EFFECTIVELY AND MUTED, NO ISSUES IN THE PORT'S FINANCIAL CONDITION AND SUSTAINABILITY
THE SECOND AREA THAT WE'D LIKE TO DISCUSS IS THE PORT'S SELF INSURANCE PROGRAM
THIS AREA COVERS HEALTH AND WELFARE, UNEMPLOYMENT, WORKERS COMPENSATION, AND PAID FAMILY AND MEDICAL LEAVE
WE REVIEWED THE PORT POLICIES AND PROCEDURES OVER THIS AREA, GAINED AN UNDERSTANDING OF THE PORT CONTROLS AND SELECTED TRANSACTIONS FOR TESTING TO ENSURE IT COMPLIED WITH STATE REGULATIONS
OUR AUDIT DETERMINED THE PORT INTERNAL CONTROLS ARE WORKING EFFECTIVELY, AND NO SIGNIFICANT RECOMMENDATIONS WERE IDENTIFIED
WE DID, HOWEVER, IDENTIFY AN AREA OF OPPORTUNITY FOR THE PORT TO BETTER DEMONSTRATE ITS COMPLIANCE WITH THE WASHINGTON ADMINISTRATIVE CODE
WE ALSO WANT TO KNOW THAT THE EXIT ITEMS ADDRESS CONTROL, DEFICIENCIES, OR NON COMPLIANCE WITH LAWS OR REGULATIONS THAT HAVE AN INSIGNIFICANT EFFECT ON THE ENTITY
WE ALSO WOULD LIKE TO NOTE THAT EXIT ITEMS ARE NOT REFERENCED IN THE AUDIT REPORT
THE NEXT AREA THAT WE'D LIKE TO DISCUSS IS THE PORT'S RENT DEFERRAL PAYMENT PLAN, AND FROM THE PRIOR AUDIT, WE IDENTIFIED THAT THE PORT CREATED AND IMPLEMENTED THIS PAYMENT PLAN AS A WAY TO ENSURE FINANCIAL SUPPORT TO THE LOCAL ECONOMY AND TO PROTECT THE COURT'S ASSETS
FOR THIS AUDIT, WE GAINED AN UNDERSTANDING OF WHERE THE PROGRAM STAYED
THIS INCLUDED OUR REVIEW OF THE AUDIT WORK THAT WAS PERFORMED BY THE INTERNAL AUDIT TEAM, THEIR REVIEW OF CONTROLS, AND THEIR TESTING SPREADSHEET, AND WE'VE REVIEWED THE PROGRAM OVERALL TO ENSURE THAT IT COMPLIES WITH STATE LAW ENFORCE POLICY
AND SO WE ARE PLEASED TO REPORT
OUR AUDIT DETERMINED THE PORT INTERNAL CONTROLS ARE WORKING EFFECTIVELY, AND NO RECOMMENDATIONS WERE IDENTIFIED
THE NEXT AREA THAT WE'D ALSO LIKE TO DISCUSS IS THE PORT THE PORT'S TELEWORK EQUIPMENT REIMBURSEMENT POLICY
SO WE REVIEWED THE PORT PORTS POLICIES AND PROCEDURES RELATED TO THE TELEWORK REIMBURSEMENT PROGRAM
YOU GAINED AN UNDERSTANDING OF THE INTERNAL CONTROLS AND SELECTED REIMBURSEMENT TRANSACTIONS FOR TESTING, AND WE DETERMINED THE PORT AND TONAL CONTROLS ARE WORKING EFFECTIVELY AND TRANSACTIONS COMPLIED WITH PORT POLICY WERE VALID AND ADEQUATELY SUPPORTED BY THE APPROPRIATE RECORDS
THE NEXT AREA THAT WE'D LIKE TO DISCUSS IS THE PROCUREMENT PERSONAL SERVICE CONTRACTS
WE REVIEWED THE COURT'S POLICIES AND PROCEDURES OVER THE PERSONAL SERVICE CONTRACTS, GAINED AN UNDERSTANDING OF THE INTERNAL CONTROLS AND SELECTED CONTRACTS TO ENSURE THAT THE CONTRACTS COMPLIED WITH COURT POLICIES AND STATE LAW
AND THE LAST AREA WE'D LIKE TO DISCUSS IS THE PAYROLL OVERTIME
SO FROM THE PRIOR AUDIT, WE REVIEWED THE PORT POLICIES AND PROCEDURES OVER THIS AREA AND CONDUCTED DETAILED TESTING ON SPECIFIC TRANSACTIONS
OUR AUDIT IDENTIFIED AN AREA OF OPPORTUNITY FOR THE PORT TO STRENGTHEN ITS INTERNAL CONTROLS RELATED TO TIMESHEET APPROVALS
AND FOR THIS AUDIT PERIOD, WE FOLLOWED UP ON THOSE RECOMMENDATIONS BY GAINING AN UNDERSTANDING OF THE LATEST INTERNAL CONTROLS RELATED TO THE TIMESHEET APPROVALS IN OUR AUDIT DETERMINED THE PORT'S INTERNAL CONTROLS ARE WORKING EFFECTIVELY
AND SO NOW I'D LIKE TO PASS IT BACK OVER TO JOE NEXT SLIDE, PLEASE
MICHELLE
AND JOE, FEEL FREE TO ASK MICHELLE TO WHEN YOU'RE READY FOR THE NEXT SLIDE
CERTAINLY
AND I SHOULD HAVE SAID AT THE BEGINNING, PLEASE LET US KNOW AT ANY TIME IF YOU HAVE ANY QUESTIONS ABOUT ANY OF THE SLIDES AS WE GO OVER THIS
ONE THING WE ALWAYS LIKE TO POINT OUT IS, AS YOU KNOW, CPA FIRM OF MOSS ADAMS PERFORMS THE FINANCIAL STATEMENT AND FEDERAL SINGLE AUDIT, THE GRANT AUDIT OF THE PORT OF SEATTLE
SO WE APPRECIATE HOW THE PORT PROVIDES COMMUNICATIONS WITH US SO THAT WE'RE LOOPED IN EVEN INTO SOME STATUS MEETINGS WITH THE MOSS ADAMS GROUP
SO WE'RE AWARE OF ANY ISSUES THAT ARISE IN THOSE AUDITS
AND THEN WHEN THE WORK IS COMPLETED, WE REVIEW THE WORK THAT WAS DONE BY MOSS ADAMS WE REVIEW THEIR WORK PAPERS, AND WE REVIEW THAT TO ALSO BE ABLE TO LEVERAGE ANY WORK THAT THEY DID
SO WE DEFINITELY AVOID TRYING TO DUPLICATE ANY WORK THAT'S DONE IN YOUR FINANCIAL STATEMENT OR FEDERAL SINGLE AUDIT
AND WE JUST ALWAYS LIKE TO JUST CONFIRM THAT WE DID NOT HAVE ANY CONCERNS ABOUT THE WORK THAT WAS DONE BY THE CPA FIRM
THERE WAS NO LIMITATIONS RESTRICTED ANALYSIS OF THOSE OTHER AUDITS, AND THERE'S NO MATERIAL STATEMENT OR FINANCIAL STATEMENTS THAT HAS OR MAY HAVE RESULTED FROM FRAUD OR SUSPECTED FRAUD
AND THEN ON THE NEXT SLIDE, JUST TALKING ABOUT NOW, WE'RE KIND OF MORE INTO CLOSING REMARKS THAT WE JUST WANT TO CONFIRM THAT THE AUDIT COSTS THAT WE ESTIMATE AT THE BEGINNING AUDIT OR ALIGNMENT WITH OUR ORIGINAL ESTIMATE
ONCE AGAIN, APPRECIATE THE WORK DONE BY PORT STAFF TO HELP MAKE OUR AUDIT PROCESS EFFECTIVE AND EFFICIENT
REALLY APPRECIATE THE WORKING RELATIONSHIP THERE
OUR NEXT AUDIT WILL BE LATER THIS YEAR
IN THE FALL, WE'LL BE AGAIN CONDUCTING OUR ACCOUNTABILITY AUDIT
AND AS PART OF THAT, WE'LL BE REVIEWING THE WORK DONE BY MOSS ADAMS AND ONE THING FOR THIS CURRENT PERIOD IS WE ARE REQUIRED TO CONDUCT WHAT WE CALL AN ASSESSMENT AUDIT OF THE PORT OF SEATTLE'S INDUSTRIAL DEVELOPMENT CORPORATION EVERY THREE YEARS
IT'S A VERY TINY GOVERNMENT BUT IT IS STILL CONSIDERED A SEPARATE LOCAL GOVERNMENT
SO WE DO A VERY SMALL AUDIT ON THAT ONE BASED ON THE SIZE
BUT WE'RE STILL REQUIRED TO CONDUCT EVERY LOCAL GOVERNMENT IN THE STATE ON AT LEAST A THREE YEAR CYCLE
SO THAT'S WHERE THAT CYCLE IS UP FOR THE IDC, AND THAT ESTIMATED COST IS INCLUDED IN THE MORE DETAILED INFORMATION IN THE EXIT PACKAGE
AND THEN ON THE NEXT SLIDE, AS WE NOTED IN THIS CASE, WE'VE ALREADY ISSUED THE REPORT
I'LL JUST REAFFIRM AGAIN THAT IT WAS A CLEAN REPORT
THERE WERE NO FINDINGS, AND WE HAVE ALREADY PUBLISHED IT IN MARCH, SO IT'S ALREADY THERE AVAILABLE ON OUR WEBSITE, AND THERE'S A LINK IF YOU ARE INTERESTED IN BEING UP BY EMAIL WHEN ANY OF OUR REPORTS ARE POSTED ON THE WEBSITE, THAT WE HAVE AN EMAIL ALERT THAT GOES OUT WHEN OUR REPORTS ARE PUBLISHED, WHICH IS TWICE A WEEK ON MONDAYS AND THURSDAYS
AND WE ALSO PROVIDE A SURVEY TO SUPPORT STAFF SO THAT THEY CAN PROVIDE US FEEDBACK
WE REALLY DO APPRECIATE GETTING FEEDBACK ON OUR AUDIT SO WE CAN CONTINUE TO IMPROVE ON OUR AUDIT SERVICES
AND THEN ON THE NEXT SLIDE JUST TALKS ABOUT A COUPLE OF OTHER SERVICES THAT WE PROVIDE FOR THE STATE AUDITOR'S OFFICE AT NO ADDITIONAL COST TO THE LOCAL GOVERNMENT
ONE IS CALLED THE LOCAL GOVERNMENT SUPPORT TEAM, AND THAT PROVIDES TECHNICAL ASSISTANCE THROUGHOUT THE YEAR RELATED TO THE PUGET COUNTY REPORTING SYSTEM, WHICH IS THE COUNTY MANUAL THAT PROVIDES INFORMATION ABOUT WHAT'S REQUIRED FOR REPORTING IN THE STATE OF WASHINGTON AND ALSO ANY REQUIREMENTS RELATED TO THE ANNUAL ONLINE FILING
WE ALSO HAVE SOME ACCOUNTING AND REPORTING TRAINING THAT'S AVAILABLE TO LOCAL GOVERNMENTS AND ALSO A HEALTH DESK THAT'S AVAILABLE FOR ANY QUESTIONS THAT COME UP DURING THE YEAR
AND THEN WE ALSO HAVE A CENTER FOR GOVERNMENT INNOVATION THAT'S MORE FOCUSED ON BEST PRACTICES, GUIDANCE, RESOURCES, TOOLS
BASICALLY, THIS GETS MORE INTO HELPING PROVIDE SOME RESOURCES FOR LOCAL GOVERNMENTS THAT THEY MAY BE ABLE TO USE TO LOOK AT PROVING CONTROLS OR PROVIDING PRACTICES OR JUST PROVIDING BEST PRACTICES ON DIFFERENT AREAS LIKE PAYROLL ACCOUNTS PAYABLE
ONE AREA THAT WE'RE VERY FOCUSED ON IS CONTINUE TO PROVIDE RESOURCES RELATED TO CYBERSECURITY AND WAYS TO BE ABLE TO ADDRESS THAT WITH THE RISKS THAT ARE OUT THERE NOW AND THEN
WE ALSO HAVE THE FINANCIAL INTELLIGENCE TOOL, WHICH IS BASICALLY WHERE WE TAKE ALL THAT INFORMATION THAT'S SUBMITTED BY LOCALS THROUGHOUT THE STATE THROUGH THE END REPORT FILING PROCESS
AND WE COMPILE THAT INFORMATION INTO VARIOUS REPORTS THAT ALLOW GOVERNMENTS TO BE ABLE TO MEASURE THEMSELVES AGAINST SOME KEY FINANCIAL INDICATORS AND ALSO BE ABLE TO COMPARE TO OTHER LOCAL GOVERNMENTS IN THE STATE
AND THEN I'M GOING TO TURN IT BACK OVER TO ANGELA FOR SOME THANK YOUS FOR APPRECIATION FOR THE WORK, YEAH, AS I SAID
I REALLY APPRECIATE HOW PORT STAFF WAS VERY TIMELY IN THEIR COMMUNICATIONS AND PROVIDING US OUR AUDIT INFORMATION THAT WE REQUEST DURING THE AUDIT
I KNOW IT'S JUST ONE MORE THING FOR EVERYONE WITH UNDERWAY, BUT REALLY APPRECIATE HOW WELL THE PORT STAFF PROVIDES US THE INFORMATION WE NEED
SO I'LL HAND IT BACK TO ANGELA
THANK YOU, JOE
YEAH
SO AS JOE, AS JOE MENTIONED BEFORE, WE WRAP UP OUR PRESENTATION TODAY, WE'D LIKE TO THANK FOR MANAGEMENT AND OFFICIALS FOR THEIR ASSISTANCE IN COOPERATION DURING OUR AUDIT
SPECIFICALLY, WE'D LIKE TO EXTEND OUR APPRECIATION TO DON, RUDY, GLENN AND MELANIE FOR KEEPING THE AUDIT RUNNING SMOOTHLY, FOLLOWING UP WITH OUR REQUEST AND MEETING EACH WEEK TO DISCUSS OUR PRELIMINARY RESULTS
AND ADDITIONALLY, WE'D LIKE TO THANK THE PORT STAFF IN THE VARIOUS DEPARTMENTS FOR THEIR TIMELY RESPONSES AND ASSISTANCE WITH THE AUDIT
NEXT SLIDE
AND SO THIS CONCLUDES THE PRESENTATION TO THE PORT FOR OUR FISCAL YEAR 2020 AUDIT RESULTS
WE THANK EVERYONE FOR YOUR TIME TODAY AND YOUR PARTICIPATION IN THIS MEETING
AND SO AT THIS POINT, IF YOU HAVE ANY QUESTIONS, WE'D LIKE TO OPEN IT UP FOR
THANK YOU SO MUCH, ANGELA AND JOSEPH, AND ALSO TO OUR SUPPORT STAFF, GLENN AND YOUR TEAM
COMMISSIONER MOHAMED, DO YOU HAVE ANY QUESTIONS AT THIS TIME? I DON'T HAVE ANY QUESTIONS, BUT I WILL ALSO JUST SAY THANK YOU SO MUCH FOR THIS IMPORTANT WORK THAT YOU'RE DOING AS STEWARDS OF PUBLIC DOLLARS
AUDITS ARE SO IMPORTANT AND IMPORTANT TO OUR PUBLIC
AND SO JUST GRATEFUL FOR THE WORK THAT EVERYONE HAS DONE TO PRODUCE THIS REPORT
SO THANK YOU
YEAH
AND LIKEWISE, I DON'T THINK IT WOULD BE WISE FOR ME TO QUESTION A CLEAN AUDIT
SO I'M ALSO NOT GOING TO ASK ANY MORE QUESTIONS
AND SO IF THERE ARE NO ADDITIONAL QUESTIONS FOR THE AUDIT TEAM OR MR FERNANDO ON THIS ITEM, WE WILL MOVE ON TO THE NEXT TOPIC
THANK YOU SO MUCH TO OUR FRIENDS OVER AT THE STATE AUDITOR'S OFFICE FOR BEING HERE TODAY
ALL RIGHT
THANK YOU
THANK YOU AGAIN FOR YOUR TIME
TAKE CARE
ITEM NUMBER FOUR ON THE AGENDA IS AN UPDATE REGARDING THE DIRECTOR'S ANNUAL COMMUNICATION INDEPENDENCE, INTERNAL AUDIT, CHARTER QUALITY ASSURANCE, AND FOLLOW UP
GLENN, PLEASE PROCEED
THANK YOU, COMMISSIONER CHO
MICHELLE, IF YOU COULD PULL UP OUR DECK
GIVE ME JUST A SECOND HERE
THANK YOU
NEXT SLIDE, PLEASE, MICHELLE
SO, COMMISSIONER, SINCE COMMISSIONER MOHAMED IS NEW, I FIGURED I'D START WITH AN.ORG CHART JUST TO INTRODUCE YOU TO OUR DEPARTMENT
A LOT OF THE FOLKS I KNOW WE'RE VIRTUAL
I'M HOPING WE'RE IN PERSON NEXT TIME SO YOU CAN SEE ALL THE FACES THAT PUT CALL THE ROLL TOGETHER THAT I'LL DISCUSS TODAY
ON THE OPERATIONAL SIDE, YOU HAVE DAN, WHO'S OUR MANAGER THERE
AND ACTUALLY, RUMI OKUMA, DOES A LOT OF OPERATIONAL AUDITS AS WELL
SHE DOES A LOT OF COMMISSION INTERACTION AS WELL
WE DO A LOT OF CAPITAL AT THE PORT
WE SPENT A LOT OF MONEY, SO IT'S IMPORTANT THAT WE HAVE A CAPITAL AUDIT FUNCTION
AND SPENCER AND TEAM MANAGE THAT REDDISH COLOR THERE
AND THEN IT AND CYBERSECURITY CRITICAL AND BECOMES MORE IMPORTANT TO EVERY DAY WITH ALL THE RISKS OUT THERE
AND BRUCE AND RIDICARD THAT DOMAIN, AND THEY DO A GREAT JOB THERE
NEXT SLIDE, PLEASE
CHRIST, THERE'S TWO BOOKS YOU'LL HEAR US REFER TO, RED BOOK AND A YELLOW BOOK
THE RED BOOK IS THE INTERNATIONAL PROFESSIONAL PRACTICES FRAMEWORK
IT'S ISSUED BY THE IA STUDENT INTERNAL AUDITORS
AND IT'S USED BY ORGANIZATIONS AROUND THE WORLD THAT HAVE INTERNAL AUDIT FUNCTIONS
IT'S ESSENTIALLY A GOLD STANDARD FOR CORPORATE AND EVEN GOVERNMENT FOR INTERNAL AUDIT SHOPS
AND THEN THERE'S THE YELLOW BOOK, WHICH IS THE GAO, THE GOVERNMENT AUDITING STANDARDS
AND THE YELLOW BOOK IS DESIGNED MORE FOR GOVERNMENT ORGANIZATIONS, FOR EXTERNAL AUDITS OF GOVERNMENT ORGANIZATIONS
IT TALKS ABOUT INDEPENDENCE AND HOW YOU CONDUCT AN AUDIT, WHICH IS IN MANY CASES IN THE RED BOOK AS WELL
THE YELLOW BOOK ALSO SUGGESTS FOR INTERNAL AUDIT SHOPS LIKE OURSELVES THAT WE ALSO PUT A LOT OF WE USE THE RED BOOK AS WELL
SO THE YELLOW BOOK IS VERY PRESCRIPTIVE ON CERTAIN THINGS
WE WANT TO BE INDEPENDENT
YOU HAVE TO DO THIS AND THIS
BUT THEY ALSO SAY YOU NEED TO LOOK AT THE RED BOOK AND START USING A LOT OF THINGS IN THERE
SO TOGETHER, THESE TWO GUIDES CONTROL THE WAY WE DO OR GUIDE US
THEY'RE GUIDEBOOKS AND THEY'RE CONSTANTLY UPDATED
NEXT SLIDE, PLEASE
SHELL SO ON AN ANNUAL BASIS, THE RED BOOK OR THE INSTITUTE OF MATERNAL LAUNDERS REQUIRES US TO COME BACK TO YOU AND JUST TELL THE AUDIT COMMITTEE THAT, YES, WE'RE INDEPENDENT
OUR CHARTER IS STILL VALID AND TODAY CONFIRMING THAT OUR CHARTER RECENTLY UPDATED A YEAR AND A HALF AGO, STILL VERY VALID, THAT WE DO HAVE A QUALITY INSURANCE PROGRAM, QUALITY ASSURANCE PROGRAM
BOTH THE RED BOOK AND THE YELLOW BOOK REQUIRE US TO GET BETTER EVERY YEAR
HOW DO YOU IMPROVE INTERNALLY? HOW DO YOU MAKE SURE THAT YOUR TEAM'S GETTING BETTER AND IMPROVING? AND THEN WHEN WE DO AUDITS, ARE THEY BEING FOLLOWED UP ON OR SOMEBODY TAKING THE AUDIT REPORT, PUTTING IT ON A SHELF AND NOTHING'S DONE THEREAFTER BECAUSE THAT ADDS NO VALUE
SO YOU DO AUDITS AND THINGS GET FIXED, AND IS THERE A MECHANISM IN PLACE TO FOLLOW UP ON THOSE AUDITS AND ADDRESS THOSE ISSUES? SO NEXT SLIDE, PLEASE, MICHELLE
SO ON ORGANIZATIONAL INDEPENDENCE, I'M JUST CONFIRMING BACK THAT WE CONTINUE TO REPORT TO YOU TO COMMISSIONERS CHO AND MOHAMED AND THE AUDIT COMMITTEE FUNCTIONALLY AND THEN ADMINISTRATIVE LEADERS, STEVE METRUCK, THE EXECUTIVE DIRECTOR
SO OUR WORK FOR WORK RELATED STUFF, WE'RE DIRECTLY ACCOUNTABLE TO THE AUDIT COMMITTEE, AND THAT MAKES SURE THAT THINGS ARE TRANSPARENT AND WE'RE A CONDUIT FOR YOU TO EVERYTHING WITHIN THE ORGANIZATION AND THEN WORK WITH STEVE ALSO
AND IF STEVE SOMETHING RAISES TO AYE
CONCERN, ABSOLUTELY
I THINK IT'S IMPORTANT TO WORK WITH STEVE AS WELL
SO NEXT SLIDE, PLEASE, MICHELLE
A QUALITY ASSURANCE PROGRAM
WE DO IT EVERY THREE YEARS BECAUSE THE RED BOOK INTERNATIONAL STANDARDS SAY YOU HAVE TO HAVE AN EXTERNAL PARTY COME IN AND LOOK AT YOU EVERY FIVE YEARS
THE YELLOW BOOK, WHICH IS A LITTLE MORE STRINGENT, SAYS EVERY THREE YEARS
SO WE DO IT EVERY THREE YEARS BECAUSE OF COVID IT'S BEEN PUSHED OUT A LITTLE BIT, BUT WE ARE GOING TO HAVE ONE SOMETIME THIS YEAR
AND I THINK THEY WAIVED THE STANDARDS DURING THE PANDEMIC A LITTLE BIT BECAUSE PEOPLE AYE UNCOMFORTABLE COMING ON SITE
BUT I THINK THAT'S ALL DONE NOW AND WE'VE GOT ONE PLANNED, BUT WE ARE REQUIRED EVERY YEAR TO DO AN IN HOUSE ASSESSMENT, AND WE HAVE AN INDIVIDUAL WITHIN OUR TEAM RUMI THAT OKUMA, THAT LOOKS AT THE WORK THAT WE'VE DONE AND DOCUMENTS IT AND WRITES A MEMO ON IMPROVEMENT OPPORTUNITIES
AND SHE'S CONSISTENTLY DONE THAT
AND WE IMPROVE, WE DOCUMENT, WE IMPLEMENT WHAT IS RECOMMENDED AND MOVE FORWARD
NEXT SLIDE, PLEASE
OPPORTUNITY TO GET BETTER
AND THEN THE LAST THING IS OUR FOLLOW UP, OPEN ISSUE FOLLOW UP, LIKE I TALKED ABOUT, THEY WANT TO MAKE SURE THAT THESE ISSUES ARE BEING ADDRESSED AND MANY OF THEM ARE BEING ADDRESSED
WE ARE ADDING NEW ONES CONSTANTLY, BUT THERE AYE SOME THAT ARE LAGGING ALSO
I JUST WANT TO KIND OF HIGHLIGHT SOME THAT ARE SITTING OUT THERE
THE IT ONES ARE SECURITY SENSITIVE, AND WE'LL TALK ABOUT THOSE IN NON PUBLIC SESSIONS
I'M NOT GOING TO DISCUSS THEM NOW
THE THIRD BULLET DOWN ON ITEM ONE, THE OTHER TWO IS ABOUT SURETY
THE FIRST ONE IS ABOUT SURETY
SO SURETY IS WHEN YOU HAVE A CONCESSIONNAIRES AT THE AIRPORT
STATE LAW REQUIRES THAT A CERTAIN PERCENTAGE OF THEIR INCOME OR THEIR REVENUE IS MAINTAINED
SURETY
MINIMUM SURETY THAT YOU CAN HAVE FOR THE RCW
IS THIS LIKE A YEAR'S WORTH? AND THERE'S SOME PARAMETERS AROUND THAT
HOW DO YOU GET TO THAT? BUT THEN THE STATE LAW RCW ALSO NAYS, THE COMMISSION CAN CHANGE THAT THROUGH A RESOLUTION OR THROUGH GUIDANCE OR POLICY
SO THERE'S SOMETHING CALLED RE TWO THAT THE COMMISSION ISSUED IN 1995 THAT SET IT AT SIX MONTHS, ROUGHLY, WITH SOME PARAMETERS THERE
AND, YOU KNOW, THINGS HAVE CHANGED
MAYBE BUSINESS NEEDS HAVE CHANGED
WE'VE GOT A DIFFERENT MIX OF TENANTS IN AND MAYBE SIX MONTHS IS TOO HIGH
MAYBE IT'S THE RIGHT AMOUNT, BUT WHATEVER IT IS, THAT DECISION IS SUPPOSED TO COME FROM THE COMMISSION, AND RIGHT NOW, WE'RE NOT COMPLYING WITH THAT
WE'RE BELOW THAT AND WE'RE BELOW STATE LAW
BUT THAT NEEDS TO COME BACK TO COMMISSION NEEDS TO BE UPDATED AND THERE NEEDS TO BE SOME SORT OF AGREEMENT AS TO WHAT SURETY NEEDS TO BE
SO THAT'S ONE FOLLOW UP ITEM THAT'S BEEN SITTING OUT THERE FOR A WHILE AND THAT WE NEED TO ADDRESS
THE OTHER ONE IS ARCHITECTURAL AND ENGINEERING AUDIT THAT WE DID BACK IN LATE 2019
AND IT'S ESSENTIALLY AN ARCHITECTURAL AND ENGINEERING FEES, AND THERE WERE SOME GAPS AND A LOT OF OPPORTUNITIES FOR IMPROVEMENT
SO WHILE THAT'S BEING WORKED ON, IT'S STILL BEHIND SCHEDULE
A LOT OF THE ITEMS I WANT TO HIGHLIGHT THAT, LIKE I SAID, THE INFORMATION TECHNOLOGY AUDITS WILL TALK ABOUT PUBLIC SECTION
SO I'LL PAUSE AT THAT RIGHT NOW AND SEE IF ANYONE GOT ANY QUESTIONS
YOU, COMMISSIONER COMMENTS
I THINK WE'RE GOOD
OKAY, NEXT SLIDE, PLEASE, MICHELLE
OKAY, SO NEXT, WE'VE GOT OUR 2022 AUDIT PLAN AS APPROVED IN DECEMBER
SO, COMMISSIONER MOHAMED, JUST TO BRING YOU UP TO SPEED, THIS IS ESSENTIALLY OUR PLAN, OUR WORK PLAN FOR THE YEAR
WE'RE MAKING PROGRESS ON IT
WE DID ADD ACH PAYMENT FRAUD TO THIS, AND THAT WAS ADDED LATE DECEMBER, EARLY JANUARY, AFTER THE AUDIT COMMITTEE
BUT IN A NUTSHELL, WE'VE GOT A LOT OF WORK TO DO, A LOT OF GROUND TO COVER, AND TIME FLIES QUICKLY
BUT THIS IS JUST A SNAPSHOT OF ALL THE OTHERS
I'M NOT GOING TO GO THROUGH THEM, BUT JUST FOR YOUR INFORMATION, NEXT SLIDE, PLEASE, MICHELLE
SO THIS GANTT CHART ESSENTIALLY ILLUSTRATES HOW WE'RE GOING TO COMPLETE ALL THESE AUDITS THROUGH THE COURSE OF THE YEAR
EVERYTHING IN GREEN WE'VE COMPLETED, AND WE'RE GOING TO TALK ABOUT TODAY
EVERYTHING IN YELLOW IS KICKED OFF OR SOMEWHAT IN PROCESS, AND IT WILL BE DISCUSSED IN THE JUNE ON COMMITTEE
THEN THE OTHER ONES WILL ADJUST AS WE GO THROUGH THE YEAR
IT'S A PRELIMINARY SNAPSHOT AS TO HOW WE PLAN ON COVERING THE AUTO PLAN AS OF RIGHT NOW
PRETTY COMFORTABLE THAT WE'LL BE ABLE TO ADDRESS ALL OF THESE BY YOUR END
I ALSO WANT TO POINT OUT THAT THERE ARE SOME CONSTRUCTION AUDITS, SUCH AS THE POST IAF AIRLINE REALIGNMENT, THE C ONE BUILDING EXPANSION, AND THE MAIN TERMINAL LOW VOLTAGE, WHICH ARE LONGER TERM PROJECTS THAT WILL GO ON FOR FIVE YEARS
AND SINCE THE GCCM GENERAL CONTRACTOR CONSTRUCTION MANAGER AUDITS PROJECTS, THE RCW REQUIRES AN AUDIT OF THOSE THROUGH THE COURSE OF THE AUDIT OF THE PROJECT
SO THOSE AUDITS WILL GO ON WHILE THE PROJECT IS RUNNING FOR ABOUT FIVE YEARS
THEY WILL NOT BE COMPLETED THIS YEAR, BUT THERE'LL BE ONGOING PROJECTS AS THE PROJECT WORKS FOR
OKAY, THAT'S OUR AUDIT PLAN, IF YOU HAVE ANY, I'LL ASSUME NO QUESTIONS
AND I'M GOING TO JUMP FORWARD TO THE NEXT SLIDE
ARE YOU JUMPING FORWARD TO ITEM FIVE? SORRY, I JUST WANT TO MAKE SURE I KNOW WHERE YOU'RE ON THE AGENDA
SORRY
NOW, COMMISSIONER, SHOW BACK TO YOU FOR INTRODUCTION FOR OPERATION AUDITS
YEAH, WE'RE GOING TO JUMP TO ITEM SEVEN, ITEM OF PAGE FIVE, COMMISSIONER
OKAY
ALL RIGHT, MOVING TO OPERATIONAL AUDITS AND ITEM NUMBER SEVEN, ACH PAYMENT FRAUD
GLENN, PLEASE INTRODUCE THE ITEM AND PRESENTERS
YES, COMMISSIONER
CHAIR
I'M GOING TO TALK ABOUT FOUR AUDITS HERE
ACH PAYMENT FRAUD IS THE FIRST ONE
THE TWO ONES IN RED WILL TALK ABOUT NON PUBLIC SESSION
SO, MICHELLE, NEXT SLIDE, PLEASE, COMMISSIONER, I'M GOING TO INTRODUCE THE AUDIT COMMISSIONERS, AND THEN I'M GOING TO HAVE DAN CHASE FROM MY STAFF AND BRUCE CLAUSAL, WHO IS OUR IT MANAGER AS WELL, PRESENT CERTAIN ISSUES
BUT FRAMEWORK HERE IS WE JUST COMPLETED OR NOT, IT OFF ACH PAYMENT FRAUD, WHERE THROUGH A BUSINESS EMAIL COMPROMISE OF A VENDOR, THE PORT INCORRECTLY WIRED $572,000 PLUS INTO FRAUDULENT PROSPEROUS BANK ACCOUNTS OR FRAUDULENT BANK ACCOUNTS
BOTH SEATTLE PARKS FOUNDATION AND URBAN LEAGUE WERE COMPROMISED, AND THAT'S WHERE THE PAYMENTS WERE SUPPOSED TO GO
BUT AS WE'LL TALK ABOUT THROUGH THEIR EMAIL COMPROMISE, THEY GENUINE EMAIL ADDRESSES FROM THEIR ORGANIZATION WAS SENT TO THE PORT OF SEATTLE AND CONVINCED US TO CHANGE BANK ACCOUNT INFORMATION TO THE FRAUDSTERS BANK ACCOUNT
SO THE AUDIT WAS TO IDENTIFY THERE'S TWO PARTS OF THIS
WHAT BROKE DOWN AT THE PORT OF SEATTLE THAT ALLOWED THIS TO HAPPEN? BECAUSE WE SHOULD HAVE CONTROLS THAT CATCH THIS AND OUR CONTROLS FAILED
MULTIPLE LAYERS OF CONTROLS FAILED TO THE POINT WHERE THE MONEY WAS WIRED OUT
SO WHAT DID WE DO WRONG? THAT WAS THE GIST OF THE AUDIT THAT WE COULD IMPROVE TO PREVENT THIS FROM HAPPENING AGAIN
AND THEN THE CRIMINAL ASPECT, ALTHOUGH IT WAS HANDED OFF TO THE PORT POOR POLICE, WHO HAVE SUBSEQUENTLY HANDED IT OFF TO THE NSA
AND NSA HAS LUMPED ALL THESE CASES TOGETHER AND LOOKING AT THEM COMPREHENSIVELY
NOW THE MONEY MOVES QUICKLY
THEY'RE SOMEWHAT ORGANIZED, AND WE'LL SEE WHAT HAPPENS WITH THAT REPORT BACK IN TIME
NEXT SLIDE, PLEASE
SO AS AN OVERVIEW, THERE WAS A COORDINATOR AT SEATTLE PARKS WHOSE EMAIL WAS COMPROMISED AND THEN ESSENTIALLY A FRAUDSTER MIMICKING HER SENT AN EMAIL TO THE PORT ASKING FOR BANK ACCOUNT INFORMATION TO BE CHANGED
AND THEN FRAUDSTER ALSO COVID CREATED A FAKE DOMAIN
WELL, IT'S A REAL DOMAIN NAME, BUT SEATTLEPRACTICESFOUNDATION.ORG, THEY CHANGED THE SWAP THE R AND THE A AND MIMICKED THE DIRECTOR OF SEATTLE PARKS, AND THEY SENT THE EMAIL OVER
AND THEN THEY DID SOMETHING VERY SIMILAR FOR URBAN LEAGUE, WHERE AN AP SPECIALIST'S EMAIL WAS COMPROMISED
AND ON URBAN LEAGUE, THEY CHANGED THE L TO AN I ON SPOOFED ON DOMAIN NAMES THAT WERE FRAUDULENTLY CREATED TO MAKE IT LOOK LIKE THEY WERE LEGITIMATE
AND AT THE SAME TIME, I THINK PART OF THE REASON THE FRAUDSTERS DO THIS IS IN CASE FELICIA OR LATONIA, THE PEOPLE WHOSE EMAILS HAVE BEEN COMPROMISED BLOCK THOSE OR CATCH ON TO IT OR CHANGE THEIR PASSWORD
THEY CAN STILL AT THAT POINT, POTENTIALLY OPERATE UNDER THESE FRAUDULENT DOMAIN NAME, THE SPOOFY DOMAIN NAYS AND MAYBE CONTINUE YOUR DIALOGUE
THE CONVERSATION GET YOU TO CHANGE BANK ACCOUNT INFORMATION OR WHATEVER THEY'RE TRYING TO ACCOMPLISH
OF COURSE, A LOT OF MONEY WAS WIRED OUT BECAUSE OF THAT
NEXT SLIDE, PLEASE
SO THIS IS A SLIDE FROM INTERPOL
THIS IS HAPPENING GLOBALLY AND QUITE THROUGHOUT THE US, AND IT'S IMPORTANT TO DEFEND AGAINST IT HACKING
ITEM NUMBER ONE
AND THE EMAIL IS COMPROMISED THROUGH MALWARE, EMPLOYEE INTRUSION OR BUSINESS EMAIL COMPROMISE
IN THIS CASE, SOMEHOW THEY GOT ACCESS TO SOMEONE'S EMAIL AT A VENDOR ORGANIZATION AND THEN THE SOCIAL ENGINEERING FRAUD
ITEM NUMBER TWO, WE AS THE VICTIMS WHO AYE MANIPULATED INTO PROVIDING OR CHANGING BANK ACCOUNT INFORMATION AND PROVIDING FUNDS
AND THREE, WHICH IS PROBABLY HAPPENING RIGHT NOW, HAS ALREADY HAPPENED
DES MOINES LAUNDERING AND TRANSFERS QUICKLY INVOLVED IN FOREIGN BANKS AND INSTITUTIONS
AND THAT THIRD PART IS THE NSA IS TO GO SEE IF THEY CAN GET THE MONEY BACK AND WHAT THEY CAN DO WITH THESE ORGANIZATIONS AND HOW THEY CAN PREVENT THIS STUFF FROM HAPPENING
BUT THE FIRST LINE OF DEFENSE IS US PROTECTING OUR SYSTEMS, NOT HAVING GOOD CONTROLS AT THE FRONT END, PROTECTING OUR EMAIL, AND NOT LETTING IT HAPPEN TO THE PORT OR OUR VENDORS
SO THIS IS A CAMPAIGN THAT'S BEEN RUNNING THAT'S BEING RUN BY INTERPOL AND BRUCE CLAUS
I'LL TALK A LITTLE BIT ABOUT IT LATER
NEXT SLIDE, PLEASE
SO I'M GOING TO FRAME THIS UP FOR DAN AND HAND IT OVER TO HIM TO TALK ABOUT THE FIRST ISSUE
BUT IN A NUTSHELL, AT THE POINT OF THE AUDIT OR THE FRAUD, WE HAD 58 USERS OF PEOPLESOFT THAT COULD MODIFY ADD BANKING INFORMATION, VENDOR INFORMATION
AND WE THINK THAT WAS MAYBE A LITTLE TOO MANY
THEY ALSO DIDN'T VALIDATE THE INFORMATION WHEN THEY PUT IT IN
A LOT OF TIMES, PHONE NUMBERS WORN IN
WHEN WE LOOKED AT DATA LAST YEAR, WE SAW EMAIL ADDRESSES, VENDOR CONTACT NAMES WEREN'T IN, PHONE NUMBERS WEREN'T IN WHICH ALL OF THIS DATA AFTER THEY ENTER IT OR PUT IN THE REQUEST, THEY TYPE IT INTO THE SYSTEM
IT THEN MOVES OVER TO AFR'S, CORE SERVICES TEAM AND ONE OF THE INDIVIDUALS, ONE OF THE THREE INDIVIDUALS THERE HAS TO IMPROVE THESE
AND IF IT'S APPROVED, THEN IT'S LIVE IN PEOPLESOFT
IF IT'S DENIED, THE USERS NOTIFIED OF THE DENIAL AND PROCESS MOVES FORWARD
NOW, AS I MENTIONED, AT THE FRONT END, THE 58 USERS WEREN'T COMPREHENSIVE
AND PUTTING DATA IN ON APPROVING VENDOR CHANGES
THERE WERE SOME GAPS THERE AS WELL, AND THAT FAILED BOTH TIMES
AND THERE WERE GAPS BECAUSE OF FRAUDULENT REQUESTS WERE APPROVED
THEY SHOULDN'T HAVE PUT IT IN THE FIRST PLACE AND CAUGHT AT THE FRONT END, BUT THEY GOT THROUGH THE PROCESS
THE KEY CONTROL THAT FAILED WAS THE APPROVAL OF THE NEW CHANGES, AND THEY WENT LIVE IN PEOPLESOFT
AND PAYMENTS JUST CONTINUED TO GO UP
NEXT SLIDE, PLEASE
AND I'M GOING TO INTRODUCE DAN CHASE, OUR MANAGER OF OPERATIONAL AUDIT
DAN, I'LL TALK YOU THROUGH THE NEXT TWO ISSUES
YEAH, THANKS, GLENN
SO GOOD AFTERNOON
LIKE GLENN SAID, I'LL GIVE AN OVERVIEW OF ISSUES ONE AND TWO, AND THEN I'LL TURN IT BACK TO GLENN
YOU'RE GOING TO GO OVER THREE AND FOUR, I THINK, AND THEN BRUCE WILL CLOSE IT OUT WITH THE FINAL ISSUE
AND I THINK HOW WE'RE GOING TO DO THIS IS WE'RE GOING TO RUN THROUGH THE ISSUES IN TOTALITY, AND THEN AT THAT POINT, WE'LL LET RUDY AND OTHERS PROVIDE COMMENTS
DO YOU STILL WANT TO DO IT THAT WAY, GLENN? OKAY, SO THE FIRST ISSUE IS REALLY WHAT I CONSIDER THE MOST IMPORTANT
AND AS GLENN DISCUSSED IN A PRIOR SLIDE, WHEN CHANGES ARE MADE TO SUPPLIER INFORMATION AND WHEN I SAY SUPPLIERS, I'M TALKING ABOUT IT'S ANOTHER TERM FOR A VENDOR, A THIRD PARTY VENDOR
SO WHEN THESE CHANGES ARE ENTERED INTO PEOPLESOFT
IT THEN GOES TO A DIFFERENT GROUP WHO REVIEWS THAT INFORMATION AND THEN EITHER APPROVES OR DENIES THAT CHANGE
AND IT'S ONLY AFTER THE APPROVAL THAT THE SUPPLIER WITH THIS NEW INFORMATION CAN BE USED
RIGHT
AND THE WAY IT'S DESIGNED, IT ESTABLISHES A STRONG SEGREGATION OF DUTIES BECAUSE THE PERSON THAT'S REQUESTING THE CHANGES AND ENTERS THEM INTO THE SYSTEM CAN THEN NOT APPROVE THOSE CHANGES
IT HAS TO GO TO A SEPARATE PERSON WHO THEN APPROVES IT
WHAT HAPPENED IN THE FRAUD INSTANCES IS THAT THE BANK ACCOUNT WAS CHANGED UNKNOWINGLY, THAT THE REQUEST WAS MADE FROM THE FRAUDSTER
AND WHAT WAS SUPPOSED TO OCCUR IS THE PERSON WHO THEN APPROVED THOSE REQUESTS NEEDED TO CALL THE SUPPLIER TO VALIDATE THE AUTHENTICITY OF THE REQUEST
AND WHEN THAT DIDN'T HAPPEN, THAT'S WHAT ALLOWED THE PAYMENTS TO BE MADE TO THE FRAUDSTER AND NOT TO THE SUPPLIER
THERE'S OVERLAP, I THINK YOU'LL SEE, WITH ALL THESE ISSUES WHICH KIND OF LEADS INTO THE SECOND ISSUE THAT WE HAVE, AND IT REALLY TALKS ABOUT THE CRITICAL APPROVAL FUNCTION
IS THAT REALLY PLACED AT THE APPROPRIATE LEVEL? DO THOSE PEOPLE THAT ARE DOING THOSE APPROVALS, DO THEY HAVE THE NECESSARY KNOWLEDGE, SKILL AND UNDERSTANDING OF HOW IMPORTANT THAT VALIDATION PROCESS IS? WE'VE MADE SOME RECOMMENDATIONS THAT KIND OF FLOW FROM OUR OBSERVATIONS
NUMBER ONE, TO ESTABLISH AN OVERSIGHT FUNCTION TO MAKE SURE THAT THE APPROVALS ARE BEING DONE
DAN, YOU NEED TO MOVE TO THE NEXT SLIDE
YEAH, I'VE ONLY GOT ONE SCREEN, SO I'M SORRY
YEAH
NEXT, THIS IS YOUR RECOMMENDATION
HOPEFULLY YOU'RE LISTENING TO ME AND NOT FOLLOWING ALONG ON YOUR SLIDES
AND THEN THERE'S ALSO SOME POLICY UPDATES THAT NEED TO BE MADE SO THAT THE POLICIES ARE CURRENT AND CAN BE FOLLOWED
THERE'S ALSO A SOFTWARE SERVICE THAT IF IT WERE PURCHASED, THAT WOULD HELP VALIDATE SOME OF THE CHANGES THAT ARE REQUESTED
SO THESE ARE SOME OF THE RECOMMENDATIONS THAT WE'VE COME FORWARD WITH
AND I THINK THE MANAGEMENT RESPONSES, YOU PROBABLY READ THEM IN THE PORT, AND I THINK RUDY AND MAYBE OTHERS WANT TO PROVIDE SOME ADDITIONAL CONTEXT TO IT
SO, GLENN, I'LL TURN IT BACK TO YOU SLIDE WISE
YOU STILL ON THE RECOMMENDATION OF ISSUE ONE
SO, MICHELLE, NEXT SLIDE, PLEASE
AND DAN, ARE YOU NOT ABLE TO SEE THE SLIDES? I CAN, BUT LIKE I SAID, I ONLY HAVE ONE SCREEN
OKAY
SO YOU'RE AN ISSUE TWO
NOW, THE RELIANCE PLACED SO PROCEDURES TO CONFIRM AUTHENTICITY OF SUPPLIER REQUESTED BANK ACCOUNT CHANGES NOT PLACED AT THE APPROPRIATE LEVEL
SO IF YOU WANT TO TALK TO SPEND A MINUTE OR TWO TALKING ABOUT THIS
YEAH
SO I ALREADY TOUCHED IT ON THAT
RIGHT
IT'S REALLY THE PERSON OF THE INDIVIDUAL THAT'S PERFORMING THAT APPROVAL FUNCTION
IS THAT REALLY PLACED AT THE APPROPRIATE LEVEL, GIVEN HOW IMPORTANT THAT VALIDATION STEP IS IN THE PROCESS? SO I DID KIND OF TOUCH ON THAT
THAT'S THE SPIRIT OF WHAT WE'RE GETTING OUT THERE
YEAH
DAN SAID VERY IMPORTANT JOB CRITICAL AND REQUIRES TRAINING AND AWARENESS
RIGHT
THE INDIVIDUAL THAT WAS IN THIS ROLE HADN'T ATTENDED INFORMATION SECURITY AWARENESS TRAINING IN BOTH 2021
SO IF YOU HAVE SOMEONE IN THAT CRITICAL ROLE, YOU HAVE TO TRAIN THEM
THERE'S A RESPONSIBILITY TO MAKE SURE THAT THEY HAVE THE TOOLS, THE EQUIPMENT
SO IT'S NOT JUST THE INDIVIDUAL'S FAULT, IT'S THE SYSTEM AND THE STRUCTURE THAT PUT THE PERSON IN THAT POSITION WHERE THEY WON'T PROVIDE WITH THE RESOURCES TO ADEQUATELY DO THEIR JOB
NEXT SLIDE, PLEASE, MICHELLE
AND THAT'S JUST THE RECOMMENDATION THAT DAN TALKED ABOUT
SO WOULD THAT JUMP INTO THE NEXT SLIDE, PLEASE, MICHELLE? CAN I ASK A QUESTION? YEAH, ABSOLUTELY, COMMISSIONER, IS THERE A WAY WE CAN RESTRUCTURE THE POLICY OR THE STANDING OPERATING PROCEDURE SO THAT THE ONUS IS NOT ON US TO CONFIRM, BUT ON OUR VENDOR? LIKE, FOR INSTANCE, I'M THINKING ABOUT, LET'S SAY, LIKE YOUR CELL PHONE CARRIER
RIGHT
WHEN I GO AND TRY TO MAKE A CHANGE TO MY PHONE PLAN, THERE IS THE MAIN ACCOUNT HOLDER, BUT ALSO A DELEGATE, AND IT'S ALREADY IN THE ACCOUNT
SO WHEN I GO TO SPRINTER RISE AND I SAY, HEY, I WANT TO ADD A LINE, THEY LOOK AND SEE WHETHER OR NOT THAT PERSON IS ON A LIST
RIGHT
IT SOUNDS LIKE WHAT THIS POLICY IS DOING IS PUTTING ON THE ONUS, ON OUR STAFF TO GO INVESTIGATE WHETHER OR NOT THIS PERSON IS THE APPROPRIATE PERSON TO MAKE THE CHANGES, OR IS IT THE SAME THING STARTS OFF WITH AND IT TIES INTO THIS ISSUE? WELL, THAT WE'RE GOING TO TALK ABOUT IT'S GETTING THE DATA CORRECTLY IN THE FIRST PLACE
SO JUST LIKE YOUR CELL PHONE CARRIER, WHEN YOU PUT THE DATA IN FOR, SAY, SEATTLE PARKS, YOU SAY JUST THE PEOPLE THAT ARE AUTHORIZED TO MAKE CHANGES ARE THESE TWO INDIVIDUALS OR THIS INDIVIDUAL
SO IT'S PUTTING THE DATA IN THE FIRST PLACE
AS YOU MENTIONED, AS I TALKED ABOUT, WE WEREN'T DOING THAT
WE'RE REQUIRED TO
AND THEN THE BACK END TEAM IS SUPPOSED TO GO TO THAT TO SAY, OKAY, ONLY MICHELLE CAN MAKE CHANGES
AND THIS ISN'T MICHELLE
THIS IS MICHELLE'S CONTACT INFORMATION
SO WHEN YOU LEAVE, WHEN YOU DON'T HAVE THAT DATA IN AT THE FRONT END, THE BACK END CAN'T DO ANYTHING WITH IT
YES
THIS ISSUE SAID THERE WERE TOO MANY EMPLOYEES AND THEY WEREN'T PUTTING THE DATA IN JUST LIKE YOU TALKED ABOUT
SO THEY NEED TO DO THAT
TOO MANY EMPLOYEES PUTTING INCORRECT DATA
AND THEN LIKE YOU MENTIONED, COMMISSIONER, SHOW POLICY DOES REQUIRE THAT THE PERSON THAT'S VERIFYING LOOK AT THAT DATA, THE APPROVED PEOPLE WHO'S APPROVED LOOK AT THE PHONE NUMBER AND ALL OF THAT INFORMATION
BUT IF THAT INFORMATION ISN'T PUT IN, THEN THE BACK END PEOPLE, AYE, FLYING BLIND, OR IT MAKES IT A LOT MORE DIFFICULT FOR THEM
I BELIEVE THAT'S BEING DONE
AND RUDY WILL TALK ABOUT THAT IN AYE
RESPONSE
THESE WERE GAPS THAT THE AUDIT IDENTIFIED AND HIGHLIGHTED
SO WAY TOO MANY PEOPLE
AND THAT'S A BIG ISSUE
COMMISSIONER, MOHAMED, I NOTICED THAT YOU MENTIONED SEATTLE PARKS EARLIER, AND THERE SEEMS TO BE AN INCREASE OF THE PORT OF FRAUD HAPPENING ACROSS THE BOARD WITH A LOT OF DIFFERENT GOVERNMENT AGENCIES
HAVE WE SEEN A SIMILAR ATTACK LIKE THIS IN OTHER AGENCIES? AND HOW ARE WE COMMUNICATING WITH THEM? HOW ARE WE LIKE, COLLABORATING AND ENSURING WE HAVE STRONG TOOLS IN PLACE? SO THE CITY OF SEATTLE HAD ABOUT 805,000 STOLEN FROM THEM IN THE SAME MANNER ABOUT A YEAR AND A HALF, TWO YEAR AND A HALF AGO, AND THEY COMMUNICATED TO US, AND IT WAS IN EVERY NEWSPAPER, AND IT'S WIDELY AVAILABLE
BUT THE ONUSES ON US TO ADDRESS OUR WEAKNESSES AND OUR GAPS
RIGHT
WHEN THOSE COME ACROSS, JUST GETTING THE DATA AND SHARING IT IS IMPORTANT
BUT YOU NEED TO ALSO TAKE IT TO THE NEXT STEP AND LOOK IN HOUSE AND SAY, WHAT ARE WE DOING WRONG? AND I THINK WE HAD A LOT OF GAPS THAT WHILST AWARE, OBVIOUSLY, WE SHOULD HAVE DONE BETTER
THERE'S ALSO COMMUNICATION, LIKE I MENTIONED, I PUT THAT SLIDE UP FROM INTERPOL WHERE THEY HAVE THIS HUGE CAMPAIGN
BE CAREFUL WHERE THEY TALK ABOUT THESE
AND I SEE RON JIMISON'S HAND IN
RON, DO YOU WANT TO JUMP IN AND SPEAK FOR A SECOND? YEAH
I'M RON JAMESON
I'M THE CHIEF INFORMATION SECURITY OFFICER FOR THE PORT HERE, AND I JUST WANTED TO QUICKLY INTERJECT THAT WE ARE ASSOCIATED WITH MANY COMMUNITIES OF PRACTICES, ESPECIALLY IN A LOCAL AREA
SO WE HAVE GOOD VISIBILITY OF WHAT'S TAKING PLACE
AND THE ANSWER TO YOUR QUESTION, COMMISSIONER, IS YES, WE ARE SEEING THIS TYPE OF OCCURRENCE IN OTHER TYPES OF INDUSTRIES AND OTHER TYPE OF ORGANIZATIONS, NOT JUST THROUGHOUT THE PORT, AND ESPECIALLY WITH THE RUSSIAN UKRAINIAN PRICES TAKING PLACE
THERE'S BEEN AN UPTICK IN THAT AREA
SO WE ARE BEING EXTREMELY VIGILANT IN HOW WE
AYE APPROACHING THAT, ESPECIALLY WITH THE INFORMATION THAT WE'RE RECEIVING FROM OUR FEDERAL ORGANIZATIONS
SO I HOPE THAT GIVES YOU A LITTLE BIT MORE INSIGHT INTO HOW WE'RE APPROACHING THIS
YEAH
THANK YOU BOTH FOR THAT ANSWER
AND OUR PRIORITY IS TO ENSURE THAT WE HAVE STRONG CHANNELS IN PLACE TO DETER AND DISRUPT ANY OF THOSE TYPES OF FRAUDS AND SCAMS SO THE INFORMATION YOU AYE PROVIDING IS HELPFUL
NEXT SLIDE, PLEASE
MICHELLE, THE COMMISSIONERS, AGAIN, SOME OF THESE THINGS HAVE ALREADY BEEN DONE
MANY OF THEM, NOT ALL OF THEM HAVE BEEN ADDRESSED AT THIS POINT
SO WE DO HAVE BETTER CONTROLS IN PLACE
THIS WOULDN'T OCCUR RIGHT NOW, BUT I JUST WANT TO HIGHLIGHT WHAT WE WERE RECOMMENDING CLEARLY REDUCED THE NUMBER OF INDIVIDUALS
EVERY POINT THAT YOU HAVE IS A WEAKNESS THAT'S UNNECESSARY
AND ALSO CERTAIN FIELDS NEED TO BE REQUIRED OR BY POLICY, PREFERABLY SYSTEM CONTROLS SUCH AS PHONE NUMBERS OR INFORMATION
SO, COMMISSIONER CHO, AS YOU MENTIONED, SO IT'S PUT IN CORRECTLY IN THE FRONT END, LIKE CELL PHONE COMPANIES
NEXT SLIDE, PLEASE
AND WITH THIS, I'M GOING TO HAND IT OVER TO BRUCE CLAUS, ALL OUR IT MANAGER I'VE GOT ONE MORE BEFORE I PUGET OVER BRUCE DETECTIVE CONTROLS
SO ALSO, DETECTIVE CONTROLS DIDN'T EXIST AND NEEDED TO BE CREATED
DETECTIVE CONTROL
WITHOUT A DETECTIVE CONTROL, YOU ONLY FIND OUT ABOUT THESE THINGS AFTER THE FACT
AND WHILE A DETECTIVE CONTROL WOULDN'T IMMEDIATELY TELL YOU WHAT THAT FRAUD OCCURRED, YOU WOULDN'T WAIT SEVERAL MONTHS BEFORE YOU FOUND OUT IT WOULD OCCUR A LITTLE FASTER
SOME EXAMPLES OF A DETECTIVE CONTROL WOULD BE LIKE YOUR CREDIT CARD COMPANY OR YOUR BANK
IF YOU MAKE CHANGES, THEY SEND YOU EITHER AN EMAIL OR A LETTER TO YOUR HOUSE SAYING, GLENN, YOUR BANK ACCOUNT HAS CHANGED
IF YOU DIDN'T MAKE THIS CHANGE, PLEASE CALL THIS NUMBER IMMEDIATELY
AND PEOPLE WILL TAKE THEIR TIME, BUT THEY WILL
IF SOMETHING LOOKS FISHY, IT'S A GOOD CHANCE THEY'LL CALL AND YOU'LL CATCH IT A LITTLE BIT QUICKER
AND IT'S NOT A PREFERRED IT'S A BACK END CONTROL RATHER THAN THE FRONT END, BUT IT'S ONE LAYER, ONE ADDITIONAL LAYER OF PROTECTION
NEXT SLIDE, PLEASE
MICHELLE, OUR RECOMMENDATIONS
JUST SOME EXAMPLES THAT WE PROVIDED SENDING NOTIFICATIONS TO SUPPLIERS AND THINGS CHANGE
SOME OTHER AUTOMATED CONTROLS THAT EXIST THAT CAN BE PUT TOGETHER, WHICH WOULD NOTIFY YOU SAY, HEY, GLENN, THERE'S SOMETHING WEIRD HAPPENING
YOU MIGHT WANT TO TAKE A LOOK AT THIS
IT'S LIKE AN ELECTRONIC DON'T SKATE THESE FRAUD CONTROLS THAT ARE OUT THERE
AND YOU CAN BUILD THIS INTO YOUR DAY TO DAY WORK
BUT THE MOST SIMPLISTIC ONES ARE JUST SENDING OUT AN EMAIL OR LETTER TO THE CLIENT SAYING, I CHANGE YOUR BANK INFORMATION
AND DO YOU AGREE OR DO YOU THINK SOMETHING'S WRONG? SO WITH THAT NOW, I THINK I'M READY TO HAND IT OVER TO BRUCE
BRUCE, YOU'RE ALL UP
YOU'RE READY? NEXT SLIDE, PLEASE, MICHELLE AND BRUCE, YOU'VE GOT THE SLIDE
SO TELL THE SHOW WHEN
THANK YOU
SO GOOD AFTERNOON, EVERYBODY
AS GLENN MENTIONED, FOR THE RECORD, YOU ALREADY DID THAT, BUT I'LL DO IT AGAIN
SO
AYE, I'M BRUCE PAUSEL
I'M THE IT AUDIT MANAGER FOR THE PORT
SO AS GLENN MENTIONED EARLIER, THIS WHOLE FRAUD IS BASED UPON BUSINESS EMAIL COMPROMISE, PHISHING EMAILS
AND SO ONE OF THE BEST THINGS THAT WE CAN DO TO PROTECT AGAINST THOSE EMAILS IS TO TRAIN OUR STAFF AND HOW TO RECOGNIZE THEM AND BE AWARE OF THEM
AND IT'S ACTUALLY A LOT HARDER THAN IT SOUNDS
OUR POOR INFORMATION SECURITY DEPARTMENT HAS DONE A GREAT JOB IN DEVELOPING ANNUAL REQUIRED TRAINING FOR ALL THE EMPLOYEES TO TAKE EVERY YEAR THAT TALKS ABOUT PHISHING AND HELPS TO TRAIN THEM AND KEEP THEM AWARE
AND SO I THOUGHT IT WOULD BE HELPFUL TO SHOW YOU A COUPLE OF EXAMPLES OF THE DOCUMENTS AND EMAILS THAT CAME ACROSS DURING THIS FRAUD
AND SO, FOR INSTANCE, THIS IS THE ONE THAT RELATES TO THE SEATTLE PARKS FOUNDATION
AND SO IF YOU LOOK AT THIS EMAIL, YOU CAN SEE ON THE VERY TOP LINE THE MICHELLE BENETUA, THIS IS THE SPOOF DOMAIN FOR A QUICK REVIEW
IF YOU'RE NOT LOOKING CAREFULLY, IT LOOKS LIKE SEATTLE PARKS FOUNDATION, BUT IT'S NOT
IT'S SEATTLE PRATT FOUNDATION
AND SO THE FRAUDSTERS LITERALLY HAD TO GO OUT AND PURCHASE THAT DOMAIN NAME, THAT FAKE DOMAIN NAME, IN ORDER TO GET THIS EMAIL TO WORK
AND SO IF YOU LOOK AT THE REST OF IT, THAT'S A HUGE RED FLAG SEEING THAT INCORRECT DOMAIN NAME
IF YOU LOOK AT THE REST OF THE EMAIL, IF YOU LOOK IT OVER, YOU CAN SEE THAT THERE'S POOR GRAMMAR IN SEVERAL PLACES IN THE EMAIL
THAT'S ALSO ANOTHER RED FLAG THAT YOU TYPICALLY SEE IN PHISHING EMAILS UP THERE IN THE HEADER OF THE CC THAT YOU SEE THE FELICIA AT SEATTLE PARK
THAT WAS ACTUALLY THE COMPROMISED EMAIL
THAT WAS THE EMAIL
THAT WAS THE PERSON WHOSE EMAIL CREDENTIALS THEY ACTUALLY GOT
THEY HAD HER PASSWORD AND GOT ACCESS INTO HER EMAIL, AND THEY LITERALLY WERE HER
SO THIS IS ONE EXAMPLE
SO NOW NEXT SLIDE, PLEASE
SO CAN I JUST IF YOU DON'T MIND, TWO THINGS
ONE IS A QUESTION, ANOTHER IS A COMMENT
BUT IS THE PURPOSE OF CSI THE COMPROMISED EMAIL FOR THESE PEOPLE TO ADD A LAYER OF LEGITIMACY OR THE PERCEPTION OF LEGITIMACY? I DON'T UNDERSTAND WHY THAT EXACTLY
SO ACTUALLY, GO BACK A SLIDE, PLEASE
LET'S LOOK AT THIS
THIS IS A LITTLE MORE COMPLICATED THAN IT APPEARS BECAUSE THIS ONE EMAIL THAT YOU SEE HERE IS ACTUALLY PART OF LIKE A 15 EMAIL CONVERSATION
AND AT THE VERY BEGINNING OF THAT EMAIL CONVERSATION, IT WAS REAL PEOPLE
AT THE BEGINNING OF THAT CONVERSATION, THERE WAS NO SPOOF DOMAIN NAME
THE FELICIA THAT YOU SEE WAS PROBABLY THE REAL FELICIA
AND THEN SOMEPLACE ALONG THAT CONVERSATION, THE FRAUDSTERS INSERTED THEMSELVES INTO IT WAS A FAKE IT
AND AT THAT POINT, WHEN THEY INSERTED THEMSELVES IN, THEY NEEDED TO MAKE SURE THAT ANYBODY ELSE THAT WAS CC FROM SEATTLE PARKS FOUNDATION WEREN'T THE REAL PEOPLE
RIGHT
THEY SENT THE EMAIL IN, FELICIA'S INBOX, SO SHE DIDN'T SEE IT
SO WE DON'T ACTUALLY KNOW WHAT HAPPENED
BUT IT'S POSSIBLE
AND I KNOW THIS FROM TALKING TO OUR SECURITY FOLKS THAT IF YOU GET ACCESS TO SOMEBODY'S EMAIL SO I CAN GET IN THERE AND THE FIRST THING I CAN DO IS SET UP RULES IN YOUR EMAIL SO THAT ALL OF YOUR INCOMING EMAIL FROM THE PORT OF SEATTLE GETS SENT OUT TO ME IN ANOTHER ACCOUNT
YOU WILL NO LONGER SEE INCOMING EMAIL FROM SEATTLE FROM THE PORT OF SEATTLE IN YOUR INBOX
BUT I'LL BE ABLE TO SEE IT IN MY OTHER ACCOUNT AND I'LL BE ABLE TO RESPOND BACK
SO SOMETHING LIKE THAT COULD HAVE BEEN SET UP THAT ALLOWED THIS TO HAPPEN
OKAY
BUT YOU'RE RIGHT
AS SOON AS YOU SEE ALL THESE OTHER THINGS LIKE TITLE, PRACTICE, FOUNDATION, IT THEN LOOKS LEGITIMATE
RIGHT
BECAUSE YOU'RE SAYING SHE SEES SEEING SOMEBODY
AND ACTUALLY, AS THESE CONVERSATIONS CONTINUED, THEY CHANGED OVER TO ONLY BEING FROM FELICIA
BUT THEY WERE C SEEING MICHELLE
SO IT ALWAYS LOOKED LIKE SOMEBODY ELSE WAS BEING SUCCEED TO MAKE IT LOOK LIKE A LEGITIMATE EMAIL CONVERSATION
FIRST, I HAVE A QUESTION
I WAS JUST GOING TO ASK A QUESTION ABOUT THAT
SO HOW COME YOU'RE NOT ABLE TO IDENTIFY OR KNOW THAT CHANGE HAPPENED, THAT FELICIA'S INBOX OR THAT THE REQUIREMENTS IN HER INBOX? THIS IS A GOOD QUESTION, BUT THAT'S A QUESTION FOR SEATTLE PARKS FOUNDATION AND THEIR OWN INTERNAL SECURITY AND THEIR OWN INTERNAL PROCESSES
WELL, THE POLICE DEPARTMENT HAS OUR POLICE DEPARTMENT HAS TALKED TO THEM ABOUT THIS AND EVEN OUR SECURITY DEPARTMENT CONTACTED THEM
INFORMATION SECURITY CONTACTED THEM AND ACTUALLY CUT OFF ALL EMAIL ACCESS TO THEM UNTIL THEY COULD BE ASSURED THAT THEY HAD LOOKED AT THEIR OWN SYSTEMS AND MADE SURE THAT THEY HAD CLEANED OUT ALL THIS
SO THEY DID THAT BACKGROUND WORK
BUT TO YOUR QUESTION, IF I WERE TO GO INTO YOUR EMAIL ACCOUNT AND SET UP A RULE THAT SENDS ALL YOUR EMAIL FROM THE PORT OF SEATTLE OUTBOUND TO SOME OTHER EMAIL ACCOUNT, YOU WOULD NEVER SEE THIS UNLESS YOU HAPPEN TO BE A TYPE PERSON THAT GOES IN AND CHECKS YOUR EMAIL RULES, WHICH ARE TEN MENU SELECTIONS AWAY
SO IT WOULD BE HARD FOR ANYONE TO NOTICE THIS ONCE IT HAD BEEN DONE
SO COMMISSIONERS, IF I CAN JUMP IN AND THEN RON, I'LL HAND IT TO YOU BECAUSE I SEE YOUR HAMDI OUT
SO THIS WAS A CONVERSATION BETWEEN THE PORT AND FELICIA TO CHANGE FILES FROM JPEG TO PDF OR SOMETHING VERY TRADITIONAL WORK
AND THEN SOMEWHERE IN THE MIDDLE IN THAT CONVERSATION WITH BRUCE IS TALKING ABOUT THE FRAUDSTER, JUMPED IN, TOOK OVER FELICIA'S EMAIL AT THAT POINT AND STARTED JPEG FILES, STARTED ASKING ABOUT BANK ACCOUNT INFORMATION CHANGES AND SAY HEY, AN URGENCY
IF YOU PAY US NOW, WE'LL GIVE YOU 5% DISCOUNT AND LET'S CHANGE BANK ACCOUNT INFORMATION
SO THOSE ARE RED FLAGS THAT RON'S TEAM TALKS ABOUT AND RON WILL TALK ABOUT LATER
BUT ALL OF THIS IS ENOUGH TRAINING AND YOU GOT TO WATCH OUT FOR THOSE THINGS AND CATCH THOSE
BEFORE YOU HAND IT OFF, COULD I JUST MAKE A REAL QUICK COMMENT? YEAH, I COULD UNDERSTAND WHY POOR GRAMMAR MIGHT BE A RED FLAG
BUT I ALSO JUST WANT TO FLAG THAT A LOT OF THESE COMMUNITY GROUPS AND ORGANIZATIONS ARE RUN BY PEOPLE WHO HAVE PROGRAMMER
AND I REALLY DON'T WANT US TO GO DOWN THE PATH WHERE WE'RE PROFILING PEOPLE BECAUSE ENGLISH IS SECOND LANGUAGE
I TOTALLY UNDERSTAND WHY A SCAMMER MIGHT HAVE BAD ENGLISH, BUT IT'S KIND OF KILLING ME INSIDE TO KNOW THAT WHEN WE SEE POOR GRAMMAR, WE JUST ASSUME THAT WE THINK THAT THIS MIGHT BE A SCAMMER
RIGHT
I REALLY DON'T THINK THAT'S A SCIENTIFIC OR DATA BACKED FILTER
IT IS
NO, I UNDERSTAND, COMMISSIONER CHO, BUT YOU HAVE TO LOOK AT A VARIETY OF THINGS
THESE OCCURRED LIKELY IN SPAIN AND TURKEY
THAT'S WHERE THESE CRIME RINGS ARE RUNNING OUT OF
IT'S JUST ONE
BUT THE DOMAIN NAME
THE SPOOF DOMAIN NAME
SURE
NO, THAT MAKES SENSE
THE DOMAIN NAME MAKES SENSE
BUT JUST LIKE IN THE BODY OF THE PARAGRAPH WHEN YOU HAVE MISSPELLINGS OR GRAMMATICAL ERRORS, I JUST DON'T WANT THAT TO BE THE ONLY REASON WHY WE GO DOWN THE RABBIT HOLE OF THIS MUST BE FRAUD
WELL, NO, IT TURNS OUT THIS PERSON, THEY JUST DON'T SPEAK GREAT ENGLISH
AND PLUS, IF YOU'VE EVER SEEN MY EMAILS, YOU WOULD NOTICE THEY'RE FULL OF MISSPELLINGS, TOO
BUT I THINK WHEN YOU DO HAVE CONCERNS OR ANYTHING, IT'S AS SIMPLE AS PICKING UP THE PHONE AND TALKING TO THE PERSON
IF YOU'RE WORKING VIA EMAIL, YOU DON'T KNOW IF YOU'RE WORKING WITH SOMEONE INTERNATIONALLY OR THOSE RELATIONSHIPS AND THE ABILITY TO JUST TALK TO A PERSON ELIMINATES THEM
I KNOW YOU GUYS AREN'T PROFILING PEOPLE, BUT WE TALK ABOUT INCREASING THE SHARE OF MINORITY BUSINESS OWNERS AND SOME OF THOSE MINORITY BUSINESS AYE DOORS TO BE PERFECT ENGLISH IS ALL I WANT
RON, DID YOU STILL HAVE A COMMENT? YEAH, I JUST WANTED TO SAY THAT A LOT OF THESE SMALLER ORGANIZATIONS THAT WERE ASSOCIATED WITH, ESPECIALLY IN THE PAYMENT PROCESS, THAT THEY'RE NOT OFTEN ADEQUATELY EQUIPPED IN THE REALM OF CYBER FOR PROTECTING THEIR SYSTEMS SO IN THESE PARTICULAR PLACES, WE REALLY HAD TO COLLABORATE WITH AYE
TO GET THEM TO EVEN UNDERSTAND WHAT WAS GOING ON
SO THAT WAS AN EDUCATION THAT WE PROVIDED ON OUR PART TO THEM SO THAT IN THE FUTURE WE'D BE BETTER OFF
SO I JUST WANT TO MAKE IT CLEAR THAT THERE'S SOME THINGS THAT WE DID WORK COLLABORATIVELY WITH THESE ORGANIZATIONS TO TRY TO GET THEM TO UNDERSTAND HOW THIS HAPPENED AND WHAT THEY COULD DO TO PREVENT THAT IN THE FUTURE
AND MAYBE THIS IS SOMETHING WE SHOULD BE ROLLING OUT IN GENERAL TO OUR VENDORS AND AS PART OF THE ONBOARDING PROCESS, TO BE A VENDOR TO THE PORT OF SEATTLE, YOU HAVE TO GO THROUGH SOME FORM OF TRAINING
I REALIZE THAT'S, TEDIOUS, FOR US, BUT I THINK IN THE BROAD STEAM OF THINGS, TRAINING OUR NEW SUPPLIERS, VENDORS, SOME OF THIS STUFF WOULD BE, I THINK IN THE LONG RUN, A HUGE VALUE ADD
I'LL LET RUDY TALK ABOUT THIS LATER ON, BUT WE DID JUST DO SOME MESSAGING TO THAT VERY FACT RIGHT THERE
WE PUT SOME LEARNING INFORMATION OUT THERE ON THE WEBSITE AND WE'VE GIVEN OUR VENDORS A LITTLE MORE INSIGHT AS TO HOW THEY NEED TO BE MORE CAREFUL
BUT I'LL SAVE THAT FOR RUDY
CAN GO INTO THAT LATER
BOOTH, BACK TO YOUR NEXT SLIDE, PLEASE
SO THIS WAS ACTUALLY FOR THE
LET'S GO BACK ON SLIDE
THANK YOU
SO THIS IS ACTUALLY FOR THE URBAN LEAGUE FRAUD
AND SO THEIR EMAILS WERE ACTUALLY MUCH TOUGHER TO RECOGNIZE THAT SOMETHING WAS GOING ON
BUT THEY INCLUDED THIS DOCUMENT IN WEATHER EMAILS AND IT HAD SOME OBVIOUS THINGS THAT COULD HAVE BEEN NOTICED
CITIBANK IS MISSPELLED
IT DOESN'T HAVE A SPACE BETWEEN CITY AND BANK
ONCE AGAIN, WE HAVE THAT KIND OF POOR GRAMMAR IN A BANK LETTER, WHICH IS AN ODD THING IN A BANK LETTER
THE SIGNATURE IS LIKE BELOW THE PERSON'S NAME
THE SIGNATURE DOESN'T REALLY MATCH THE PERSON'S NAME
SO THERE WERE SOME THINGS IN HERE THAT COULD HAVE BEEN FLAGS TO CAUSE SOMEBODY TO THINK ABOUT IT
MICHELLE, NEXT SLIDE
SO THE BEST WAY WE HAVE TO ADDRESS THESE KINDS OF PHISHING EMAILS IS REALLY TO TRAIN OUR PEOPLE, BECAUSE WE CAN TRAIN THEM TO LOOK FOR PHISHING STUFF
WE CAN TRAIN THEM TO LOOK FOR THE RED FLAGS, WE CAN TRAIN THEM TO BE AWARE OF IT
AND THE AWARENESS IS ACTUALLY IMPORTANT
JUST SO THEY'RE THINKING ABOUT THE FACT IT'S A POSSIBILITY
SO THAT EMAILS GO ACROSS, THEY KIND OF OCCASIONALLY THINK ABOUT IT
SO, LIKE I SAID EARLIER, THE PORT INFORMATION SECURITY DEPARTMENT HAS DEVELOPED NICE REQUIRED ANNUAL TRAINING FOR ALL PORT EMPLOYEES
AND SO THE TRAINING IS PROVIDED BY AN HR ONLINE APPLICATION
AND AS PART OF OUR AUDIT, WE REQUESTED DATA FROM HR FOR WHICH EMPLOYEES COMPLETED THE REQUIRED TRAINING IN 2021
AND WHEN WE LOOKED AT THAT, WE DECIDED THAT THE METHODOLOGY TO ENSURE THAT VULNERABLE EMPLOYEES RECEIVE THE REQUIRED TRAINING WASN'T FUNCTIONING EFFECTIVELY
BECAUSE AS WE LOOKED AT THE SEVEN PEOPLE WHO HAD THE MOST INTERACTION WITH THESE EMAILS, ONLY TWO OF THE SEVEN COMPLETED THEIR TRAINING IN 2021
AND WHEN WE LOOKED AT THE PORT OVERALL, ONLY 51% OF THE EMPLOYEES HAD COMPLETED THEIR TRAINING
SO CLEARLY WE HAVE SOME ROOM FOR IMPROVEMENT IN MAKING SURE THAT EVERYBODY ACTUALLY TAKES THAT TRAINING
AND I'LL BE THE FIRST TO SAY, EVEN IF YOU TAKE THE TRAINING, IT'S NO GUARANTEE THAT YOU'RE ACTUALLY GOING TO CATCH ANYTHING
IT JUST HELPS IMPROVE THE CHANCES
THERE'S NO ONE HERE
SOME OF THESE WERE VERY DIFFICULT TO CATCH
SO FROM THIS, WE HAVE TWO RECOMMENDATIONS
NEXT SLIDE, PLEASE
AND ACTUALLY THE SECOND RECOMMENDATION IS JUST A RECOMMENDATION TO KIND OF FIX THE EXISTING PROCESS SO THAT THERE'S SOME ASSURANCE THAT PEOPLE ACTUALLY COMPLETE THE TRAINING WHEN THEY'RE SUPPOSED TO COMPLETE THE TRAINING
THE FIRST ONE IS MORE FOCUSED UPON THIS PARTICULAR RISK FOR BUSINESS EMAIL COMPROMISE
IN THAT MEMBER, I SAID THE TRAINING IS GOOD FOR MAKING PEOPLE AWARE OF THE WHOLE PHISHING CONCEPT
SO WE'VE KIND OF RECOMMEND HERE THAT THE PEOPLE INVOLVED WITH THIS VENDOR PROCESS RECEIVE TRAINING LIKE A MINIMUM OF TWICE A YEAR ON BUSINESS EMAIL COMPROMISE RISKS TO KIND OF MAKE SURE THAT THEY'RE MORE AWARE OF IT AND THEY KEEP AWARE OF IT
IT'S KIND OF BURDENSOME, BUT IT PROBABLY INCREASES OUR CHANCES OF CATCHING THIS
AND AS A MATTER OF FACT, THE AUDIT DOESN'T MENTION
BUT IN A PERIOD OF TIME BETWEEN THIS, WHEN THIS HAPPENED AND TODAY, WITH ALL THE AUDITING AND ALL THE DISCUSSIONS THAT WENT BACK AND FORTH ABOUT THE PHISHING EMAILS AND EVERYTHING LIKE THIS, THE DEPARTMENTS THAT RECEIVED THIS ACTUALLY RECEIVED A THIRD ATTEMPT TO DEFRAUD US
IN THIS ATTEMPT, THEY ACTUALLY CAUGHT THE EMAILS BEFORE THEY GOT TO THAT STAGE OF SENDING THEM OFF TO FINANCE
SO CLEARLY, AWARENESS IS A VERY VALUABLE THING THAT'S OFF TO THE CTO TEAM
THE CUPBANK
YEAH
THANK YOU
NEXT SLIDE, PLEASE
MICHELLE, RUDY, DID YOU OR SOMEBODY FROM YOUR TEAM WANT TO TALK ABOUT MANAGEMENT RESPONSES? YES
THANK YOU SO MUCH
I APPRECIATE THE OPPORTUNITY
I'M RUDY CALUSA, ACCOUNTING FINANCIAL REPORTING DIRECTOR, AND I APPRECIATE THE OPPORTUNITY TO ADDRESS THE COMMISSION OUT OF THE COMMITTEE THIS AFTERNOON
THANK YOU, COMMISSIONER AND COMMISSIONER MOHAMED
WELCOME TO YOU
COMMISSIONER MOHAMED, AS I HAVE FOUND OVER MY 21 YEARS AT THE PORT OF SEATTLE FOR AN EXCEPTIONAL ORGANIZATION AND WITH VERY DEDICATED EMPLOYEES
JUST A LITTLE BIT MY BACKGROUND
I'VE BEEN AT THE PORT OF SEATTLE FOR 21 YEARS
PRIOR TO I'VE HAD A CAREER WITH THE FEDERAL GOVERNMENT, THE UNITED STATES GOVERNMENT ACCOUNTABILITY OFFICE, CONDUCTING CONGRESSIONAL AUDITS FOR LEGAL PUBLIC LAW COMPLIANCE NATIONWIDE, AS WELL AS THE DIRECTOR OF THE EXECUTIVE INTERNAL AUDIT FOR THE EXECUTIVE BRANCH OF KING COUNTY GOVERNMENT, AS WELL AS CHIEF ACCOUNTING OFFICER AND NOW WORKING AT THE PORT OF SEATTLE
AND THE CURRENT POSITION IS ACCOUNTING FINANCE REPORTING DIRECTOR
THIS FRAUD EXPERIENCE HAS BEEN VERY DISHEARTENING TO MANY OF US, AND IT'S NOTABLY DIFFICULT FOR US IN ACCOUNTING LEADERSHIP HERE IN TERMS OF WHAT HAS HAPPENED, BECAUSE WE HOLD OURSELVES VERY ACCOUNTABLE AND HOLD OURSELVES TO A VERY HIGH BAR
WITH REGARD TO THE NOTABLE ACCOMPLISHMENTS FOR THE SEATTLE PORT OF SEATTLE, THE PRIORITY THAT WE PLACE ON SOLID PUBLIC ACCOUNTABILITY, AND JUST A COUPLE OF THINGS THAT I LIKE TO PUT A ROUNDED PICTURE ON THIS
WITH REGARD TO THE PORT OF SEATTLE, WE'RE VERY COMMITTED TO PUBLIC ACCOUNTABILITY AND WE HAVE ACCOMPLISHMENTS TO DEMONSTRATE THAT THE PORT OF SEATTLE WE HAVE EARNED FOR THE 16 CONSECUTIVE YEARS IN A ROLE NOW REGARD TO THE AWARD FOR FINANCIAL REPORTING EXCELLENCE FOR THE GOVERNMENT FINANCE OFFICE ASSOCIATION OF UNITED STATES AND CANADA AS THE HIGHEST FORM OF RECOGNITION FOR GOVERNMENT FINANCIAL REPORTING, ACCOUNTABILITY AND PUBLIC TRANSPARENCY
YEAR TO YEAR, WE HAVE CONSISTENTLY ACHIEVED CLEAN, UNQUALIFIED AUDIT OPINIONS ON THE PORT'S FINANCIAL STATEMENTS AS WELL AS MINIMAL AUDIT OBSERVATIONS AND NO AUDIT FINDINGS
IT RELATES TO AFR OPERATIONS, ACCOUNTING FINANCIAL REPORTING WITH REGARD TO OUR INTERNAL CONTROLS FROM OUR INDEPENDENT EXTERNAL CERTIFIED PUBLIC ACCOUNTING FIRM CURRENTLY IN LOS ADAMS, AND ALSO WITH REGARD TO THE STATE AUDITOR'S OFFICE ON THEIR PUBLIC ACCOUNTABILITY OFFICE, AS DEMONSTRATED JUST PRIOR TO ON THIS PRESENTATION, THE ACCOUNTING DEPARTMENT REALLY HAS HAD NO AUDIT FINDINGS AS IT RELATES TO LEGAL COMPLIANCE AND PUBLIC ACCOUNTABILITY
AND SO I JUST WANT THE PUBLIC AND THE COMMISSION TO UNDERSTAND THAT WE HOLD OUR ACCOUNTABILITY FOR PUBLIC ACCOUNTABILITY VERY HIGHLY AND WE HAVE ACCOMPLISHMENTS TO DEMONSTRATE THAT
IT'S JUST A VERY FEW OF WHAT WE ARE PROUD OF HERE AT THE PORT OF SEATTLE
NOW WITH REGARD TO THIS FRAUD EXPERIENCE, THERE ARE, A COUPLE OF ASPECTS OF THIS
ONE IS THERE HAVE BEEN MANY ATTEMPTS AT THE PORT AT THE PORT OF SEATTLE OVER THE YEARS WITH REGARD TO FRAUDULENT CHECKS, BUT WE HAVE SOLID AND INTERNAL CONTROL PROCESSES IN PLACE OVER THE DISPERSE FROM THE PUBLIC FUNDS AND WE'VE CAUGHT EVERY ONE OF THEM, ESPECIALLY WITH RELATIONS WITH THE BANK OF POSITIVE PAY
AND WE HAVE NOT LOST A DOLLAR WITH REGARD TO THESE FRAUDULENT CHECKS AT THE PORT OF SEATTLE RECENTLY, ONLINE CRIME TO DIVERT ELECTRONIC PAYMENTS IS NOW GROWING
IT'S GETTING MUCH MORE AGGRESSIVE, GETTING MORE SOPHISTICATED INVOLVED OTHER COUNTRIES
AND IT'S A VERY ORGANIZED NETWORK THROUGHOUT
AND WITH REGARD TO VENDOR ELECTRONIC PAYMENTS ARENA, THIS IS THE FIRST FOR THE PORT OF SEATTLE THAT WE'VE BEEN AYE., WE'VE BEEN SPOOFED AND SPONSORS ARE FRAUDULENTLY DIVERTED, UNFORTUNATELY
BUT NONETHELESS, WE CAN AFFIRM THAT THIS IS AN ISOLATED SITUATION BECAUSE WE WERE ABLE TO GET RIGHT ON TOP OF THIS TO MITIGATE FURTHER EXPOSURE
SO WHEN WE BECAME AWARE OF THIS EXPOSURE, WE TOOK IMMEDIATE STEPS IN TERMS OF STOP GAP MEASURES TO MITIGATE FURTHER RISK TO PUBLIC FUNDS
I PUT A DIRECT ORDER TO HALT ALL AUTOMATED CLEARINGHOUSE ACH PAYMENTS PERIOD UNTIL WE EVALUATE HOW WE'RE GOING TO SAFEGUARD PUBLIC FUNDS ELECTRONICALLY
AND THE METHOD WE USED WAS BASICALLY WHEN WE RUN OUR ACH PAYMENTS WEEKLY, THAT FILE IS COMPARED TO A COMPREHENSIVE LIST OVER A YEAR AND THREE MONTHS PAST OF ANY ACH BANK ACCOUNT ESTABLISHMENTS OR CHANGES, ANY MATCHES ON PENDING ACH PAYMENTS
EACH WEEKLY WE PICK UP THE PHONE AND WE CALL THE SUPPLIER, THE VENDOR, THE CONTRACTOR
WE ARE IN A VOLATILE SITUATION
WE WANT TO CONFIRM BEFORE WE RELEASE ELECTRONIC PAYMENT TO YOU THAT YOU DID IN FACT REQUEST A CHANGE TO YOUR ACH BANK PAY TO ACCOUNT ON THIS DATE AND WE CONTACT THE SUPPLIER DIRECTLY
WE DON'T HAVE THE INFORMATION TO THE SUPPLIER DATA FILE
WE CONTACT THE CENTRAL PROCUREMENT OFFICE, THE BUYER, AND THEY PROVIDE US WITH THE RELIABLE INFORMATION BECAUSE THAT'S WHERE THE INFORMATION SHOULD COME FROM
ALSO, ANY INTERNAL CONTROL SITUATION DOES NOT EVER PROVIDE ABSOLUTE ASSURANCE OR PREVENTION OF MISAPPROPRIATION OF PUBLIC FUNDS OR FRAUD
IT PROVIDES A REASONABLE ASSURANCE
ONE CHALLENGE HERE IS THE HUMAN ELEMENT
WE ALL MAKE ERRORS
THERE ARE SOLID POLICIES AND PROCEDURES IN PLACE AS IT WAS IN THIS SITUATION
BUT IT WAS A HUMAN ERROR THAT LED TO THIS
AND FOR US TO BE ABLE TO DECIPHER PDF AND JPEG FILES AND THE WAY EMAILS ARE WRITTEN AND IT'S A CHALLENGE AS WELL AS THEN THERE'S THE HUMAN ERROR ELEMENT THERE
AND THAT'S EXACTLY WHAT HAPPENED HERE
WE DO HAVE CONTROLS IN PLACE THAT HAVE HELD US IN A SAFE ENVIRONMENT UP TO THIS POINT
AND SO I JUST WANTED TO EMPHASIZE WITH REGARD TO THE WORK THAT WE'VE DONE IS WE ALSO NOW REQUIRE TWO SEPARATE CALLS TO MITIGATE THE RISK OF HUMAN ERROR
WE DON'T RELY ON ONE INDIVIDUAL AND THE TWO CALLS ARE MADE FROM SEPARATE PARTS OF OUR OPERATIONS
WE PICK UP THE PHONE, IT CAN BECOME A USELESS SUPPLIER, BUT IT PROTECTS PUBLIC FUNDS AND IT MITIGATES THE RISK EXPOSURE RELATED TO HUMAN ERROR
AND THAT'S WHAT WE'RE DOING
AND WITH REGARD TO THE COMPARATIVES THAT WE'VE DONE, THAT I INDICATED WITH REGARDS TO THE ACH PAYMENTS, IT'S BEEN DONE FOR THE LAST FOUR MONTHS AND WE HAVE NOT IDENTIFIED ANY FURTHER EXPOSURES WITH REGARD TO THIS
AND THAT'S WHERE I FEEL CONFIDENT
THESE ARE ISOLATED SITUATIONS AND I FEEL THE CONTROLS THAT WE HAVE IMPLEMENTED IMMEDIATELY
AND AS YOU FIND IN THE AUDIT RESPONSE, WE HAVE COMPLETED MANY OF THE RECOMMENDATIONS AND THESE RECOMMENDATIONS HAVE COME FROM OUR STAFF AS WELL, WHICH PARALLEL AUDIT RECOMMENDATIONS HAVE BEEN COMPLETED
BUT GENERALLY THE INTERNET CONTROLS AT THE PORT OF SEATTLE ARE STRONG AND THEY HAVE BEEN PROVEN TO BE EFFECTIVE OVER THE MANY YEARS AND THEY ARE BOTH IN THE CONTEXT OF SYSTEM CONTROLS
THEY AYE DETAILED IN THE MANAGEMENT RESPONSE AS WELL AS PROCESS CONTROLS
WE HAVE A CLEAR PROCESS WITH REGARDS TO WHAT EXPECTED
IT'S JUST SOMETIMES THERE'S AN ERROR MADE IN TERMS OF CONFORMANCE AND WE END UP WITH AN EXPOSURE HERE
ALSO, WE TOOK VERY SERIOUSLY WITH REGARD TO LOOKING AT THIS VERY COMPREHENSIVELY IMMEDIATELY IN TERMS OF OUR CONTROL CENTRIC, LEAN PROCESS IMPROVEMENT INITIATIVE CONTROL CENTRIC
SO WE LEVERAGED THE EXPERTISE OF THE LEAN SPECIALIST OF THE OFFICE OF STRATEGIC INITIATIVES TO FACILITATE A COMPREHENSIVE REVIEW WITH REGARD TO MITIGATING FURTHER RISK AND ENHANCING CONTROLS AND COORDINATING OUR PROCESSES
AND INVOLVED A DEDICATED INVOLVEMENT BY MANY PROFESSIONALS FROM THE CENTRAL PROCUREMENT OFFICE AS WELL AS THE ACCOUNTING FINANCIAL REPORTING DEPARTMENT AS WELL
AND THE TEAM HAS IDENTIFIED MANY IMPROVEMENTS
MANY HAVE BEEN IMPLEMENTED IMMEDIATELY THUS FAR TO TIGHTEN UP THE CONTROLS IN OUR ENVIRONMENT
I JUST LIKE TO ADDRESS A COUPLE OF THINGS THEN
WITH REGARD TO THE REFERENCE TO 58 EMPLOYEES, I JUST NEED TO CLARIFY HERE THAT IT'S NOT BROUGHT ANYBODY AT THE PORT OF SEATTLE CAN DO THIS STUFF
IN TERMS OF ENTERING THERE'S MADE REFERENCE TO 58 EMPLOYEES CAN ADD OR MODIFY SUPPLY INFORMATION NO EMPLOYEES CAN ADD OR MODIFY
AND PRECISE THAT THE SECOND PART OF THE EXPLANATION
TURN AUDIT ONLY WHEN IT'S AFTER IT IS VETTED AND APPROVED
BUT THE 15 EMPLOYEES ARE REALLY PREDOMINANTLY IN THE CENTRAL PREGNANT OFFICE AND THESE ARE PROFESSIONALS THAT ARE INVOLVED WITH THE PROCUREMENT AND THE LIGHTING OF THE CONTRACTS
AND THROUGH THAT PROCESS IS A RELIABLE PROCESS TO SECURE SUPPLIER INFORMATION
AND SO WITH REGARD TO THE SOURCE OF INFORMATION, IT IS PREDOMINANTLY FROM THE CENTRAL PROCUREMENT OFFICE BUYERS THAT HAVE THE DIRECT VENDOR RELATIONS THAT ESTABLISH THE MORE RELIABLE PROCESS TO OBTAIN SUPPLIER INFORMATION
WHAT WE'VE DONE HERE AT PARALLEL INTERNAL AUDIT RECOMMENDATION IS REQUIRED FIELDS THERE'S MENTIONED WITH REGARD TO THE SUPPLIER DATA FILE NOT BEING TOTALLY COMPLETE
IT'S A REQUIRED FIELD NOW
SO WHAT WE'VE DONE BASICALLY IS IMPLEMENTED IN TWO STEPS TO ENSURE THAT IT'S IMMEDIATE IMPLEMENTATION OF EFFECTIVE CONTROL
WE BUY BUSINESS PROCESS
WE RECEIVE A REQUEST TO ESTABLISH OR MAKE CHANGES TO A SUPPLIER
THE BUSINESS PROCESS IS IF WE FIND THAT THE INFORMATION THAT'S REQUIRED IS A COMPLETE DENIED AND SENT BACK TO THE REQUESTER PRIMARILY IN THE CENTRAL PREMIERE OFFICE TO OBTAIN THAT INFORMATION, WE HAVE SINCE LEVERAGE TECHNOLOGY TO IMPLEMENT A PROCESS IN THE SYSTEM THAT'S CALLED REQUIRED FIELDS AND THAT PARALLELS INTERNAL ARTIST RECOMMENDATIONS AS WELL
WHEN YOU SET UP A SUPPLIER, THESE ARE FIELDS YOU MUST ENTER OR YOU CANNOT GO TO THE NEXT STEP OF INITIATING A REQUEST TO SET UP OR MAKE CHANGES TO THE SUPPLIER
WHAT KEY BENEFIT IT PROVIDES HERE IS THAT WE ARE ABLE TO ONLY SOURCE ONE PLACE FOR VENDOR CONTACT PHONE NUMBER, WHICH IS THE VENDOR DATA FILE AND THAT'S SUPPORTED IN TERMS OF COMPLETENESS THROUGH THE REQUIRED DATA FIELDS AND PRACTICE NOW
AND SO WHEN WE GO THROUGH THE PROCESS, THROUGH THE ACCOUNTING DEPARTMENT TO PICK UP THE PHONE, WE SOURCE THAT INFORMATION IN TERMS OF THE CONTACT NUMBER AND THE NAME AND THE PORT CENTRAL DATA FILE FOR SUPPLIERS THAT WE HAVE A RELIABLE PROCESS IN TERMS OF MOVING FORWARD
AND ONE INTERESTING POINT COMMISSIONER JOE MENTIONED WITH REGARD TO CAN'T WE PUT THE ONUS ON THE VENDORS TO THE PORT INTO ENSURING VALIDITY OF THE INFORMATION? AND SO WE HAVE BEEN PROGRESSIVE AND MOVING AND WE WON'T STOP UNTIL WE TIGHTEN UP CONTROLS
AND WE'RE FINDING THAT THIS IS EMAIL COMPROMISE
WHAT HAS BEEN REFERRED TO HERE IS A HIGH RISK ENVIRONMENT FOR THE PORT OF SEATTLE OR ANY ENTITY WHEN WE HAVE TO TRAIN EMPLOYEES TO LOOK FOR PDF, JPEGS, BAD ENGLISH, AND SO WHAT WE'RE TRYING TO JUST FIND A WAY TO REDUCE THE AMOUNT OF COMMUNICATION, IN FACT MITIGATE WITH VENDORS
AND SO WE'RE LOOKING AT IMPLEMENTING AND THAT'S THE SUPPORT OF INFORMATION COMMUNICATION TECHNOLOGY DEPARTMENT LEVERAGING THE PEOPLE'S FINANCIAL SYSTEM, THE FRONT END CALLED VENDOR CONNECT AND WE AYE GOING TO ESTABLISH A BUSINESS PROCESS THAT THEY WILL NOT BE COMMUNICATED THROUGH THE EMAIL, BUT WE WOULD REQUIRE THE VENDOR TO ENTER INTO VENDOR CONNECT, ENTER THEIR DATA
THEN WE WOULD ACCESS THE CONTACT INFORMATION FOR THE VENDOR SUPPLIER AND THEN WE WOULD THEN CONTACT THE SUPPLIER VENDOR WITH REGARD TO VALIDATING AND VETTING THE REQUEST
MOVING FORWARD, BUT WE'RE MOVING FORWARD TO REDUCE THE AMOUNT OF EMAIL BECAUSE THIS IS JUST TOO RIPE FOR FRAUD
WITH REGARD TO BEING SPOOFED TOO EASY BEING SPOOKED
NO MATTER HOW WELL YOU'RE TRAINED, THERE'S THE RISK OF NOT SEEING WHAT YOU'RE SUPPOSED TO BE SEEING THAT YOU'RE TRAINED AND IT'S A COMPLEX EXPECTATION OF EVERYONE
THE OTHER HOWEVER, I DO RESPECT WITH REGARD TO THE 58 EMPLOYEES MENTIONED, ALTHOUGH THEY DO NOT HAVE THE ABILITY TO DIRECTLY MODIFY OR ADD A CHANGE, THEY HAVE TO GO TO THE VETTING PROCESS AND THEY ARE APPROPRIATELY SET WITH REGARDS TO PROFESSIONALS IN THE CENTRAL PROCUREMENT OFFICE REGARD TO PROCUREMENT CONTRACTS ADMINISTRATION LETTING
WHAT WE'RE DONE THOUGH ALREADY IS WE REMOVED THE ABILITY FOR ANYONE TO INPUT ACH BANKING INFORMATION THAT HAS BEEN REDUCED TO A TEAM WITHIN THE ACCOUNTS PAYABLE LEADERSHIP TEAM AND THEY WOULD HAVE THE DIRECT COMMUNICATION WITH THE SUPPLIER VENDOR CONTRACTOR IN TERMS OF ESTABLISHING THE ACH BANKING ACCOUNT INFORMATION IN THE SYSTEM
AND THEY WOULD ALSO INDEPENDENTLY MAKE THE CALL THAT'S THE FIRST CALL I MENTIONED WITH REGARDS TO THE SECOND CALL WOULD BE BY THE ACCOUNTING, FINANCE, REPORTING OR SERVICES TEAM TO VALIDATE AND EITHER APPROVE OR DENY THE CHANGE AS WELL
SO WE ARE MAKING PROGRESS WITH REGARD TO REDUCING EXPOSURE
AND IN FACT, WITH REGARD TO THIS REDUCTION, NOBODY CAN SEE THE BANKING ACCOUNT INFORMATION ANYMORE
WE HAVE CLOSED THAT OUT IN TERMS OF SUPPLIER DATA FILE, IT'S ONLY EXCLUSIVELY AVAILABLE TO THE FOUR TO FIVE TEAM MEMBERS IN THE ACCOUNTING DEPARTMENT
SO WE'RE PROTECTING SUPPLIER INFORMATION AS WELL
SO IF YOU COULD LOOK AT THE VARIOUS RECOMMENDATIONS, YOU'LL SEE THAT WE HAVE COMPLETED MANY OF THEM
MANY OF THEM HAVE PARALLELED WHAT HAS COME UP WITH OUR CONTROL CENTRIC LEAN PROCESS IMPROVEMENT TEAM
AND I LIKE TO ALSO MENTION THAT THE PORT OF SEATTLE IS VERY PROACTIVE WITH REGARD TO PROTECTING PUBLIC FUNDS
WE'RE NOT ONLY FOCUSED ON PREVENTATIVE CONTROLS, BUT WE UNDERSTAND LIFE IS NOT PERFECT AND WE ARE GOING TO END UP IN SITUATIONS WHERE THERE ARE POTENTIAL LOSSES AND WE KEEP THEM TO A MINIMUM
AND I'M GLAD THIS HAS BEEN KEPT TO A MINIMUM
AND OVER THE YEARS, WE APPROVED OUR COMMITMENT TO PUBLIC ACCOUNTABILITY OVER PUBLIC FUNDS, BUT NEVERTHELESS, THINGS CAN HAPPEN
SO THE PORT IS VERY PROACTIVE AND WE HAVE CRIME INSURANCE IN PLACE, AND ON THESE TWO INSTANCES, THERE'S A $25,000 DEDUCTIBLE, BUT IT'S BEING COVERED BY INSURANCE
SO THERE'S NOT GOING TO BE A PUBLIC FUNDS LOST BEYOND THE DEDUCTIBLE ON THIS
THAT'S THE FALLBACK THAT WE'RE LEVERAGING IN THE PORT OF SEATTLE'S RISK MANAGEMENT OFFICE IS NOW IN ACTIVE DISCUSSIONS WITH REGARD TO THE INSURER, AND WE'RE AT A POINT OF PROVIDING DOCUMENTATION
SO WE CAN SHOW THAT UP IN TERMS OF COVERAGE AS WELL AND IN TERMS OF DETECTIVE CONTROLS, I DEFINITELY EMBRACE INTERNAL AUDITS RECOMMENDATIONS
HOW WE CAN MOVE FORWARD
AGAIN, THOUGH, WE ALL ACKNOWLEDGE THAT PREVENTATIVE CONTROLS ARE THE BEST AND AVOIDANCE CONTROLS ARE THE BEST AS WELL, AND THAT'S WHAT WE'RE FOCUSING ON
BUT NEVERTHELESS, WE CAN HAVE SECONDARY AWARENESS THROUGH DETECTIVE CONTROLS
WE WILL WORK WITH INTERNAL AUDIT TO SEE WHAT CAN BE REASONABLY PROVIDED
WE CAN EASILY SHOOT EMAILS TO THE VENDORS, BUT THE PROBLEM IS SOME MAY NOT READ IT, SOME MAY NOT RESPOND
WE HAVE THAT EXPERIENCE WITH THE VETTING OF THE BANK ACCOUNT AND CHANGES WITH REGARD TO THAT
WE DON'T ALWAYS GET RESPONSES BACK FROM SUPPLIERS AS WELL, AND THAT'S AN INDEPENDENT ISSUED EMAIL, BUT NEVERTHELESS, THERE'S MERIT TALKING ABOUT DETECTIVE CONTROLS, ALTHOUGH WE ARE PRIMARILY FOCUSED ON PREVENTATIVE AND AVOIDANCE CONTROLS AS WELL
COMMISSIONER MOHAMED HAS A QUESTION
YES, THANK YOU, FIRST OF ALL, FOR ALL OF THE HELPFUL INFORMATION THAT YOU'VE PROVIDED THUS FAR
I JUST HAD A QUICK QUESTION
WHAT IS THAT DEDUCTIBLE AMOUNT? I KNOW YOU SAID WE HAVE INSURANCE
THAT'S RIGHT NOW
YES, COMMISSIONER
IT'S $25,000 DEDUCTIBLE FOR EACH INCIDENT, SO IT'D BE A $50,000 EXPOSURE HERE AGAINST PROBABLY $580,000 EXPOSURE, WHICH THE NET IS BEING COVERED BY INSURANCE
WHEN WE BECAME AWARE OF THIS
WE'RE AWARE OF NEEDING TO LEVERAGE THE INSURANCE COVERAGE
SO WE HAVE ALREADY ACCRUED THIS AGAINST THE 2021 BUDGET AND EXPENSE
AND WHEN WE MAKE PAYMENT AND WE ARE PROCEEDING AS WELL
IN YOUR INTEREST TO YOUTH OPPORTUNITY INITIATIVES PROGRAM, WE AYE VERY SENSITIVE TO THE CASH FLOW CHALLENGES THAT WE PULL SO WE DON'T GET THE MONEY TO ORGANIZATIONS IN OUR COMMUNITY AS TIMELY AS POSSIBLE
EXECUTIVE DIRECTOR METRUCK AND AFTER BEING CONSULTED WITH THE PORT POLICE WITH REGARD TO OUR INVESTIGATION AND LEGAL, WE FIND IT APPROPRIATE TO RELEASE PAYMENTS FOR THE FUNDS THAT WERE UNFORTUNATELY DIVERTED TO THE FRAUD PAYMENTS
AND WE'RE MOVING TO MAKE PAYMENT TO URBAN LEAGUE OF METROPOLITAN SEATTLE, AS WELL AS SEATTLE PARTS FOUNDATION NEXT WEEK
WE'RE GOING TO DO IT IN A MORE SAFE WAY, THOUGH
ANYTHING UNDER INVESTIGATION
I SHUT DOWN THE ABILITY TO PAY BY ACH UNTIL THE INVESTIGATION
WHAT WE'RE DOING IS WE'RE CUTTING CHECKS AND THERE'S GOING TO BE A DELIVERY OF THE CHECK TO A KNOWN CONTACT OF EACH OF THE AGENCIES TO THE REPRESENTATIVE AND ECONOMIC DEVELOPMENT WITH REGARD TO THE HANDING OF THE CHECK
AND THAT WILL HAPPEN NEXT WEEK AS WELL TO PROTECT THE PORT OF SEATTLE
THAT'S HELPFUL
I HAVE ONE OTHER QUESTION
I THINK NOW MORE THAN EVER, WE HAVE TO EXERCISE HEIGHTENED AWARENESS WITH JUST EVEN JUST THE THREATS THAT WE ARE SEEING FROM RUSSIA
SO I'M ALSO WONDERING IF THERE IS AND THIS MIGHT BE A QUESTION THAT WAS FOR BRUCE
I THINK EARLIER HE SAID THERE IS YEARLY TRAINING, THE PHISHING TRAININGS FOR STAFF MEMBERS
IS THAT CORRECT? THAT'S CORRECT
BRUCE, YOU WANT TO JUMP IN AND ANSWER THAT QUESTION? IT IS FOR ALL PORT EMPLOYEES, NOT CONTRACTORS, BUT PORT EMPLOYEES
OKAY, THAT'S GREAT
SO I'M JUST WONDERING, IN THIS SORT OF UNPRECEDENTED TIME THAT WE'RE IN, IF WE ARE CONSIDERING INCREASING THAT TO A MORE QUARTERLY BASIS, ARE WE CONSIDERING ADDING MORE REGULAR FISHING EXERCISES ACROSS THE PORT FOR EMPLOYEES? I'M THINKING OF THINGS LIKE A TEST THAT MAYBE INVOLVES AN EMAIL THAT GETS SENT TO AN EMPLOYEE THAT MAYBE RESEMBLES A MALICIOUS ATTEMPT TO GAIN THAT EMPLOYEES LOG IN AND IF THEY DO CLICK THE LINK OR SOMETHING ALONG THOSE LINES AND PROVIDE THEIR INFORMATION, AND THEN THEY'RE ASSIGNED A PREVENTATIVE PHISHING TRAINING IN ONE OF OUR PLATFORMS, BUT DOING THAT MORE SO ON A QUARTERLY BASIS AND NOTIFYING THEIR SUPERVISOR OR THEIR MANAGER TO JUST MAKE SURE THAT WE ARE RECOGNIZING THAT WE SHOULD BE EXERCISING JUST HEIGHTENED AWARENESS AND ENSURING THAT THIS IS ON THE TOP OF OUR EMPLOYEE'S MIND
WHILE THESE TRAININGS CAN'T PREVENT FRAUD FROM HAPPENING OR THESE SORT OF SCAMS FROM HAPPENING, I THINK WE ARE IN A VERY UNUSUAL TIME WHERE WE'RE SEEING THIS FRAUD ACROSS AGENCIES
SO IS THERE SOME CONSIDERATION TO MOVE THAT TRAINING FROM ONE YEAR TO MORE GOOD POINTS
I THINK RON JIMMERSON HAS THE ANSWER FOR YOU
GO AHEAD, RON
JEFFERSON, INFORMATION SECURITY HERE AGAIN ON COMMISSION
YES
WE ACTUALLY HAVE BEEN CONDUCTING QUARTERLY FISHING EXERCISES SINCE LAST YEAR
WE ACTUALLY CREATED A BASELINE OF THE LEVEL OF VULNERABILITY THAT WE FOUND OUR EMPLOYEES TO BE AT
AND AS OF THIS YEAR, WE REDUCED THAT BY 15%
SO THE ACTUAL NUMBER WE WERE UP TO ABOUT 21% LAST YEAR OF OUR EMPLOYEES BEING VULNERABLE TO THESE TYPES OF ATTACKS
WE'VE GONE THROUGH A MASSIVE AND PRETTY AGGRESSIVE INFORMATION AWARENESS TRAINING, AND WE BOUGHT MORE TO THE FOREFRONT
AND WE'RE NOT JUST PROVIDING TRAINING THROUGH OUR LMS SYSTEMS, WE'RE DOING IT IN A HOLISTIC MANNER WHERE WE'RE TRYING TO REALLY SHAPE THE CULTURE AROUND AN AWARENESS AND HOW WE'VE DONE THAT, AYE THROUGH SPECIAL MESSAGING THROUGH OUR EMPLOYEES, ESPECIALLY WHEN WE RECEIVE INTELLIGENCE TO HAVE HEIGHTENED AWARENESS AND THINGS THAT ARE TAKING PLACE AROUND OUR ORGANIZATION
WE HAVE SEMINARS THAT WE CONDUCT ON A MONTHLY BASIS, USER AWARENESS TRAINING
WE'VE GOT A SHAREPOINT SITE THAT OFFERS A VARIETY OF RESOURCES AND TOOLS THAT PEOPLE CAN CONNECT WITH, AND WE ARE PERSONALLY CONNECTING WITH THOSE THAT WE THINK AYE VERY INVULNERABLE POSITIONS THAT WE KNOW WE NEED TO WORK WITH A LITTLE BIT MORE AND THINGS LIKE THAT
SO IT'S AN ONGOING CAMPAIGN TO MAKE SURE THAT OUR FOLKS ARE STAYING CURRENT AND INDIVIDUAL
AND I'LL JUST ADD VERY QUICKLY, OUR LEARNING MANAGEMENT SYSTEM
WE HAVE RECENTLY SWITCHED VENDORS, SO WE'RE GOING TO BE PROVIDING SOME TRAINING THAT'S A LITTLE BIT MORE ROUNDED AROUND USER BEHAVIOR FROM WHAT WE SEE ON OUR PART AS WELL
SO SOME OF THE NUMBERS AND THINGS LIKE THAT THAT FOLKS SHOW UP ON TRAINING AREN'T ACTUALLY ACCURATE BECAUSE OF THE WAY OUR LMS SYSTEM WAS UPGRADED LAST YEAR
SO WE'RE STILL WORKING THE BUGS OUT OF ALL THAT JUST TO SEE EXACTLY WHERE WE ARE
BUT WE'VE GOT SOME MECHANISMS THAT WE'RE PUTTING IN PLACE TO MAKE SURE THAT WE'RE MONITORING WHO SAID WHAT KIND OF THING
SO I HOPE THAT ANSWERS YOUR QUESTION THAT DOES THAT'S SUPER HELPFUL
AS STEWARDS OF PUBLIC DOLLARS, I THINK IT'S GREAT FOR THE PUBLIC TO HEAR THIS AS WELL
THAT AS A PORT WORK, CONTINUING TO BE TRANSPARENT AND HAVING THESE CHANNELS IN PLACE TO ENSURE THAT OUR EMPLOYEES AYE TRAINED AND THEY KNOW WHAT'S HAPPENING OUT THERE AS WELL
AND IT'S ALSO GOOD TO KNOW THAT WE'RE CONTINUING TO WORK WITH LAW ENFORCEMENT AND SECURITY STAFF ON INVESTIGATING THESE TYPES OF CRIMES WHEN THEY DO HAPPEN
SO THANK YOU FOR ALL THE INFORMATION YOU'VE ALL PROVIDED
CAN I ALSO ADD REAL QUICKLY, WE EMBARKED ON AN INITIATIVE FOR EMPLOYEE COMMITMENT AND CYBER SECURITY WHERE EMPLOYEES WOULD SIGN UP AND MAKE A PLEDGE THAT THEY WOULD DO THEIR PART TO BE VIGILANT IN THIS PROCESS
AND I DON'T HAVE THE EXACT NUMBERS, BUT WE HAVE A VERY LENGTHY LIST OF INDIVIDUALS THAT HAVE GONE OUT OF THEIR WAY TO COMMIT THEMSELVES TO BEING PART OF THIS EFFORT
YEAH
ALSO IN THE INTEREST OF TIME, MICHELLE JUST PINNED US AND SAID, WE'RE RUNNING UP AGAINST OUR TIME
RON, ARE YOU GOING TO DISCUSS THE LAST ISSUE RESPONSE OR RUDY, IS RUDY GOING TO I CAN TAKE THAT OVER
I TRIED TO PREVIEW SOME OF THAT, BUT GOING BACK TO CREATING AND SHAPING THE CULTURE OF CYBERSECURITY
SO THE LEARNING MANAGEMENT SYSTEM WAS UPGRADED IN JUNE LAST YEAR
THERE HAVE BEEN SOME BUGS INTO THAT
SO WE'RE NOT ACTUALLY GETTING ACCURATE REPORTS AS TO WHO'S RECEIVING THE RETRAINING
AND I THINK COMMISSIONER CHO WAS A VICTIM OF HATE AS WELL
BUT ONCE THIS NEW SYSTEM THAT WE HAVE IN PLACE, ONCE WE GET THAT ALL PULL UP AND RUNNING, WE'RE GOING TO GET A LITTLE BIT MORE ACCURATE LISTING OF NOT ONLY WHO'S HAD THE TRAINING, BUT HOW WE CAN MONITOR THAT BETTER
SO WE PUT IN THE PROCESS IN FOR THAT
AND GOING BACK TO THE AFR FOLKS IN PURCHASING AND CPO SERVICE AGREEMENTS AND THINGS LIKE THAT, WE HAVE ALREADY CONDUCTED SPECIAL TRAINING FOR THOSE FOLKS BASED OFF THE RECOMMENDATIONS OF THE AUDIT TEAM
SO WE FOLLOWED THAT
WE'VE COMPLETED THAT
AND THEN I SPOKE ALREADY ABOUT THE EFFICIENT CAMPAIGN THAT WE RAN LAST MONTH BEEN INVOLVED ABOUT OVER TWO, 2000 HUNDRED PERSONNEL, AND THEN JUST ONCE AGAIN DID THE RESOURCES THAT WE HAVE OUT THERE
THIS IS AN ONGOING PROCESS AND IT'S A CONTINUING CAMPAIGN WHICH IS SUPPOSED TO BE
SO IF YOU'VE GOT ANY QUESTIONS, I'M HERE TO ANSWER
AND RUDY, WE'RE ABOUT OUT OF TIME
I SEE YOUR HAND UP
DO YOU WANT ANY FINAL COMMENTS? YES
THANK YOU SO MUCH, GLENN
NOW, I JUST WANT TO EMPHASIZE WHAT RON JUST INDICATED THERE
AND WE MADE IT A TOP PRIORITY, REALIZING THAT IT WASN'T A COMPLETE RECORD WITH THE GUY WHO WAS TRAINED
AND WE MADE A TOP PRIORITY TO TRAIN BOTH ALL OF THE AFR DEPARTMENT STAFF AS WELL AS CPU STAFF AND AS WELL AS THEM
JUST TWO AND A HALF YEARS AGO, AFR STAFF WAS A MANDATORY TRAINING AS WELL ON SECURITY
IT'S JUST BEEN A GAP WITH REGARD TO THIS, BUT WE'RE TAKING TRAINING VERY SERIOUSLY
THANK YOU, GLENN
I NEED TO PASS SO THAT WE CAN RESPECT THE TIME FOR COMMISSIONER, BUT THANK YOU SO MUCH, COMMISSIONER CHO AND MOHAMED, FOR YOUR INSIGHT GUIDANCE
AND JUST PLEASE BE SURE
AND I NEED TO EMPHASIZE THIS IN PUBLIC TO THE PUBLIC
LISTEN TO THIS
WE ARE VERY COMMITTED TO PUBLIC ACCOUNTABILITY AND INTEGRITY, AND WE HAVE DEMONSTRATED THAT WE JUST BEEN SPOOKED HERE, BUT WE'RE NOT GOING TO LET THIS HAPPEN AGAIN
MICHELLE, IF YOU CAN ADVANCE US TO THE FIRE STATION, THE NEXT AUDIT, COUPLE NEXT SLIDE
KEEP GOING
ONE MORE AND ONE MORE
OKAY, I'M JUST CATCHING UP IN HERE
THERE WE GO
THERE WE GO
SO, COMMISSIONER, UNLESS YOU HAVE ANY OTHER QUESTIONS ON ACH, I WILL NOTE, THOUGH, ON THAT, JUST ONE CLOSING COMMENT
WHEN YOU DO GO BACK TO INSURANCE COMPANIES, THEY GENERALLY OFTEN GET YOU BACK BY RAISING YOUR RATES
SO THE BEST CONTROL IS TO HAVE STRONG FINANCE CONTROLS
AS RUDY SAID ON THIS AUDIT, WE PARTNERED WITH JANISON AND HER TEAM IN CONSTRUCTION MANAGEMENT
WE HAVE A REALLY GOOD WORKING RELATIONSHIP WITH THEM
THEY MANAGE THE CONSTRUCTION OF PROJECTS
WHEN YOU DECIDE TO BUILD SOMETHING LIKE FIRE STATION, THERE ARE MANY GROUPS INVOLVED
THERE'S PROGRAM MANAGEMENT, THERE'S EXECUTIVE, AND THEN THERE'S THE FIRE DEPARTMENT
BUT WHEN THE CONSTRUCTION IS BEING DONE, I BELIEVE THAT ALL FALLS INTO JANICE'S TEAM
AND THIS IS WHAT WE DID OVER HERE
WE LOOKED AT THE WEST SIDE FIRE STATION
IT'S A STANDALONE BUILDING, A FIRE STATION NEXT TO THE PACCAR HANGAR ON THE NEXT SLIDE OF THE FIRE STATION
I MEAN NEXT SLIDE OF THE AIRPORT
SO IT'S BY RUNWAY THREE
AND I BELIEVE IN ABOUT 2015
INITIALLY, THERE WAS A NEED IDENTIFIED BECAUSE OF SOME CONSTRUCTION TO GET FIREMEN TO THE MIDDLE OF RUNWAY THREE IN A CERTAIN AMOUNT OF TIME AND COULDN'T BE DONE FROM THE REGULAR FIRE STATION
SO THEY NEEDED A FACILITY
AND LATE 2015, WE RENTED A COUPLE OF ROOMS FOR THEM IN THE PACK OUR HANGAR, AND WE PUT A MAKESHIFT SHELTER FOR THE FIRE METRUCK OVER THERE
AND THERE WAS A PLAN TO BUILD OR LOOK AT IT, CREATE SOME SHELTER FOR THEM
THIS HAS BEEN A LONG PROCESS
IT'S BEEN IN PROCESS FOR A WHILE
IT ORIGINALLY CAME TO THE COMMISSION WITH A MODULAR DESIGN USING DESIGN BID BUILD METHODOLOGY, AND IT WAS ABOUT FIVE AND A HALF MILLION
IT STARTED OFF WITH THAT, BUT THERE WERE SOME CHANGES
IT WENT OUT AS A FULL FLEDGED BUILDING EVENTUALLY AND YOU CAN FROM THE STATE WILL SEE THE BUDGET INCREASES
AND I THINK PART OF THIS IS JUST BECAUSE THE TIME IS TAKEN AND THE CHANGES THAT HAVE OCCURRED
NEXT SLIDE, PLEASE
AND SPENCER, I'M GOING TO HAVE YOU JUMP IN ALSO AS I TALK, I'M GOING TO INTRODUCE YOU BEFORE YOU HAND IT OFF TO JANICE
YOU CAN TALK THROUGH SOME OF THE WORK YOU'VE DONE
SPENCER BRIGHT IS OUR CAPITAL AUDIT MANAGER THAT DID THE WORK HERE
AND HE IDENTIFIED WHEN HE LOOKED AT THIS THAT EVEN BEFORE IT WAS HANDED OFF TO CONSTRUCTION MANAGEMENT, THERE WAS SOME DESIGN WORK THAT WAS DONE WITH ARCHITECTURAL AND ENGINEERING CONSULTANTS THAT DESIGNED THE OLD FACILITY BEFORE IT WAS MOVED TO THE NEW STANDALONE BUILDING
AND THERE WERE SOME SUNK COSTS THERE
ABOUT $850,460 WAS IN DESIGN
THE REST WAS JUST BECAUSE STAFF HAD WORKED A LOT OF TIME WHEN WE CHANGED TRACKS, ESSENTIALLY, THE CONTRACT WITH MACROS WAS EVENTUALLY SIGNED FOR FOUR POINT 95 MILLION
AND THERE AYE SOME CHANGE ORDERS
AND ALTHOUGH MACRO'S EAST CONTRACT ENDED UP AT ABOUT FIVE, SIX IN TOTAL, THERE'S A LOT OF SOFT COST
SO WHEN YOU HAVE A PROJECT SITTING OUT THERE FOR A LONG TIME AND THE CONTRACTOR TAKES A LOT OF TIME TO DO IT, THE PORT IN TURN INCURS COSTS
SO THAT'S KIND OF WHY THE BUDGET INCREASES AND THE SOFT COSTS THAT KIND OF RUN UP ACCORDINGLY
THE PROJECT IS WAY BEHIND SCHEDULE ON THE BACKGROUND
SPENCER, ON THIS, IS THERE ANYTHING ELSE YOU WANT TO ADD OR ANYTHING I MISS? NO, THAT SOUNDS GOOD, GLENN
YEAH
SO NEXT SLIDE, PLEASE
AND I'LL HAND IT OVER TO SPENCER, ESPECIALLY OF THIS
I THINK SPENCER RELAYED BACK TO US THAT CONSTRUCTION MANAGEMENT DID EVERYTHING THEY CAN COULD
THEY DID A GREAT JOB
THIS PARTICULAR ISSUE IS ALL MCT
MCT TOOK A LONG TIME AND THEY WERE A VERY DIFFICULT VENDOR TO WORK WITH, FROM WHAT I UNDERSTAND
BUT IN SOME RESPECTS
BUT SPENCER, YOU CAN PROVIDE INSIGHT INTO THAT
GOOD AFTERNOON, COMMISSIONER
AS GLENN MENTIONED, I'M SPENCER BRIGHT, THE CAPITAL PROJECTS AUDIT MANAGER
WE HAD, OUT OF THE ABOUT FIVE AREAS THAT WE REVIEWED, THERE WERE TWO THAT WE HAVE PROVIDED SOME OBSERVATIONS, THE OTHER AREAS WE DIDN'T FIND ANYTHING TO REPORT
EVERYTHING LOOKED GOOD
SO ON THE FIRST ISSUE HERE, MCT HAD NOT COMPLETED THE PROJECT FILE THE CONTRACTUAL SUBSTANTIAL COMPLETION DATE, WHICH RESULTED NOT ONLY IN THE PORT INABILITY TO UTILIZE THE NEW FIRE STATION, BUT THE PORT IS ALSO INCURRING ADDITIONAL OVERSIGHT COSTS
AND THEN SO CONTRACTUALLY, WHEN A CONTRACTOR DOES NOT COMPLETE A PROJECT ON TIME, THE PORT IS ENTITLED TO PURSUE LIQUIDATED DAMAGES TO HELP RECOVER THESE ADDITIONAL COSTS OR FOR THE FIRE STATION, THE PORT CONSTRUCTION MANAGEMENT TEAM PROVIDED MCT MULTIPLE OPPORTUNITIES TO GET THE PROJECT BACK ON TRACK, AND IF THEY HAD DONE THAT, THE PORT WAS WILLING TO FOREGO ASSESSING ANY LIQUIDATED DAMAGES
HOWEVER, MCT WAS UNRESPONSIVE TO THOSE OPPORTUNITIES
FOR PURPOSES OF OUR AUDIT CALCULATION OF LIQUIDATED DAMAGES, WE USED MARCH 31 AS THE DATE TO ESTIMATE THAT AT THAT TIME, THE PORT IS ENTITLED TO APPROXIMATELY $680,000 IN LDS
THE PORT HAS ALREADY WITHHELD 300,000 FROM PREVIOUS MONTHLY PAY ESTIMATES, WITH THE ANTICIPATION THAT THERE WERE GOING TO BE LIQUIDATED DAMAGES TO PURSUE
ADDITIONALLY, THE PORT WILL BE INCURRING APPROXIMATELY $200,000 IN ADDITIONAL INSPECTOR COSTS THAT WERE NOT INCLUDED IN THE LIQUIDATED DAMAGE DAILY CALCULATION
THOSE COSTS WILL NOT BE COLLECTIBLE
THE REASON BEING WAS THE ORIGINAL DAILY CALCULATION CONSIDERED THE COST OF HAVING AN IN HOUSE DAILY INSPECTOR INSTEAD OF THE COST FOR USING AN OUTSIDE CONSULTING FIRM, WHICH WAS THE CASE
NEXT SLIDE, PLEASE
WE PROVIDED TWO RECOMMENDATIONS
THE FIRST ONE, OF COURSE, IS PORT CALCULATE AND PURSUE LIQUIDATED DAMAGES UPON COMPLETION OF THE PROJECT
AND THE SECOND RECOMMENDATION IS MORE OF A GENERALIZED RECOMMENDATION FOR FIXED FUTURE PROJECTS TO CONSIDER CRITERIA OF CONTRACTORS PERFORMANCE THAT MIGHT HELP MITIGATE POTENTIAL SCHEDULE SLIPPAGE PROJECTS IN THE FUTURE
NEXT SLIDE
I'M SORRY, WHY DOESN'T THE RECOMMENDATIONS ADDRESS ANY OF THE COST OVERRUNS? I'M SORRY COMMISSIONER, CAN YOU REPEAT THAT? ARE WE GOING TO TALK ABOUT THE COST OVERRUN SOME PROJECT OR I DON'T SEE ANY RECOMMENDATIONS ON HOW WE CAN ADDRESS WHY THIS PROJECT COST TWICE WHAT IT WAS ORIGINALLY PROJECTED TO COST
LET'S SEE HERE AND MAYBE JANICE WHEN SHE COULD PROVIDE MAYBE SOME BETTER OR ADDITIONAL INFORMATION
I DO KNOW
FOR ONE, THERE IS DEFINITELY AN INCREASE IN COST BY THE SWITCH IN THE PROJECT FROM WHEN IT WAS ORIGINALLY GOING TO BE A DESIGN BID BUILD AND THE DESIGN WAS FULLY COMPLETE
AND THEN THE PROJECT METHODOLOGY CHANGED AND ALL OF THOSE COSTS BASICALLY BECAME SOME COSTS THAT WAS CLOSE TO A MILLION DOLLARS IN TOTAL BETWEEN PORT COSTS AND DESIGN COSTS
SO THAT DEFINITELY PLAYED A ROLE INTO COSTS
BUT I SEE
JANICE, DO YOU HAVE ANY INSIGHT, JANICE, OR DO YOU THINK THAT COULD PROBABLY BE MORE ON MAYBE A PROJECT MANAGEMENT STAFF MEMBER? IF THEY'RE AVAILABLE AS TO WHY WE WENT FROM SOMEONE FROM PROJECT MANAGEMENT IS AVAILABLE, THEY WOULD BE THE MOST APPROPRIATE TO COMMENT ON THIS
IF WE DON'T HAVE SOMEONE, I CAN CERTAINLY PROVIDE SOME CONTEXT
I'M LOOKING HERE, I DON'T SEE WAYNE ON
SO WHY DON'T I JUST GIVE SOME CONTEXT? SO INITIALLY FOR THIS PROJECT, THE TEAM BELIEVE THAT THIS COULD BE A MODULAR BUILDING WHICH THEN WOULD COME ONTO THE JOB SITE
UNFORTUNATELY, BECAUSE OF THE LAYOUT OF THIS PARTICULAR LOCATION ON THE OPPOSITE SIDE OF THE RUNWAY, THE ACCESS IS SUCH THAT THE TEAM DIDN'T BELIEVE THAT A MODULAR WOULD ACTUALLY BE ABLE TO EASILY COME ONTO THE JOB SITE WITHOUT HAVING TO SHUT DOWN THE RUNWAY AND HAVE IT COME ALL THE WAY ACROSS
AND SO WHAT THAT MEANT THEN IS THE TEAM STARTED TO LOOK AT WHAT ARE SOME OTHER WAYS THAT WE COULD DELIVER THE PROJECT INSTEAD OF EXPECTING IT TO BE A MODULAR CONSTRUCTION
AND SO ALL OF THOSE PERMUTATIONS RESULTED IN SOME ADDITIONAL COST
I WOULD SAY THAT THE OTHER PART OF WHAT DROVE THE COST
AND PERHAPS I SEE KYLE FROM CPO ON HERE
SO HE CAN ALSO COMMENT THAT THIS IS A VERY MESSY PROJECT FROM THE STANDPOINT OF THE PROXIMITY TO THE RUNWAY ITSELF
SO WE ONLY RECEIVED PROPOSALS FROM THREE PROPOSERS AND ONLY TWO OF WHICH WE FOUND TO BE RESPONSIVE TO ADVANCE TO THE FINAL PRICING
AND SO WHEN YOU DON'T HAVE A REALLY COMPETITIVE MARKET OF A LOT OF PROPOSERS THAT ARE INTERESTED IN THE PROJECT, THEN IT CREATES SOME ISSUES FOR COST
I WOULD SAY THAT IN SPITE OF THAT, THE TWO PROPOSALS WE GOT, THIS PARTICULAR ONE WITH MCT, WAS JUST ABOUT $5 MILLION
AND I BELLEVUE THAT THE SECOND PROPOSER, KYLE, WAS CLOSER TO 8 MILLION
IF YOU COULD UNMUTE AND MAYBE COMMENT, I WANT TO MAKE SURE I DON'T PROVIDE ERRONEOUS INFORMATION
KYLE
YEAH, THANKS, JANICE
I WOULD HAVE TO VERIFY AS WELL
I DO REMEMBER SOMETHING LIKE 7.9 MILLION, BUT I WILL VERIFY WHAT YOU'RE DISCUSSING
YEAH
AND COMMISSIONER, IF I CAN CHIME IN
SO YOUR QUESTION WAS THE AUDIT FOCUSED SPECIFICALLY ON THE CONSTRUCTION AND THIS PARTICULAR CONTRACT? WE DID LOOK AT OPTIONS AND SCENARIOS BACK IN 2018, AND THERE WAS A LOT OF COMMISSION NOISE DISCUSSION, CONCERN ABOUT HOW THIS COST THIS WAS GOING UP A LITTLE BIT, BUT THE FOCUS OF THIS AUDIT WAS EXCLUSIVELY ON THE CONSTRUCTION CONTRACT
SO THAT'S WHY YOU DON'T SEE IT IN THIS
SO, GLENN AND COMMISSIONER, IF YOU HAVE AN INTEREST STAFF TO CERTAINLY PUT TOGETHER A SEPARATE MEMO WITH MORE INFORMATION ABOUT THE HISTORY OF THE PROJECT AND WHAT LED TO WHERE WE ARE TODAY, BECAUSE AS GLENN SAID, IT WASN'T A SUBJECT OF THIS PARTICULAR AUDIT
BUT CERTAINLY I THINK THAT THERE IS A LOT OF INFORMATION ABOUT THE CHRONOLOGY AND HOW WE GOT TO WHERE WE ARE TODAY
THAT WOULD BE HELPFUL
I SEE SOME HEAD NODS
OKAY, THAT'S RIGHT
BACK TO YOU FOR YOUR NEXT ISSUE
I GOT IT
SO THE SECOND ISSUE IS RELATED TO CHANGE ORDERS, SPECIFICALLY THE COVID-19 EXPENSE REIMBURSEMENT CHANGE ORDER
THE INTENT OF THIS PARTICULAR CHANGE ORDER WAS WHEN COVID 19 AYE
AND STATE STARTED MAKING MANDATES TO ALLOW CONSTRUCTION PROJECTS TO RESUME
WITH SAFETY MEASURES IN PLACE, THE PORT REALIZED THAT CONTRACTORS WOULD BE INCURRING ADDITIONAL COSTS
AND THE PORT ALSO WANTED TO IMPLEMENT ADDITIONAL MEASURES BEYOND STATE MANDATES TO HELP MITIGATE THE POTENTIAL RISK OF COVID CASES
SO WHAT WE LOOKED AT WAS THE REIMBURSEMENT COMPARED TO WHAT THE PORT COURT ISSUED A LETTER ON HOW AND WHAT WOULD BE REIMBURSED
CAN YOU NEXT SLIDE, PLEASE, MICHELLE? SO OVERALL, THE BIGGEST AREAS THAT WE FOUND ERRORS IN POTENTIAL OVER BILLING WERE INSTANCES WHERE THE PORT WAS BILLED FOR ONE OF THEIR COVID SUPERVISORS STATING THE SUPERVISOR WAS ON SITE
BUT OUR REVIEW IDENTIFIED THAT THEY WEREN'T ON SITE OR ONE SUPERVISOR IN PARTICULAR THAT POTENTIALLY COULD BE ALLOWABLE REIMBURSABLE, BUT WE WERE NOT PROVIDED THE DOCUMENTATION THAT WE REQUESTED, SO WE COULDN'T VERIFY THOSE COSTS
AND THEN LESTER AREA WAS THE BILLABLE RATES THAT THE PORT WAS CHARGED AT $89 FLAT RATE WAS DIFFERENT THAN THE COVID SUPERVISOR'S ACTUAL PAY RATE OF $52, WHICH THE PORT LETTER STATED THAT ACTUAL COSTS WOULD BE REIMBURSED
YEAH
SPENCER, IF I CAN JUMP IN, WHAT DO YOU THINK? COMMISSIONERS HAVE BEEN SEEING A LOT OF COVID CHANGE ORDERS, AND GENESIS KIND OF SENT A VERY CLEAR MESSAGE TO PEOPLE THAT THEY CAN'T DO THIS
PEOPLE CHARGE US FOR THINGS THAT THEY'RE NOT SUPPOSED TO
AND WE'VE SEEN THIS SEVERAL TIMES
COVID SUPERVISORS THAT ARE SUPPOSED TO BE ON SITE, AND THEN SPENCER AND TEAM WILL FIND THAT THEY'RE NOT THERE OR YOU GET BILLED FOR HOURS OR RATES THAT ARE DIFFERENT
SO IT'S PART OF WHY WE DO THE AUDITS TO IDENTIFY THESE THINGS
HISTORICALLY, JANICE'S, TEAM WOULDN'T HAVE ACCESS TO A LOT OF THIS STUFF
SPENCER DOES GO OUT TO LNI AND GET REPORTS FROM THEM
SO YOU CAN CROSS CHECK EVERYTHING AND SAY, HEY, WAIT A MINUTE, YOU SHOULDN'T BE BILLING US FOR THESE THINGS
SO OPPORTUNITIES TO CLEAN UP
AND SPENCER, YOU WANT TO GO TO YOUR RECOMMENDATION AND THEN THE INTEREST OF TIME, CLOSE THAT, PASS IT OVER TO JANICE
YEAH
IF WE COULD JUST GO THROUGH
HOLD ON
YES, COMMISSIONER, I HAD A QUICK QUESTION
YOU SAID, DIRECTOR GLENN, THAT PEOPLE CHANGE AND CHARGE US FOR THINGS THAT THEY'RE NOT SUPPOSED TO
IS THERE, LIKE CONTRACT TEMPLATES THAT WE COULD PUT IN PLACE OR HAVE IN PLACE THAT THEY'RE EITHER BREACHING OR WE COULD INCORPORATE TO ENSURE THAT DOESN'T HAPPEN? WHAT ARE THE PREVENTED MEASURES, OR IS THE PORT OF THE RECOMMENDATION? THERE'S DEFINITELY CONTRACT LANGUAGE THAT SAYS THEY SHOULDN'T DO THAT
BUT, JANICE, I DON'T KNOW HOW YOU'RE I WANT TO PROVIDE AN EXAMPLE
SO WHAT WE'RE TALKING ABOUT IS THAT WHAT WE EXPECT IS TO HAVE A DEDICATED COVID SUPERVISOR TO MAKE SURE THAT WE AYE KEEPING WORKERS AS SAFE AS POSSIBLE
SO IN LOOKING AT PAYROLL RECORDS, THAT INTERNAL AUDIT WAS ABLE TO PULL ADDITIONAL RECORDS FOR THAT
WHAT THEY DISCOVERED IS THAT PERHAPS THE COVID SUPERVISOR WAS ON SITE FOR HALF A DAY, BUT NOT FOR THE WHOLE DAY, OR THAT WHEN THEY LOOKED AT THE ACTUAL PAYROLL INFORMATION, THEY WERE SPENDING HALF THE DAY AS A COVID SUPERVISOR
BUT THE OTHER HALF, MAYBE THEY WERE DOING QUALITY CONTROL DUTIES, WHICH WOULD NOT BE PART OF THE REIMBURSEMENT
WHAT THEY'VE IDENTIFIED HERE IS WHERE THOSE FORCE ACCOUNT SHEETS THEY SIGN ON THE BOTTOM ATTESTING TO THE ACCURACY OF THE INFORMATION
AND THEN WHAT THEY'RE FINDING WHEN THEY DIG INTO ADDITIONAL RECORDS
THAT IS NOT CUSTOMARILY
WHAT WE DO FOR VALIDATION, THEY'RE FINDING THAT THESE ERRORS ARE OCCURRING, AND THEY APPEAR TO BE ONLY DURING THESE COVID CHANGE ORDER PIECES, BECAUSE I BELIEVE THAT IN THE LAST SEVERAL YEARS, WE'VE DONE MANY AUDITS OF FORCE ACCOUNTS WITHOUT ISSUE, BUT CERTAINLY FOR THE COVID FORCE ACCOUNTS, WE HAVE IDENTIFIED SOME ISSUES WHERE COLLATERAL DUTIES WOULD MEAN THAT WE DON'T PAY FOR THE ENTIRE EIGHT HOUR DAY BECAUSE THEY WERE NOT DEDICATED SOLELY ON COVID ACTIVITIES AS A SUPERVISOR
SO THIS RECOMMENDATION WE WILL TAKE A LOOK AT FOR OUR STANDARD OPERATING PROCEDURES, WHAT ADDITIONAL MEASURES WE SHOULD CONSIDER TO IDENTIFY WHEN THESE FACTUALLY INCORRECT PIECES OF INFORMATION ARE BEING PRESENTED TO US, BECAUSE THE WAY WE EXPECT ACCOUNTABILITY FROM THE CONTRACTOR, THAT'S WHY WE ASKED THEM TO ATTEST TO THE ACCURACY WHEN THEY SIGNED THE NAME TO THE SHEET SAYING THAT THIS IS HOW MUCH FORCE ACCOUNT IS BEING DONE HERE'S, WHO IS PERFORMING THE WORK, AND HERE IS THE HOURS
SO WE ARE GOING TO TAKE A LOOK AT WHAT WE MIGHT WANT TO DO DIFFERENTLY TO TRY TO IDENTIFY IDS AS PART OF OUR EVERYDAY ACTIVITIES
THE ISSUE HERE, THOUGH, IS THAT IT DOES INCUR ADDITIONAL ADMINISTRATIVE COST FOR US TO TAKE ON ADDITIONAL REVIEW OF RECORDS AND PULL MORE RECORDS
SO WE WANT TO WORK WITH LEGAL AND CPO TO LOOK AT WHAT OTHER MEASURES YOU MIGHT WANT TO TAKE TO PREVENT THIS FROM HAPPENING IN THE FUTURE
AND THEN IN THIS PARTICULAR SCENARIO, WE ARE GOING TO, AS PART OF THE RECONCILIATION OF THAT CHANGE ORDER, RECOVER ANY AMOUNTS THAT WERE OVERPAID FOR COVID COST, WHERE THEY BUILD MORE THAN THEY HAD ACTUALLY INCURRED AS COSTS, BECAUSE THIS IS A REIMBURSABLE
SO WHAT WE'RE SAYING TO CONTRACTORS IS TO KEEP OUR WORKERS SAFE, WE'RE PAYING THE ACTUAL COST YOU INCURRED FOR THAT COVID SAFETY AND CULVERT SUPERVISOR
THANKS FOR THAT, JANICE
IS THERE ANYTHING ELSE, OR IS THERE MORE TO THIS PRESENTATION? GLENN, THIS IS IT
JANICE, ON THE FIRST ISSUE, ON THE LIQUIDATED DAMAGES, I'M GUESSING YOU CONCUR WITH SPENCER AND WE'RE GOOD THERE
SO THAT'S IT, COMMISSIONER
THAT'S THE END OF OUR DISCUSSION FOR PUBLIC SESSION
GREAT
ANY LAST QUESTIONS, COMMISSIONER HAMDI? NO, THANK YOU
THANK YOU FOR THIS PRESENTATION
PERFECT
OKAY
WELL, WITH THAT, WE HAVE NO SCHEDULE, LIMITED CONTRACT COMPLIANCE AUDITS FOR DISCUSSION TODAY
AND ITEM IS NUMBER NINE AND TEN ON THE AGENDA ARE SECURITY SENSITIVE IN NATURE, SO WE'RE GOING TO BE DISCUSSING THIS IN NON PUBLIC SESSION, SO WE WILL MOVE THE CLOSING COMMENTS AT THIS TIME
MS FERNANDEZ, DO YOU HAVE ANY CLOSING COMMENTS? I DO NOT, COMMISSIONER
OKAY
COMMISSIONER MOHAMED? NO, THANK YOU
WELL, I JUST WANTED TO BEFORE WE COVID ON TO THE FIRE STATION CONVERSATION, I DID WANT TO SAY REGARDING THE ACH FRAUD THAT I REALIZED IT'S AN UNFORTUNATE SCENARIO AND IT'S UNFORTUNATE THAT WE HAD TO GO THROUGH THIS PROCESS, BUT I FEEL LIKE THIS IS A GREAT LEARNING MOMENT FOR THE ORGANIZATION
I WANT TO THANK RUDY AND GLENN FOR KIND OF TAKING AYE
HEAD ON AND ROLLING WITH THE PUNCHES
I UNDERSTAND THAT SOMETIMES SOME OF THESE ADMINISTRATIVE PROCEDURES CAN BE TEDIOUS AND IT CAN TURN TO BE JUST APPROVED APPROVED
BUT I DO APPRECIATE YOU ALL ON THE LEADERSHIP KIND OF RALLYING AROUND IT AND MAKING SURE THAT WE ARE MAKING ALL THE RIGHT CORRECTIONS
THIS DOESN'T HAPPEN AGAIN
AND RUDY, I APPRECIATE YOUR COMMITMENT TO MAKING SURE IT DOESN'T SAY THAT WE'RE GOING TO HOLD YOU TO IT
RUDY, IT'S NOT HAPPENING AGAIN
RIGHT
YOU CAN DON'T MEAN DISRESPECT
IF I COULD JUST HAVE A MINUTE, PLEASE GO FOR IT
THANK YOU SO MUCH
AND IT'S RELATING TO THE GOOD COMMENT YOU MADE WITH REGARD TO BEING SENSITIVE, WITH REGARD TO BIAS
AND I JUST RESPECTFULLY SUGGEST THAT WE USE CAUTION WITH REGARD TO HOW WE APPROACH RECOMMENDATIONS
WE HAVE TO REHAB A PRIORITY HERE AT THE PORT OF SEATTLE WITH REGARD TO EQUITY, DIVERSITY, INCLUSION
YOU AYE SOLID LEADER, COMMISSIONER CHO, WITH REGARD TO ADDRESSING INSTITUTIONAL RACISM
I MEAN, I FEEL SO PROUD TO BE ALIGNED WITH YOU
AND THEN WHAT, COMMISSIONER MOHAMED AND HATHAY GALA STANFOR COMING IN
I FEEL SO PROUD TO BE A PERSON OF COLOR, TO BE AT THE PORT OF SEATTLE
AND THEN I CAN SPEAK FREELY AND I CAN AMPLIFY SOME THINGS THAT WE NEED TO BE AWARE OF, AND WE DON'T INTEND IT
BUT WE SAY THINGS AND THINGS IN REPORTS THAT REALLY NEED TO BE SENSITIVE WITH REGARD TO THE POINT IN TERMS OF THE LEVEL OF WORK THAT'S BEING DONE, IN TERMS OF FRAUD, IDENTIFICATION AND VETTING, THE ACH ACCOUNT CHANGES, IT IS REFERENCE TO THE ADMINISTRATIVE PROFESSIONALS
AND I KNOW IT'S NOT INTENDED, BUT WE CAN'T SAY IN A PUBLIC DOCUMENT THAT ADMINISTRATIVE PROFESSIONALS AREN'T CAPABLE OF DOING THIS WORK
WHAT YOU DO IS YOU PICK UP THE PHONE AND CALL THE VENDOR
DID YOU ASK FOR ACH CHANGE? YES OR NO? THAT IS NOT COMPLICATED WORK
AND I'VE RECEIVED A LOT OF COMMENTS BACK WITH REGARD TO THAT, WITH REGARD TO ADMINISTRATIVE PROFESSIONALS, BECAUSE I EVEN EXPERIENCED THE GREATNESS OF ADMINISTRATIVE PROFESSIONALS AT THE PORT OF SEATTLE, ESPECIALLY A TEAM MEMBER THAT I HAVE ON TEAM AFR CORE SERVICES, WHO'S THE ADMINISTRATIVE PROFESSIONAL
BUT WHAT IS SHE? SHE'S A KENMORE CITY COUNCIL MEMBER
ALL RIGHT
AND THEN SHE'S BEEN VOTED AS DEPUTY MAYOR
AND FOR US TO STAY ADMINISTRATIVE PROFESSIONALS CAN'T PICK UP THE PHONE AND CALL A SUPPLIER AND VALIDATE
I THINK IT'S JUST A DOLLAR DISRESPECT TO ADMINISTRATIVE PROFESSIONALS AT THE PORT OF SEATTLE
AND I JUST SUGGEST, PLEASE, THAT WE BE VERY CONSCIOUS ABOUT NOT BEING SUBCONSCIOUS BIAS AND BY DEFAULT, INSTITUTIONALIZING INPUTS OF BIAS
WE GOT TO BE VERY CAREFUL ABOUT MICROAGGRESSIONS UNINTENDED
WE'RE SIMPLY NOT INFORMED STATEMENTS MADE ANYTHING IN TERMS OF PUBLIC DOCUMENTS, BECAUSE AS WE CONCLUDE AUDITS AND REPORTS TO THE AUDIT COMMITTEE, IT'S BY FUNCTION THAT THE AUDIT COMMITTEE, AND THEREFORE REPRESENTING COMMISSIONER, SANCTIONED THESE REPORTS AS WELL AS THE SUBSTANCE
AND I JUST PLEASE YOU AYE LEADERS HERE THAT REALLY UNDERSTAND WHERE I'M COMING FROM
I FEEL VERY SAFE TO SPEAK UP
AND I AM
I'M NOT BEING CRITICAL
I'M JUST SAYING LET'S JUST DO BETTER
LET'S WORK TOGETHER TO BE BETTER
THANK YOU SO MUCH FOR THE OPPORTUNITY
THANKS, RUDY
I APPRECIATE YOUR COMMENTS AND YOUR WISDOM
YEAH
THANK YOU FOR SPEAKING UP ON IT
IT'S IMPORTANT
IT'S PART OF THE TRANSPARENCY THAT WE TALK ABOUT AND ENSURING THAT WE ARE GOOD STEWARDS OF PUBLIC DOLLARS, AND THAT IS ALSO ENSURING THAT WE'RE NOT BEING BIASED AND THAT WE SPEAK TRUTH TO POWER AT ANY POINT
AND SO IT'S IMPORTANT THAT WE'RE DOING THAT
SO I APPRECIATE YOU SAYING THAT
YEAH
ALTHOUGH TO MAKE SURE, I DO WANT TO POINT OUT, THE REPORT DOES NOT SINGLE OUT
IT JUST SAYS WHOEVER YOU PUT IN THAT ROLE, YOU NEED TO ENSURE THAT THEY HAVE THE RIGHT TRAINING
YEAH, I UNDERSTAND
BUT THE CHALLENGE IS THE PERSON IN THAT ROLE IS A WOMAN OF COLOR
ALRIGHT? AND WE JUST GOT TO BE CAREFUL
COURT KNOWS WHO WE'RE TALKING ABOUT
THANK YOU
THANK YOU ALL
HEARING NO FURTHER COMMENTS
IF IT'S OKAY WITH COMMISSIONER HOMICIDE, I'D LIKE TO FOREGO A BREAK
WE DON'T KNOW WE'RE SUPPOSED TO TAKE A BREAK BETWEEN PUBLIC AND PRIVATE, BUT IF YOU'RE GOOD, I'M GOOD
ANYONE ELSE IS GOOD
OKAY, GOOD
ALL RIGHT
SO HEARING NO FOR THE COMMENTS, WE WILL BREAK INTO THE NON PUBLIC PORTION OF OUR MEETING
THE TIME IS NOW 430 P
M
EXACTLY ON TIME TO DISCUSS TWO MATTERS RELATED TO SECURITY SENSITIVE INFORMATION
THE NON PUBLIC PORTION OF THE MEETING WILL LAST APPROXIMATELY 30 MINUTES AND THE MEETING WILL ADJOURN WITH NO FURTHER BUSINESS AFTER THAT TIME
PARTICIPANTS JOIN THE NON PUBLIC PORTION OF THE MEETING, PLEASE
PARTICIPANTS JOINING THE NON PUBLIC PORTION OF THE MEETING, PLEASE CLOSE OUT OF THIS MEETING LINK AND JOIN BEFORE 30 P
M
TEAMS MEETING INVITATION THE CURRENT AND TIME IS 04:30 P.M.
AND WE WILL SEE YOU IN THE NON PUBLIC SIDE DEAL
THANK YOU,

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