3. Presentation

Moss Adams Presentation

Port of Seattle
Report on 2021 Audit Results

1 Port of Seattle 2021 Audit Results

• Reports Issued
• Areas of Audit Emphasis
• Internal Control Matters
• Matters Required to be Communicated to
the Audit Committee
• Upcoming Accounting Pronouncements
• Other Communications

2 Port of Seattle 2021 Audit Results

                        Auditor Reports Issued
Auditor Report on Financial Statements for     •   Unmodified opinion
the Enterprise Fund and the
Warehousemen’s Pension Trust Fund          •  Dated April 28, 2022

Report on Internal Control Over Financial      •   No internal control or compliance findings
Reporting and on Compliance and Other
Matters                                    •  Dated April 28, 2022

•    No internal control or compliance findings
Report on Compliance for the Major            •   The Schedule of Expenditures of Federal
Federal Program and on Internal Control           Awards (SEFA) is presented fairly in all
Over Compliance; Report on Schedule of           material respects in relation to the financial
Expenditures of Federal Awards Required          statements
by the Uniform Guidance (Single Audit)        •   One Major Program – Airport Improvement
Program with $135.9 million in federal funds
received (of which $100.3 million in COVID-
19 funding).

                   Auditor Reports Issued (continued)
•    Audit and report on the schedule of Passenger Facility Charge (PFC) receipts and
expenditures and related internal controls
•    One significant deficiency in internal control included in the report related to the reporting of certain
PFC revenues resulted in an adjustment of unliquidated revenues in the FAA quarterly reports.
•   Report on the Schedule of Net Revenues Available for Revenue Bond Debt Service

•   Report on Agreed Upon Procedures for Washington State Department of Ecology (to
be completed in May)

•   Report on Agreed Upon Procedures for Environmental Protection Agency (to be
completed in May)

4 Port of Seattle 2021 Audit Results

                       Areas of Audit Emphasis
•    Internal control environment
o  Capital assets/project management, cash receipts/receivables, cash disbursements/payables,
payroll, bond and investment transactions, and administration of federal awards with focus on
COVID-19 funding
•    Management estimates
o  Allowance for doubtful accounts, environmental remediation liability, special item related to habitat
restoration costs recorded in 2021, legal contingencies and insurance recoveries, compensated
absences, actuarial valuations for pension and other postemployment benefits amounts
•    Northwest Seaport Alliance (NWSA) joint venture
o  Confirmed the Port of Seattle’s share in operating revenue through confirmation with component
auditor and agreement to NWSA audited financial statements
•    Capital assets
o  Consideration of capitalization policies, testing of additions, retirements, overhead application, and
depreciation; consideration of timely closing of capital improvement projects
5 Port of Seattle 2021 Audit Results

                   Areas of Audit Emphasis (continued)
•    Bond activity
o  Tested the five new bond issuances and four refunding bonds during 2021.
o  Debt repayments, arbitrage liability, discounts and premiums, compliance with covenants, and
procedures over information presented in the net revenues schedule
•    Airline lease and operating agreement
o  Analysis of revenue requirement by cost center category under the Signatory Lease and Operating
Agreement (SLOA IV) agreement, including landing fees, terminal rents, gate fees, and baggage claim
o  Confirmations of amounts on an airline-by-airline basis
•    Fiduciary activities
o  Consideration of investment balances, plan contributions and distributions for the Warehousemen’s
Pension Trust Fund

6 Port of Seattle 2021 Audit Results

                   Areas of Audit Emphasis (continued)
•    Revenue recognition
o  Operating revenue analysis using business indicators such as landed weight, enplanements, gate
usage, and boat counts
o  Ad valorem tax levy, investment income, PFC, Customer Facility Charges (CFCs), and federal grants
o  Consideration of the collectability of related receivables
•    Information technology
o  General Computer Controls

•    One major federal program identified and tested current year –
o  Total federal awards reported on schedule of expenditures of federal awards - $137.3M
o  Major program – FAA Airport Improvement Program - $135,865,813, including COVID Relief funding
of $100,272,161

7 Port of Seattle 2021 Audit Results

                      PFC Internal Control Matter
Through their internal review process, Port of Seattle (the Port) staff identified multiple transactions
between 2011 and the second quarter of 2021 that were not accurately reported in the quarterly and
annual PFC reports submitted to the FAA. The cumulative effect of all identified adjustments caused an
increase to the PFC balance as of December 31, 2021 by $6.3 million.
We recommend that Port management improve the process to include reconciliation of cash balances of
PFC funds to the unliquidated revenue balance on the PFC Schedule of Revenues and Expenditures, at
least quarterly, evaluate unusual transactions and resolve discrepant items identified prior to submission
of the report to the FAA.
Management response: Management provided a response that included corrective action that has
been implemented already.

8 Port of Seattle 2021 Audit Results

                    Required Communications
•    Auditor and Management responsibilities for financial statements under Generally
Accepted Auditing Standards
o  To form and express an opinion about whether the financial statements are fairly presented; to
plan and perform the audit in accordance with generally accepted auditing standards and
Government Auditing Standards
o  Our audit does not relieve Port management and the Port Commission of its responsibilities
•    Audit was performed according to the planned scope
•    Significant accounting policies are summarized in Note 1 to the financial
•    Financial statement disclosures were consistent, clear and understandable
•    Representations were requested and received from management
•    There were no disagreements with management or difficulties encountered during
the audit
9 Port of Seattle 2021 Audit Results

                 Required Communications (continued)
•    There were no uncorrected audit adjustments identified
•    Consultation with other independent auditors (none of which we are aware)
•    Illegal acts (none noted)
•    Ability to continue as a going concern (no disclosure necessary)
•    Consideration of fraud in a financial statement audit
o  Procedures performed included journal entry testing, deferred payment plan analysis, and
interviews of personnel

10 Port of Seattle 2021 Audit Results

            New & Upcoming Accounting Pronouncements
•    New accounting pronouncements implemented in 2021
o  GASB Statement No. 98, The Annual Comprehensive Financial Report
•    Upcoming accounting pronouncements
o  GASB 87 – Leases (effective in 2022): Addresses recognition of certain lease assets and
liabilities for leases that previously were classified as operating leases.
o  GASB Statement No. 91, Conduit Debt Obligations (effective 2022)
o  GASB Statement No. 92, Omnibus 2020 (effective 2022)
o  GASB Statement No. 93, Replacement of Interbank Offered Rates (effective 2022)
o  GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability
Payment Arrangements (effective 2023)
o  GASB Statement No. 96, Subscription-Based Information Technology Arrangements (effective
We have been working with management to plan for the implementation of these standards.
11 Port of Seattle 2021 Audit Results

•    Regular status meetings were held between Moss Adams and Port management and staff
throughout the audit term
•    Technical ‘whitepapers’ were received from Port management throughout the year
•    The audits progressed on time and in an orderly fashion, fully in a remote work
•    All Port personnel organization wide were responsive and fulfilled all our requests in a
timely manner
•    ‘Tone at the Top’ and attitude from management was one of openness in response to
audit requests and discussion points
•    As planned, Branch Richards & Co. personnel and Humbition Consulting personnel were
an integral part of our audit team. Over 14% of our audit fee for the audit was to these
small business & minority owned firms.

12 Port of Seattle 2021 Audit Results


Contact Us

+   Olga A. Darlington             +   Anna Waldren                   +   Connor McCauley

Olga.Darlington@mossadams.com                 Anna.Waldren@mossadams.com                    Connor.McCauley@mossadams.com
(425) 551-5712                                    (206) 302-6282                                       (206) 302-6793

13  Port of Seattle 2021 Audit Results

                                                        The material appearing in this presentation is for informational purposes only and should not be
construed as advice of any kind, including, without limitation, legal, accounting, or investment advice.
This information is not intended to create, and receipt does not constitute, a legal relationship, including,
but not limited to, an accountant-client relationship. Although this information may have been prepared
by professionals, it should not be used as a substitute for professional services. If legal, accounting,
investment, or other professional advice is required, the services of a p rofession al sh ould be so ught .
Assurance, tax, and consulting offered through Moss Ada ms LLP. Inves tment advisor y off ere d throug h
Moss Adams Wealth Advisors LLC. Investment banking offered throu gh Moss Adam  s Capital LLC.


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