INTERNAL AUDIT REPORT 
Concession Audit 
The Hertz Corporation 

June 2018 – May 2021 


Issue Date: June 3, 2022 
Report No. 2022-05

           The Hertz Corporation 
June 2018 – May 2021 


TABLE OF CONTENTS 

Executive Summary ................................................................................................................................................ 3 
Background ............................................................................................................................................................. 4 
Audit Scope and Methodology ............................................................................................................................... 5 
Schedule of Findings and Recommendations ....................................................................................................... 6 
Appendix A: Risk Ratings ....................................................................................................................................... 7 












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           The Hertz Corporation 
June 2018 – May 2021 
Executive Summary 
Internal Audit (IA) completed an audit of the Consolidated Rental Car Facility Lease Agreement
(Agreement) between Hertz Corporation (Hertz) and the Port of Seattle (Port). The period audited was
June 1, 2018, through May 31, 2021. The audit was performed to determine whether Hertz reported
Concession Fees were complete, properly calculated, and remitted timely to the Port. We also assessed
whether Hertz complied with significant contract provisions, and that the Customer Facility Charge
(CFC) was properly collected and remitted. 
We concluded that Hertz Corporation generally complied with the terms of the Agreement and that the
reported concession fees were accurate, complete, and remitted timely to the Port. However, using a
new tool developed within Internal Audit, with assistance from the Port Business Intelligence team, we
were able to test CFC transactions reported by Hertz, in a more comprehensive and efficient manner.
When applying this approach, we identified the following medium rated issue briefly described below: 
(Medium) - Hertz’s systems and records were unable to clearly discern which customers were eligible
to receive a CFC waiver. Internal Audit identified 3,081 rental tickets, totaling approximately $173,000,
where the CFC was not charged and remitted. Hertz asserted that approximately $164,000 were
insurance replacement rentals and therefore allowable exclusions. 
This issue is discussed in more detail on page six. 
We extend our appreciation to management and staff of the Aviation Commercial Management
Department and the Accounting and Financial Reporting Department for their assistance and
cooperation during the audit. 


Glenn Fernandes, CPA 
Director, Internal Audit 




Responsible Management Team 
Jeffrey Brown, Interim Aviation, Chief Development Officer 
Geoffrey Foster, Interim Sr. Manager, Aviation Business Development 
Dawn Hunter, Interim Aviation, Chief Operating Officer 
Lance Lyttle, Managing Director Aviation 
Jeff Wolf, Interim Director, Aviation Commercial Management 

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           The Hertz Corporation 
June 2018 – May 2021 
Background 
The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc., operates the Hertz, Dollar and Thrifty
vehicle  rental  brands  throughout North  America, Europe,  the Caribbean, Latin  America, Africa,
the Middle  East, Asia, Australia, and New  Zealand.  The  Port  of  Seattle  (Port)  entered  into  a
Consolidated Rental Car Facility Lease Agreement (Agreement) with The Hertz Corporation (Hertz) in
July 2008.
In May 2020, Hertz filed for bankruptcy protection. According to Port Management, there was no impact
to Port operations resulting from the bankruptcy filing. Also in May, the Port Commission passed a
motion to grant economic relief to concessionaires due to the covid pandemic. This relief was in the form
of: 
1.  Adjustment of the minimum annual guarantee (MAG).
2.  Waiver of late interest charges for any late payments.
The terms of the Agreement provide for a MAG equal to 85% of the total amount paid to the Port for the
previous Agreement Year. Additionally, the Agreement requires a Percentage Fee equal to 10% of gross
revenues, provided the fee is higher than the monthly MAG. The MAG is payable in advance, on or
before the first day of each month. The Percentage Fee, if applicable, is due on or before the 20th of the
following month. 
The Agreement states that the Operator must bill a daily CFC of $6 on vehicle rental transactions, and
remit the full amount to the Port, regardless of whether or not the full amount is actually collected. The
first transaction day provides for a twenty five (25) hour period and each successive day provides for a
twenty four (24) hour period. The CFC was revised to $6.50 effective on January 1, 2021. Although
outside of the scope of this audit, the CFC increased to $7.00 effective on January 1, 2022. 
The table below reflects the Gross Revenues, Percentage Fees, and CFC fees: 

Agreement Year               Gross Revenue        Percentage Fees              CFC Fees 
June 2018 – May 2019              54,477,017              5,447,701               5,668,692 
June 2019 – May 2020              43,800,157              4,380,016               4,672,812 
June 2020 – May 2021              16,343,174              1,634,317               1,820,703 
Total                                $114,620,348              $11,462,034               $12,162,207 

Source: The Hertz Corporation Monthly Revenue Reports, Peoplesoft Financials, AFR YE documents 




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           The Hertz Corporation 
June 2018 – May 2021 
Audit Scope and Methodology 
We conducted the engagement in accordance with Generally Accepted Government Auditing Standards 
and the International Standards for the Professional Practice of Internal Auditing. Those standards
require that we plan and conduct an engagement to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our engagement objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and conclusions based on our
engagement objectives. 
The period audited was June 2018 through May 2021 and included the following procedures: 
Revenue Completeness and Accuracy 
• Traced concession payments to Port records to verify payments were received by Agreement
dates. 
• Agreed revenue reported to the Port, to the Operator’s monthly revenue reports, charge sheets,
and to independently audited schedules. 
Customer Facility Charge 
• Using Tableau, tested 100% of transactions, by re-calculating the checkout and return dates to
assess the accuracy of CFC’s charged and remitted. 
• Agreed Operator’s audited CFC counts to daily transaction records. 
Rent Surety and Insurance Adequacy
• Compared the Surety posted, to the Provisions of the Agreement, Port Procedures (RE-2 Section
E.1.c(2)), and the Revised Code of Washington RCW 53.08.085. 
• Compared the Insurance provided to the Provisions of the Agreement.










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           The Hertz Corporation 
June 2018 – May 2021 
Schedule of Findings and Recommendations 
1) Rating: Medium 
Hertz’s systems and records were unable to clearly discern which customers were eligible to
receive a CFC waiver. Internal Audit identified 3,081 rental tickets, totaling approximately
$173,000, where the CFC was not charged and remitted. Hertz asserted that approximately 
$164,000 were insurance replacement rentals and therefore allowable exclusions. 
The Agreement requires the Operator to bill a daily CFC of $6 on vehicle rental transactions, and to
remit the full amount to the Port, regardless of whether or not the full amount is actually collected. An
exception exists for local customers who do not use airport facilities. The first transaction day provides
for a twenty five (25) hour period and each successive day provides for a twenty four (24) hour period. 
On January 1, 2021, the CFC daily rate was revised to $6.50. According to the Lease, the CFC must be
collected at the time the first payment is made for a qualifying vehicle rental transaction and must remit
the full amount of the CFC to the Port regardless of whether or not the full amount of the CFC is collected. 
Using data from the operator, we recalculated the CFC by comparing the check-out date and time to
the check in date and time. Based on this analysis for the 3-year period under review, we identified
23,778 days or 3,081 rental tickets. This represents $173,533 of CFC’s not charged to the customer
and subsequently not remitted to the Port. 2,087 out of the 3,081 tickets had no CFC charged. 
Hertz was provided with our exceptions and asserted that $164,352 were for insurance replacement
rentals for local customers, which is an allowable exclusion. The initial data provided by Hertz, did not
correctly flag these transactions as allowable exceptions. Hertz was unable to provide a reason for
the remaining $9,181. Internal Audit in partnership with the Port’s Commercial Management team
requested further documentation to substantiate Hertz’s assertion. Once this documentation is
provided, Internal Audit will assess whether these can be waived. 
Through our internal follow up process, Internal Audit continue to work closely with Commercial
Management and will request additional documentation to determine if we agree with their (Hertz)
assertion. 
Recommendations: 
We recommend collecting the $9,181 plus any accrued interest and/or penalties. 
Internal Audit will partner with Aviation Commercial Management (AVCM) and will recommend an
appropriate course of action based on data provided by Hertz. 
Management Response/Action Plan: 
Aviation Commercial Management (AVCM) will continue working with Hertz and Internal Audit to review
the variances identified through this audit, Hertz’s documentation supporting the variances, and
determine the total under reported CFC charges due to the Port and will seek collection accordingly.
AVCM is continuing conversations with both Hertz and Internal Audit to review the variances identified
and will continue to work together to ensure all CFCs owed to the Port under the agreement have been
collected. We appreciate the efforts of the Internal Audit team for their work on this audit. 

DUE DATE: 09/30/2022 


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           The Hertz Corporation 
June 2018 – May 2021 
Appendix A: Risk Ratings 
Findings identified during the audit are assigned a risk rating, as outlined in the table below. Only one
of the criteria needs to be met for a finding to be rated High, Medium, or Low. Findings rated Low will
be evaluated and may or may not be reflected in the final report.
Financial      Internal                                               Commission/
Rating                                 Compliance      Public 
Stewardship  Controls                                         Management 
High probability
Non-compliance
Missing or not                       for external audit   Requires
with Laws, Port
High       Significant     followed                          issues and / or     immediate
Policies, 
negative public     attention 
Contracts 
perception 
Moderate
Partial
Partial controls                        probability for
compliance with
external audit       Requires
Medium   Moderate                  Laws, Port
Not functioning                      issues and / or      attention 
Policies 
effectively                               negative public
Contracts 
perception 
Low probability 
Functioning as   Mostly complies                      Does not
for external audit
intended but     with Laws, Port                        require
Low      Minimal                                   issues and/or
could be        Policies,                             immediate
negative public
enhanced       Contracts                          attention 
perception 











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