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

Transcript

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

Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
START OF TRANSCRIPT [00:00:28] THIS IS COMMISSIONER CHO CALLING TO [00:00:30] ORDER THE PORT OF SEATTLE AUTO COMMUNITY [00:00:32] SPECIAL MEETING TODAY IS THURSDAY, [00:00:35] APRIL 7, 2022, AND THE TIME IS 230 03:00 [00:00:38] P.M.
WE ARE MEETING REMOTELY TODAY VIA [00:00:41] THE TEAM'S PLATFORM TO COMPLY WITH [00:00:43] SENATE CONCURRENT RESOLUTION 8402 AND [00:00:46] GOVERNOR INSLEE PROCLAMATION 20-28
[00:00:48] PRESENT WITH ME TODAY IS COMMITTEE [00:00:51] MEMBER COMMISSIONER HAMDI MOHAMED
[00:00:55] ALL RIGHT
AS THIS IS A VIRTUAL MEETING, [00:00:58] WE HAVE MADE SPECIAL ARRANGEMENTS TO [00:01:00] PROVIDE FOR REMOTE PARTICIPATION FOR OUR [00:01:03] STAFF AND ANY OUTSIDE PRESENTERS AND [00:01:05] COMMITTEE MEMBERS TO MAKE THIS MEETING [00:01:07] MORE ACCESSIBLE TO THE PUBLIC
THE [00:01:09] MEETING IS BEING LIVE STREAMED AND [00:01:11] DIGITALLY RECORDED AND MAY BE VIEWED OR [00:01:13] HEARD AT ANY TIME ON THE PORT WEBSITE
[00:01:17] HEADING OVER TO THE AGENDA
OUR FIRST [00:01:19] ITEM OF BUSINESS IS APPROVAL OF OUR LAST [00:01:22] MEETING MINUTES FROM DECEMBER 9
[00:01:25] I GUESS HAMDI
IF WE [00:01:29] COULD JUST REVIEW THE MINUTES AND I'LL [00:01:32] ASK IF THERE ARE ANY CORRECTIONS TO THE [00:01:33] MINUTES AND [00:01:37] IF THERE ARE ANY OBJECTIONS TO THE [00:01:40] APPROVAL MINUTES AS PRESENTED
[00:01:45] NOPE
NO OBJECTION
HEARING? NONE
THE [00:01:48] MINUTES ARE APPROVED
[00:01:51] PERFECT
OUR NEXT ORDER OF BUSINESS IS [00:01:54] EXTERNAL AUDITS
THE AUDIT REPORT TODAY [00:01:57] IS PROVIDING THE ACCOUNTABILITY AUDIT [00:01:59] RESULTS FOR 2020 FROM THE OFFICE OF THE [00:02:03] WASHINGTON STATE AUDITOR
PRESENTERS, [00:02:05] PLEASE UNMUTE YOURSELVES
COMMITTEE [00:02:07] MEMBERS MAY USE THE HAND RAISING TOOL TO [00:02:09] INDICATE THAT YOU WASH, DOT SPEAK OR [00:02:11] ALSO CALL FOR QUESTIONS AT THE [00:02:12] CONCLUSION OF THE PRESENTATION
MR [00:02:15] FERNANDEZ, PLEASE INTRODUCE OUR FIRST [00:02:17] SPEAKERS AND THE TOPIC INSURANCE
TODAY [00:02:20] WE HAVE JOE SIMMONS AND ANGELA FUNAMORI [00:02:23] FROM THE STATE AUDITOR'S OFFICE
AND [00:02:26] THEY'VE DONE A LOT OF WORK OVER THE LAST [00:02:28] FEW MONTHS, AND THEY'RE GOING TO PRESENT [00:02:29] THE RESULTS OF THEIR REPORT, WHICH IS [00:02:31] ALREADY PUBLIC, I BELIEVE
BUT ANGELA [00:02:34] AND JOE, PLEASE, YOU HAVE THE FLOOR
[00:02:38] THANK YOU, GLENN
AND THANK YOU FOR YOUR [00:02:40] TIME TODAY
COMMISSIONERS, AS I'M SAID, [00:02:43] WE'RE HERE FOR THE RESULTS OF OUR [00:02:45] ACCOUNTABILITY AUDIT FOR 2020
[00:02:49] MICHELLE, COULD YOU PULL THE DECK UP, [00:02:51] PLEASE? [00:02:55] SOUNDS GOOD
AND MADDIE, [00:03:01] WHAT'S ON THE SIDE AS A SUPERVISOR? SHE [00:03:03] IS OUT THIS WEEK, SO SHE WON'T BE HERE
[00:03:07] ON THE NEXT SLIDE, WE HAVE OUR STATE [00:03:10] AUDITOR, OUR DIRECTOR OF LOCAL AUDIT, [00:03:13] AND ASSISTANT DIRECTOR OF LOCAL AUDIT
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:03:16] AND THEN ON THE THIRD SLIDE, JUST A [00:03:18] BRIEF OVERVIEW THAT WE LOOK AT OURSELVES [00:03:21] AS A STATE AUDITOR'S OFFICE AS AN [00:03:23] INDEPENDENT, OBJECTIVE, OUTSIDE REVIEW [00:03:26] OF LOCAL GOVERNMENT AND STATE [00:03:28] GOVERNMENT, AND LOOK AT IT AS A ROLE OF [00:03:30] WORKING IN PARTNERSHIP WITH GOVERNMENT [00:03:32] TO PROVIDE INDEPENDENT AND TRANSPARENT [00:03:36] EXAMINATIONS AND ALSO LOOK AT WAYS TO [00:03:38] PROVIDE RECOMMENDATIONS THAT CAN HELP [00:03:40] IMPROVE EFFICIENCY AND EFFECTIVENESS OF [00:03:42] GOVERNMENT
AND I WILL GO AHEAD [00:03:45] AND TURN IT OVER TO ANGELA TO TALK ABOUT [00:03:48] THE RESULTS SPECIFIC TO YOUR [00:03:50] ACCOUNTABILITY AUDIT
THANK YOU, JOE
[00:03:54] SO AS JOE MENTIONED, WE CONDUCTED AN [00:03:56] ACCOUNTABILITY AUDIT THAT COVERED THE [00:03:58] PERIOD OF JANUARY THROUGH DECEMBER 31 OF [00:04:02] 2020
AND THE PURPOSE OF THE [00:04:04] ACCOUNTABILITY AUDIT IS TO DISCERN [00:04:07] WHETHER THE PORT COMPLIED WITH STATE [00:04:09] LAWS, REGULATIONS, CONTRACTS, GRANT [00:04:13] AGREEMENTS, AND ITS OWN POLICIES AND [00:04:14] PROCEDURES
IN ADDITION, THESE AUDITS [00:04:17] ALSO LOOK AT WHETHER, IN GENERAL, THE [00:04:19] PORT HAS ADEQUATE CONTROLS TO SAFEGUARD [00:04:21] PUBLIC FUNDS AND [00:04:27] IN THE NEXT SLIDE IN [00:04:31] ORDER TO SELECT SPECIFIC AREAS TO [00:04:34] REVIEW, WE CONDUCTED A NUMBER OF [00:04:36] PLANNING PROCEDURES THAT INCORPORATED [00:04:38] REVIEWING THE MEANING MINUTES OF THE [00:04:40] GOVERNING BODY AND ANALYZING TRENDS IN [00:04:43] FINANCIAL DATA
THIS INCLUDES PAYROLL, [00:04:46] VENDOR INFORMATION, AND CREDIT CARDS
[00:04:50] WE ALSO CONDUCTED RISK ASSESSMENTS WITH [00:04:52] SEVERAL KEY STAFF AND A COMMISSIONER, [00:04:55] AND FROM THE INFORMATION WE GATHERED, [00:04:57] WE BRAINSTORMED THE VARIOUS AUDIT AREAS [00:04:59] THAT INDICATED POTENTIAL RISK OF NON [00:05:01] COMPLIANCE
AS A RESULT, INCLUDED ON THE [00:05:05] SLIDE ARE THE AREAS THAT WE SELECTED FOR [00:05:07] FURTHER TESTING, AND THE FIRST AREA THAT [00:05:10] WE'D LIKE TO DISCUSS IS THE FINANCIAL [00:05:12] CONDITION, WHERE WE PERFORMED A TREND OF [00:05:15] KEY FINANCIAL INDICATORS, ASSESSED [00:05:18] ADDITIONAL NON FINANCIAL INFORMATION TO [00:05:22] IDENTIFY POTENTIAL IMPACTS, AND ANALYZED [00:05:24] THE PORT'S RESPONSE TO COVID
THIS [00:05:27] INCLUDES THE MONITORING PERFORMED BY [00:05:29] MANAGEMENT IN OUR AUDIT DETERMINED THE [00:05:33] PORT'S INTERNAL CONTROLS ARE WORKING [00:05:34] EFFECTIVELY AND MUTED, NO ISSUES IN THE [00:05:36] PORT'S FINANCIAL CONDITION AND [00:05:38] SUSTAINABILITY
THE SECOND AREA [00:05:42] THAT WE'D LIKE TO DISCUSS IS THE PORT'S [00:05:44] SELF INSURANCE PROGRAM
THIS AREA COVERS [00:05:47] HEALTH AND WELFARE, UNEMPLOYMENT, [00:05:50] WORKERS COMPENSATION, AND PAID FAMILY [00:05:52] AND MEDICAL LEAVE
WE REVIEWED THE PORT [00:05:56] POLICIES AND PROCEDURES OVER THIS AREA, [00:05:58] GAINED AN UNDERSTANDING OF THE PORT [00:06:00] CONTROLS AND SELECTED TRANSACTIONS FOR Page 2 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:06:02] TESTING TO ENSURE IT COMPLIED WITH STATE [00:06:05] REGULATIONS
OUR AUDIT DETERMINED THE [00:06:08] PORT INTERNAL CONTROLS ARE WORKING [00:06:10] EFFECTIVELY, AND NO SIGNIFICANT [00:06:11] RECOMMENDATIONS WERE IDENTIFIED
WE DID, [00:06:15] HOWEVER, IDENTIFY AN AREA OF OPPORTUNITY [00:06:17] FOR THE PORT TO BETTER DEMONSTRATE ITS [00:06:19] COMPLIANCE WITH THE WASHINGTON [00:06:20] ADMINISTRATIVE CODE
WE ALSO WANT TO [00:06:24] KNOW THAT THE EXIT ITEMS ADDRESS [00:06:25] CONTROL, DEFICIENCIES, OR NON COMPLIANCE [00:06:28] WITH LAWS OR REGULATIONS THAT HAVE AN [00:06:30] INSIGNIFICANT EFFECT ON THE ENTITY
[00:06:35] WE ALSO WOULD LIKE TO NOTE THAT EXIT [00:06:37] ITEMS ARE NOT REFERENCED IN THE AUDIT [00:06:39] REPORT
THE NEXT AREA THAT WE'D [00:06:42] LIKE TO DISCUSS IS THE PORT'S RENT [00:06:44] DEFERRAL PAYMENT PLAN, AND FROM THE [00:06:46] PRIOR AUDIT, WE IDENTIFIED THAT THE PORT [00:06:49] CREATED AND IMPLEMENTED THIS PAYMENT [00:06:51] PLAN AS A WAY TO ENSURE FINANCIAL [00:06:54] SUPPORT TO THE LOCAL ECONOMY AND TO [00:06:56] PROTECT THE COURT'S ASSETS
FOR THIS [00:06:59] AUDIT, WE GAINED AN UNDERSTANDING OF [00:07:01] WHERE THE PROGRAM STAYED
THIS INCLUDED [00:07:03] OUR REVIEW OF THE AUDIT WORK THAT WAS [00:07:06] PERFORMED BY THE INTERNAL AUDIT TEAM, [00:07:09] THEIR REVIEW OF CONTROLS, AND THEIR [00:07:11] TESTING SPREADSHEET, AND WE'VE REVIEWED [00:07:13] THE PROGRAM OVERALL TO ENSURE THAT IT [00:07:15] COMPLIES WITH STATE LAW ENFORCE POLICY
[00:07:17] AND SO WE ARE PLEASED TO REPORT
OUR [00:07:20] AUDIT DETERMINED THE PORT INTERNAL [00:07:22] CONTROLS ARE WORKING EFFECTIVELY, AND NO [00:07:24] RECOMMENDATIONS WERE IDENTIFIED
[00:07:27] THE NEXT AREA THAT WE'D ALSO LIKE TO [00:07:29] DISCUSS IS THE PORT THE PORT'S TELEWORK [00:07:31] EQUIPMENT REIMBURSEMENT POLICY
SO WE [00:07:35] REVIEWED THE PORT PORTS POLICIES AND [00:07:37] PROCEDURES RELATED TO THE TELEWORK [00:07:39] REIMBURSEMENT PROGRAM
YOU GAINED AN [00:07:41] UNDERSTANDING OF THE INTERNAL CONTROLS [00:07:44] AND SELECTED REIMBURSEMENT TRANSACTIONS [00:07:46] FOR TESTING, AND WE DETERMINED THE PORT [00:07:49] AND TONAL CONTROLS ARE WORKING [00:07:51] EFFECTIVELY AND TRANSACTIONS COMPLIED [00:07:53] WITH PORT POLICY WERE VALID AND [00:07:56] ADEQUATELY SUPPORTED BY THE APPROPRIATE [00:07:58] RECORDS
THE NEXT AREA [00:08:01] THAT WE'D LIKE TO DISCUSS IS THE [00:08:03] PROCUREMENT PERSONAL SERVICE CONTRACTS
[00:08:06] WE REVIEWED THE COURT'S POLICIES AND [00:08:08] PROCEDURES OVER THE PERSONAL SERVICE [00:08:10] CONTRACTS, GAINED AN UNDERSTANDING OF [00:08:12] THE INTERNAL CONTROLS AND SELECTED [00:08:15] CONTRACTS TO ENSURE THAT THE CONTRACTS [00:08:29] COMPLIED WITH COURT POLICIES AND STATE [00:08:31] LAW
AND THE LAST AREA WE'D LIKE TO [00:08:35] DISCUSS IS THE PAYROLL OVERTIME
[00:08:37] SO FROM THE PRIOR AUDIT, WE REVIEWED THE [00:08:40] PORT POLICIES AND PROCEDURES OVER THIS [00:08:43] AREA AND CONDUCTED DETAILED TESTING ON [00:08:46] SPECIFIC TRANSACTIONS
OUR AUDIT Page 3 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:08:49] IDENTIFIED AN AREA OF OPPORTUNITY FOR [00:08:51] THE PORT TO STRENGTHEN ITS INTERNAL [00:08:53] CONTROLS RELATED TO TIMESHEET APPROVALS
[00:08:56] AND FOR THIS AUDIT PERIOD, WE FOLLOWED [00:08:58] UP ON THOSE RECOMMENDATIONS BY GAINING [00:09:01] AN UNDERSTANDING OF THE LATEST INTERNAL [00:09:03] CONTROLS RELATED TO THE TIMESHEET [00:09:05] APPROVALS IN OUR AUDIT DETERMINED THE [00:09:08] PORT'S INTERNAL CONTROLS ARE WORKING [00:09:09] EFFECTIVELY
AND SO [00:09:12] NOW I'D LIKE TO PASS IT BACK OVER TO JOE [00:09:16] NEXT SLIDE, PLEASE
MICHELLE
AND JOE, [00:09:19] FEEL FREE TO ASK MICHELLE TO WHEN YOU'RE [00:09:21] READY FOR THE NEXT SLIDE
CERTAINLY
[00:09:25] AND I SHOULD HAVE SAID AT THE BEGINNING, [00:09:27] PLEASE LET US KNOW AT ANY TIME IF YOU [00:09:29] HAVE ANY QUESTIONS ABOUT ANY OF THE [00:09:31] SLIDES AS WE GO OVER THIS
[00:09:34] ONE THING WE ALWAYS LIKE TO POINT OUT [00:09:36] IS, AS YOU KNOW, CPA FIRM OF MOSS [00:09:40] ADAMS PERFORMS THE FINANCIAL STATEMENT [00:09:42] AND FEDERAL SINGLE AUDIT, THE GRANT [00:09:45] AUDIT OF THE PORT OF SEATTLE
SO WE [00:09:48] APPRECIATE HOW THE PORT PROVIDES [00:09:51] COMMUNICATIONS WITH US SO THAT WE'RE [00:09:53] LOOPED IN EVEN INTO SOME STATUS MEETINGS [00:09:56] WITH THE MOSS ADAMS GROUP
SO WE'RE [00:09:58] AWARE OF ANY ISSUES THAT ARISE IN THOSE [00:10:00] AUDITS
AND THEN WHEN THE WORK IS [00:10:03] COMPLETED, WE REVIEW THE WORK THAT WAS [00:10:05] DONE BY MOSS ADAMS WE REVIEW THEIR WORK [00:10:08] PAPERS, AND WE REVIEW THAT TO ALSO BE [00:10:11] ABLE TO LEVERAGE ANY WORK THAT THEY DID
[00:10:14] SO WE DEFINITELY AVOID TRYING TO [00:10:15] DUPLICATE ANY WORK THAT'S DONE IN YOUR [00:10:17] FINANCIAL STATEMENT OR FEDERAL SINGLE [00:10:18] AUDIT
AND WE JUST ALWAYS LIKE TO JUST [00:10:21] CONFIRM THAT WE DID NOT HAVE ANY [00:10:23] CONCERNS ABOUT THE WORK THAT WAS DONE BY [00:10:25] THE CPA FIRM
THERE WAS NO LIMITATIONS [00:10:28] RESTRICTED ANALYSIS OF THOSE OTHER [00:10:31] AUDITS, AND THERE'S NO MATERIAL [00:10:33] STATEMENT OR FINANCIAL STATEMENTS THAT [00:10:35] HAS OR MAY HAVE RESULTED FROM FRAUD OR [00:10:36] SUSPECTED FRAUD
AND THEN ON THE NEXT [00:10:40] SLIDE, JUST TALKING ABOUT [00:10:44] NOW, WE'RE KIND OF MORE INTO CLOSING [00:10:46] REMARKS THAT WE JUST WANT TO CONFIRM [00:10:48] THAT THE AUDIT COSTS THAT WE ESTIMATE AT [00:10:50] THE BEGINNING AUDIT OR ALIGNMENT WITH [00:10:51] OUR ORIGINAL ESTIMATE
ONCE AGAIN, [00:10:53] APPRECIATE THE WORK DONE BY PORT STAFF [00:10:55] TO HELP MAKE OUR AUDIT PROCESS EFFECTIVE [00:10:59] AND EFFICIENT
REALLY APPRECIATE THE [00:11:01] WORKING RELATIONSHIP THERE
OUR NEXT [00:11:03] AUDIT WILL BE LATER THIS YEAR
IN THE [00:11:05] FALL, WE'LL BE AGAIN CONDUCTING OUR [00:11:07] ACCOUNTABILITY AUDIT
AND AS PART OF [00:11:09] THAT, WE'LL BE REVIEWING THE WORK DONE [00:11:10] BY MOSS ADAMS AND ONE THING [00:11:14] FOR THIS CURRENT PERIOD IS WE ARE [00:11:18] REQUIRED TO CONDUCT WHAT WE CALL AN [00:11:20] ASSESSMENT AUDIT OF THE PORT OF Page 4 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:11:21] SEATTLE'S INDUSTRIAL DEVELOPMENT [00:11:23] CORPORATION EVERY THREE YEARS
IT'S A [00:11:25] VERY TINY GOVERNMENT BUT IT IS STILL [00:11:28] CONSIDERED A SEPARATE LOCAL GOVERNMENT
[00:11:30] SO WE DO A VERY SMALL AUDIT [00:11:34] ON THAT ONE BASED ON THE SIZE
BUT WE'RE [00:11:35] STILL REQUIRED TO CONDUCT EVERY LOCAL [00:11:37] GOVERNMENT IN THE STATE ON AT LEAST A [00:11:39] THREE YEAR CYCLE
SO THAT'S WHERE THAT [00:11:41] CYCLE IS UP FOR THE IDC, [00:11:44] AND THAT ESTIMATED COST IS INCLUDED IN [00:11:47] THE MORE DETAILED INFORMATION IN THE [00:11:49] EXIT PACKAGE
AND THEN ON THE NEXT [00:11:53] SLIDE, AS WE NOTED IN [00:11:56] THIS CASE, WE'VE ALREADY ISSUED THE [00:11:59] REPORT
I'LL JUST REAFFIRM AGAIN THAT IT [00:12:02] WAS A CLEAN REPORT
THERE WERE NO [00:12:04] FINDINGS, AND WE HAVE ALREADY PUBLISHED [00:12:06] IT IN MARCH, SO IT'S ALREADY THERE [00:12:09] AVAILABLE ON OUR WEBSITE, AND THERE'S [00:12:13] A LINK IF YOU ARE INTERESTED IN BEING UP [00:12:16] BY EMAIL WHEN ANY OF OUR REPORTS ARE [00:12:18] POSTED ON THE WEBSITE, THAT WE HAVE AN [00:12:21] EMAIL ALERT THAT GOES OUT WHEN OUR [00:12:23] REPORTS ARE PUBLISHED, WHICH IS TWICE A [00:12:25] WEEK ON MONDAYS AND THURSDAYS
AND WE [00:12:27] ALSO PROVIDE A SURVEY TO SUPPORT [00:12:32] STAFF SO THAT THEY CAN PROVIDE US [00:12:33] FEEDBACK
WE REALLY DO APPRECIATE [00:12:35] GETTING FEEDBACK ON OUR AUDIT SO WE CAN [00:12:37] CONTINUE TO IMPROVE ON OUR AUDIT [00:12:39] SERVICES
AND THEN ON THE NEXT SLIDE [00:12:43] JUST TALKS ABOUT A COUPLE OF OTHER [00:12:45] SERVICES THAT WE PROVIDE FOR THE STATE [00:12:47] AUDITOR'S OFFICE AT NO ADDITIONAL COST [00:12:50] TO THE LOCAL GOVERNMENT
ONE IS CALLED [00:12:52] THE LOCAL GOVERNMENT SUPPORT TEAM, AND [00:12:54] THAT PROVIDES TECHNICAL ASSISTANCE [00:12:57] THROUGHOUT THE YEAR RELATED TO THE PUGET [00:13:00] COUNTY REPORTING SYSTEM, WHICH IS THE [00:13:03] COUNTY MANUAL THAT PROVIDES INFORMATION [00:13:06] ABOUT WHAT'S REQUIRED FOR REPORTING IN [00:13:08] THE STATE OF WASHINGTON AND ALSO ANY [00:13:10] REQUIREMENTS RELATED TO THE ANNUAL [00:13:12] ONLINE FILING
WE ALSO HAVE SOME [00:13:14] ACCOUNTING AND REPORTING TRAINING THAT'S [00:13:15] AVAILABLE TO LOCAL GOVERNMENTS AND ALSO [00:13:19] A HEALTH DESK THAT'S AVAILABLE FOR ANY [00:13:21] QUESTIONS THAT COME UP DURING THE YEAR
[00:13:23] AND THEN WE ALSO HAVE A CENTER FOR [00:13:25] GOVERNMENT INNOVATION THAT'S MORE [00:13:27] FOCUSED ON BEST PRACTICES, [00:13:30] GUIDANCE, RESOURCES, TOOLS
[00:13:33] BASICALLY, THIS GETS MORE INTO HELPING [00:13:36] PROVIDE SOME RESOURCES FOR LOCAL [00:13:38] GOVERNMENTS THAT THEY MAY BE ABLE TO USE [00:13:40] TO LOOK AT PROVING CONTROLS OR PROVIDING [00:13:43] PRACTICES OR JUST PROVIDING BEST [00:13:46] PRACTICES ON DIFFERENT AREAS LIKE [00:13:50] PAYROLL ACCOUNTS PAYABLE
ONE AREA [00:13:53] THAT WE'RE VERY FOCUSED ON IS CONTINUE [00:13:55] TO PROVIDE RESOURCES RELATED TO [00:13:57] CYBERSECURITY AND WAYS TO BE ABLE TO Page 5 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:13:59] ADDRESS THAT WITH THE RISKS THAT ARE OUT [00:14:01] THERE NOW AND THEN
WE ALSO HAVE THE [00:14:03] FINANCIAL INTELLIGENCE TOOL, WHICH IS [00:14:05] BASICALLY WHERE WE TAKE ALL THAT [00:14:07] INFORMATION THAT'S SUBMITTED BY LOCALS [00:14:10] THROUGHOUT THE STATE THROUGH THE END [00:14:11] REPORT FILING PROCESS
AND WE COMPILE [00:14:14] THAT INFORMATION INTO VARIOUS REPORTS [00:14:18] THAT ALLOW GOVERNMENTS TO BE ABLE TO [00:14:20] MEASURE THEMSELVES AGAINST SOME KEY [00:14:22] FINANCIAL INDICATORS AND ALSO BE ABLE TO [00:14:25] COMPARE TO OTHER LOCAL GOVERNMENTS IN [00:14:26] THE STATE
AND THEN I'M GOING TO TURN IT [00:14:30] BACK OVER TO ANGELA FOR SOME [00:14:33] THANK YOUS FOR APPRECIATION FOR THE [00:14:36] WORK, YEAH, AS I SAID
I REALLY APPRECIATE [00:14:39] HOW PORT STAFF WAS VERY TIMELY IN THEIR [00:14:42] COMMUNICATIONS AND PROVIDING US OUR [00:14:44] AUDIT INFORMATION THAT WE REQUEST DURING [00:14:46] THE AUDIT
I KNOW IT'S JUST ONE MORE [00:14:48] THING FOR EVERYONE WITH UNDERWAY, BUT [00:14:50] REALLY APPRECIATE HOW WELL THE PORT [00:14:52] STAFF PROVIDES US THE INFORMATION WE [00:14:54] NEED
SO I'LL HAND IT BACK TO ANGELA
[00:14:59] THANK YOU, JOE
YEAH
SO AS JOE, AS JOE [00:15:02] MENTIONED BEFORE, WE WRAP UP OUR [00:15:03] PRESENTATION TODAY, WE'D LIKE TO THANK [00:15:06] FOR MANAGEMENT AND OFFICIALS FOR THEIR [00:15:09] ASSISTANCE IN COOPERATION DURING OUR [00:15:11] AUDIT
SPECIFICALLY, WE'D LIKE TO EXTEND [00:15:13] OUR APPRECIATION TO DON, RUDY, GLENN AND [00:15:17] MELANIE FOR KEEPING THE AUDIT RUNNING [00:15:19] SMOOTHLY, FOLLOWING UP WITH OUR REQUEST [00:15:21] AND MEETING EACH WEEK TO DISCUSS OUR [00:15:23] PRELIMINARY RESULTS
AND ADDITIONALLY, [00:15:27] WE'D LIKE TO THANK THE PORT STAFF IN THE [00:15:29] VARIOUS DEPARTMENTS FOR THEIR TIMELY [00:15:31] RESPONSES AND ASSISTANCE WITH THE AUDIT
[00:15:39] NEXT SLIDE
[00:15:43] AND SO THIS CONCLUDES THE PRESENTATION [00:15:45] TO THE PORT FOR OUR FISCAL YEAR 2020 [00:15:48] AUDIT RESULTS
WE THANK EVERYONE FOR [00:15:51] YOUR TIME TODAY AND YOUR PARTICIPATION [00:15:53] IN THIS MEETING
AND SO AT THIS POINT, [00:15:55] IF YOU HAVE ANY QUESTIONS, WE'D LIKE TO [00:15:58] OPEN IT UP FOR
THANK YOU SO MUCH, [00:16:02] ANGELA AND JOSEPH, AND ALSO TO OUR [00:16:05] SUPPORT STAFF, GLENN AND YOUR TEAM
[00:16:07] COMMISSIONER MOHAMED, DO YOU HAVE ANY [00:16:09] QUESTIONS AT THIS TIME? [00:16:12] I DON'T HAVE ANY QUESTIONS, BUT I WILL [00:16:16] ALSO JUST SAY THANK YOU SO MUCH FOR THIS [00:16:18] IMPORTANT WORK THAT YOU'RE DOING AS [00:16:21] STEWARDS OF PUBLIC DOLLARS
AUDITS ARE [00:16:23] SO IMPORTANT AND IMPORTANT TO OUR [00:16:25] PUBLIC
AND SO JUST GRATEFUL FOR THE [00:16:29] WORK THAT EVERYONE HAS DONE TO PRODUCE [00:16:32] THIS REPORT
SO THANK YOU
[00:16:35] YEAH
AND LIKEWISE, I DON'T THINK IT [00:16:37] WOULD BE WISE FOR ME TO QUESTION A CLEAN [00:16:39] AUDIT
SO I'M ALSO NOT GOING TO ASK ANY [00:16:40] MORE QUESTIONS
AND SO IF THERE ARE [00:16:44] NO ADDITIONAL QUESTIONS FOR THE AUDIT Page 6 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:16:46] TEAM OR MR FERNANDO ON THIS ITEM, WE [00:16:49] WILL MOVE ON TO THE NEXT TOPIC
THANK [00:16:51] YOU SO MUCH TO OUR FRIENDS OVER AT THE [00:16:52] STATE AUDITOR'S OFFICE FOR BEING HERE [00:16:54] TODAY
ALL RIGHT
THANK YOU
THANK YOU [00:16:57] AGAIN FOR YOUR TIME
TAKE CARE
ITEM [00:17:00] NUMBER FOUR ON THE AGENDA IS AN UPDATE [00:17:02] REGARDING THE DIRECTOR'S ANNUAL [00:17:04] COMMUNICATION INDEPENDENCE, INTERNAL [00:17:06] AUDIT, CHARTER QUALITY ASSURANCE, AND [00:17:08] FOLLOW UP
GLENN, PLEASE PROCEED
THANK [00:17:11] YOU, COMMISSIONER CHO
MICHELLE, IF YOU [00:17:14] COULD PULL UP OUR DECK
GIVE ME JUST A [00:17:18] SECOND HERE
[00:17:23] THANK YOU
NEXT SLIDE, PLEASE, [00:17:24] MICHELLE
SO, [00:17:27] COMMISSIONER, SINCE COMMISSIONER MOHAMED [00:17:30] IS NEW, I FIGURED I'D START WITH AN.ORG [00:17:33] CHART JUST TO INTRODUCE YOU TO OUR [00:17:35] DEPARTMENT
A LOT OF THE FOLKS I KNOW [00:17:37] WE'RE VIRTUAL
I'M HOPING WE'RE IN [00:17:39] PERSON NEXT TIME SO YOU CAN SEE ALL THE [00:17:41] FACES THAT PUT CALL THE ROLL TOGETHER [00:17:44] THAT I'LL DISCUSS TODAY
ON THE [00:17:46] OPERATIONAL SIDE, YOU HAVE DAN, WHO'S [00:17:49] OUR MANAGER THERE
AND ACTUALLY, [00:17:52] RUMI OKUMA, DOES A LOT OF OPERATIONAL [00:17:54] AUDITS AS WELL
SHE DOES A LOT OF [00:17:56] COMMISSION INTERACTION AS WELL
WE DO A [00:17:59] LOT OF CAPITAL AT THE PORT
WE SPENT A [00:18:01] LOT OF MONEY, SO IT'S IMPORTANT THAT WE [00:18:03] HAVE A CAPITAL AUDIT FUNCTION
AND [00:18:05] SPENCER AND TEAM MANAGE THAT REDDISH [00:18:08] COLOR THERE
AND THEN IT AND [00:18:11] CYBERSECURITY CRITICAL AND BECOMES MORE [00:18:14] IMPORTANT TO EVERY DAY WITH ALL THE [00:18:16] RISKS OUT THERE
AND BRUCE AND RIDICARD [00:18:18] THAT DOMAIN, AND THEY DO A GREAT JOB [00:18:21] THERE
NEXT SLIDE, PLEASE
[00:18:26] CHRIST, THERE'S TWO BOOKS YOU'LL HEAR US [00:18:28] REFER TO, RED BOOK AND A YELLOW BOOK
[00:18:32] THE RED BOOK IS THE INTERNATIONAL [00:18:34] PROFESSIONAL PRACTICES FRAMEWORK
IT'S [00:18:37] ISSUED BY THE IA STUDENT INTERNAL [00:18:40] AUDITORS
AND IT'S USED BY ORGANIZATIONS [00:18:43] AROUND THE WORLD THAT HAVE INTERNAL [00:18:45] AUDIT FUNCTIONS
IT'S ESSENTIALLY A GOLD [00:18:49] STANDARD FOR CORPORATE AND EVEN [00:18:52] GOVERNMENT FOR INTERNAL AUDIT [00:18:55] SHOPS
AND THEN THERE'S THE YELLOW BOOK, [00:18:57] WHICH IS THE GAO, THE GOVERNMENT [00:18:58] AUDITING STANDARDS
AND THE YELLOW BOOK [00:19:01] IS DESIGNED MORE FOR GOVERNMENT [00:19:04] ORGANIZATIONS, FOR EXTERNAL AUDITS [00:19:09] OF GOVERNMENT ORGANIZATIONS
IT TALKS [00:19:11] ABOUT INDEPENDENCE AND HOW YOU CONDUCT [00:19:13] AN AUDIT, WHICH IS IN MANY CASES IN THE [00:19:16] RED BOOK AS WELL
THE YELLOW BOOK ALSO [00:19:19] SUGGESTS FOR INTERNAL AUDIT SHOPS LIKE [00:19:21] OURSELVES THAT WE ALSO PUT A LOT OF WE [00:19:24] USE THE RED BOOK AS WELL
SO THE YELLOW [00:19:27] BOOK IS VERY PRESCRIPTIVE ON CERTAIN [00:19:29] THINGS
WE WANT TO BE INDEPENDENT
YOU Page 7 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:19:31] HAVE TO DO THIS AND THIS
BUT THEY ALSO [00:19:33] SAY YOU NEED TO LOOK AT THE RED BOOK AND [00:19:36] START USING A LOT OF THINGS IN THERE
[00:19:39] SO TOGETHER, THESE TWO GUIDES CONTROL [00:19:42] THE WAY WE DO OR GUIDE US
THEY'RE [00:19:44] GUIDEBOOKS AND THEY'RE CONSTANTLY [00:19:45] UPDATED
NEXT SLIDE, PLEASE
SHELL SO [00:19:51] ON AN ANNUAL BASIS, THE RED BOOK OR THE [00:19:54] INSTITUTE OF MATERNAL LAUNDERS REQUIRES [00:19:56] US TO COME BACK TO YOU AND JUST TELL THE [00:19:59] AUDIT COMMITTEE THAT, YES, WE'RE [00:20:01] INDEPENDENT
OUR CHARTER IS STILL [00:20:05] VALID AND TODAY CONFIRMING [00:20:08] THAT OUR CHARTER RECENTLY UPDATED A YEAR [00:20:11] AND A HALF AGO, STILL VERY VALID, [00:20:14] THAT WE DO HAVE A QUALITY INSURANCE [00:20:16] PROGRAM, QUALITY ASSURANCE PROGRAM
[00:20:18] BOTH THE RED BOOK AND THE YELLOW BOOK [00:20:20] REQUIRE US TO GET BETTER EVERY YEAR
[00:20:23] HOW DO YOU IMPROVE INTERNALLY? HOW DO [00:20:25] YOU MAKE SURE THAT YOUR TEAM'S GETTING [00:20:28] BETTER AND IMPROVING? AND THEN WHEN WE [00:20:31] DO AUDITS, ARE THEY BEING FOLLOWED UP ON [00:20:35] OR SOMEBODY TAKING THE AUDIT REPORT, [00:20:36] PUTTING IT ON A SHELF AND NOTHING'S DONE [00:20:39] THEREAFTER BECAUSE THAT ADDS NO VALUE
[00:20:41] SO YOU DO AUDITS AND THINGS GET FIXED, [00:20:44] AND IS THERE A MECHANISM IN PLACE TO [00:20:47] FOLLOW UP ON THOSE AUDITS AND ADDRESS [00:20:49] THOSE ISSUES? SO NEXT SLIDE, PLEASE, [00:20:52] MICHELLE
SO ON ORGANIZATIONAL [00:20:56] INDEPENDENCE, I'M JUST CONFIRMING BACK [00:20:58] THAT WE CONTINUE TO REPORT TO YOU TO [00:21:01] COMMISSIONERS CHO AND MOHAMED AND THE [00:21:04] AUDIT COMMITTEE FUNCTIONALLY AND THEN [00:21:07] ADMINISTRATIVE LEADERS, STEVE METRUCK, THE [00:21:09] EXECUTIVE DIRECTOR
SO OUR WORK FOR WORK [00:21:13] RELATED STUFF, WE'RE DIRECTLY [00:21:14] ACCOUNTABLE TO THE AUDIT COMMITTEE, AND [00:21:16] THAT MAKES SURE THAT THINGS ARE [00:21:19] TRANSPARENT AND WE'RE [00:21:23] A CONDUIT FOR YOU TO EVERYTHING WITHIN [00:21:25] THE ORGANIZATION AND THEN WORK [00:21:29] WITH STEVE ALSO
AND IF STEVE SOMETHING [00:21:31] RAISES TO AYE
CONCERN, ABSOLUTELY
[00:21:34] I THINK IT'S IMPORTANT TO WORK WITH [00:21:36] STEVE AS WELL
SO NEXT SLIDE, PLEASE, [00:21:39] MICHELLE
A QUALITY [00:21:43] ASSURANCE PROGRAM
WE DO IT EVERY THREE [00:21:46] YEARS BECAUSE THE RED BOOK INTERNATIONAL [00:21:49] STANDARDS SAY YOU HAVE TO HAVE AN [00:21:50] EXTERNAL PARTY COME IN AND LOOK AT YOU [00:21:52] EVERY FIVE YEARS
THE YELLOW BOOK, [00:21:55] WHICH IS A LITTLE MORE STRINGENT, SAYS [00:21:56] EVERY THREE YEARS
SO WE DO IT EVERY [00:21:58] THREE YEARS BECAUSE OF COVID IT'S BEEN [00:22:01] PUSHED OUT A LITTLE BIT, BUT WE ARE [00:22:03] GOING TO HAVE ONE SOMETIME THIS YEAR
[00:22:06] AND I THINK THEY WAIVED THE STANDARDS [00:22:08] DURING THE PANDEMIC A LITTLE BIT BECAUSE [00:22:10] PEOPLE AYE UNCOMFORTABLE COMING ON SITE
[00:22:12] BUT I THINK THAT'S ALL DONE NOW AND [00:22:15] WE'VE GOT ONE PLANNED, BUT WE ARE Page 8 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:22:18] REQUIRED EVERY YEAR TO DO AN IN HOUSE [00:22:20] ASSESSMENT, AND WE HAVE AN INDIVIDUAL [00:22:23] WITHIN OUR TEAM RUMI THAT OKUMA, [00:22:25] THAT LOOKS AT THE WORK THAT WE'VE DONE [00:22:28] AND DOCUMENTS IT AND WRITES A MEMO ON [00:22:31] IMPROVEMENT OPPORTUNITIES
AND SHE'S [00:22:33] CONSISTENTLY DONE THAT
[00:22:38] AND WE IMPROVE, WE DOCUMENT, WE [00:22:41] IMPLEMENT WHAT IS RECOMMENDED AND MOVE [00:22:44] FORWARD
NEXT SLIDE, PLEASE
[00:22:47] OPPORTUNITY TO GET BETTER
AND THEN THE [00:22:50] LAST THING IS OUR FOLLOW UP, OPEN ISSUE [00:22:53] FOLLOW UP, LIKE I TALKED ABOUT, THEY [00:22:55] WANT TO MAKE SURE THAT THESE ISSUES ARE [00:22:57] BEING ADDRESSED AND MANY OF THEM ARE [00:22:59] BEING ADDRESSED
WE ARE ADDING NEW ONES [00:23:02] CONSTANTLY, BUT THERE AYE SOME THAT ARE [00:23:04] LAGGING ALSO
I JUST WANT TO KIND OF [00:23:06] HIGHLIGHT SOME THAT ARE SITTING OUT [00:23:08] THERE
THE IT ONES ARE SECURITY [00:23:11] SENSITIVE, AND WE'LL TALK ABOUT THOSE IN [00:23:13] NON PUBLIC SESSIONS
I'M NOT GOING TO [00:23:14] DISCUSS THEM NOW
THE THIRD BULLET DOWN [00:23:17] ON ITEM ONE, THE OTHER TWO IS [00:23:22] ABOUT SURETY
THE FIRST ONE IS ABOUT [00:23:24] SURETY
SO SURETY IS WHEN YOU HAVE A [00:23:26] CONCESSIONNAIRES AT THE AIRPORT
STATE [00:23:28] LAW REQUIRES THAT A CERTAIN PERCENTAGE [00:23:31] OF THEIR INCOME OR THEIR REVENUE IS [00:23:36] MAINTAINED
SURETY
MINIMUM SURETY THAT [00:23:38] YOU CAN HAVE FOR THE RCW
IS THIS [00:23:42] LIKE A YEAR'S WORTH? AND THERE'S SOME [00:23:44] PARAMETERS AROUND THAT
[00:23:47] HOW DO YOU GET TO THAT? BUT THEN THE [00:23:52] STATE LAW RCW ALSO NAYS, THE COMMISSION [00:23:55] CAN CHANGE THAT THROUGH A RESOLUTION OR [00:23:58] THROUGH GUIDANCE OR POLICY
SO THERE'S [00:24:01] SOMETHING CALLED RE TWO THAT THE [00:24:03] COMMISSION ISSUED IN 1995 THAT SET [00:24:06] IT AT SIX MONTHS, ROUGHLY, WITH SOME [00:24:09] PARAMETERS THERE
AND, YOU KNOW, THINGS [00:24:12] HAVE CHANGED
MAYBE BUSINESS NEEDS HAVE [00:24:14] CHANGED
WE'VE GOT A DIFFERENT MIX OF [00:24:17] TENANTS IN AND MAYBE SIX MONTHS IS TOO [00:24:19] HIGH
MAYBE IT'S THE RIGHT AMOUNT, BUT [00:24:21] WHATEVER IT IS, THAT DECISION IS [00:24:23] SUPPOSED TO COME FROM THE COMMISSION, [00:24:25] AND RIGHT NOW, WE'RE NOT COMPLYING WITH [00:24:27] THAT
WE'RE BELOW THAT AND WE'RE BELOW [00:24:30] STATE LAW
BUT THAT NEEDS [00:24:34] TO COME BACK TO COMMISSION NEEDS TO BE [00:24:36] UPDATED AND THERE NEEDS TO BE SOME SORT [00:24:38] OF AGREEMENT AS TO WHAT SURETY NEEDS TO [00:24:40] BE
SO THAT'S ONE FOLLOW UP ITEM THAT'S [00:24:42] BEEN SITTING OUT THERE FOR A WHILE AND [00:24:44] THAT WE NEED TO ADDRESS
THE OTHER ONE [00:24:47] IS ARCHITECTURAL AND ENGINEERING AUDIT [00:24:49] THAT WE DID BACK IN LATE 2019
[00:24:52] AND IT'S ESSENTIALLY [00:24:55] AN ARCHITECTURAL AND ENGINEERING FEES, [00:24:59] AND THERE WERE SOME GAPS [00:25:03] AND A LOT OF OPPORTUNITIES FOR [00:25:05] IMPROVEMENT
SO WHILE THAT'S BEING Page 9 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:25:07] WORKED ON, IT'S STILL BEHIND SCHEDULE
[00:25:10] A LOT OF THE ITEMS I WANT TO HIGHLIGHT [00:25:12] THAT, LIKE I SAID, THE INFORMATION [00:25:13] TECHNOLOGY AUDITS WILL TALK ABOUT PUBLIC [00:25:16] SECTION
SO I'LL PAUSE AT THAT [00:25:20] RIGHT NOW AND SEE IF ANYONE GOT ANY [00:25:22] QUESTIONS
YOU, COMMISSIONER COMMENTS
[00:25:26] I THINK WE'RE GOOD
OKAY, [00:25:30] NEXT SLIDE, PLEASE, MICHELLE
[00:25:34] OKAY, SO NEXT, WE'VE GOT OUR [00:25:37] 2022 AUDIT PLAN AS APPROVED IN DECEMBER
[00:25:41] SO, COMMISSIONER MOHAMED, JUST TO [00:25:45] BRING YOU UP TO SPEED, THIS IS [00:25:47] ESSENTIALLY OUR PLAN, OUR WORK PLAN FOR [00:25:49] THE YEAR
WE'RE MAKING PROGRESS ON IT
[00:25:51] WE DID ADD ACH PAYMENT FRAUD TO THIS, [00:25:55] AND THAT WAS ADDED LATE DECEMBER, EARLY [00:25:57] JANUARY, AFTER THE AUDIT COMMITTEE
BUT [00:25:59] IN A NUTSHELL, WE'VE GOT A LOT OF WORK [00:26:01] TO DO, A LOT OF GROUND TO COVER, AND [00:26:05] TIME FLIES QUICKLY
BUT THIS IS [00:26:08] JUST A SNAPSHOT OF ALL THE OTHERS
I'M [00:26:10] NOT GOING TO GO THROUGH THEM, BUT JUST [00:26:12] FOR YOUR INFORMATION, NEXT SLIDE, [00:26:15] PLEASE, MICHELLE
SO THIS [00:26:18] GANTT CHART ESSENTIALLY ILLUSTRATES [00:26:22] HOW WE'RE GOING TO COMPLETE ALL THESE [00:26:23] AUDITS THROUGH THE COURSE OF THE YEAR
[00:26:25] EVERYTHING IN GREEN WE'VE COMPLETED, [00:26:27] AND WE'RE GOING TO TALK ABOUT TODAY
[00:26:30] EVERYTHING IN YELLOW IS KICKED OFF OR [00:26:33] SOMEWHAT IN PROCESS, AND IT WILL BE [00:26:36] DISCUSSED IN THE JUNE ON COMMITTEE
[00:26:38] THEN THE OTHER ONES WILL ADJUST AS WE GO [00:26:40] THROUGH THE YEAR
IT'S A PRELIMINARY [00:26:44] SNAPSHOT AS TO HOW WE PLAN ON COVERING [00:26:47] THE AUTO PLAN AS OF RIGHT NOW
PRETTY [00:26:50] COMFORTABLE THAT WE'LL BE ABLE TO [00:26:51] ADDRESS ALL OF THESE BY YOUR END
I ALSO [00:26:54] WANT TO POINT OUT THAT THERE ARE SOME [00:26:55] CONSTRUCTION AUDITS, SUCH AS THE POST [00:26:59] IAF AIRLINE REALIGNMENT, THE C ONE [00:27:02] BUILDING EXPANSION, AND THE MAIN [00:27:04] TERMINAL LOW VOLTAGE, WHICH ARE LONGER [00:27:08] TERM PROJECTS THAT WILL GO ON FOR FIVE [00:27:11] YEARS
AND SINCE THE GCCM GENERAL [00:27:15] CONTRACTOR CONSTRUCTION MANAGER AUDITS [00:27:20] PROJECTS, THE RCW REQUIRES [00:27:24] AN AUDIT OF THOSE THROUGH THE COURSE OF [00:27:27] THE AUDIT OF THE PROJECT
SO THOSE [00:27:30] AUDITS WILL GO ON WHILE THE PROJECT IS [00:27:32] RUNNING FOR ABOUT FIVE YEARS
THEY WILL [00:27:34] NOT BE COMPLETED THIS YEAR, BUT THERE'LL [00:27:35] BE ONGOING PROJECTS AS [00:27:39] THE PROJECT WORKS FOR
[00:27:42] OKAY, THAT'S OUR AUDIT PLAN, IF YOU HAVE [00:27:45] ANY, I'LL ASSUME NO QUESTIONS
AND I'M [00:27:47] GOING TO JUMP FORWARD TO THE NEXT SLIDE
[00:27:53] ARE YOU JUMPING FORWARD TO ITEM FIVE? [00:27:55] SORRY, I JUST WANT TO MAKE SURE I KNOW [00:27:56] WHERE YOU'RE ON THE AGENDA
[00:28:02] SORRY
NOW, COMMISSIONER, SHOW BACK TO [00:28:04] YOU FOR INTRODUCTION FOR OPERATION Page 10 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:28:07] AUDITS
YEAH, [00:28:10] WE'RE GOING TO JUMP TO ITEM SEVEN, [00:28:13] ITEM OF PAGE FIVE, COMMISSIONER
[00:28:17] OKAY
ALL RIGHT, MOVING TO OPERATIONAL [00:28:20] AUDITS AND ITEM NUMBER SEVEN, ACH [00:28:23] PAYMENT FRAUD
GLENN, PLEASE INTRODUCE [00:28:26] THE ITEM AND PRESENTERS
[00:28:31] YES, COMMISSIONER
CHAIR
I'M GOING TO [00:28:32] TALK ABOUT FOUR AUDITS HERE
ACH PAYMENT [00:28:34] FRAUD IS THE FIRST ONE
THE TWO ONES IN [00:28:36] RED WILL TALK ABOUT NON PUBLIC SESSION
[00:28:39] SO, MICHELLE, NEXT SLIDE, PLEASE, [00:28:45] COMMISSIONER, I'M GOING TO INTRODUCE THE [00:28:47] AUDIT COMMISSIONERS, AND THEN I'M GOING [00:28:50] TO HAVE DAN CHASE FROM MY STAFF AND [00:28:54] BRUCE CLAUSAL, WHO IS OUR IT MANAGER AS [00:28:58] WELL, PRESENT CERTAIN ISSUES
[00:29:01] BUT FRAMEWORK HERE IS [00:29:06] WE JUST COMPLETED OR NOT, IT OFF ACH [00:29:11] PAYMENT FRAUD, WHERE THROUGH A [00:29:14] BUSINESS EMAIL COMPROMISE OF A VENDOR, [00:29:18] THE PORT INCORRECTLY WIRED $572,000 [00:29:23] PLUS INTO FRAUDULENT PROSPEROUS [00:29:27] BANK ACCOUNTS OR FRAUDULENT BANK [00:29:29] ACCOUNTS
BOTH SEATTLE PARKS [00:29:33] FOUNDATION AND URBAN LEAGUE WERE [00:29:35] COMPROMISED, AND THAT'S WHERE THE [00:29:38] PAYMENTS WERE SUPPOSED TO GO
BUT AS [00:29:40] WE'LL TALK ABOUT THROUGH THEIR EMAIL [00:29:44] COMPROMISE, THEY GENUINE [00:29:47] EMAIL ADDRESSES FROM THEIR ORGANIZATION [00:29:52] WAS SENT TO THE PORT OF SEATTLE AND [00:30:00] CONVINCED US TO CHANGE BANK ACCOUNT [00:30:02] INFORMATION TO THE FRAUDSTERS BANK [00:30:05] ACCOUNT
SO THE AUDIT WAS TO IDENTIFY [00:30:08] THERE'S TWO PARTS OF THIS
WHAT BROKE [00:30:10] DOWN AT THE PORT OF SEATTLE THAT ALLOWED [00:30:12] THIS TO HAPPEN? BECAUSE WE SHOULD HAVE [00:30:14] CONTROLS THAT CATCH THIS AND OUR [00:30:16] CONTROLS FAILED
MULTIPLE LAYERS OF [00:30:18] CONTROLS FAILED TO THE POINT WHERE THE [00:30:21] MONEY WAS WIRED OUT
SO WHAT DID WE DO [00:30:24] WRONG? THAT WAS THE GIST OF THE AUDIT [00:30:27] THAT WE COULD IMPROVE TO PREVENT THIS [00:30:29] FROM HAPPENING AGAIN
AND THEN THE [00:30:31] CRIMINAL ASPECT, ALTHOUGH IT WAS HANDED [00:30:33] OFF TO THE PORT POOR POLICE, WHO HAVE [00:30:36] SUBSEQUENTLY HANDED IT OFF TO THE NSA
[00:30:39] AND NSA HAS LUMPED ALL THESE CASES [00:30:42] TOGETHER AND LOOKING AT THEM [00:30:43] COMPREHENSIVELY
NOW THE MONEY MOVES [00:30:47] QUICKLY
THEY'RE SOMEWHAT ORGANIZED, [00:30:51] AND WE'LL SEE [00:30:55] WHAT HAPPENS WITH THAT REPORT BACK IN [00:30:58] TIME
NEXT SLIDE, PLEASE
[00:31:03] SO AS AN OVERVIEW, THERE WAS A [00:31:06] COORDINATOR AT SEATTLE PARKS WHOSE EMAIL [00:31:08] WAS COMPROMISED AND THEN ESSENTIALLY A [00:31:12] FRAUDSTER MIMICKING HER SENT AN EMAIL [00:31:15] TO THE PORT ASKING FOR BANK ACCOUNT [00:31:17] INFORMATION TO BE CHANGED
AND THEN [00:31:20] FRAUDSTER ALSO COVID CREATED A FAKE [00:31:23] DOMAIN
WELL, IT'S A REAL DOMAIN NAME, Page 11 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:31:25] BUT SEATTLEPRACTICESFOUNDATION.ORG, [00:31:29] THEY CHANGED THE SWAP THE R AND THE A [00:31:33] AND MIMICKED THE DIRECTOR [00:31:36] OF SEATTLE PARKS, AND THEY SENT THE [00:31:39] EMAIL OVER
AND THEN THEY [00:31:42] DID SOMETHING VERY SIMILAR FOR URBAN [00:31:44] LEAGUE, WHERE AN AP SPECIALIST'S EMAIL [00:31:47] WAS COMPROMISED
AND ON URBAN LEAGUE, [00:31:51] THEY CHANGED THE L TO AN I ON SPOOFED [00:31:54] ON DOMAIN NAMES THAT WERE FRAUDULENTLY [00:31:58] CREATED TO MAKE IT LOOK LIKE THEY WERE [00:32:01] LEGITIMATE
AND AT THE SAME TIME, I [00:32:03] THINK PART OF THE REASON THE FRAUDSTERS [00:32:06] DO THIS IS IN CASE FELICIA OR LATONIA, [00:32:10] THE PEOPLE WHOSE EMAILS HAVE BEEN [00:32:12] COMPROMISED BLOCK THOSE OR [00:32:15] CATCH ON TO IT OR CHANGE THEIR PASSWORD
[00:32:19] THEY CAN STILL AT THAT POINT, [00:32:20] POTENTIALLY OPERATE UNDER THESE [00:32:23] FRAUDULENT DOMAIN NAME, THE SPOOFY [00:32:25] DOMAIN NAYS AND MAYBE [00:32:28] CONTINUE YOUR DIALOGUE
THE CONVERSATION [00:32:31] GET YOU TO CHANGE BANK ACCOUNT [00:32:33] INFORMATION OR WHATEVER THEY'RE TRYING [00:32:35] TO ACCOMPLISH
OF COURSE, A LOT OF MONEY [00:32:38] WAS WIRED OUT BECAUSE OF THAT
NEXT [00:32:41] SLIDE, PLEASE
[00:32:45] SO THIS IS A SLIDE FROM INTERPOL
THIS [00:32:47] IS HAPPENING GLOBALLY AND QUITE [00:32:51] THROUGHOUT THE US, AND IT'S IMPORTANT TO [00:32:56] DEFEND AGAINST IT HACKING
ITEM NUMBER [00:32:59] ONE
AND THE EMAIL IS COMPROMISED [00:33:01] THROUGH MALWARE, EMPLOYEE INTRUSION OR [00:33:05] BUSINESS EMAIL COMPROMISE
IN THIS CASE, [00:33:07] SOMEHOW THEY GOT ACCESS TO SOMEONE'S [00:33:09] EMAIL AT A VENDOR ORGANIZATION AND [00:33:13] THEN THE SOCIAL ENGINEERING FRAUD
ITEM [00:33:15] NUMBER TWO, WE AS THE VICTIMS WHO AYE [00:33:19] MANIPULATED INTO PROVIDING OR CHANGING [00:33:21] BANK ACCOUNT INFORMATION AND PROVIDING [00:33:23] FUNDS
AND THREE, WHICH IS PROBABLY [00:33:26] HAPPENING RIGHT NOW, HAS ALREADY [00:33:27] HAPPENED
DES MOINES LAUNDERING AND [00:33:29] TRANSFERS QUICKLY INVOLVED IN [00:33:32] FOREIGN BANKS AND INSTITUTIONS
AND THAT [00:33:35] THIRD PART IS THE NSA IS TO GO SEE IF [00:33:37] THEY CAN GET THE MONEY BACK AND WHAT [00:33:39] THEY CAN DO WITH THESE ORGANIZATIONS AND [00:33:41] HOW THEY CAN PREVENT THIS STUFF FROM [00:33:44] HAPPENING
BUT THE FIRST LINE OF DEFENSE [00:33:48] IS US PROTECTING OUR SYSTEMS, NOT HAVING [00:33:52] GOOD CONTROLS AT THE FRONT END, [00:33:55] PROTECTING OUR EMAIL, AND NOT LETTING IT [00:33:58] HAPPEN TO THE PORT OR OUR VENDORS
SO [00:34:02] THIS IS A CAMPAIGN THAT'S BEEN RUNNING [00:34:05] THAT'S BEING RUN BY INTERPOL AND BRUCE [00:34:08] CLAUS
I'LL TALK A LITTLE BIT ABOUT IT [00:34:09] LATER
NEXT SLIDE, PLEASE
[00:34:14] SO I'M GOING TO FRAME THIS UP FOR DAN [00:34:17] AND HAND IT OVER TO HIM TO TALK ABOUT [00:34:19] THE FIRST ISSUE
BUT IN [00:34:23] A NUTSHELL, [00:34:29] AT THE POINT OF THE AUDIT OR THE FRAUD, Page 12 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:34:32] WE HAD 58 USERS OF PEOPLESOFT [00:34:36] THAT COULD MODIFY ADD BANKING [00:34:39] INFORMATION, VENDOR INFORMATION
AND WE [00:34:42] THINK THAT WAS MAYBE A LITTLE TOO MANY
[00:34:46] THEY ALSO DIDN'T VALIDATE THE [00:34:48] INFORMATION WHEN THEY PUT IT IN
A LOT [00:34:50] OF TIMES, PHONE NUMBERS WORN IN
[00:34:54] WHEN WE LOOKED AT DATA LAST YEAR, WE SAW [00:34:57] EMAIL ADDRESSES, VENDOR CONTACT NAMES [00:35:00] WEREN'T IN, PHONE NUMBERS WEREN'T IN [00:35:02] WHICH ALL OF THIS DATA AFTER THEY ENTER [00:35:05] IT OR PUT IN THE REQUEST, THEY TYPE IT [00:35:07] INTO THE SYSTEM
IT THEN MOVES OVER TO [00:35:10] AFR'S, CORE SERVICES TEAM AND ONE OF THE [00:35:13] INDIVIDUALS, ONE OF THE THREE [00:35:14] INDIVIDUALS THERE HAS TO IMPROVE THESE
[00:35:18] AND IF IT'S APPROVED, THEN IT'S LIVE IN [00:35:20] PEOPLESOFT
IF IT'S DENIED, THE USERS [00:35:23] NOTIFIED OF THE DENIAL AND PROCESS MOVES [00:35:26] FORWARD
NOW, AS I MENTIONED, AT THE [00:35:29] FRONT END, THE 58 USERS WEREN'T [00:35:33] COMPREHENSIVE
AND PUTTING DATA IN ON [00:35:37] APPROVING VENDOR CHANGES
THERE WERE [00:35:39] SOME GAPS THERE AS WELL, AND THAT FAILED [00:35:42] BOTH TIMES
AND THERE WERE GAPS BECAUSE [00:35:48] OF FRAUDULENT REQUESTS WERE APPROVED
[00:35:51] THEY SHOULDN'T HAVE PUT IT IN THE FIRST [00:35:53] PLACE AND CAUGHT AT THE FRONT END, BUT [00:35:55] THEY GOT THROUGH THE PROCESS
THE KEY [00:35:57] CONTROL THAT FAILED WAS THE APPROVAL OF [00:36:00] THE NEW CHANGES, AND THEY WENT LIVE IN [00:36:03] PEOPLESOFT
AND PAYMENTS JUST CONTINUED [00:36:07] TO GO UP
NEXT SLIDE, PLEASE
AND I'M [00:36:09] GOING TO INTRODUCE DAN CHASE, OUR [00:36:12] MANAGER OF OPERATIONAL AUDIT
DAN, [00:36:15] I'LL TALK YOU THROUGH THE NEXT TWO [00:36:17] ISSUES
YEAH, THANKS, [00:36:20] GLENN
SO GOOD AFTERNOON
LIKE GLENN [00:36:24] SAID, I'LL GIVE AN OVERVIEW OF ISSUES [00:36:25] ONE AND TWO, AND THEN I'LL TURN IT BACK [00:36:28] TO GLENN
YOU'RE GOING TO GO OVER THREE [00:36:29] AND FOUR, I THINK, AND THEN BRUCE WILL [00:36:31] CLOSE IT OUT WITH THE FINAL ISSUE
AND I [00:36:35] THINK HOW WE'RE GOING TO DO THIS IS [00:36:36] WE'RE GOING TO RUN THROUGH THE ISSUES IN [00:36:39] TOTALITY, AND THEN AT THAT POINT, WE'LL [00:36:43] LET RUDY AND OTHERS PROVIDE COMMENTS
[00:36:46] DO YOU STILL WANT TO DO IT THAT WAY, [00:36:47] GLENN? OKAY, [00:36:51] SO THE FIRST ISSUE IS REALLY WHAT I [00:36:54] CONSIDER THE MOST IMPORTANT
AND AS [00:36:58] GLENN DISCUSSED IN A PRIOR SLIDE, [00:37:01] WHEN CHANGES ARE MADE TO SUPPLIER [00:37:04] INFORMATION AND WHEN I SAY SUPPLIERS, [00:37:06] I'M TALKING ABOUT IT'S ANOTHER TERM FOR [00:37:08] A VENDOR, A THIRD PARTY VENDOR
SO WHEN [00:37:11] THESE CHANGES ARE ENTERED INTO [00:37:12] PEOPLESOFT
IT THEN GOES TO A DIFFERENT [00:37:15] GROUP WHO REVIEWS THAT INFORMATION AND [00:37:19] THEN EITHER APPROVES OR DENIES THAT [00:37:23] CHANGE
AND IT'S ONLY [00:37:26] AFTER THE APPROVAL THAT THE SUPPLIER [00:37:30] WITH THIS NEW INFORMATION CAN BE USED
Page 13 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:37:31] RIGHT
AND THE WAY IT'S DESIGNED, [00:37:35] IT ESTABLISHES A STRONG SEGREGATION OF [00:37:38] DUTIES BECAUSE THE PERSON THAT'S [00:37:40] REQUESTING THE CHANGES AND ENTERS THEM [00:37:42] INTO THE SYSTEM CAN THEN NOT APPROVE [00:37:46] THOSE CHANGES
IT HAS TO GO TO A [00:37:47] SEPARATE PERSON WHO THEN APPROVES IT
[00:37:50] WHAT HAPPENED IN THE FRAUD INSTANCES IS [00:37:55] THAT THE BANK ACCOUNT WAS CHANGED [00:37:58] UNKNOWINGLY, THAT THE REQUEST WAS MADE [00:38:00] FROM THE FRAUDSTER
AND WHAT WAS [00:38:04] SUPPOSED TO OCCUR IS THE PERSON WHO THEN [00:38:07] APPROVED THOSE REQUESTS NEEDED [00:38:11] TO CALL THE SUPPLIER TO VALIDATE [00:38:15] THE AUTHENTICITY OF THE REQUEST
AND [00:38:17] WHEN THAT DIDN'T HAPPEN, THAT'S WHAT [00:38:20] ALLOWED THE PAYMENTS TO BE MADE TO THE [00:38:22] FRAUDSTER AND NOT TO THE SUPPLIER
[00:38:26] THERE'S OVERLAP, I THINK YOU'LL SEE, [00:38:29] WITH ALL THESE ISSUES WHICH KIND OF [00:38:31] LEADS INTO THE SECOND ISSUE THAT WE [00:38:34] HAVE, AND IT REALLY TALKS ABOUT THE [00:38:38] CRITICAL APPROVAL FUNCTION
IS THAT [00:38:41] REALLY PLACED AT THE APPROPRIATE LEVEL? [00:38:46] DO THOSE PEOPLE THAT ARE DOING THOSE [00:38:48] APPROVALS, DO THEY HAVE THE NECESSARY [00:38:50] KNOWLEDGE, SKILL AND UNDERSTANDING OF [00:38:53] HOW IMPORTANT THAT VALIDATION PROCESS [00:38:55] IS? [00:38:59] WE'VE MADE SOME RECOMMENDATIONS THAT [00:39:04] KIND OF FLOW FROM OUR OBSERVATIONS
[00:39:07] NUMBER ONE, TO ESTABLISH AN OVERSIGHT [00:39:10] FUNCTION TO MAKE SURE THAT THE APPROVALS [00:39:12] ARE BEING DONE
DAN, YOU NEED TO MOVE TO [00:39:16] THE NEXT SLIDE
YEAH, I'VE ONLY GOT ONE [00:39:19] SCREEN, SO I'M SORRY
YEAH
NEXT, THIS [00:39:22] IS YOUR RECOMMENDATION
HOPEFULLY YOU'RE [00:39:24] LISTENING TO ME AND NOT FOLLOWING ALONG [00:39:25] ON YOUR SLIDES
[00:39:29] AND THEN THERE'S ALSO SOME POLICY [00:39:32] UPDATES THAT NEED TO BE MADE SO THAT THE [00:39:35] POLICIES ARE CURRENT AND CAN BE [00:39:37] FOLLOWED
THERE'S ALSO [00:39:41] A SOFTWARE SERVICE THAT [00:39:47] IF IT WERE PURCHASED, THAT WOULD HELP [00:39:49] VALIDATE SOME OF THE CHANGES THAT ARE [00:39:51] REQUESTED
SO THESE ARE SOME OF THE [00:39:53] RECOMMENDATIONS THAT WE'VE COME FORWARD [00:39:56] WITH
AND I THINK THE MANAGEMENT [00:39:58] RESPONSES, YOU PROBABLY READ THEM IN THE [00:40:01] PORT, AND I THINK RUDY AND MAYBE OTHERS [00:40:04] WANT TO PROVIDE SOME ADDITIONAL CONTEXT [00:40:05] TO IT
SO, GLENN, I'LL TURN IT BACK TO [00:40:08] YOU SLIDE WISE
[00:40:12] YOU STILL ON THE RECOMMENDATION OF ISSUE [00:40:15] ONE
SO, MICHELLE, NEXT SLIDE, PLEASE
[00:40:19] AND DAN, ARE YOU NOT ABLE TO SEE THE [00:40:21] SLIDES? I CAN, BUT LIKE I SAID, I ONLY [00:40:23] HAVE ONE SCREEN
OKAY
SO YOU'RE AN [00:40:27] ISSUE TWO
NOW, THE RELIANCE PLACED [00:40:31] SO PROCEDURES TO CONFIRM AUTHENTICITY OF [00:40:34] SUPPLIER REQUESTED BANK ACCOUNT CHANGES [00:40:36] NOT PLACED AT THE APPROPRIATE LEVEL
SO Page 14 of 42 This transcript is not an official record
It was generated using speech-to-text technology and may contain inaccuracies or misspellings
Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:40:38] IF YOU WANT TO TALK TO SPEND A MINUTE OR [00:40:40] TWO TALKING ABOUT THIS
YEAH
SO I [00:40:42] ALREADY TOUCHED IT ON THAT
RIGHT
IT'S [00:40:44] REALLY THE [00:40:49] PERSON OF THE INDIVIDUAL THAT'S [00:40:50] PERFORMING THAT APPROVAL FUNCTION
IS [00:40:52] THAT REALLY PLACED AT THE APPROPRIATE [00:40:54] LEVEL, GIVEN HOW IMPORTANT THAT [00:40:57] VALIDATION STEP IS IN THE PROCESS? [00:41:01] SO I DID KIND OF TOUCH ON THAT
THAT'S [00:41:03] THE SPIRIT OF WHAT WE'RE GETTING OUT [00:41:04] THERE
YEAH
DAN SAID VERY IMPORTANT JOB [00:41:09] CRITICAL AND REQUIRES TRAINING AND [00:41:12] AWARENESS
RIGHT
THE INDIVIDUAL THAT [00:41:17] WAS IN THIS ROLE HADN'T ATTENDED [00:41:20] INFORMATION SECURITY [00:41:25] AWARENESS TRAINING IN BOTH 2021
[00:41:28] SO IF YOU HAVE SOMEONE IN THAT CRITICAL [00:41:30] ROLE, YOU HAVE TO TRAIN THEM
THERE'S A [00:41:32] RESPONSIBILITY TO MAKE SURE THAT THEY [00:41:34] HAVE THE TOOLS, THE EQUIPMENT
SO IT'S [00:41:37] NOT JUST THE INDIVIDUAL'S FAULT, IT'S [00:41:39] THE SYSTEM AND THE STRUCTURE THAT PUT [00:41:42] THE PERSON IN THAT POSITION WHERE THEY [00:41:44] WON'T PROVIDE WITH THE RESOURCES TO [00:41:47] ADEQUATELY DO THEIR JOB
NEXT SLIDE, [00:41:50] PLEASE, MICHELLE
[00:41:53] AND THAT'S JUST THE RECOMMENDATION THAT [00:41:56] DAN TALKED ABOUT
SO WOULD THAT JUMP [00:41:59] INTO THE NEXT SLIDE, PLEASE, MICHELLE? [00:42:02] CAN I ASK A QUESTION? YEAH, ABSOLUTELY, [00:42:04] COMMISSIONER, IS THERE A WAY WE CAN [00:42:08] RESTRUCTURE THE POLICY OR THE STANDING [00:42:10] OPERATING PROCEDURE SO THAT THE ONUS IS [00:42:12] NOT ON US TO CONFIRM, BUT ON OUR VENDOR? [00:42:15] LIKE, FOR INSTANCE, I'M THINKING ABOUT, [00:42:18] LET'S SAY, LIKE YOUR CELL PHONE CARRIER
[00:42:20] RIGHT
WHEN I GO AND TRY TO MAKE [00:42:24] A CHANGE TO MY PHONE PLAN, [00:42:27] THERE IS THE MAIN ACCOUNT HOLDER, BUT [00:42:31] ALSO A DELEGATE, AND IT'S ALREADY IN THE [00:42:33] ACCOUNT
SO WHEN I GO TO SPRINTER RISE [00:42:36] AND I SAY, HEY, I WANT TO ADD A LINE, [00:42:39] THEY LOOK AND SEE WHETHER OR NOT THAT [00:42:41] PERSON IS ON A LIST
[00:42:44] RIGHT
IT SOUNDS LIKE WHAT THIS POLICY [00:42:47] IS DOING IS PUTTING ON THE ONUS, ON OUR [00:42:49] STAFF TO GO INVESTIGATE WHETHER OR NOT [00:42:51] THIS PERSON IS THE [00:42:55] APPROPRIATE PERSON TO MAKE THE CHANGES, [00:42:56] OR IS IT THE SAME THING STARTS OFF [00:43:00] WITH AND IT TIES INTO THIS ISSUE? WELL, [00:43:02] THAT WE'RE GOING TO TALK ABOUT IT'S [00:43:03] GETTING THE DATA CORRECTLY IN THE FIRST [00:43:05] PLACE
SO JUST LIKE YOUR CELL PHONE [00:43:07] CARRIER, WHEN YOU PUT THE DATA IN FOR, [00:43:10] SAY, SEATTLE PARKS, YOU SAY JUST THE [00:43:15] PEOPLE THAT ARE AUTHORIZED TO MAKE [00:43:16] CHANGES ARE THESE TWO INDIVIDUALS OR [00:43:20] THIS INDIVIDUAL
SO IT'S PUTTING THE [00:43:21] DATA IN THE FIRST PLACE
AS YOU [00:43:24] MENTIONED, AS I TALKED ABOUT, WE WEREN'T [00:43:27] DOING THAT
WE'RE REQUIRED TO
AND THEN Page 15 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:43:30] THE BACK END TEAM IS SUPPOSED TO GO TO [00:43:32] THAT TO SAY, OKAY, ONLY MICHELLE CAN [00:43:36] MAKE CHANGES
AND THIS ISN'T MICHELLE
[00:43:41] THIS IS MICHELLE'S CONTACT INFORMATION
[00:43:43] SO WHEN YOU LEAVE, WHEN YOU DON'T HAVE [00:43:46] THAT DATA IN AT THE FRONT END, THE BACK [00:43:50] END CAN'T DO ANYTHING WITH IT
YES
[00:43:52] THIS ISSUE SAID THERE WERE TOO MANY [00:43:54] EMPLOYEES AND THEY WEREN'T PUTTING THE [00:43:56] DATA IN JUST LIKE YOU TALKED [00:44:00] ABOUT
SO THEY NEED TO DO THAT
TOO MANY [00:44:03] EMPLOYEES PUTTING INCORRECT DATA
AND [00:44:06] THEN LIKE YOU MENTIONED, COMMISSIONER, [00:44:08] SHOW POLICY DOES REQUIRE THAT [00:44:12] THE PERSON THAT'S VERIFYING LOOK AT THAT [00:44:15] DATA, THE APPROVED PEOPLE WHO'S APPROVED [00:44:18] LOOK AT THE PHONE NUMBER AND ALL OF THAT [00:44:21] INFORMATION
BUT IF THAT INFORMATION [00:44:22] ISN'T PUT IN, THEN THE BACK END PEOPLE, [00:44:24] AYE, FLYING BLIND, OR IT MAKES IT A LOT [00:44:26] MORE DIFFICULT FOR THEM
I BELIEVE [00:44:29] THAT'S BEING DONE
AND RUDY WILL TALK [00:44:31] ABOUT THAT IN AYE
RESPONSE
THESE WERE [00:44:34] GAPS THAT THE AUDIT IDENTIFIED AND [00:44:38] HIGHLIGHTED
SO WAY TOO MANY PEOPLE
[00:44:41] AND THAT'S A BIG ISSUE
COMMISSIONER, [00:44:42] MOHAMED, [00:44:47] I NOTICED THAT YOU MENTIONED SEATTLE [00:44:49] PARKS EARLIER, AND THERE SEEMS [00:44:53] TO BE AN INCREASE OF THE PORT OF FRAUD [00:44:56] HAPPENING ACROSS THE BOARD WITH A LOT OF [00:44:58] DIFFERENT GOVERNMENT AGENCIES
HAVE WE [00:45:02] SEEN A SIMILAR ATTACK LIKE THIS IN OTHER [00:45:06] AGENCIES? AND HOW ARE WE COMMUNICATING [00:45:08] WITH THEM? HOW ARE WE LIKE, [00:45:09] COLLABORATING AND ENSURING WE HAVE [00:45:11] STRONG TOOLS IN PLACE? SO THE CITY OF [00:45:14] SEATTLE HAD ABOUT 805,000 [00:45:19] STOLEN FROM THEM IN THE SAME MANNER [00:45:21] ABOUT A YEAR AND A HALF, TWO YEAR AND A [00:45:23] HALF AGO, AND THEY COMMUNICATED TO US, [00:45:26] AND IT WAS IN EVERY NEWSPAPER, AND IT'S [00:45:29] WIDELY AVAILABLE
BUT THE ONUSES ON US [00:45:32] TO ADDRESS OUR WEAKNESSES AND OUR GAPS
[00:45:35] RIGHT
WHEN THOSE COME ACROSS, JUST [00:45:38] GETTING THE DATA AND SHARING IT IS [00:45:40] IMPORTANT
BUT YOU NEED TO ALSO TAKE IT [00:45:42] TO THE NEXT STEP AND LOOK IN HOUSE AND [00:45:44] SAY, WHAT ARE WE DOING WRONG? AND I [00:45:47] THINK WE HAD A LOT OF GAPS THAT WHILST [00:45:51] AWARE, OBVIOUSLY, [00:45:56] WE SHOULD HAVE DONE BETTER
[00:45:59] THERE'S ALSO COMMUNICATION, LIKE I [00:46:02] MENTIONED, I PUT THAT SLIDE UP FROM [00:46:04] INTERPOL WHERE THEY HAVE THIS HUGE [00:46:07] CAMPAIGN
BE CAREFUL WHERE [00:46:11] THEY TALK ABOUT THESE
AND I SEE RON [00:46:15] JIMISON'S HAND IN
RON, DO YOU WANT TO [00:46:18] JUMP IN AND SPEAK FOR A SECOND? [00:46:23] YEAH
I'M RON JAMESON
I'M THE CHIEF [00:46:26] INFORMATION SECURITY OFFICER FOR THE [00:46:28] PORT HERE, AND I JUST WANTED TO QUICKLY [00:46:29] INTERJECT THAT WE ARE ASSOCIATED WITH Page 16 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:46:32] MANY COMMUNITIES OF PRACTICES, [00:46:34] ESPECIALLY IN A LOCAL AREA
SO WE HAVE [00:46:36] GOOD VISIBILITY OF WHAT'S TAKING PLACE
[00:46:38] AND THE ANSWER TO YOUR QUESTION, [00:46:40] COMMISSIONER, IS YES, WE ARE SEEING THIS [00:46:42] TYPE OF OCCURRENCE IN OTHER TYPES OF [00:46:44] INDUSTRIES AND OTHER TYPE OF [00:46:45] ORGANIZATIONS, NOT JUST THROUGHOUT THE [00:46:47] PORT, AND ESPECIALLY WITH THE RUSSIAN [00:46:49] UKRAINIAN PRICES TAKING PLACE
THERE'S [00:46:51] BEEN AN UPTICK IN THAT AREA
SO WE ARE [00:46:53] BEING EXTREMELY VIGILANT IN HOW WE
AYE [00:46:55] APPROACHING THAT, ESPECIALLY WITH THE [00:46:57] INFORMATION THAT WE'RE RECEIVING FROM [00:46:58] OUR FEDERAL ORGANIZATIONS
SO I HOPE [00:47:00] THAT GIVES YOU A LITTLE BIT MORE INSIGHT [00:47:01] INTO HOW WE'RE APPROACHING THIS
[00:47:04] YEAH
THANK YOU BOTH FOR THAT ANSWER
[00:47:07] AND OUR PRIORITY IS TO ENSURE THAT WE [00:47:10] HAVE STRONG CHANNELS IN PLACE TO DETER [00:47:13] AND DISRUPT ANY OF THOSE TYPES OF FRAUDS [00:47:16] AND SCAMS SO THE INFORMATION YOU AYE [00:47:18] PROVIDING IS HELPFUL
[00:47:22] NEXT SLIDE, PLEASE
MICHELLE, [00:47:28] THE COMMISSIONERS, AGAIN, [00:47:32] SOME OF THESE THINGS HAVE ALREADY BEEN [00:47:33] DONE
MANY OF THEM, NOT ALL [00:47:37] OF THEM HAVE BEEN ADDRESSED AT THIS [00:47:38] POINT
SO WE DO HAVE BETTER CONTROLS IN [00:47:40] PLACE
THIS WOULDN'T OCCUR RIGHT NOW, [00:47:43] BUT I JUST WANT TO HIGHLIGHT WHAT WE [00:47:46] WERE RECOMMENDING CLEARLY REDUCED THE [00:47:49] NUMBER OF INDIVIDUALS
EVERY POINT THAT [00:47:52] YOU HAVE IS A WEAKNESS THAT'S [00:47:55] UNNECESSARY
AND ALSO CERTAIN [00:47:59] FIELDS NEED TO BE REQUIRED OR BY POLICY, [00:48:02] PREFERABLY SYSTEM CONTROLS SUCH AS PHONE [00:48:05] NUMBERS OR INFORMATION
SO, [00:48:07] COMMISSIONER CHO, AS YOU MENTIONED, SO [00:48:10] IT'S PUT IN CORRECTLY IN THE FRONT END, [00:48:13] LIKE CELL PHONE COMPANIES
NEXT SLIDE, [00:48:16] PLEASE
AND WITH THIS, I'M GOING TO HAND [00:48:18] IT OVER TO BRUCE CLAUS, ALL OUR IT [00:48:20] MANAGER I'VE GOT ONE MORE BEFORE I PUGET [00:48:22] OVER BRUCE DETECTIVE CONTROLS
SO ALSO, [00:48:26] DETECTIVE CONTROLS DIDN'T EXIST AND [00:48:29] NEEDED TO BE CREATED
DETECTIVE CONTROL
[00:48:33] WITHOUT A DETECTIVE CONTROL, YOU ONLY [00:48:35] FIND OUT ABOUT THESE THINGS AFTER THE [00:48:36] FACT
AND WHILE A DETECTIVE CONTROL [00:48:38] WOULDN'T IMMEDIATELY TELL [00:48:43] YOU WHAT THAT FRAUD OCCURRED, [00:48:46] YOU WOULDN'T WAIT SEVERAL MONTHS BEFORE [00:48:48] YOU FOUND OUT IT WOULD OCCUR A LITTLE [00:48:50] FASTER
[00:48:54] SOME EXAMPLES OF A DETECTIVE CONTROL [00:48:59] WOULD BE LIKE YOUR CREDIT CARD COMPANY [00:49:02] OR YOUR BANK
IF YOU MAKE CHANGES, THEY [00:49:03] SEND YOU EITHER AN EMAIL OR A LETTER TO [00:49:07] YOUR HOUSE SAYING, GLENN, YOUR BANK [00:49:10] ACCOUNT HAS CHANGED
IF YOU DIDN'T MAKE [00:49:12] THIS CHANGE, PLEASE CALL THIS NUMBER [00:49:14] IMMEDIATELY
AND PEOPLE WILL TAKE THEIR Page 17 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:49:17] TIME, BUT THEY WILL
IF SOMETHING LOOKS [00:49:20] FISHY, IT'S A GOOD CHANCE THEY'LL CALL [00:49:23] AND YOU'LL CATCH IT A LITTLE BIT [00:49:25] QUICKER
AND IT'S NOT A PREFERRED IT'S A [00:49:28] BACK END CONTROL RATHER THAN THE FRONT [00:49:30] END, BUT IT'S ONE LAYER, ONE ADDITIONAL [00:49:32] LAYER OF PROTECTION
NEXT SLIDE, [00:49:35] PLEASE
MICHELLE, [00:49:39] OUR RECOMMENDATIONS
JUST SOME EXAMPLES [00:49:42] THAT WE PROVIDED SENDING NOTIFICATIONS [00:49:46] TO SUPPLIERS AND THINGS CHANGE
SOME [00:49:49] OTHER AUTOMATED CONTROLS THAT EXIST [00:49:53] THAT CAN BE PUT TOGETHER, WHICH WOULD [00:49:55] NOTIFY YOU SAY, HEY, GLENN, [00:49:58] THERE'S SOMETHING WEIRD HAPPENING
YOU [00:50:00] MIGHT WANT TO TAKE A LOOK AT THIS
IT'S [00:50:02] LIKE AN ELECTRONIC DON'T SKATE THESE [00:50:04] FRAUD CONTROLS THAT ARE OUT THERE
AND [00:50:06] YOU CAN BUILD THIS INTO YOUR DAY TO DAY [00:50:08] WORK
BUT THE MOST SIMPLISTIC ONES ARE [00:50:11] JUST SENDING OUT AN EMAIL OR LETTER TO [00:50:13] THE CLIENT SAYING, I CHANGE YOUR BANK [00:50:16] INFORMATION
AND DO YOU AGREE OR DO YOU [00:50:19] THINK SOMETHING'S WRONG? SO WITH THAT [00:50:23] NOW, I THINK I'M READY TO HAND IT OVER [00:50:24] TO BRUCE
BRUCE, YOU'RE ALL UP
YOU'RE [00:50:27] READY? NEXT SLIDE, PLEASE, MICHELLE AND [00:50:29] BRUCE, YOU'VE GOT THE SLIDE
SO TELL THE [00:50:31] SHOW WHEN
THANK YOU
SO GOOD AFTERNOON, [00:50:34] EVERYBODY
AS GLENN MENTIONED, [00:50:38] FOR THE RECORD, YOU ALREADY DID THAT, [00:50:39] BUT I'LL DO IT AGAIN
SO
AYE, I'M BRUCE [00:50:41] PAUSEL
I'M THE IT AUDIT MANAGER FOR THE [00:50:43] PORT
SO AS GLENN MENTIONED EARLIER, [00:50:46] THIS WHOLE FRAUD IS BASED UPON BUSINESS [00:50:49] EMAIL COMPROMISE, PHISHING EMAILS
AND [00:50:51] SO ONE OF THE BEST THINGS THAT WE CAN DO [00:50:54] TO PROTECT AGAINST THOSE EMAILS IS TO [00:50:56] TRAIN OUR STAFF AND HOW TO RECOGNIZE [00:50:58] THEM AND BE AWARE OF THEM
AND IT'S [00:50:59] ACTUALLY A LOT HARDER THAN IT SOUNDS
[00:51:02] OUR POOR INFORMATION SECURITY DEPARTMENT [00:51:04] HAS DONE A GREAT JOB IN DEVELOPING [00:51:06] ANNUAL REQUIRED TRAINING FOR ALL THE [00:51:08] EMPLOYEES TO TAKE EVERY YEAR THAT TALKS [00:51:10] ABOUT PHISHING AND HELPS TO TRAIN THEM [00:51:12] AND KEEP THEM AWARE
AND SO I THOUGHT IT [00:51:14] WOULD BE HELPFUL TO SHOW YOU A COUPLE OF [00:51:16] EXAMPLES OF THE DOCUMENTS AND EMAILS [00:51:18] THAT CAME ACROSS DURING THIS FRAUD
AND [00:51:21] SO, FOR INSTANCE, THIS IS THE ONE THAT [00:51:22] RELATES TO THE SEATTLE PARKS FOUNDATION
[00:51:24] AND SO IF YOU LOOK AT THIS EMAIL, YOU [00:51:26] CAN SEE ON THE VERY TOP LINE THE [00:51:28] MICHELLE BENETUA, THIS IS THE SPOOF [00:51:30] DOMAIN FOR A QUICK REVIEW
IF YOU'RE NOT [00:51:33] LOOKING CAREFULLY, IT LOOKS LIKE SEATTLE [00:51:35] PARKS FOUNDATION, BUT IT'S NOT
IT'S [00:51:36] SEATTLE PRATT FOUNDATION
AND SO THE [00:51:39] FRAUDSTERS LITERALLY HAD TO GO OUT AND [00:51:41] PURCHASE THAT DOMAIN NAME, THAT FAKE [00:51:42] DOMAIN NAME, IN ORDER TO GET THIS EMAIL [00:51:44] TO WORK
AND SO IF YOU LOOK AT THE REST Page 18 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:51:48] OF IT, THAT'S A HUGE RED FLAG SEEING [00:51:50] THAT INCORRECT DOMAIN NAME
IF YOU [00:51:53] LOOK AT THE REST OF THE EMAIL, IF YOU [00:51:55] LOOK IT OVER, YOU CAN SEE THAT THERE'S [00:51:56] POOR GRAMMAR IN SEVERAL PLACES IN THE [00:51:58] EMAIL
THAT'S ALSO ANOTHER RED FLAG THAT [00:52:00] YOU TYPICALLY SEE IN PHISHING EMAILS UP [00:52:04] THERE IN THE HEADER OF THE CC THAT YOU [00:52:05] SEE THE FELICIA AT SEATTLE PARK
THAT [00:52:08] WAS ACTUALLY THE COMPROMISED EMAIL
[00:52:10] THAT WAS THE EMAIL
THAT WAS THE PERSON [00:52:12] WHOSE EMAIL CREDENTIALS THEY ACTUALLY [00:52:14] GOT
THEY HAD HER PASSWORD AND GOT [00:52:16] ACCESS INTO HER EMAIL, AND THEY [00:52:18] LITERALLY WERE HER
SO THIS [00:52:22] IS ONE EXAMPLE
SO NOW NEXT SLIDE, [00:52:25] PLEASE
SO CAN I JUST IF [00:52:29] YOU DON'T MIND, TWO THINGS
ONE IS [00:52:32] A QUESTION, ANOTHER IS A COMMENT
BUT IS [00:52:35] THE PURPOSE OF CSI THE [00:52:40] COMPROMISED EMAIL FOR THESE PEOPLE [00:52:45] TO ADD A LAYER OF LEGITIMACY OR THE [00:52:48] PERCEPTION OF LEGITIMACY? I DON'T [00:52:50] UNDERSTAND WHY THAT EXACTLY
SO [00:52:52] ACTUALLY, GO BACK A SLIDE, PLEASE
[00:52:54] LET'S LOOK AT THIS
THIS IS [00:52:57] A LITTLE MORE COMPLICATED THAN IT [00:52:58] APPEARS BECAUSE THIS ONE EMAIL THAT YOU [00:52:59] SEE HERE IS ACTUALLY PART OF LIKE A 15 [00:53:02] EMAIL CONVERSATION
AND AT THE VERY [00:53:04] BEGINNING OF THAT EMAIL CONVERSATION, [00:53:06] IT WAS REAL PEOPLE
AT THE BEGINNING OF [00:53:08] THAT CONVERSATION, THERE WAS NO SPOOF [00:53:10] DOMAIN NAME
THE FELICIA THAT YOU SEE [00:53:13] WAS PROBABLY THE REAL FELICIA
AND THEN [00:53:15] SOMEPLACE ALONG THAT CONVERSATION, THE [00:53:17] FRAUDSTERS INSERTED THEMSELVES INTO IT [00:53:20] WAS A FAKE IT
AND AT THAT POINT, WHEN [00:53:22] THEY INSERTED THEMSELVES IN, THEY NEEDED [00:53:24] TO MAKE SURE THAT ANYBODY ELSE THAT WAS [00:53:26] CC FROM SEATTLE PARKS FOUNDATION WEREN'T [00:53:28] THE REAL PEOPLE
RIGHT
THEY SENT THE [00:53:31] EMAIL IN, FELICIA'S INBOX, SO SHE DIDN'T [00:53:33] SEE IT
SO WE DON'T ACTUALLY KNOW WHAT [00:53:35] HAPPENED
BUT IT'S POSSIBLE
AND I KNOW [00:53:38] THIS FROM TALKING TO OUR SECURITY FOLKS [00:53:39] THAT IF YOU GET ACCESS TO SOMEBODY'S [00:53:41] EMAIL SO I CAN GET IN THERE AND THE [00:53:43] FIRST THING I CAN DO IS SET UP RULES IN [00:53:44] YOUR EMAIL SO THAT ALL OF YOUR INCOMING [00:53:46] EMAIL FROM THE PORT OF SEATTLE GETS SENT [00:53:49] OUT TO ME IN ANOTHER ACCOUNT
YOU WILL [00:53:52] NO LONGER SEE INCOMING EMAIL FROM [00:53:54] SEATTLE FROM THE PORT OF SEATTLE IN YOUR [00:53:56] INBOX
BUT I'LL BE ABLE TO SEE IT IN MY [00:53:58] OTHER ACCOUNT AND I'LL BE ABLE TO [00:53:59] RESPOND BACK
SO SOMETHING LIKE THAT [00:54:02] COULD HAVE BEEN SET UP THAT ALLOWED THIS [00:54:03] TO HAPPEN
OKAY
BUT YOU'RE RIGHT
AS [00:54:05] SOON AS YOU SEE ALL THESE OTHER THINGS [00:54:06] LIKE TITLE, PRACTICE, FOUNDATION, IT [00:54:08] THEN LOOKS LEGITIMATE
RIGHT
BECAUSE [00:54:11] YOU'RE SAYING SHE SEES SEEING SOMEBODY
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:54:13] AND ACTUALLY, AS THESE CONVERSATIONS [00:54:14] CONTINUED, THEY CHANGED OVER TO ONLY [00:54:17] BEING FROM FELICIA
BUT THEY WERE C [00:54:19] SEEING MICHELLE
SO IT ALWAYS LOOKED [00:54:21] LIKE SOMEBODY ELSE WAS BEING SUCCEED TO [00:54:23] MAKE IT LOOK LIKE A LEGITIMATE EMAIL [00:54:25] CONVERSATION
FIRST, I HAVE A QUESTION
[00:54:29] I WAS JUST GOING TO ASK A QUESTION ABOUT [00:54:31] THAT
SO HOW COME YOU'RE NOT ABLE TO [00:54:34] IDENTIFY OR KNOW THAT CHANGE [00:54:37] HAPPENED, THAT FELICIA'S INBOX OR [00:54:41] THAT THE [00:54:47] REQUIREMENTS IN HER INBOX? THIS IS A [00:54:50] GOOD QUESTION, BUT THAT'S A QUESTION FOR [00:54:52] SEATTLE PARKS FOUNDATION AND THEIR OWN [00:54:54] INTERNAL SECURITY AND THEIR OWN INTERNAL [00:54:56] PROCESSES
[00:55:02] WELL, THE POLICE DEPARTMENT HAS OUR [00:55:04] POLICE DEPARTMENT HAS TALKED TO THEM [00:55:05] ABOUT THIS AND EVEN OUR SECURITY [00:55:06] DEPARTMENT CONTACTED THEM
INFORMATION [00:55:09] SECURITY CONTACTED THEM AND ACTUALLY CUT [00:55:12] OFF ALL EMAIL ACCESS TO THEM UNTIL THEY [00:55:14] COULD BE ASSURED THAT THEY HAD LOOKED AT [00:55:15] THEIR OWN SYSTEMS AND MADE SURE THAT [00:55:18] THEY HAD CLEANED OUT ALL THIS
[00:55:20] SO THEY DID THAT BACKGROUND WORK
BUT TO [00:55:23] YOUR QUESTION, IF I WERE TO GO INTO YOUR [00:55:25] EMAIL ACCOUNT AND SET UP A RULE THAT [00:55:27] SENDS ALL YOUR EMAIL FROM THE PORT OF [00:55:29] SEATTLE OUTBOUND TO SOME OTHER EMAIL [00:55:31] ACCOUNT, YOU WOULD NEVER SEE THIS UNLESS [00:55:33] YOU HAPPEN TO BE A TYPE PERSON THAT GOES [00:55:34] IN AND CHECKS YOUR EMAIL RULES, WHICH [00:55:37] ARE TEN MENU SELECTIONS [00:55:40] AWAY
SO IT WOULD BE HARD FOR ANYONE TO [00:55:42] NOTICE THIS ONCE IT HAD BEEN DONE
SO [00:55:45] COMMISSIONERS, IF I CAN JUMP IN AND THEN [00:55:47] RON, I'LL HAND IT TO YOU BECAUSE I SEE [00:55:49] YOUR HAMDI OUT
SO THIS WAS A [00:55:52] CONVERSATION BETWEEN THE PORT AND [00:55:54] FELICIA TO CHANGE FILES FROM JPEG TO PDF [00:55:58] OR SOMETHING VERY TRADITIONAL WORK
[00:56:01] AND THEN SOMEWHERE IN THE MIDDLE IN THAT [00:56:04] CONVERSATION WITH BRUCE IS TALKING ABOUT [00:56:05] THE FRAUDSTER, JUMPED IN, TOOK OVER [00:56:07] FELICIA'S EMAIL AT THAT POINT AND [00:56:09] STARTED JPEG FILES, STARTED ASKING ABOUT [00:56:13] BANK ACCOUNT INFORMATION CHANGES AND SAY [00:56:15] HEY, AN URGENCY
IF YOU PAY US NOW, [00:56:18] WE'LL GIVE YOU 5% DISCOUNT AND LET'S [00:56:20] CHANGE BANK ACCOUNT INFORMATION
SO [00:56:22] THOSE ARE RED FLAGS THAT RON'S TEAM [00:56:24] TALKS ABOUT AND RON WILL TALK ABOUT [00:56:27] LATER
BUT ALL OF THIS IS ENOUGH [00:56:30] TRAINING AND YOU GOT TO WATCH OUT FOR [00:56:31] THOSE THINGS AND CATCH THOSE
[00:56:35] BEFORE YOU HAND IT OFF, COULD I JUST [00:56:36] MAKE A REAL QUICK COMMENT? YEAH, I COULD [00:56:40] UNDERSTAND WHY POOR GRAMMAR MIGHT BE A [00:56:42] RED FLAG
BUT I ALSO JUST WANT TO FLAG [00:56:45] THAT A LOT OF THESE COMMUNITY GROUPS AND [00:56:47] ORGANIZATIONS ARE RUN BY PEOPLE WHO HAVE Page 20 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:56:49] PROGRAMMER
AND I REALLY DON'T WANT US [00:56:52] TO GO DOWN THE PATH WHERE WE'RE [00:56:54] PROFILING PEOPLE BECAUSE ENGLISH IS [00:56:57] SECOND LANGUAGE
I TOTALLY UNDERSTAND [00:56:58] WHY A SCAMMER MIGHT HAVE BAD ENGLISH, [00:57:03] BUT IT'S KIND OF KILLING ME INSIDE TO [00:57:06] KNOW THAT WHEN WE SEE POOR GRAMMAR, WE [00:57:08] JUST ASSUME THAT WE THINK THAT THIS [00:57:10] MIGHT BE A SCAMMER
RIGHT
I REALLY [00:57:12] DON'T THINK THAT'S A SCIENTIFIC OR [00:57:16] DATA BACKED FILTER
[00:57:21] IT IS
NO, I UNDERSTAND, COMMISSIONER [00:57:23] CHO, BUT YOU HAVE TO LOOK AT A VARIETY [00:57:27] OF THINGS
THESE OCCURRED LIKELY IN [00:57:29] SPAIN AND TURKEY
THAT'S WHERE THESE [00:57:31] CRIME RINGS ARE RUNNING OUT OF
IT'S [00:57:34] JUST ONE
BUT THE DOMAIN NAME
THE SPOOF [00:57:36] DOMAIN NAME
SURE
NO, THAT MAKES SENSE
[00:57:39] THE DOMAIN NAME MAKES SENSE
BUT JUST [00:57:43] LIKE IN THE BODY OF THE PARAGRAPH WHEN [00:57:45] YOU HAVE MISSPELLINGS OR GRAMMATICAL [00:57:47] ERRORS, I JUST DON'T WANT THAT TO BE THE [00:57:49] ONLY REASON WHY WE GO DOWN THE RABBIT [00:57:52] HOLE OF THIS MUST BE FRAUD
WELL, NO, [00:57:54] IT TURNS OUT THIS PERSON, [00:57:59] THEY JUST DON'T SPEAK GREAT ENGLISH
[00:58:01] AND PLUS, IF YOU'VE EVER SEEN MY EMAILS, [00:58:03] YOU WOULD NOTICE THEY'RE FULL OF [00:58:04] MISSPELLINGS, TOO
[00:58:06] BUT I THINK WHEN YOU DO HAVE CONCERNS OR [00:58:10] ANYTHING, IT'S AS SIMPLE AS PICKING UP [00:58:12] THE PHONE AND TALKING TO THE PERSON
IF [00:58:14] YOU'RE WORKING VIA EMAIL, YOU DON'T [00:58:18] KNOW IF YOU'RE WORKING WITH SOMEONE [00:58:20] INTERNATIONALLY OR THOSE RELATIONSHIPS [00:58:23] AND THE ABILITY TO JUST TALK TO A PERSON [00:58:26] ELIMINATES THEM
I KNOW YOU GUYS AREN'T [00:58:29] PROFILING PEOPLE, BUT WE TALK ABOUT [00:58:31] INCREASING THE SHARE OF MINORITY [00:58:32] BUSINESS OWNERS AND SOME OF THOSE [00:58:33] MINORITY BUSINESS AYE DOORS TO BE [00:58:35] PERFECT ENGLISH IS ALL I WANT
RON, DID [00:58:38] YOU STILL HAVE A COMMENT? YEAH, I JUST [00:58:41] WANTED TO SAY THAT A LOT OF THESE [00:58:43] SMALLER ORGANIZATIONS THAT WERE [00:58:45] ASSOCIATED WITH, ESPECIALLY IN THE [00:58:47] PAYMENT PROCESS, THAT THEY'RE NOT OFTEN [00:58:51] ADEQUATELY EQUIPPED IN THE REALM OF [00:58:53] CYBER FOR PROTECTING THEIR SYSTEMS SO [00:58:56] IN THESE PARTICULAR PLACES, WE REALLY [00:58:58] HAD TO COLLABORATE WITH AYE
TO GET THEM [00:59:00] TO EVEN UNDERSTAND WHAT WAS GOING ON
[00:59:02] SO THAT WAS AN EDUCATION THAT WE [00:59:04] PROVIDED ON OUR PART TO THEM SO THAT IN [00:59:07] THE FUTURE WE'D BE BETTER OFF
SO I JUST [00:59:08] WANT TO MAKE IT CLEAR THAT THERE'S SOME [00:59:11] THINGS THAT WE DID WORK COLLABORATIVELY [00:59:13] WITH THESE ORGANIZATIONS TO TRY TO GET [00:59:15] THEM TO UNDERSTAND HOW THIS HAPPENED AND [00:59:17] WHAT THEY COULD DO TO PREVENT THAT IN [00:59:18] THE FUTURE
AND MAYBE THIS IS SOMETHING [00:59:21] WE SHOULD BE ROLLING OUT IN GENERAL TO [00:59:24] OUR VENDORS AND AS PART OF THE Page 21 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[00:59:25] ONBOARDING PROCESS, TO BE A VENDOR TO [00:59:28] THE PORT OF SEATTLE, YOU HAVE TO GO [00:59:29] THROUGH SOME FORM OF TRAINING
I REALIZE [00:59:32] THAT'S, TEDIOUS, FOR US, BUT I THINK IN [00:59:35] THE BROAD STEAM OF THINGS, TRAINING OUR [00:59:37] NEW SUPPLIERS, VENDORS, SOME OF THIS [00:59:40] STUFF WOULD BE, I THINK IN THE LONG RUN, [00:59:42] A HUGE VALUE ADD
I'LL LET RUDY TALK [00:59:45] ABOUT THIS LATER ON, BUT WE DID JUST DO [00:59:47] SOME MESSAGING TO THAT VERY FACT RIGHT [00:59:50] THERE
WE PUT SOME LEARNING INFORMATION [00:59:53] OUT THERE ON THE WEBSITE AND WE'VE GIVEN [00:59:57] OUR VENDORS A LITTLE MORE INSIGHT AS TO [00:59:58] HOW THEY NEED TO BE MORE CAREFUL
BUT [01:00:00] I'LL SAVE THAT FOR RUDY
CAN GO INTO [01:00:02] THAT LATER
BOOTH, [01:00:05] BACK TO YOUR NEXT SLIDE, PLEASE
[01:00:09] SO THIS WAS ACTUALLY FOR THE
LET'S GO [01:00:13] BACK ON SLIDE
THANK YOU
[01:00:16] SO THIS IS ACTUALLY FOR THE URBAN LEAGUE [01:00:18] FRAUD
AND SO THEIR EMAILS WERE ACTUALLY [01:00:21] MUCH TOUGHER TO RECOGNIZE THAT SOMETHING [01:00:23] WAS GOING ON
BUT THEY INCLUDED THIS [01:00:25] DOCUMENT IN WEATHER EMAILS AND IT HAD [01:00:28] SOME OBVIOUS THINGS THAT COULD HAVE BEEN [01:00:30] NOTICED
CITIBANK IS MISSPELLED
IT [01:00:33] DOESN'T HAVE A SPACE BETWEEN CITY AND [01:00:34] BANK
ONCE AGAIN, WE HAVE THAT KIND OF [01:00:36] POOR GRAMMAR IN A BANK LETTER, WHICH IS [01:00:39] AN ODD THING IN A BANK LETTER
THE [01:00:42] SIGNATURE IS LIKE BELOW THE PERSON'S [01:00:44] NAME
THE SIGNATURE DOESN'T REALLY MATCH [01:00:46] THE PERSON'S NAME
SO THERE WERE SOME [01:00:48] THINGS IN HERE THAT COULD HAVE BEEN [01:00:51] FLAGS TO CAUSE SOMEBODY TO THINK ABOUT [01:00:54] IT
[01:00:59] MICHELLE, NEXT SLIDE
SO THE BEST WAY [01:01:02] WE HAVE TO ADDRESS THESE KINDS OF [01:01:07] PHISHING EMAILS IS REALLY TO TRAIN OUR [01:01:09] PEOPLE, BECAUSE WE CAN TRAIN THEM TO [01:01:11] LOOK FOR PHISHING STUFF
WE CAN TRAIN [01:01:13] THEM TO LOOK FOR THE RED FLAGS, WE CAN [01:01:14] TRAIN THEM TO BE AWARE OF IT
AND THE [01:01:17] AWARENESS IS ACTUALLY IMPORTANT
JUST SO [01:01:19] THEY'RE THINKING ABOUT THE FACT IT'S A [01:01:20] POSSIBILITY
SO THAT EMAILS GO ACROSS, [01:01:22] THEY KIND OF OCCASIONALLY THINK ABOUT [01:01:24] IT
SO, LIKE I SAID EARLIER, THE PORT [01:01:27] INFORMATION SECURITY DEPARTMENT HAS [01:01:29] DEVELOPED NICE REQUIRED ANNUAL TRAINING [01:01:31] FOR ALL PORT EMPLOYEES
AND SO THE [01:01:34] TRAINING IS PROVIDED BY AN HR ONLINE [01:01:37] APPLICATION
AND AS PART OF OUR AUDIT, [01:01:39] WE REQUESTED DATA FROM HR FOR WHICH [01:01:41] EMPLOYEES COMPLETED THE REQUIRED [01:01:43] TRAINING IN 2021
AND WHEN WE LOOKED AT [01:01:46] THAT, WE DECIDED THAT THE METHODOLOGY TO [01:01:48] ENSURE THAT VULNERABLE EMPLOYEES RECEIVE [01:01:50] THE REQUIRED TRAINING WASN'T FUNCTIONING [01:01:52] EFFECTIVELY
BECAUSE AS WE LOOKED AT THE [01:01:55] SEVEN PEOPLE WHO HAD THE MOST [01:01:57] INTERACTION WITH THESE EMAILS, ONLY TWO [01:01:59] OF THE SEVEN COMPLETED THEIR TRAINING IN Page 22 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:02:01] 2021
AND WHEN WE LOOKED AT THE PORT [01:02:03] OVERALL, ONLY 51% OF THE EMPLOYEES HAD [01:02:06] COMPLETED THEIR TRAINING
SO CLEARLY WE [01:02:08] HAVE SOME ROOM FOR IMPROVEMENT IN MAKING [01:02:10] SURE THAT EVERYBODY ACTUALLY TAKES THAT [01:02:12] TRAINING
AND I'LL BE THE FIRST TO SAY, [01:02:15] EVEN IF YOU TAKE THE TRAINING, IT'S NO [01:02:16] GUARANTEE THAT YOU'RE ACTUALLY GOING TO [01:02:17] CATCH ANYTHING
IT JUST HELPS IMPROVE [01:02:20] THE CHANCES
THERE'S NO ONE HERE
[01:02:23] SOME OF THESE WERE VERY DIFFICULT TO [01:02:25] CATCH
SO FROM THIS, WE HAVE TWO [01:02:29] RECOMMENDATIONS
NEXT SLIDE, PLEASE
[01:02:33] AND ACTUALLY THE SECOND RECOMMENDATION [01:02:34] IS JUST A RECOMMENDATION TO KIND OF FIX [01:02:36] THE EXISTING PROCESS SO THAT THERE'S [01:02:38] SOME ASSURANCE THAT PEOPLE ACTUALLY [01:02:40] COMPLETE THE TRAINING WHEN THEY'RE [01:02:41] SUPPOSED TO COMPLETE THE TRAINING
THE [01:02:43] FIRST ONE IS MORE FOCUSED UPON THIS [01:02:45] PARTICULAR RISK FOR BUSINESS EMAIL [01:02:47] COMPROMISE
IN THAT MEMBER, I SAID THE [01:02:49] TRAINING IS GOOD FOR MAKING PEOPLE AWARE [01:02:51] OF THE WHOLE PHISHING CONCEPT
SO WE'VE [01:02:54] KIND OF RECOMMEND HERE THAT THE PEOPLE [01:02:56] INVOLVED WITH THIS VENDOR PROCESS [01:02:58] RECEIVE TRAINING LIKE A MINIMUM OF TWICE [01:03:01] A YEAR ON BUSINESS EMAIL COMPROMISE [01:03:03] RISKS TO KIND OF MAKE SURE THAT THEY'RE [01:03:06] MORE AWARE OF IT AND THEY KEEP AWARE OF [01:03:07] IT
IT'S KIND OF BURDENSOME, BUT IT [01:03:10] PROBABLY INCREASES OUR CHANCES OF [01:03:11] CATCHING THIS
AND AS A MATTER OF FACT, [01:03:13] THE AUDIT DOESN'T MENTION
BUT IN A [01:03:15] PERIOD OF TIME BETWEEN THIS, WHEN THIS [01:03:17] HAPPENED AND TODAY, WITH ALL THE [01:03:19] AUDITING AND ALL THE DISCUSSIONS THAT [01:03:21] WENT BACK AND FORTH ABOUT THE PHISHING [01:03:22] EMAILS AND EVERYTHING LIKE THIS, THE [01:03:24] DEPARTMENTS THAT RECEIVED THIS ACTUALLY [01:03:26] RECEIVED A THIRD ATTEMPT TO DEFRAUD US
[01:03:29] IN THIS ATTEMPT, THEY ACTUALLY CAUGHT [01:03:31] THE EMAILS BEFORE THEY GOT TO THAT STAGE [01:03:34] OF SENDING THEM OFF TO FINANCE
SO [01:03:36] CLEARLY, AWARENESS IS A VERY VALUABLE [01:03:38] THING THAT'S OFF TO THE [01:03:41] CTO TEAM
THE CUPBANK
YEAH
[01:03:46] THANK YOU
NEXT SLIDE, PLEASE
[01:03:48] MICHELLE, RUDY, DID YOU OR [01:03:51] SOMEBODY FROM YOUR TEAM WANT TO TALK [01:03:53] ABOUT MANAGEMENT RESPONSES? [01:03:57] YES
THANK YOU SO MUCH
I APPRECIATE THE [01:04:00] OPPORTUNITY
I'M RUDY CALUSA, [01:04:04] ACCOUNTING FINANCIAL REPORTING DIRECTOR, [01:04:06] AND I APPRECIATE THE OPPORTUNITY TO [01:04:07] ADDRESS THE COMMISSION OUT OF THE [01:04:08] COMMITTEE THIS AFTERNOON
THANK YOU, [01:04:10] COMMISSIONER AND COMMISSIONER MOHAMED
[01:04:15] WELCOME TO YOU
COMMISSIONER MOHAMED, [01:04:19] AS I HAVE FOUND OVER MY 21 YEARS [01:04:22] AT THE PORT OF SEATTLE FOR AN [01:04:23] EXCEPTIONAL ORGANIZATION AND WITH VERY [01:04:26] DEDICATED EMPLOYEES
JUST A Page 23 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:04:29] LITTLE BIT MY BACKGROUND
I'VE BEEN AT [01:04:30] THE PORT OF SEATTLE FOR 21 YEARS
PRIOR [01:04:34] TO I'VE HAD A CAREER WITH THE FEDERAL [01:04:37] GOVERNMENT, THE UNITED STATES GOVERNMENT [01:04:39] ACCOUNTABILITY OFFICE, CONDUCTING [01:04:41] CONGRESSIONAL AUDITS FOR LEGAL PUBLIC [01:04:44] LAW COMPLIANCE NATIONWIDE, AS WELL AS [01:04:46] THE DIRECTOR OF THE EXECUTIVE INTERNAL [01:04:48] AUDIT FOR THE EXECUTIVE BRANCH OF KING [01:04:50] COUNTY GOVERNMENT, AS WELL AS CHIEF [01:04:52] ACCOUNTING OFFICER AND NOW WORKING AT [01:04:55] THE PORT OF SEATTLE
AND THE CURRENT [01:04:57] POSITION IS ACCOUNTING FINANCE REPORTING [01:04:59] DIRECTOR
THIS FRAUD EXPERIENCE HAS BEEN [01:05:02] VERY DISHEARTENING TO MANY OF US, AND [01:05:05] IT'S NOTABLY DIFFICULT FOR US IN [01:05:07] ACCOUNTING LEADERSHIP HERE IN TERMS OF [01:05:09] WHAT HAS HAPPENED, BECAUSE WE HOLD [01:05:12] OURSELVES VERY ACCOUNTABLE AND HOLD [01:05:15] OURSELVES TO A VERY HIGH BAR
WITH [01:05:16] REGARD TO THE NOTABLE ACCOMPLISHMENTS [01:05:19] FOR THE SEATTLE PORT OF SEATTLE, THE [01:05:21] PRIORITY THAT WE PLACE ON SOLID PUBLIC [01:05:24] ACCOUNTABILITY, AND JUST A COUPLE OF [01:05:26] THINGS THAT I LIKE TO PUT A ROUNDED [01:05:28] PICTURE ON THIS
WITH REGARD TO THE PORT [01:05:29] OF SEATTLE, WE'RE VERY COMMITTED TO [01:05:32] PUBLIC ACCOUNTABILITY AND WE HAVE [01:05:35] ACCOMPLISHMENTS TO DEMONSTRATE THAT THE [01:05:38] PORT OF SEATTLE WE HAVE EARNED FOR THE [01:05:41] 16 CONSECUTIVE YEARS IN A ROLE NOW [01:05:44] REGARD TO THE AWARD FOR FINANCIAL [01:05:46] REPORTING EXCELLENCE FOR THE GOVERNMENT [01:05:47] FINANCE OFFICE ASSOCIATION OF UNITED [01:05:49] STATES AND CANADA AS THE HIGHEST FORM OF [01:05:51] RECOGNITION FOR GOVERNMENT FINANCIAL [01:05:54] REPORTING, ACCOUNTABILITY AND PUBLIC [01:05:57] TRANSPARENCY
YEAR TO YEAR, WE HAVE [01:05:59] CONSISTENTLY ACHIEVED CLEAN, [01:06:01] UNQUALIFIED AUDIT OPINIONS ON THE PORT'S [01:06:03] FINANCIAL STATEMENTS AS WELL AS MINIMAL [01:06:07] AUDIT OBSERVATIONS AND NO AUDIT [01:06:09] FINDINGS
IT RELATES TO AFR OPERATIONS, [01:06:12] ACCOUNTING FINANCIAL REPORTING WITH [01:06:14] REGARD TO OUR INTERNAL CONTROLS FROM OUR [01:06:16] INDEPENDENT EXTERNAL CERTIFIED PUBLIC [01:06:18] ACCOUNTING FIRM CURRENTLY IN LOS ADAMS, [01:06:21] AND ALSO WITH REGARD TO THE STATE [01:06:22] AUDITOR'S OFFICE ON THEIR PUBLIC [01:06:24] ACCOUNTABILITY OFFICE, AS DEMONSTRATED [01:06:26] JUST PRIOR TO ON THIS PRESENTATION, THE [01:06:28] ACCOUNTING DEPARTMENT REALLY HAS HAD NO [01:06:31] AUDIT FINDINGS AS IT RELATES TO LEGAL [01:06:33] COMPLIANCE AND PUBLIC ACCOUNTABILITY
[01:06:36] AND SO I JUST WANT THE PUBLIC AND THE [01:06:38] COMMISSION TO UNDERSTAND THAT WE HOLD [01:06:41] OUR ACCOUNTABILITY FOR PUBLIC [01:06:42] ACCOUNTABILITY VERY HIGHLY AND WE HAVE [01:06:46] ACCOMPLISHMENTS TO DEMONSTRATE THAT
[01:06:48] IT'S JUST A VERY FEW OF WHAT WE ARE [01:06:51] PROUD OF HERE AT THE PORT OF SEATTLE
[01:06:53] NOW WITH REGARD TO THIS FRAUD [01:06:55] EXPERIENCE, THERE ARE, A COUPLE OF Page 24 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:06:58] ASPECTS OF THIS
ONE IS THERE HAVE BEEN [01:07:00] MANY ATTEMPTS AT THE PORT AT THE PORT OF [01:07:03] SEATTLE OVER THE YEARS WITH REGARD TO [01:07:07] FRAUDULENT CHECKS, BUT WE HAVE SOLID AND [01:07:09] INTERNAL CONTROL PROCESSES IN PLACE OVER [01:07:12] THE DISPERSE FROM THE PUBLIC FUNDS AND [01:07:14] WE'VE CAUGHT EVERY ONE OF THEM, [01:07:16] ESPECIALLY WITH RELATIONS WITH THE BANK [01:07:18] OF POSITIVE PAY
AND WE HAVE NOT LOST A [01:07:20] DOLLAR WITH REGARD TO THESE FRAUDULENT [01:07:22] CHECKS AT THE PORT OF SEATTLE RECENTLY, [01:07:26] ONLINE CRIME TO DIVERT ELECTRONIC [01:07:29] PAYMENTS IS NOW GROWING
IT'S GETTING [01:07:31] MUCH MORE AGGRESSIVE, GETTING MORE [01:07:32] SOPHISTICATED INVOLVED OTHER COUNTRIES
[01:07:35] AND IT'S A VERY ORGANIZED NETWORK [01:07:37] THROUGHOUT
AND WITH REGARD TO VENDOR [01:07:40] ELECTRONIC PAYMENTS ARENA, THIS IS THE [01:07:42] FIRST FOR THE PORT OF SEATTLE THAT WE'VE [01:07:44] BEEN AYE., WE'VE BEEN SPOOFED AND [01:07:48] SPONSORS ARE FRAUDULENTLY DIVERTED, [01:07:49] UNFORTUNATELY
BUT NONETHELESS, WE CAN [01:07:53] AFFIRM THAT THIS IS AN ISOLATED [01:07:55] SITUATION BECAUSE WE WERE ABLE TO GET [01:07:58] RIGHT ON TOP OF THIS TO MITIGATE FURTHER [01:07:59] EXPOSURE
SO WHEN WE BECAME AWARE OF [01:08:02] THIS EXPOSURE, WE TOOK IMMEDIATE STEPS [01:08:05] IN TERMS OF STOP GAP MEASURES TO [01:08:07] MITIGATE FURTHER RISK TO PUBLIC FUNDS
[01:08:11] I PUT A DIRECT ORDER TO HALT ALL [01:08:14] AUTOMATED CLEARINGHOUSE ACH PAYMENTS [01:08:16] PERIOD UNTIL WE EVALUATE HOW WE'RE GOING [01:08:20] TO SAFEGUARD PUBLIC FUNDS [01:08:21] ELECTRONICALLY
AND THE METHOD WE USED [01:08:24] WAS BASICALLY WHEN WE RUN OUR ACH [01:08:26] PAYMENTS WEEKLY, THAT FILE IS COMPARED [01:08:29] TO A COMPREHENSIVE LIST OVER A YEAR AND [01:08:32] THREE MONTHS PAST OF ANY ACH BANK [01:08:36] ACCOUNT ESTABLISHMENTS OR CHANGES, [01:08:39] ANY MATCHES ON PENDING ACH PAYMENTS
[01:08:42] EACH WEEKLY WE PICK UP THE PHONE AND WE [01:08:44] CALL THE SUPPLIER, THE VENDOR, THE [01:08:46] CONTRACTOR
WE ARE IN A VOLATILE [01:08:49] SITUATION
WE WANT TO CONFIRM BEFORE WE [01:08:52] RELEASE ELECTRONIC PAYMENT TO YOU THAT [01:08:54] YOU DID IN FACT REQUEST A CHANGE TO YOUR [01:08:57] ACH BANK PAY TO ACCOUNT ON THIS DATE AND [01:09:01] WE CONTACT THE SUPPLIER DIRECTLY
WE [01:09:04] DON'T HAVE THE INFORMATION TO THE [01:09:06] SUPPLIER DATA FILE
WE CONTACT THE [01:09:08] CENTRAL PROCUREMENT OFFICE, THE BUYER, [01:09:10] AND THEY PROVIDE US WITH THE RELIABLE [01:09:12] INFORMATION BECAUSE THAT'S WHERE THE [01:09:13] INFORMATION SHOULD COME FROM
ALSO, [01:09:17] ANY INTERNAL CONTROL SITUATION DOES [01:09:22] NOT EVER PROVIDE ABSOLUTE ASSURANCE OR [01:09:25] PREVENTION OF MISAPPROPRIATION OF PUBLIC [01:09:27] FUNDS OR FRAUD
IT PROVIDES A REASONABLE [01:09:30] ASSURANCE
ONE CHALLENGE HERE IS THE [01:09:33] HUMAN ELEMENT
WE ALL MAKE ERRORS
[01:09:36] THERE ARE SOLID POLICIES AND PROCEDURES [01:09:38] IN PLACE AS IT WAS IN THIS SITUATION
[01:09:41] BUT IT WAS A HUMAN ERROR THAT LED TO Page 25 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:09:43] THIS
AND FOR US TO BE ABLE TO DECIPHER [01:09:45] PDF AND JPEG FILES AND THE WAY EMAILS [01:09:49] ARE WRITTEN AND IT'S A CHALLENGE AS WELL [01:09:52] AS THEN THERE'S THE HUMAN ERROR ELEMENT [01:09:55] THERE
AND THAT'S EXACTLY WHAT HAPPENED [01:09:57] HERE
WE DO HAVE CONTROLS IN PLACE THAT [01:10:00] HAVE HELD US IN A SAFE ENVIRONMENT UP TO [01:10:02] THIS POINT
AND SO I JUST WANTED TO [01:10:05] EMPHASIZE WITH REGARD TO THE WORK THAT [01:10:08] WE'VE DONE IS WE ALSO NOW [01:10:12] REQUIRE TWO SEPARATE CALLS TO MITIGATE [01:10:15] THE RISK OF HUMAN ERROR
WE DON'T RELY [01:10:17] ON ONE INDIVIDUAL AND THE TWO CALLS ARE [01:10:20] MADE FROM SEPARATE PARTS OF OUR [01:10:22] OPERATIONS
WE PICK UP THE PHONE, IT CAN [01:10:25] BECOME A USELESS SUPPLIER, BUT IT [01:10:27] PROTECTS PUBLIC FUNDS AND IT MITIGATES [01:10:28] THE RISK EXPOSURE RELATED TO HUMAN [01:10:30] ERROR
AND THAT'S WHAT WE'RE DOING
AND [01:10:32] WITH REGARD TO THE COMPARATIVES THAT [01:10:34] WE'VE DONE, THAT I INDICATED WITH [01:10:35] REGARDS TO THE ACH PAYMENTS, IT'S BEEN [01:10:38] DONE FOR THE LAST FOUR MONTHS AND WE [01:10:39] HAVE NOT IDENTIFIED ANY FURTHER [01:10:41] EXPOSURES WITH REGARD TO THIS
AND [01:10:43] THAT'S WHERE I FEEL CONFIDENT
THESE ARE [01:10:45] ISOLATED SITUATIONS AND I FEEL THE [01:10:47] CONTROLS THAT WE HAVE IMPLEMENTED [01:10:49] IMMEDIATELY
AND AS YOU FIND IN THE [01:10:52] AUDIT RESPONSE, WE HAVE COMPLETED MANY [01:10:54] OF THE RECOMMENDATIONS AND THESE [01:10:55] RECOMMENDATIONS HAVE COME FROM OUR STAFF [01:10:57] AS WELL, WHICH PARALLEL AUDIT [01:10:59] RECOMMENDATIONS HAVE BEEN COMPLETED
[01:11:02] BUT GENERALLY THE INTERNET CONTROLS AT [01:11:03] THE PORT OF SEATTLE ARE STRONG AND THEY [01:11:06] HAVE BEEN PROVEN TO BE EFFECTIVE OVER [01:11:07] THE MANY YEARS AND THEY ARE BOTH IN THE [01:11:10] CONTEXT OF SYSTEM CONTROLS
THEY AYE [01:11:12] DETAILED IN THE MANAGEMENT RESPONSE AS [01:11:14] WELL AS PROCESS CONTROLS
WE HAVE A [01:11:17] CLEAR PROCESS WITH REGARDS TO WHAT [01:11:19] EXPECTED
IT'S JUST SOMETIMES THERE'S AN [01:11:21] ERROR MADE IN TERMS OF CONFORMANCE AND [01:11:24] WE END UP WITH AN EXPOSURE HERE
[01:11:27] ALSO, WE TOOK VERY SERIOUSLY WITH REGARD [01:11:29] TO LOOKING AT THIS VERY COMPREHENSIVELY [01:11:31] IMMEDIATELY IN TERMS OF OUR CONTROL [01:11:34] CENTRIC, LEAN PROCESS IMPROVEMENT [01:11:36] INITIATIVE CONTROL CENTRIC
SO WE [01:11:39] LEVERAGED THE EXPERTISE OF THE LEAN [01:11:42] SPECIALIST OF THE OFFICE OF STRATEGIC [01:11:44] INITIATIVES TO FACILITATE A [01:11:46] COMPREHENSIVE REVIEW WITH REGARD TO [01:11:48] MITIGATING FURTHER RISK AND ENHANCING [01:11:51] CONTROLS AND COORDINATING OUR PROCESSES
[01:11:54] AND INVOLVED A DEDICATED INVOLVEMENT BY [01:11:57] MANY PROFESSIONALS FROM THE CENTRAL [01:11:59] PROCUREMENT OFFICE AS WELL AS THE [01:12:01] ACCOUNTING FINANCIAL REPORTING [01:12:02] DEPARTMENT AS WELL
AND THE TEAM HAS [01:12:05] IDENTIFIED MANY IMPROVEMENTS
MANY HAVE [01:12:07] BEEN IMPLEMENTED IMMEDIATELY THUS FAR TO Page 26 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:12:10] TIGHTEN UP THE CONTROLS IN OUR [01:12:11] ENVIRONMENT
[01:12:16] I JUST LIKE TO ADDRESS A COUPLE OF [01:12:18] THINGS THEN
WITH REGARD TO THE [01:12:19] REFERENCE TO 58 EMPLOYEES, I JUST NEED [01:12:23] TO CLARIFY HERE THAT IT'S NOT BROUGHT [01:12:25] ANYBODY AT THE PORT OF SEATTLE CAN DO [01:12:27] THIS STUFF
IN TERMS OF ENTERING THERE'S [01:12:29] MADE REFERENCE TO 58 EMPLOYEES CAN ADD [01:12:33] OR MODIFY SUPPLY INFORMATION NO [01:12:35] EMPLOYEES CAN ADD OR MODIFY
AND PRECISE [01:12:38] THAT THE SECOND PART OF THE EXPLANATION
[01:12:39] TURN AUDIT ONLY WHEN IT'S AFTER IT IS [01:12:43] VETTED AND APPROVED
BUT THE 15 [01:12:44] EMPLOYEES ARE REALLY PREDOMINANTLY IN [01:12:46] THE CENTRAL PREGNANT OFFICE AND THESE [01:12:48] ARE PROFESSIONALS THAT ARE INVOLVED WITH [01:12:50] THE PROCUREMENT AND THE LIGHTING OF THE [01:12:52] CONTRACTS
AND THROUGH THAT PROCESS IS A [01:12:54] RELIABLE PROCESS TO SECURE SUPPLIER [01:12:57] INFORMATION
AND SO WITH REGARD TO THE [01:13:00] SOURCE OF INFORMATION, IT IS [01:13:01] PREDOMINANTLY FROM THE CENTRAL [01:13:04] PROCUREMENT OFFICE BUYERS THAT HAVE THE [01:13:06] DIRECT VENDOR RELATIONS THAT ESTABLISH [01:13:09] THE MORE RELIABLE PROCESS TO OBTAIN [01:13:10] SUPPLIER INFORMATION
WHAT WE'VE DONE [01:13:13] HERE AT PARALLEL INTERNAL AUDIT [01:13:15] RECOMMENDATION IS REQUIRED FIELDS [01:13:18] THERE'S MENTIONED WITH REGARD TO THE [01:13:19] SUPPLIER DATA FILE NOT BEING TOTALLY [01:13:21] COMPLETE
IT'S A REQUIRED FIELD NOW
SO [01:13:24] WHAT WE'VE DONE BASICALLY IS IMPLEMENTED [01:13:25] IN TWO STEPS TO ENSURE THAT IT'S [01:13:27] IMMEDIATE IMPLEMENTATION OF EFFECTIVE [01:13:29] CONTROL
WE BUY BUSINESS PROCESS
WE [01:13:33] RECEIVE A REQUEST TO ESTABLISH OR [01:13:36] MAKE CHANGES TO A SUPPLIER
THE BUSINESS [01:13:39] PROCESS IS IF WE FIND THAT THE [01:13:41] INFORMATION THAT'S REQUIRED IS A [01:13:43] COMPLETE DENIED AND SENT BACK TO [01:13:46] THE REQUESTER PRIMARILY IN THE CENTRAL [01:13:49] PREMIERE OFFICE TO OBTAIN THAT [01:13:51] INFORMATION, WE HAVE SINCE LEVERAGE [01:13:53] TECHNOLOGY TO IMPLEMENT A PROCESS [01:13:57] IN THE SYSTEM THAT'S CALLED REQUIRED [01:13:59] FIELDS AND THAT PARALLELS INTERNAL [01:14:01] ARTIST RECOMMENDATIONS AS WELL
WHEN YOU [01:14:04] SET UP A SUPPLIER, THESE ARE FIELDS YOU [01:14:07] MUST ENTER OR YOU CANNOT GO TO THE NEXT [01:14:09] STEP OF INITIATING A REQUEST TO SET UP [01:14:11] OR MAKE CHANGES TO THE SUPPLIER
[01:14:15] WHAT KEY BENEFIT IT PROVIDES HERE IS [01:14:19] THAT WE ARE ABLE TO ONLY SOURCE ONE [01:14:21] PLACE FOR VENDOR CONTACT PHONE NUMBER, [01:14:23] WHICH IS THE VENDOR DATA FILE AND THAT'S [01:14:27] SUPPORTED IN TERMS OF COMPLETENESS [01:14:29] THROUGH THE REQUIRED DATA FIELDS AND [01:14:31] PRACTICE NOW
AND SO WHEN WE GO [01:14:34] THROUGH THE PROCESS, THROUGH THE [01:14:36] ACCOUNTING DEPARTMENT TO PICK UP THE [01:14:38] PHONE, WE SOURCE THAT INFORMATION IN [01:14:41] TERMS OF THE CONTACT NUMBER AND THE NAME Page 27 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:14:42] AND THE PORT CENTRAL DATA FILE FOR [01:14:45] SUPPLIERS THAT WE HAVE A RELIABLE [01:14:48] PROCESS IN TERMS OF MOVING FORWARD
[01:14:51] AND ONE INTERESTING POINT COMMISSIONER [01:14:55] JOE MENTIONED WITH REGARD TO CAN'T WE [01:14:57] PUT THE ONUS ON THE VENDORS TO THE PORT [01:15:01] INTO ENSURING VALIDITY OF THE [01:15:03] INFORMATION? AND SO WE HAVE BEEN [01:15:06] PROGRESSIVE AND MOVING AND WE WON'T STOP [01:15:08] UNTIL WE TIGHTEN UP CONTROLS
AND WE'RE [01:15:10] FINDING THAT THIS IS EMAIL COMPROMISE
[01:15:12] WHAT HAS BEEN REFERRED TO HERE IS A HIGH [01:15:15] RISK ENVIRONMENT FOR THE PORT OF SEATTLE [01:15:17] OR ANY ENTITY WHEN WE HAVE TO TRAIN [01:15:19] EMPLOYEES TO LOOK FOR PDF, JPEGS, BAD [01:15:21] ENGLISH, AND SO WHAT WE'RE TRYING TO [01:15:25] JUST FIND A WAY TO REDUCE THE AMOUNT OF [01:15:27] COMMUNICATION, IN FACT MITIGATE WITH [01:15:30] VENDORS
AND SO WE'RE LOOKING AT [01:15:33] IMPLEMENTING AND THAT'S THE SUPPORT OF [01:15:35] INFORMATION COMMUNICATION TECHNOLOGY [01:15:36] DEPARTMENT LEVERAGING THE PEOPLE'S [01:15:40] FINANCIAL SYSTEM, THE FRONT END CALLED [01:15:42] VENDOR CONNECT AND WE AYE GOING TO [01:15:44] ESTABLISH A BUSINESS PROCESS THAT THEY [01:15:46] WILL NOT BE COMMUNICATED THROUGH THE [01:15:48] EMAIL, BUT WE WOULD REQUIRE THE VENDOR [01:15:50] TO ENTER INTO VENDOR CONNECT, ENTER [01:15:53] THEIR DATA
THEN WE WOULD ACCESS THE [01:15:56] CONTACT INFORMATION FOR THE VENDOR [01:15:58] SUPPLIER AND THEN WE WOULD THEN CONTACT [01:16:00] THE SUPPLIER VENDOR WITH REGARD TO [01:16:03] VALIDATING AND VETTING THE REQUEST
[01:16:06] MOVING FORWARD, BUT WE'RE MOVING FORWARD [01:16:08] TO REDUCE THE AMOUNT OF EMAIL BECAUSE [01:16:10] THIS IS JUST TOO RIPE FOR FRAUD
WITH [01:16:12] REGARD TO BEING SPOOFED TOO EASY BEING [01:16:15] SPOOKED
NO MATTER HOW WELL YOU'RE [01:16:16] TRAINED, THERE'S THE RISK OF NOT SEEING [01:16:19] WHAT YOU'RE SUPPOSED TO BE SEEING THAT [01:16:21] YOU'RE TRAINED AND IT'S A COMPLEX [01:16:23] EXPECTATION OF EVERYONE
THE OTHER [01:16:26] HOWEVER, I DO RESPECT WITH REGARD TO THE [01:16:29] 58 EMPLOYEES MENTIONED, ALTHOUGH THEY DO [01:16:33] NOT HAVE THE ABILITY TO DIRECTLY MODIFY [01:16:35] OR ADD A CHANGE, THEY HAVE TO GO TO THE [01:16:36] VETTING PROCESS AND THEY ARE [01:16:38] APPROPRIATELY SET WITH REGARDS TO [01:16:40] PROFESSIONALS IN THE CENTRAL PROCUREMENT [01:16:42] OFFICE REGARD TO PROCUREMENT CONTRACTS [01:16:44] ADMINISTRATION LETTING
WHAT WE'RE DONE [01:16:48] THOUGH ALREADY IS WE REMOVED THE ABILITY [01:16:51] FOR ANYONE TO INPUT ACH BANKING [01:16:53] INFORMATION THAT HAS BEEN REDUCED TO A [01:16:56] TEAM WITHIN THE ACCOUNTS PAYABLE [01:16:57] LEADERSHIP TEAM AND THEY WOULD HAVE THE [01:17:00] DIRECT COMMUNICATION WITH THE SUPPLIER [01:17:02] VENDOR CONTRACTOR IN TERMS OF [01:17:04] ESTABLISHING THE ACH BANKING ACCOUNT [01:17:06] INFORMATION IN THE SYSTEM
AND THEY [01:17:09] WOULD ALSO INDEPENDENTLY MAKE THE CALL [01:17:10] THAT'S THE FIRST CALL I MENTIONED WITH [01:17:12] REGARDS TO THE SECOND CALL WOULD BE BY Page 28 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:17:15] THE ACCOUNTING, FINANCE, REPORTING OR [01:17:18] SERVICES TEAM TO VALIDATE AND EITHER [01:17:21] APPROVE OR DENY THE CHANGE AS WELL
SO [01:17:24] WE ARE MAKING PROGRESS WITH REGARD TO [01:17:27] REDUCING EXPOSURE
AND IN FACT, WITH [01:17:30] REGARD TO THIS REDUCTION, NOBODY CAN SEE [01:17:32] THE BANKING ACCOUNT INFORMATION ANYMORE
[01:17:34] WE HAVE CLOSED THAT OUT IN TERMS OF [01:17:36] SUPPLIER DATA FILE, IT'S ONLY [01:17:37] EXCLUSIVELY AVAILABLE TO THE FOUR TO [01:17:40] FIVE TEAM MEMBERS IN THE ACCOUNTING [01:17:42] DEPARTMENT
SO WE'RE PROTECTING SUPPLIER [01:17:44] INFORMATION AS WELL
SO IF YOU COULD [01:17:47] LOOK AT THE VARIOUS RECOMMENDATIONS, [01:17:48] YOU'LL SEE THAT WE HAVE COMPLETED MANY [01:17:50] OF THEM
MANY OF THEM HAVE PARALLELED [01:17:53] WHAT HAS COME UP WITH OUR CONTROL [01:17:57] CENTRIC LEAN PROCESS IMPROVEMENT TEAM
[01:18:00] AND I LIKE TO ALSO MENTION THAT THE PORT [01:18:02] OF SEATTLE IS VERY PROACTIVE WITH REGARD [01:18:06] TO PROTECTING PUBLIC FUNDS
WE'RE NOT [01:18:08] ONLY FOCUSED ON PREVENTATIVE CONTROLS, [01:18:11] BUT WE UNDERSTAND LIFE IS NOT PERFECT [01:18:13] AND WE ARE GOING TO END UP IN SITUATIONS [01:18:15] WHERE THERE ARE POTENTIAL LOSSES AND WE [01:18:17] KEEP THEM TO A MINIMUM
AND I'M GLAD [01:18:18] THIS HAS BEEN KEPT TO A MINIMUM
AND [01:18:21] OVER THE YEARS, WE APPROVED OUR [01:18:23] COMMITMENT TO PUBLIC ACCOUNTABILITY OVER [01:18:25] PUBLIC FUNDS, BUT NEVERTHELESS, THINGS [01:18:28] CAN HAPPEN
SO THE PORT IS VERY [01:18:30] PROACTIVE AND WE HAVE CRIME [01:18:34] INSURANCE IN PLACE, AND ON THESE TWO [01:18:36] INSTANCES, THERE'S A $25,000 [01:18:40] DEDUCTIBLE, BUT IT'S BEING COVERED BY [01:18:42] INSURANCE
SO THERE'S NOT GOING TO BE A [01:18:44] PUBLIC FUNDS LOST BEYOND THE DEDUCTIBLE [01:18:46] ON THIS
THAT'S THE FALLBACK THAT WE'RE [01:18:48] LEVERAGING IN THE PORT OF SEATTLE'S RISK [01:18:50] MANAGEMENT OFFICE IS NOW IN ACTIVE [01:18:53] DISCUSSIONS WITH REGARD TO THE INSURER, [01:18:56] AND WE'RE AT A POINT OF PROVIDING [01:18:57] DOCUMENTATION
SO WE CAN SHOW THAT UP IN [01:18:59] TERMS OF COVERAGE AS WELL AND IN TERMS [01:19:03] OF DETECTIVE CONTROLS, I DEFINITELY [01:19:04] EMBRACE INTERNAL AUDITS RECOMMENDATIONS
[01:19:07] HOW WE CAN MOVE FORWARD
AGAIN, THOUGH, [01:19:09] WE ALL ACKNOWLEDGE THAT PREVENTATIVE [01:19:10] CONTROLS ARE THE BEST AND AVOIDANCE [01:19:12] CONTROLS ARE THE BEST AS WELL, AND [01:19:14] THAT'S WHAT WE'RE FOCUSING ON
BUT [01:19:16] NEVERTHELESS, WE CAN HAVE SECONDARY [01:19:17] AWARENESS THROUGH DETECTIVE CONTROLS
[01:19:19] WE WILL WORK WITH INTERNAL AUDIT TO SEE [01:19:21] WHAT CAN BE REASONABLY PROVIDED
WE CAN [01:19:23] EASILY SHOOT EMAILS TO THE VENDORS, BUT [01:19:25] THE PROBLEM IS SOME MAY NOT READ IT, [01:19:28] SOME MAY NOT RESPOND
WE HAVE THAT [01:19:30] EXPERIENCE WITH THE [01:19:34] VETTING OF THE BANK ACCOUNT AND CHANGES [01:19:38] WITH REGARD TO THAT
WE DON'T ALWAYS GET [01:19:42] RESPONSES BACK FROM SUPPLIERS AS WELL, [01:19:44] AND THAT'S AN INDEPENDENT ISSUED EMAIL, Page 29 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:19:47] BUT NEVERTHELESS, THERE'S MERIT TALKING [01:19:49] ABOUT DETECTIVE CONTROLS, ALTHOUGH WE [01:19:51] ARE PRIMARILY FOCUSED ON PREVENTATIVE [01:19:53] AND AVOIDANCE CONTROLS AS WELL
[01:19:57] COMMISSIONER MOHAMED HAS A QUESTION
[01:19:59] YES, THANK YOU, [01:20:03] FIRST OF ALL, FOR ALL OF THE HELPFUL [01:20:05] INFORMATION THAT YOU'VE PROVIDED THUS [01:20:06] FAR
I JUST HAD A QUICK QUESTION
WHAT [01:20:09] IS THAT DEDUCTIBLE AMOUNT? I KNOW YOU [01:20:11] SAID WE HAVE INSURANCE
THAT'S RIGHT [01:20:13] NOW
YES, COMMISSIONER
IT'S $25,000 [01:20:16] DEDUCTIBLE FOR EACH INCIDENT, SO IT'D [01:20:19] BE A $50,000 EXPOSURE HERE AGAINST [01:20:23] PROBABLY $580,000 EXPOSURE, WHICH THE [01:20:26] NET IS BEING COVERED BY INSURANCE
WHEN [01:20:29] WE BECAME AWARE OF THIS
WE'RE AWARE OF [01:20:31] NEEDING TO LEVERAGE THE INSURANCE [01:20:33] COVERAGE
SO WE HAVE ALREADY ACCRUED [01:20:35] THIS AGAINST THE 2021 BUDGET AND [01:20:37] EXPENSE
AND WHEN WE MAKE PAYMENT AND WE [01:20:41] ARE PROCEEDING AS WELL
IN YOUR INTEREST [01:20:43] TO YOUTH OPPORTUNITY INITIATIVES [01:20:44] PROGRAM, WE AYE VERY SENSITIVE TO THE [01:20:47] CASH FLOW CHALLENGES THAT WE PULL SO WE [01:20:50] DON'T GET THE MONEY TO ORGANIZATIONS [01:20:53] IN OUR COMMUNITY AS TIMELY AS POSSIBLE
[01:20:56] EXECUTIVE DIRECTOR METRUCK AND AFTER [01:20:58] BEING CONSULTED WITH THE PORT POLICE [01:21:01] WITH REGARD TO OUR INVESTIGATION AND [01:21:03] LEGAL, WE FIND IT APPROPRIATE TO RELEASE [01:21:06] PAYMENTS FOR THE FUNDS THAT WERE [01:21:07] UNFORTUNATELY DIVERTED TO THE FRAUD [01:21:09] PAYMENTS
AND WE'RE MOVING TO MAKE [01:21:12] PAYMENT TO URBAN LEAGUE OF METROPOLITAN [01:21:14] SEATTLE, AS WELL AS SEATTLE PARTS [01:21:16] FOUNDATION NEXT WEEK
WE'RE GOING TO DO [01:21:19] IT IN A MORE SAFE WAY, THOUGH
ANYTHING [01:21:20] UNDER INVESTIGATION
I SHUT DOWN THE [01:21:23] ABILITY TO PAY BY ACH UNTIL THE [01:21:26] INVESTIGATION
WHAT WE'RE DOING IS WE'RE [01:21:27] CUTTING CHECKS AND THERE'S GOING TO BE A [01:21:30] DELIVERY OF THE CHECK TO A KNOWN CONTACT [01:21:33] OF EACH OF THE AGENCIES TO THE [01:21:35] REPRESENTATIVE AND ECONOMIC DEVELOPMENT [01:21:38] WITH REGARD TO THE HANDING OF THE CHECK
[01:21:41] AND THAT WILL HAPPEN NEXT WEEK AS WELL [01:21:42] TO PROTECT THE PORT OF SEATTLE
[01:21:48] THAT'S HELPFUL
I HAVE ONE OTHER [01:21:52] QUESTION
I THINK NOW MORE THAN EVER, [01:21:55] WE HAVE TO EXERCISE HEIGHTENED AWARENESS [01:21:59] WITH JUST EVEN JUST THE THREATS THAT WE [01:22:01] ARE SEEING FROM RUSSIA
SO I'M ALSO [01:22:04] WONDERING IF THERE IS AND THIS MIGHT BE [01:22:08] A QUESTION THAT WAS FOR BRUCE
I THINK [01:22:11] EARLIER HE SAID THERE IS YEARLY [01:22:14] TRAINING, THE PHISHING TRAININGS FOR [01:22:16] STAFF MEMBERS
IS THAT CORRECT? [01:22:20] THAT'S CORRECT
BRUCE, YOU WANT TO JUMP [01:22:22] IN AND ANSWER THAT QUESTION? [01:22:25] IT IS FOR ALL PORT EMPLOYEES, NOT [01:22:27] CONTRACTORS, BUT PORT EMPLOYEES
OKAY, [01:22:30] THAT'S GREAT
SO I'M JUST WONDERING, IN Page 30 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:22:32] THIS SORT OF UNPRECEDENTED TIME THAT [01:22:34] WE'RE IN, IF WE ARE CONSIDERING [01:22:39] INCREASING THAT TO A MORE QUARTERLY [01:22:42] BASIS, [01:22:46] ARE WE CONSIDERING ADDING MORE REGULAR [01:22:49] FISHING EXERCISES ACROSS THE PORT [01:22:52] FOR EMPLOYEES? I'M THINKING OF THINGS [01:22:55] LIKE A TEST THAT MAYBE INVOLVES AN EMAIL [01:22:58] THAT GETS SENT TO AN EMPLOYEE THAT MAYBE [01:23:01] RESEMBLES A MALICIOUS ATTEMPT TO [01:23:05] GAIN THAT EMPLOYEES LOG IN AND IF [01:23:09] THEY DO CLICK THE LINK OR SOMETHING [01:23:12] ALONG THOSE LINES AND PROVIDE THEIR [01:23:14] INFORMATION, AND THEN THEY'RE ASSIGNED A [01:23:16] PREVENTATIVE PHISHING TRAINING IN ONE OF [01:23:19] OUR PLATFORMS, BUT DOING THAT MORE SO ON [01:23:21] A QUARTERLY BASIS AND NOTIFYING [01:23:25] THEIR SUPERVISOR OR THEIR MANAGER TO [01:23:29] JUST MAKE SURE THAT WE ARE RECOGNIZING [01:23:32] THAT WE SHOULD BE EXERCISING JUST [01:23:34] HEIGHTENED AWARENESS AND ENSURING THAT [01:23:37] THIS IS ON THE TOP OF OUR EMPLOYEE'S [01:23:40] MIND
WHILE THESE TRAININGS CAN'T [01:23:42] PREVENT FRAUD FROM HAPPENING OR [01:23:45] THESE SORT OF SCAMS FROM HAPPENING, I [01:23:48] THINK WE ARE IN A VERY UNUSUAL TIME [01:23:50] WHERE WE'RE SEEING THIS FRAUD ACROSS [01:23:53] AGENCIES
SO IS THERE SOME CONSIDERATION [01:23:56] TO MOVE THAT TRAINING FROM ONE YEAR TO [01:23:59] MORE GOOD POINTS
I THINK [01:24:02] RON JIMMERSON HAS THE ANSWER FOR YOU
[01:24:05] GO AHEAD, RON
JEFFERSON, INFORMATION [01:24:08] SECURITY HERE AGAIN ON COMMISSION
YES
[01:24:10] WE ACTUALLY HAVE BEEN CONDUCTING [01:24:12] QUARTERLY FISHING EXERCISES SINCE LAST [01:24:15] YEAR
WE ACTUALLY CREATED A BASELINE OF [01:24:19] THE LEVEL OF VULNERABILITY THAT WE FOUND [01:24:21] OUR EMPLOYEES TO BE AT
AND AS OF THIS [01:24:24] YEAR, WE REDUCED THAT BY 15%
[01:24:27] SO THE ACTUAL NUMBER WE WERE UP TO ABOUT [01:24:31] 21% LAST YEAR OF OUR EMPLOYEES [01:24:35] BEING VULNERABLE TO THESE TYPES OF [01:24:36] ATTACKS
WE'VE GONE THROUGH A MASSIVE [01:24:38] AND PRETTY AGGRESSIVE INFORMATION [01:24:41] AWARENESS TRAINING, AND WE BOUGHT MORE [01:24:44] TO THE FOREFRONT
AND WE'RE NOT JUST [01:24:46] PROVIDING TRAINING THROUGH OUR LMS [01:24:47] SYSTEMS, WE'RE DOING IT IN A HOLISTIC [01:24:50] MANNER WHERE WE'RE TRYING TO REALLY [01:24:52] SHAPE THE CULTURE AROUND AN AWARENESS [01:24:55] AND HOW WE'VE DONE THAT, AYE THROUGH [01:24:58] SPECIAL MESSAGING THROUGH OUR EMPLOYEES, [01:25:00] ESPECIALLY WHEN WE RECEIVE INTELLIGENCE [01:25:03] TO HAVE HEIGHTENED AWARENESS AND THINGS [01:25:05] THAT ARE TAKING PLACE AROUND OUR [01:25:07] ORGANIZATION
WE HAVE SEMINARS THAT WE [01:25:11] CONDUCT ON A MONTHLY BASIS, USER [01:25:13] AWARENESS TRAINING
WE'VE GOT A [01:25:16] SHAREPOINT SITE THAT OFFERS A VARIETY OF [01:25:18] RESOURCES AND TOOLS THAT PEOPLE CAN [01:25:20] CONNECT WITH, AND WE ARE PERSONALLY [01:25:22] CONNECTING WITH THOSE THAT WE THINK AYE [01:25:24] VERY INVULNERABLE POSITIONS THAT WE KNOW Page 31 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:25:27] WE NEED TO WORK WITH A LITTLE BIT MORE [01:25:28] AND THINGS LIKE THAT
SO IT'S AN ONGOING [01:25:30] CAMPAIGN TO MAKE SURE THAT OUR FOLKS ARE [01:25:32] STAYING CURRENT AND INDIVIDUAL
AND I'LL [01:25:34] JUST ADD VERY QUICKLY, OUR LEARNING [01:25:36] MANAGEMENT SYSTEM
WE HAVE RECENTLY [01:25:40] SWITCHED VENDORS, SO WE'RE GOING TO BE [01:25:43] PROVIDING SOME TRAINING THAT'S A LITTLE [01:25:44] BIT MORE ROUNDED AROUND USER BEHAVIOR [01:25:47] FROM WHAT WE SEE ON OUR PART AS WELL
[01:25:50] SO SOME OF THE NUMBERS AND THINGS LIKE [01:25:51] THAT THAT FOLKS SHOW UP ON TRAINING [01:25:54] AREN'T ACTUALLY ACCURATE BECAUSE OF THE [01:25:56] WAY OUR LMS SYSTEM WAS UPGRADED LAST [01:25:58] YEAR
SO WE'RE STILL WORKING THE BUGS [01:26:00] OUT OF ALL THAT JUST TO SEE EXACTLY [01:26:02] WHERE WE ARE
BUT WE'VE GOT SOME [01:26:04] MECHANISMS THAT WE'RE PUTTING IN PLACE [01:26:05] TO MAKE SURE THAT WE'RE MONITORING WHO [01:26:07] SAID WHAT KIND OF THING
SO I HOPE THAT [01:26:09] ANSWERS YOUR QUESTION THAT DOES THAT'S [01:26:12] SUPER HELPFUL
AS STEWARDS OF PUBLIC [01:26:16] DOLLARS, I THINK IT'S GREAT FOR THE [01:26:17] PUBLIC TO HEAR THIS AS WELL
THAT AS A [01:26:20] PORT WORK, CONTINUING TO BE TRANSPARENT [01:26:22] AND HAVING THESE CHANNELS IN PLACE TO [01:26:25] ENSURE THAT OUR EMPLOYEES AYE TRAINED [01:26:28] AND THEY KNOW WHAT'S HAPPENING OUT THERE [01:26:31] AS WELL
AND IT'S ALSO GOOD TO KNOW [01:26:35] THAT WE'RE CONTINUING TO WORK WITH LAW [01:26:38] ENFORCEMENT AND SECURITY STAFF ON [01:26:39] INVESTIGATING THESE TYPES OF CRIMES WHEN [01:26:41] THEY DO HAPPEN
SO THANK YOU FOR ALL THE [01:26:43] INFORMATION YOU'VE ALL PROVIDED
CAN I [01:26:46] ALSO ADD REAL QUICKLY, WE EMBARKED ON AN [01:26:48] INITIATIVE FOR EMPLOYEE COMMITMENT AND [01:26:50] CYBER SECURITY WHERE EMPLOYEES WOULD [01:26:52] SIGN UP AND MAKE A PLEDGE THAT THEY [01:26:53] WOULD DO THEIR PART TO BE VIGILANT IN [01:26:56] THIS PROCESS
AND I DON'T HAVE THE EXACT [01:26:58] NUMBERS, BUT WE HAVE A VERY LENGTHY LIST [01:27:01] OF INDIVIDUALS THAT HAVE GONE OUT OF [01:27:02] THEIR WAY TO COMMIT THEMSELVES TO BEING [01:27:04] PART OF THIS EFFORT
YEAH
[01:27:08] ALSO IN THE INTEREST OF TIME, MICHELLE [01:27:10] JUST PINNED US AND SAID, WE'RE RUNNING [01:27:11] UP AGAINST OUR TIME
RON, ARE YOU GOING [01:27:14] TO DISCUSS THE LAST ISSUE RESPONSE OR [01:27:17] RUDY, IS RUDY GOING TO I CAN TAKE THAT [01:27:20] OVER
I TRIED TO PREVIEW SOME OF THAT, [01:27:22] BUT GOING BACK TO CREATING AND SHAPING [01:27:25] THE CULTURE OF CYBERSECURITY
SO THE [01:27:27] LEARNING MANAGEMENT SYSTEM WAS UPGRADED [01:27:29] IN JUNE LAST YEAR
THERE HAVE BEEN SOME [01:27:31] BUGS INTO THAT
SO WE'RE NOT ACTUALLY [01:27:33] GETTING ACCURATE REPORTS AS TO WHO'S [01:27:35] RECEIVING THE RETRAINING
AND I THINK [01:27:38] COMMISSIONER CHO WAS A VICTIM OF HATE [01:27:40] AS WELL
BUT ONCE THIS NEW SYSTEM THAT [01:27:42] WE HAVE IN PLACE, ONCE WE GET THAT ALL [01:27:45] PULL UP AND RUNNING, WE'RE GOING TO GET [01:27:46] A LITTLE BIT MORE ACCURATE LISTING OF [01:27:48] NOT ONLY WHO'S HAD THE TRAINING, BUT HOW Page 32 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:27:50] WE CAN MONITOR THAT BETTER
SO WE PUT IN [01:27:51] THE PROCESS IN FOR THAT
AND GOING BACK [01:27:54] TO THE AFR FOLKS IN PURCHASING AND [01:27:59] CPO SERVICE AGREEMENTS AND THINGS LIKE [01:28:01] THAT, WE HAVE ALREADY CONDUCTED SPECIAL [01:28:04] TRAINING FOR THOSE FOLKS BASED OFF THE [01:28:06] RECOMMENDATIONS OF THE AUDIT TEAM
SO WE [01:28:10] FOLLOWED THAT
WE'VE COMPLETED THAT
[01:28:11] AND THEN I SPOKE ALREADY ABOUT THE [01:28:13] EFFICIENT CAMPAIGN THAT WE RAN LAST [01:28:15] MONTH BEEN INVOLVED ABOUT OVER TWO, [01:28:19] 2000 HUNDRED PERSONNEL, AND THEN JUST [01:28:22] ONCE AGAIN DID THE RESOURCES THAT WE [01:28:23] HAVE OUT THERE
THIS IS AN ONGOING [01:28:26] PROCESS AND IT'S A CONTINUING CAMPAIGN [01:28:29] WHICH IS SUPPOSED TO BE
SO IF YOU'VE [01:28:31] GOT ANY QUESTIONS, I'M HERE TO ANSWER
[01:28:35] AND RUDY, WE'RE ABOUT OUT OF TIME
I SEE [01:28:37] YOUR HAND UP
DO YOU WANT ANY FINAL [01:28:39] COMMENTS? YES
THANK YOU SO MUCH, [01:28:41] GLENN
NOW, I JUST WANT TO EMPHASIZE [01:28:44] WHAT RON JUST INDICATED THERE
AND WE [01:28:45] MADE IT A TOP PRIORITY, REALIZING THAT [01:28:48] IT WASN'T A COMPLETE RECORD WITH THE GUY [01:28:49] WHO WAS TRAINED
AND WE MADE A TOP [01:28:51] PRIORITY TO TRAIN BOTH ALL OF THE AFR [01:28:54] DEPARTMENT STAFF AS WELL AS CPU STAFF [01:28:56] AND AS WELL AS THEM
JUST TWO AND A HALF [01:28:58] YEARS AGO, AFR STAFF WAS A MANDATORY [01:29:01] TRAINING AS WELL ON SECURITY
IT'S JUST [01:29:03] BEEN A GAP WITH REGARD TO THIS, BUT [01:29:05] WE'RE TAKING TRAINING VERY SERIOUSLY
[01:29:06] THANK YOU, GLENN
I NEED TO PASS SO THAT [01:29:08] WE CAN RESPECT THE TIME FOR [01:29:10] COMMISSIONER, BUT THANK YOU SO MUCH, [01:29:13] COMMISSIONER CHO AND MOHAMED, FOR YOUR [01:29:15] INSIGHT GUIDANCE
AND JUST PLEASE BE [01:29:17] SURE
AND I NEED TO EMPHASIZE THIS IN [01:29:19] PUBLIC TO THE PUBLIC
LISTEN TO THIS
[01:29:21] WE ARE VERY COMMITTED TO PUBLIC [01:29:23] ACCOUNTABILITY AND INTEGRITY, AND WE [01:29:25] HAVE DEMONSTRATED THAT WE JUST BEEN [01:29:27] SPOOKED HERE, BUT WE'RE NOT GOING TO LET [01:29:29] THIS HAPPEN AGAIN
MICHELLE, [01:29:32] IF YOU CAN ADVANCE US TO THE FIRE [01:29:35] STATION, THE NEXT AUDIT, COUPLE NEXT [01:29:37] SLIDE
KEEP GOING
ONE MORE AND [01:29:45] ONE MORE
OKAY, I'M JUST CATCHING [01:29:49] UP IN HERE
THERE WE GO
THERE WE GO
[01:29:53] SO, COMMISSIONER, UNLESS YOU HAVE ANY [01:29:55] OTHER QUESTIONS ON ACH, [01:29:58] I WILL NOTE, THOUGH, ON THAT, JUST ONE [01:30:01] CLOSING COMMENT
WHEN YOU DO GO BACK TO [01:30:03] INSURANCE COMPANIES, THEY GENERALLY [01:30:06] OFTEN GET YOU BACK BY RAISING YOUR [01:30:07] RATES
SO THE BEST CONTROL IS TO HAVE [01:30:11] STRONG FINANCE CONTROLS
AS RUDY SAID [01:30:16] ON THIS AUDIT, WE PARTNERED WITH JANISON [01:30:18] AND HER TEAM IN CONSTRUCTION MANAGEMENT
[01:30:21] WE HAVE A REALLY GOOD WORKING [01:30:22] RELATIONSHIP WITH THEM
THEY MANAGE [01:30:26] THE CONSTRUCTION OF PROJECTS
[01:30:29] WHEN YOU DECIDE TO BUILD SOMETHING LIKE Page 33 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:30:31] FIRE STATION, THERE ARE MANY GROUPS [01:30:32] INVOLVED
THERE'S PROGRAM MANAGEMENT, [01:30:35] THERE'S EXECUTIVE, AND THEN THERE'S THE [01:30:37] FIRE DEPARTMENT
BUT WHEN THE [01:30:39] CONSTRUCTION IS BEING DONE, I BELIEVE [01:30:40] THAT ALL FALLS INTO JANICE'S TEAM
AND [01:30:43] THIS IS WHAT WE DID OVER HERE
WE LOOKED [01:30:47] AT THE WEST SIDE FIRE STATION
IT'S A [01:30:50] STANDALONE BUILDING, A FIRE STATION NEXT [01:30:53] TO THE PACCAR HANGAR ON [01:30:56] THE NEXT SLIDE OF THE FIRE STATION
I [01:30:59] MEAN NEXT SLIDE OF THE AIRPORT
SO IT'S [01:31:00] BY RUNWAY THREE
AND I [01:31:04] BELIEVE IN ABOUT 2015
[01:31:09] INITIALLY, THERE WAS A NEED IDENTIFIED [01:31:11] BECAUSE OF SOME CONSTRUCTION TO GET [01:31:14] FIREMEN TO THE MIDDLE OF RUNWAY THREE IN [01:31:17] A CERTAIN AMOUNT OF TIME AND COULDN'T BE [01:31:19] DONE FROM THE REGULAR FIRE STATION
SO [01:31:21] THEY NEEDED A FACILITY
AND LATE 2015, [01:31:26] WE RENTED A COUPLE OF ROOMS FOR THEM IN [01:31:31] THE PACK OUR HANGAR, AND WE PUT A [01:31:35] MAKESHIFT SHELTER FOR THE FIRE METRUCK [01:31:37] OVER THERE
[01:31:41] AND THERE WAS A PLAN TO [01:31:44] BUILD OR LOOK AT IT, CREATE SOME SHELTER [01:31:48] FOR THEM
THIS HAS BEEN A LONG PROCESS
[01:31:51] IT'S BEEN IN PROCESS FOR A WHILE
[01:31:56] IT ORIGINALLY CAME TO THE COMMISSION [01:32:00] WITH A MODULAR DESIGN USING [01:32:05] DESIGN BID BUILD METHODOLOGY, AND IT WAS [01:32:09] ABOUT FIVE AND A HALF MILLION
IT [01:32:12] STARTED OFF WITH THAT, BUT THERE WERE [01:32:13] SOME CHANGES
IT WENT OUT AS A [01:32:17] FULL FLEDGED BUILDING EVENTUALLY AND [01:32:21] YOU CAN FROM THE STATE WILL SEE THE [01:32:23] BUDGET INCREASES
AND I THINK [01:32:26] PART OF THIS IS JUST BECAUSE THE TIME IS [01:32:28] TAKEN AND THE CHANGES THAT HAVE [01:32:30] OCCURRED
NEXT SLIDE, PLEASE
[01:32:36] AND SPENCER, I'M GOING TO HAVE YOU JUMP [01:32:39] IN ALSO AS I TALK, I'M GOING TO [01:32:40] INTRODUCE YOU BEFORE YOU HAND IT OFF TO [01:32:43] JANICE
YOU CAN TALK THROUGH SOME OF THE [01:32:45] WORK YOU'VE DONE
SPENCER BRIGHT IS OUR [01:32:48] CAPITAL AUDIT MANAGER THAT DID THE WORK [01:32:51] HERE
AND HE IDENTIFIED WHEN HE LOOKED [01:32:54] AT THIS THAT EVEN BEFORE IT WAS HANDED [01:32:57] OFF TO CONSTRUCTION MANAGEMENT, THERE [01:32:59] WAS SOME DESIGN WORK THAT WAS DONE WITH [01:33:02] ARCHITECTURAL AND ENGINEERING [01:33:04] CONSULTANTS THAT DESIGNED THE OLD [01:33:08] FACILITY BEFORE IT WAS MOVED TO THE NEW [01:33:12] STANDALONE BUILDING
AND THERE WERE SOME [01:33:14] SUNK COSTS THERE
ABOUT $850,460 [01:33:18] WAS IN DESIGN
THE REST WAS JUST BECAUSE [01:33:21] STAFF HAD WORKED A LOT OF TIME WHEN WE [01:33:23] CHANGED TRACKS, ESSENTIALLY, THE [01:33:26] CONTRACT WITH MACROS WAS EVENTUALLY [01:33:28] SIGNED FOR FOUR POINT 95 MILLION
[01:33:30] AND THERE AYE SOME CHANGE ORDERS
[01:33:33] AND ALTHOUGH MACRO'S EAST CONTRACT ENDED [01:33:36] UP AT ABOUT FIVE, SIX IN TOTAL, Page 34 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:33:39] THERE'S A LOT OF SOFT COST
SO WHEN YOU [01:33:42] HAVE A PROJECT SITTING OUT THERE FOR A [01:33:43] LONG TIME AND THE CONTRACTOR TAKES A LOT [01:33:46] OF TIME TO DO IT, THE PORT IN TURN [01:33:49] INCURS COSTS
SO THAT'S KIND OF WHY THE [01:33:52] BUDGET INCREASES AND THE SOFT COSTS THAT [01:33:54] KIND OF RUN UP ACCORDINGLY
[01:34:00] THE PROJECT IS WAY BEHIND SCHEDULE ON [01:34:03] THE BACKGROUND
SPENCER, ON THIS, IS [01:34:05] THERE ANYTHING ELSE YOU WANT TO ADD OR [01:34:07] ANYTHING I MISS? NO, [01:34:10] THAT SOUNDS GOOD, GLENN
YEAH
SO NEXT [01:34:14] SLIDE, PLEASE
AND I'LL HAND IT OVER TO [01:34:15] SPENCER, ESPECIALLY OF THIS
[01:34:19] I THINK SPENCER RELAYED BACK TO US THAT [01:34:22] CONSTRUCTION MANAGEMENT DID EVERYTHING [01:34:24] THEY CAN COULD
THEY DID A GREAT JOB
[01:34:27] THIS PARTICULAR ISSUE IS ALL MCT
[01:34:30] MCT TOOK A LONG TIME AND THEY WERE A [01:34:33] VERY DIFFICULT VENDOR TO WORK WITH, [01:34:35] FROM WHAT I UNDERSTAND
BUT IN SOME [01:34:38] RESPECTS
BUT SPENCER, YOU CAN PROVIDE [01:34:40] INSIGHT INTO THAT
GOOD AFTERNOON, [01:34:44] COMMISSIONER
AS GLENN MENTIONED, I'M [01:34:47] SPENCER BRIGHT, THE CAPITAL PROJECTS [01:34:49] AUDIT MANAGER
WE HAD, [01:34:54] OUT OF THE ABOUT FIVE AREAS THAT WE [01:34:57] REVIEWED, THERE WERE TWO THAT WE HAVE [01:35:01] PROVIDED SOME OBSERVATIONS, THE OTHER [01:35:04] AREAS WE DIDN'T FIND ANYTHING TO REPORT
[01:35:08] EVERYTHING LOOKED GOOD
SO ON THE [01:35:13] FIRST ISSUE HERE, [01:35:16] MCT HAD NOT COMPLETED THE PROJECT FILE [01:35:19] THE CONTRACTUAL SUBSTANTIAL COMPLETION [01:35:22] DATE, WHICH RESULTED NOT ONLY IN THE [01:35:25] PORT INABILITY TO UTILIZE THE NEW FIRE [01:35:28] STATION, BUT THE PORT IS ALSO INCURRING [01:35:31] ADDITIONAL OVERSIGHT COSTS
AND THEN SO [01:35:35] CONTRACTUALLY, WHEN A CONTRACTOR DOES [01:35:37] NOT COMPLETE A PROJECT ON TIME, THE PORT [01:35:40] IS ENTITLED TO PURSUE LIQUIDATED DAMAGES [01:35:44] TO HELP RECOVER THESE ADDITIONAL COSTS [01:35:50] OR FOR THE FIRE STATION, THE PORT [01:35:52] CONSTRUCTION MANAGEMENT TEAM PROVIDED [01:35:55] MCT MULTIPLE OPPORTUNITIES TO GET THE [01:35:59] PROJECT BACK ON TRACK, AND IF THEY HAD [01:36:03] DONE THAT, THE PORT WAS WILLING TO [01:36:05] FOREGO ASSESSING ANY LIQUIDATED DAMAGES
[01:36:08] HOWEVER, MCT WAS UNRESPONSIVE TO [01:36:11] THOSE OPPORTUNITIES
[01:36:15] FOR PURPOSES OF OUR AUDIT CALCULATION [01:36:19] OF LIQUIDATED DAMAGES, WE USED MARCH 31 [01:36:22] AS THE DATE TO ESTIMATE THAT AT THAT [01:36:25] TIME, THE PORT IS ENTITLED TO [01:36:29] APPROXIMATELY $680,000 IN LDS
[01:36:34] THE PORT HAS ALREADY WITHHELD 300,000 [01:36:37] FROM PREVIOUS MONTHLY PAY ESTIMATES, [01:36:41] WITH THE ANTICIPATION THAT THERE WERE [01:36:43] GOING TO BE LIQUIDATED DAMAGES TO [01:36:47] PURSUE
[01:36:50] ADDITIONALLY, THE PORT WILL BE INCURRING [01:36:53] APPROXIMATELY $200,000 IN [01:36:56] ADDITIONAL INSPECTOR COSTS THAT Page 35 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:37:00] WERE NOT INCLUDED IN THE LIQUIDATED [01:37:04] DAMAGE DAILY CALCULATION
THOSE COSTS [01:37:07] WILL NOT BE COLLECTIBLE
THE REASON [01:37:10] BEING WAS THE ORIGINAL DAILY CALCULATION [01:37:14] CONSIDERED THE COST OF HAVING AN IN [01:37:16] HOUSE DAILY INSPECTOR INSTEAD OF [01:37:20] THE COST FOR USING AN OUTSIDE [01:37:24] CONSULTING FIRM, WHICH WAS THE CASE
[01:37:27] NEXT SLIDE, PLEASE
[01:37:31] WE PROVIDED TWO RECOMMENDATIONS
THE [01:37:35] FIRST ONE, OF COURSE, IS PORT CALCULATE [01:37:38] AND PURSUE LIQUIDATED DAMAGES UPON [01:37:41] COMPLETION OF THE PROJECT
AND THE [01:37:44] SECOND RECOMMENDATION IS MORE OF A [01:37:47] GENERALIZED RECOMMENDATION FOR FIXED [01:37:49] FUTURE PROJECTS [01:37:53] TO CONSIDER CRITERIA OF [01:37:57] CONTRACTORS PERFORMANCE [01:38:02] THAT MIGHT HELP MITIGATE POTENTIAL [01:38:06] SCHEDULE SLIPPAGE PROJECTS IN THE [01:38:08] FUTURE
NEXT SLIDE
[01:38:12] I'M SORRY, WHY DOESN'T THE [01:38:13] RECOMMENDATIONS ADDRESS ANY OF THE COST [01:38:15] OVERRUNS? I'M SORRY COMMISSIONER, CAN [01:38:18] YOU REPEAT THAT? ARE WE GOING TO TALK [01:38:21] ABOUT THE COST OVERRUN SOME PROJECT OR I [01:38:24] DON'T SEE ANY RECOMMENDATIONS ON HOW WE [01:38:26] CAN ADDRESS WHY THIS PROJECT COST [01:38:29] TWICE WHAT IT WAS ORIGINALLY PROJECTED [01:38:31] TO COST
[01:38:38] LET'S SEE HERE AND [01:38:41] MAYBE JANICE WHEN SHE COULD PROVIDE [01:38:45] MAYBE SOME BETTER OR ADDITIONAL [01:38:47] INFORMATION
I DO KNOW
[01:38:51] FOR ONE, THERE IS DEFINITELY AN INCREASE [01:38:54] IN COST BY THE SWITCH IN THE PROJECT [01:38:58] FROM WHEN IT WAS ORIGINALLY GOING TO BE [01:39:01] A DESIGN BID BUILD AND THE DESIGN WAS [01:39:04] FULLY COMPLETE
AND THEN THE PROJECT [01:39:07] METHODOLOGY CHANGED AND ALL OF THOSE [01:39:09] COSTS BASICALLY BECAME SOME COSTS [01:39:14] THAT WAS CLOSE TO A MILLION DOLLARS IN [01:39:17] TOTAL BETWEEN PORT COSTS AND DESIGN [01:39:20] COSTS
SO THAT DEFINITELY PLAYED [01:39:23] A ROLE INTO COSTS
[01:39:26] BUT I SEE
JANICE, DO YOU [01:39:29] HAVE ANY INSIGHT, JANICE, OR DO YOU [01:39:32] THINK THAT COULD PROBABLY BE MORE ON [01:39:34] MAYBE A PROJECT MANAGEMENT STAFF MEMBER? [01:39:36] IF THEY'RE AVAILABLE AS TO WHY WE WENT [01:39:39] FROM SOMEONE FROM PROJECT MANAGEMENT IS [01:39:41] AVAILABLE, THEY WOULD BE THE MOST [01:39:43] APPROPRIATE TO COMMENT ON THIS
IF WE [01:39:45] DON'T HAVE SOMEONE, I CAN CERTAINLY [01:39:48] PROVIDE SOME CONTEXT
I'M LOOKING [01:39:52] HERE, I DON'T SEE WAYNE ON
[01:39:56] SO WHY DON'T I JUST GIVE SOME CONTEXT? [01:39:59] SO INITIALLY FOR THIS PROJECT, [01:40:02] THE TEAM BELIEVE THAT THIS COULD BE A [01:40:05] MODULAR BUILDING WHICH THEN WOULD COME [01:40:09] ONTO THE JOB SITE
UNFORTUNATELY, [01:40:12] BECAUSE OF THE LAYOUT OF THIS PARTICULAR [01:40:14] LOCATION ON THE OPPOSITE SIDE OF THE Page 36 of 42 This transcript is not an official record
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:40:16] RUNWAY, THE ACCESS IS SUCH THAT THE [01:40:20] TEAM DIDN'T BELIEVE THAT A MODULAR WOULD [01:40:23] ACTUALLY BE ABLE TO EASILY [01:40:26] COME ONTO THE JOB SITE WITHOUT HAVING TO [01:40:29] SHUT DOWN THE RUNWAY AND HAVE IT COME [01:40:31] ALL THE WAY ACROSS
AND SO WHAT THAT [01:40:34] MEANT THEN IS THE TEAM STARTED TO LOOK [01:40:36] AT WHAT ARE SOME OTHER WAYS THAT WE [01:40:38] COULD DELIVER THE PROJECT INSTEAD OF [01:40:41] EXPECTING IT TO BE A MODULAR [01:40:42] CONSTRUCTION
AND SO ALL OF THOSE [01:40:45] PERMUTATIONS RESULTED IN SOME ADDITIONAL [01:40:48] COST
I WOULD SAY THAT THE OTHER PART OF [01:40:51] WHAT DROVE THE COST
AND PERHAPS I SEE [01:40:53] KYLE FROM CPO ON HERE
SO HE CAN ALSO [01:40:56] COMMENT THAT THIS IS A VERY MESSY [01:41:00] PROJECT FROM THE STANDPOINT OF THE [01:41:01] PROXIMITY TO THE RUNWAY ITSELF
[01:41:04] SO WE ONLY RECEIVED PROPOSALS FROM [01:41:08] THREE PROPOSERS AND ONLY TWO [01:41:11] OF WHICH WE FOUND TO BE RESPONSIVE TO [01:41:14] ADVANCE TO THE FINAL PRICING
AND SO [01:41:18] WHEN YOU DON'T HAVE A REALLY COMPETITIVE [01:41:21] MARKET OF A LOT OF PROPOSERS THAT ARE [01:41:23] INTERESTED IN THE PROJECT, THEN IT [01:41:26] CREATES SOME ISSUES FOR COST
I WOULD [01:41:29] SAY THAT IN SPITE OF THAT, THE TWO [01:41:32] PROPOSALS WE GOT, THIS PARTICULAR ONE [01:41:35] WITH MCT, WAS JUST ABOUT $5 MILLION
[01:41:37] AND I BELLEVUE THAT THE SECOND [01:41:40] PROPOSER, KYLE, WAS CLOSER TO 8 MILLION
[01:41:43] IF YOU COULD UNMUTE AND MAYBE COMMENT, [01:41:46] I WANT TO MAKE SURE I DON'T PROVIDE [01:41:48] ERRONEOUS INFORMATION
KYLE
[01:41:51] YEAH, THANKS, JANICE
I WOULD HAVE TO [01:41:53] VERIFY AS WELL
I DO REMEMBER SOMETHING [01:41:56] LIKE 7.9 MILLION, BUT I WILL VERIFY WHAT [01:41:59] YOU'RE DISCUSSING
[01:42:03] YEAH
AND COMMISSIONER, IF I CAN CHIME [01:42:05] IN
SO YOUR QUESTION WAS THE AUDIT [01:42:08] FOCUSED SPECIFICALLY ON THE CONSTRUCTION [01:42:10] AND THIS PARTICULAR CONTRACT? WE DID [01:42:13] LOOK AT OPTIONS AND SCENARIOS BACK IN [01:42:15] 2018, AND THERE WAS A LOT OF COMMISSION [01:42:20] NOISE DISCUSSION, [01:42:24] CONCERN ABOUT HOW THIS COST THIS [01:42:28] WAS GOING UP A LITTLE BIT, BUT THE [01:42:31] FOCUS OF THIS AUDIT WAS EXCLUSIVELY [01:42:34] ON THE CONSTRUCTION CONTRACT
SO THAT'S [01:42:38] WHY YOU DON'T SEE IT IN THIS
[01:42:43] SO, GLENN AND COMMISSIONER, IF YOU HAVE [01:42:45] AN INTEREST STAFF TO CERTAINLY PUT [01:42:47] TOGETHER A SEPARATE MEMO WITH MORE [01:42:49] INFORMATION ABOUT THE HISTORY OF THE [01:42:51] PROJECT AND WHAT LED TO WHERE WE ARE [01:42:54] TODAY, BECAUSE AS GLENN SAID, IT WASN'T [01:42:57] A SUBJECT OF THIS PARTICULAR AUDIT
BUT [01:43:00] CERTAINLY I THINK THAT THERE IS A LOT OF [01:43:03] INFORMATION ABOUT THE CHRONOLOGY AND HOW [01:43:05] WE GOT TO WHERE WE ARE TODAY
[01:43:10] THAT WOULD BE HELPFUL
I SEE SOME HEAD [01:43:12] NODS
OKAY, THAT'S RIGHT
BACK TO YOU [01:43:15] FOR YOUR NEXT ISSUE
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Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:43:23] I GOT IT
SO THE SECOND [01:43:27] ISSUE IS RELATED TO CHANGE ORDERS, [01:43:31] SPECIFICALLY THE COVID-19 [01:43:36] EXPENSE REIMBURSEMENT CHANGE ORDER
[01:43:40] THE INTENT OF THIS PARTICULAR CHANGE [01:43:43] ORDER WAS WHEN COVID 19 AYE
[01:43:47] AND STATE STARTED MAKING MANDATES TO [01:43:50] ALLOW CONSTRUCTION PROJECTS TO [01:43:55] RESUME
WITH SAFETY MEASURES IN PLACE, [01:43:59] THE PORT REALIZED THAT CONTRACTORS [01:44:04] WOULD BE INCURRING ADDITIONAL COSTS
[01:44:06] AND THE PORT ALSO WANTED TO IMPLEMENT [01:44:09] ADDITIONAL MEASURES BEYOND STATE [01:44:12] MANDATES TO HELP MITIGATE THE POTENTIAL [01:44:16] RISK OF COVID CASES
[01:44:21] SO WHAT WE LOOKED AT WAS THE [01:44:27] REIMBURSEMENT COMPARED TO [01:44:31] WHAT THE PORT COURT ISSUED A LETTER [01:44:36] ON HOW AND WHAT WOULD BE REIMBURSED
[01:44:40] CAN YOU NEXT SLIDE, PLEASE, MICHELLE? [01:44:47] SO OVERALL, THE BIGGEST AREAS THAT WE [01:44:50] FOUND ERRORS IN POTENTIAL OVER BILLING [01:44:53] WERE INSTANCES WHERE [01:44:57] THE PORT WAS BILLED FOR ONE OF THEIR [01:44:59] COVID SUPERVISORS STATING THE SUPERVISOR [01:45:03] WAS ON SITE
BUT OUR REVIEW [01:45:07] IDENTIFIED THAT THEY WEREN'T ON SITE OR [01:45:15] ONE SUPERVISOR IN PARTICULAR [01:45:20] THAT POTENTIALLY COULD [01:45:23] BE ALLOWABLE REIMBURSABLE, [01:45:26] BUT WE WERE NOT PROVIDED THE [01:45:29] DOCUMENTATION THAT WE REQUESTED, SO WE [01:45:31] COULDN'T VERIFY THOSE COSTS
[01:45:36] AND THEN LESTER AREA WAS [01:45:40] THE BILLABLE RATES THAT THE PORT WAS [01:45:43] CHARGED AT $89 FLAT [01:45:46] RATE WAS DIFFERENT THAN THE COVID [01:45:49] SUPERVISOR'S ACTUAL PAY [01:45:53] RATE OF $52, WHICH THE PORT LETTER [01:45:57] STATED THAT ACTUAL COSTS WOULD BE [01:45:59] REIMBURSED
[01:46:02] YEAH
SPENCER, IF I CAN JUMP IN, WHAT DO [01:46:04] YOU THINK? COMMISSIONERS HAVE BEEN [01:46:06] SEEING A LOT OF COVID CHANGE ORDERS, [01:46:09] AND GENESIS KIND OF SENT A VERY CLEAR [01:46:12] MESSAGE TO PEOPLE THAT THEY CAN'T DO [01:46:14] THIS
PEOPLE CHARGE [01:46:18] US FOR THINGS THAT THEY'RE NOT SUPPOSED [01:46:19] TO
AND WE'VE SEEN THIS SEVERAL TIMES
[01:46:23] COVID SUPERVISORS THAT ARE SUPPOSED TO BE [01:46:25] ON SITE, AND THEN SPENCER AND TEAM WILL [01:46:27] FIND THAT THEY'RE NOT THERE OR YOU GET [01:46:29] BILLED FOR HOURS OR RATES THAT ARE [01:46:31] DIFFERENT
SO IT'S PART OF WHY WE DO THE [01:46:33] AUDITS TO IDENTIFY THESE THINGS
[01:46:36] HISTORICALLY, JANICE'S, TEAM WOULDN'T [01:46:38] HAVE ACCESS TO A LOT OF THIS STUFF
[01:46:40] SPENCER DOES GO OUT TO LNI AND GET [01:46:43] REPORTS FROM THEM
SO YOU CAN CROSS [01:46:46] CHECK EVERYTHING AND SAY, HEY, WAIT A [01:46:48] MINUTE, YOU SHOULDN'T BE BILLING US FOR [01:46:50] THESE THINGS
SO OPPORTUNITIES TO CLEAN [01:46:52] UP
AND SPENCER, YOU WANT TO GO TO YOUR Page 38 of 42 This transcript is not an official record
It was generated using speech-to-text technology and may contain inaccuracies or misspellings
Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:46:54] RECOMMENDATION AND THEN THE INTEREST OF [01:46:56] TIME, CLOSE THAT, PASS IT OVER TO [01:46:59] JANICE
[01:47:02] YEAH
IF WE COULD JUST GO THROUGH
[01:47:06] HOLD ON
YES, COMMISSIONER, [01:47:09] I HAD A QUICK QUESTION
[01:47:13] YOU SAID, DIRECTOR GLENN, THAT PEOPLE [01:47:17] CHANGE AND CHARGE US FOR THINGS THAT [01:47:19] THEY'RE NOT SUPPOSED TO
IS THERE, LIKE [01:47:21] CONTRACT TEMPLATES THAT WE COULD PUT IN [01:47:24] PLACE OR HAVE IN PLACE THAT THEY'RE [01:47:27] EITHER BREACHING OR WE COULD INCORPORATE [01:47:30] TO ENSURE THAT DOESN'T HAPPEN? WHAT ARE [01:47:33] THE PREVENTED MEASURES, OR IS THE PORT [01:47:35] OF THE RECOMMENDATION? THERE'S [01:47:36] DEFINITELY CONTRACT LANGUAGE THAT SAYS [01:47:37] THEY SHOULDN'T DO THAT
BUT, [01:47:41] JANICE, I DON'T KNOW HOW YOU'RE I WANT [01:47:43] TO PROVIDE AN EXAMPLE
[01:47:46] SO WHAT WE'RE TALKING ABOUT IS THAT WHAT [01:47:48] WE EXPECT IS TO HAVE A DEDICATED COVID [01:47:51] SUPERVISOR TO MAKE SURE THAT WE AYE [01:47:54] KEEPING WORKERS AS SAFE AS POSSIBLE
SO [01:47:57] IN LOOKING AT PAYROLL RECORDS, THAT [01:47:59] INTERNAL AUDIT WAS ABLE TO PULL [01:48:01] ADDITIONAL RECORDS FOR THAT
WHAT THEY [01:48:03] DISCOVERED IS THAT PERHAPS THE COVID [01:48:06] SUPERVISOR WAS ON SITE FOR HALF A DAY, [01:48:09] BUT NOT FOR THE WHOLE DAY, OR THAT WHEN [01:48:12] THEY LOOKED AT THE ACTUAL PAYROLL [01:48:15] INFORMATION, THEY WERE SPENDING HALF THE [01:48:17] DAY AS A COVID SUPERVISOR
BUT THE OTHER [01:48:20] HALF, MAYBE THEY WERE DOING QUALITY [01:48:22] CONTROL DUTIES, WHICH WOULD NOT BE PART [01:48:25] OF THE REIMBURSEMENT
WHAT THEY'VE [01:48:28] IDENTIFIED HERE IS WHERE THOSE FORCE [01:48:31] ACCOUNT SHEETS THEY SIGN ON THE BOTTOM [01:48:34] ATTESTING TO THE ACCURACY OF THE [01:48:37] INFORMATION
AND THEN WHAT THEY'RE [01:48:40] FINDING WHEN THEY DIG INTO ADDITIONAL [01:48:41] RECORDS
THAT IS NOT CUSTOMARILY
WHAT [01:48:45] WE DO FOR VALIDATION, THEY'RE FINDING [01:48:47] THAT THESE ERRORS ARE OCCURRING, AND [01:48:51] THEY APPEAR TO BE ONLY DURING THESE [01:48:53] COVID CHANGE ORDER PIECES, BECAUSE I [01:48:56] BELIEVE THAT IN THE LAST SEVERAL YEARS, [01:48:59] WE'VE DONE MANY AUDITS OF FORCE ACCOUNTS [01:49:03] WITHOUT ISSUE, BUT CERTAINLY FOR THE [01:49:06] COVID FORCE ACCOUNTS, WE HAVE IDENTIFIED [01:49:09] SOME ISSUES WHERE COLLATERAL DUTIES [01:49:12] WOULD MEAN THAT WE DON'T PAY FOR THE [01:49:15] ENTIRE EIGHT HOUR DAY BECAUSE THEY WERE [01:49:17] NOT DEDICATED SOLELY ON COVID ACTIVITIES [01:49:21] AS A SUPERVISOR
[01:49:25] SO THIS RECOMMENDATION WE [01:49:29] WILL TAKE A LOOK AT FOR OUR STANDARD [01:49:32] OPERATING PROCEDURES, WHAT ADDITIONAL [01:49:34] MEASURES WE SHOULD CONSIDER TO IDENTIFY [01:49:40] WHEN THESE FACTUALLY INCORRECT PIECES OF [01:49:43] INFORMATION ARE BEING PRESENTED TO US, [01:49:45] BECAUSE THE WAY WE EXPECT ACCOUNTABILITY [01:49:49] FROM THE CONTRACTOR, THAT'S WHY WE ASKED [01:49:51] THEM TO ATTEST TO THE ACCURACY WHEN THEY Page 39 of 42 This transcript is not an official record
It was generated using speech-to-text technology and may contain inaccuracies or misspellings
Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:49:53] SIGNED THE NAME TO THE SHEET SAYING THAT [01:49:56] THIS IS HOW MUCH FORCE ACCOUNT IS BEING [01:49:58] DONE HERE'S, WHO IS PERFORMING THE WORK, [01:50:00] AND HERE IS THE HOURS
SO WE ARE GOING [01:50:03] TO TAKE A LOOK AT WHAT WE MIGHT WANT TO [01:50:05] DO DIFFERENTLY TO TRY TO IDENTIFY [01:50:09] IDS AS PART OF OUR EVERYDAY ACTIVITIES
[01:50:15] THE ISSUE HERE, THOUGH, IS THAT IT DOES [01:50:18] INCUR ADDITIONAL ADMINISTRATIVE COST FOR [01:50:22] US TO TAKE ON ADDITIONAL REVIEW OF [01:50:24] RECORDS AND PULL MORE RECORDS
SO WE [01:50:27] WANT TO WORK WITH LEGAL AND CPO TO LOOK [01:50:31] AT WHAT OTHER MEASURES YOU MIGHT WANT TO [01:50:34] TAKE TO PREVENT THIS FROM HAPPENING IN [01:50:36] THE FUTURE
AND THEN IN THIS PARTICULAR [01:50:39] SCENARIO, WE ARE GOING TO, AS PART OF [01:50:43] THE RECONCILIATION OF THAT CHANGE ORDER, [01:50:46] RECOVER ANY AMOUNTS THAT WERE OVERPAID [01:50:50] FOR COVID COST, WHERE THEY [01:50:53] BUILD MORE THAN THEY HAD ACTUALLY [01:50:56] INCURRED AS COSTS, BECAUSE THIS IS A [01:50:58] REIMBURSABLE
SO WHAT WE'RE SAYING TO [01:51:01] CONTRACTORS IS TO KEEP OUR WORKERS SAFE, [01:51:03] WE'RE PAYING THE ACTUAL COST YOU [01:51:05] INCURRED FOR THAT COVID SAFETY AND [01:51:08] CULVERT SUPERVISOR
[01:51:13] THANKS FOR THAT, JANICE
IS THERE [01:51:17] ANYTHING ELSE, OR IS THERE MORE TO THIS [01:51:18] PRESENTATION? GLENN, THIS IS IT
[01:51:20] JANICE, ON THE FIRST ISSUE, [01:51:24] ON THE LIQUIDATED DAMAGES, I'M GUESSING [01:51:26] YOU CONCUR WITH SPENCER AND WE'RE GOOD [01:51:28] THERE
SO THAT'S IT, COMMISSIONER
[01:51:31] THAT'S THE END OF OUR DISCUSSION FOR [01:51:34] PUBLIC SESSION
GREAT
ANY LAST [01:51:37] QUESTIONS, COMMISSIONER HAMDI? [01:51:40] NO, THANK YOU
THANK YOU FOR THIS [01:51:42] PRESENTATION
PERFECT
OKAY
[01:51:45] WELL, WITH THAT, WE HAVE NO SCHEDULE, [01:51:49] LIMITED CONTRACT COMPLIANCE AUDITS FOR [01:51:51] DISCUSSION TODAY
AND ITEM IS NUMBER [01:51:53] NINE AND TEN ON THE AGENDA ARE SECURITY [01:51:54] SENSITIVE IN NATURE, SO WE'RE GOING TO [01:51:57] BE DISCUSSING THIS IN NON PUBLIC [01:52:00] SESSION, SO WE WILL MOVE THE CLOSING [01:52:02] COMMENTS AT THIS TIME
[01:52:07] MS FERNANDEZ, DO YOU HAVE ANY CLOSING [01:52:08] COMMENTS? I DO NOT, COMMISSIONER
OKAY
[01:52:11] COMMISSIONER MOHAMED? NO, [01:52:15] THANK YOU
WELL, I JUST WANTED TO BEFORE [01:52:18] WE COVID ON TO THE FIRE STATION [01:52:19] CONVERSATION, I DID WANT TO SAY [01:52:21] REGARDING THE ACH FRAUD THAT I REALIZED [01:52:25] IT'S AN UNFORTUNATE SCENARIO AND IT'S [01:52:28] UNFORTUNATE THAT WE HAD TO GO [01:52:32] THROUGH THIS PROCESS, BUT I FEEL LIKE [01:52:33] THIS IS A GREAT LEARNING MOMENT FOR THE [01:52:35] ORGANIZATION
I WANT TO THANK RUDY AND [01:52:37] GLENN FOR KIND OF TAKING AYE
HEAD ON AND [01:52:40] ROLLING WITH THE PUNCHES
I UNDERSTAND [01:52:42] THAT SOMETIMES SOME OF THESE [01:52:44] ADMINISTRATIVE PROCEDURES CAN BE TEDIOUS [01:52:46] AND IT CAN TURN TO BE JUST APPROVED Page 40 of 42 This transcript is not an official record
It was generated using speech-to-text technology and may contain inaccuracies or misspellings
Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:52:50] APPROVED
BUT I DO APPRECIATE YOU ALL ON [01:52:53] THE LEADERSHIP KIND OF RALLYING AROUND [01:52:55] IT AND MAKING SURE THAT WE ARE MAKING [01:52:56] ALL THE RIGHT CORRECTIONS
THIS DOESN'T [01:52:58] HAPPEN AGAIN
AND RUDY, I APPRECIATE [01:52:59] YOUR COMMITMENT TO MAKING SURE IT [01:53:01] DOESN'T SAY THAT WE'RE GOING TO HOLD YOU [01:53:03] TO IT
RUDY, IT'S NOT HAPPENING AGAIN
[01:53:04] RIGHT
YOU CAN DON'T [01:53:08] MEAN DISRESPECT
IF I COULD JUST HAVE A [01:53:10] MINUTE, PLEASE GO FOR IT
[01:53:13] THANK YOU SO MUCH
AND IT'S RELATING TO [01:53:15] THE GOOD COMMENT YOU MADE WITH REGARD TO [01:53:17] BEING SENSITIVE, WITH REGARD TO BIAS
[01:53:20] AND I JUST RESPECTFULLY SUGGEST THAT WE [01:53:23] USE CAUTION WITH REGARD TO HOW WE [01:53:26] APPROACH RECOMMENDATIONS
WE HAVE TO [01:53:28] REHAB A PRIORITY HERE AT THE PORT OF [01:53:30] SEATTLE WITH REGARD TO EQUITY, [01:53:32] DIVERSITY, INCLUSION
YOU AYE SOLID [01:53:34] LEADER, COMMISSIONER CHO, WITH REGARD TO [01:53:37] ADDRESSING INSTITUTIONAL RACISM
I MEAN, [01:53:40] I FEEL SO PROUD TO BE ALIGNED WITH YOU
[01:53:42] AND THEN WHAT, COMMISSIONER MOHAMED AND [01:53:45] HATHAY GALA STANFOR COMING IN
I FEEL [01:53:48] SO PROUD TO BE A PERSON OF COLOR, TO BE [01:53:50] AT THE PORT OF SEATTLE
AND THEN I CAN [01:53:52] SPEAK FREELY AND I CAN AMPLIFY SOME [01:53:54] THINGS THAT WE NEED TO BE AWARE OF, AND [01:53:57] WE DON'T INTEND IT
BUT WE SAY THINGS [01:53:59] AND THINGS IN REPORTS THAT REALLY NEED [01:54:02] TO BE SENSITIVE WITH REGARD TO THE POINT [01:54:05] IN TERMS OF THE LEVEL OF WORK THAT'S [01:54:08] BEING DONE, IN TERMS OF FRAUD, [01:54:09] IDENTIFICATION AND VETTING, THE ACH [01:54:11] ACCOUNT CHANGES, IT IS REFERENCE TO THE [01:54:14] ADMINISTRATIVE PROFESSIONALS
AND I KNOW [01:54:16] IT'S NOT INTENDED, BUT WE CAN'T SAY IN [01:54:19] A PUBLIC DOCUMENT THAT ADMINISTRATIVE [01:54:21] PROFESSIONALS AREN'T CAPABLE OF DOING [01:54:23] THIS WORK
WHAT YOU DO IS YOU PICK UP [01:54:25] THE PHONE AND CALL THE VENDOR
DID YOU [01:54:27] ASK FOR ACH CHANGE? YES OR NO? THAT IS [01:54:30] NOT COMPLICATED WORK
AND I'VE RECEIVED [01:54:33] A LOT OF COMMENTS BACK WITH REGARD TO [01:54:34] THAT, WITH REGARD TO ADMINISTRATIVE [01:54:37] PROFESSIONALS, BECAUSE I EVEN [01:54:38] EXPERIENCED THE GREATNESS OF [01:54:40] ADMINISTRATIVE PROFESSIONALS AT THE PORT [01:54:42] OF SEATTLE, ESPECIALLY A TEAM MEMBER [01:54:43] THAT I HAVE ON TEAM AFR CORE SERVICES, [01:54:47] WHO'S THE ADMINISTRATIVE PROFESSIONAL
[01:54:49] BUT WHAT IS SHE? SHE'S A KENMORE CITY [01:54:52] COUNCIL MEMBER
ALL RIGHT
AND THEN [01:54:55] SHE'S BEEN VOTED AS DEPUTY MAYOR
AND [01:54:58] FOR US TO STAY ADMINISTRATIVE [01:54:59] PROFESSIONALS CAN'T PICK UP THE PHONE [01:55:01] AND CALL A SUPPLIER AND VALIDATE
I [01:55:03] THINK IT'S JUST A DOLLAR DISRESPECT TO [01:55:06] ADMINISTRATIVE PROFESSIONALS AT THE PORT [01:55:07] OF SEATTLE
AND I JUST SUGGEST, PLEASE, [01:55:10] THAT WE BE VERY CONSCIOUS ABOUT NOT [01:55:12] BEING SUBCONSCIOUS BIAS AND BY DEFAULT, Page 41 of 42 This transcript is not an official record
It was generated using speech-to-text technology and may contain inaccuracies or misspellings
Transcript of Audit Meeting on Apr 07, 2022 2:30pm The Port of Seattle Commission
[01:55:15] INSTITUTIONALIZING INPUTS OF BIAS
WE [01:55:18] GOT TO BE VERY CAREFUL ABOUT [01:55:19] MICROAGGRESSIONS UNINTENDED
WE'RE [01:55:21] SIMPLY NOT INFORMED STATEMENTS MADE [01:55:23] ANYTHING IN TERMS OF PUBLIC DOCUMENTS, [01:55:25] BECAUSE AS WE CONCLUDE AUDITS AND [01:55:28] REPORTS TO THE AUDIT COMMITTEE, IT'S BY [01:55:30] FUNCTION THAT THE AUDIT COMMITTEE, AND [01:55:32] THEREFORE REPRESENTING COMMISSIONER, [01:55:34] SANCTIONED THESE REPORTS AS WELL AS THE [01:55:36] SUBSTANCE
AND I JUST PLEASE YOU AYE [01:55:38] LEADERS HERE THAT REALLY UNDERSTAND [01:55:40] WHERE I'M COMING FROM
I FEEL VERY SAFE [01:55:42] TO SPEAK UP
AND I AM
I'M NOT BEING [01:55:44] CRITICAL
I'M JUST SAYING LET'S JUST DO [01:55:46] BETTER
LET'S WORK TOGETHER TO BE [01:55:48] BETTER
THANK YOU SO MUCH FOR THE [01:55:50] OPPORTUNITY
THANKS, RUDY
I APPRECIATE [01:55:52] YOUR COMMENTS AND YOUR WISDOM
YEAH
[01:55:56] THANK YOU FOR SPEAKING UP ON IT
IT'S [01:55:57] IMPORTANT
IT'S PART OF THE TRANSPARENCY [01:56:00] THAT WE TALK ABOUT AND ENSURING THAT WE [01:56:02] ARE GOOD STEWARDS OF PUBLIC DOLLARS, [01:56:04] AND THAT IS ALSO ENSURING THAT WE'RE NOT [01:56:06] BEING BIASED AND THAT WE SPEAK TRUTH TO [01:56:09] POWER AT ANY POINT
AND SO IT'S [01:56:12] IMPORTANT THAT WE'RE DOING THAT
SO I [01:56:14] APPRECIATE YOU SAYING THAT
YEAH
[01:56:17] ALTHOUGH TO MAKE SURE, I DO WANT TO [01:56:18] POINT OUT, THE REPORT DOES NOT SINGLE [01:56:21] OUT
IT JUST SAYS WHOEVER YOU PUT IN [01:56:24] THAT ROLE, YOU NEED TO ENSURE THAT THEY [01:56:27] HAVE THE RIGHT TRAINING
YEAH, I [01:56:29] UNDERSTAND
BUT THE CHALLENGE IS THE [01:56:31] PERSON IN THAT ROLE IS A WOMAN OF COLOR
[01:56:33] ALRIGHT? AND WE JUST GOT TO BE CAREFUL
[01:56:36] COURT KNOWS WHO WE'RE TALKING ABOUT
[01:56:38] THANK YOU
[01:56:41] THANK YOU ALL
HEARING NO FURTHER [01:56:44] COMMENTS
IF IT'S OKAY WITH COMMISSIONER [01:56:46] HOMICIDE, I'D LIKE TO FOREGO A BREAK
[01:56:49] WE DON'T KNOW WE'RE SUPPOSED TO TAKE A [01:56:51] BREAK BETWEEN PUBLIC AND PRIVATE, BUT IF [01:56:53] YOU'RE GOOD, I'M GOOD
ANYONE ELSE IS [01:56:56] GOOD
OKAY, GOOD
ALL RIGHT
SO HEARING [01:57:00] NO FOR THE COMMENTS, WE WILL BREAK INTO [01:57:02] THE NON PUBLIC PORTION OF OUR MEETING
[01:57:05] THE TIME IS NOW 430 P
M
EXACTLY ON [01:57:08] TIME TO DISCUSS TWO MATTERS RELATED TO [01:57:11] SECURITY SENSITIVE INFORMATION
THE NON [01:57:13] PUBLIC PORTION OF THE MEETING WILL LAST [01:57:15] APPROXIMATELY 30 MINUTES AND THE MEETING [01:57:17] WILL ADJOURN WITH NO FURTHER BUSINESS [01:57:19] AFTER THAT TIME
PARTICIPANTS JOIN THE [01:57:22] NON PUBLIC PORTION OF THE MEETING, [01:57:23] PLEASE
PARTICIPANTS JOINING THE NON [01:57:26] PUBLIC PORTION OF THE MEETING, PLEASE [01:57:28] CLOSE OUT OF THIS MEETING LINK AND JOIN [01:57:29] BEFORE 30 P
M
TEAMS MEETING INVITATION [01:57:33] THE CURRENT AND TIME IS 04:30 P.M.
AND [01:57:36] WE WILL SEE YOU IN THE NON PUBLIC SIDE [01:57:40] DEAL
THANK YOU, END OF TRANSCRIPT Page 42 of 42 This transcript is not an official record
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