INTERNAL AUDIT REPORT 
Operational Audit 
Fishermen’s Terminal 

January 2022 – December 2022 
Issue Date: March 20, 2023 
Report No. 2023-03

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TABLE OF CONTENTS 

Executive Summary .................................................................................................................................... 3 
Background ................................................................................................................................................. 4 
Audit Scope and Methodology ................................................................................................................ 5 
Schedule of Findings and Recommendations ........................................................................................ 6 
Appendix A: Risk Ratings ........................................................................................................................... 9 














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               Fishermen’s Terminal 
Executive Summary 
Internal Audit (IA) completed an audit of Fishermen’s Terminal for the period January 2022 
through December 2022. The audit was performed to evaluate billing processes, to evaluate
segregation of duties, and to assess internal controls, including whether standard operating
procedures were drafted and followed. The audit did not include PeopleSoft Financials. 
This audit was requested by Maritime Management to assist them in evaluating if certain
processes were being followed. S pecifically requested was our assessment to determine if
revenue billing was complete and accurate. 
We concluded that billing of moorage and berthage was accurate and complete. However, errors
were identified in revenue of auxiliary services, and we concluded that billing and collection
processes need to be more holistically understood, documented, and followed. During our audit,
roles and responsibilities were sometimes indistinct, making it unclear who is overseeing and
responsible for its accuracy.
As part of our audit, we performed a walkthrough of Fishermen’s Terminal, Salmon Bay Marina 
and any associated properties at the location. We noted the aging infrastructure at Salmon Bay
Marina (SaBM), the net sheds at Fishermen’s Terminal, and at the building that is slated to
become the Maritime Innovation Center. Of particular concern was the roof at SaBM, which is at
risk of structural failure. We reviewed an engineer’s assessment report, requested by Maritime
Management, that identified “significant risks of structural instability” and “notable risk of
fire” due to the lack of a sprinkler system. The cost to repair the existing structure was estimated
at $1.3 million, removal of the roof was $2.8 million, while a total roof replacement was estimated
at $13.5 million. Regardless of which alternative is chosen, the report highlights safety concerns,
which if left unaddressed, could result in property damage, loss of life, and to a lesser extent,
reputational harm. 
Port Management was varied in their support of the initial purchase of SaBM. On December 5,
2017, Port Commission approved the purchase with a vote of four to one for $15,679,120. As a
municipal corporation that contributes to economic development in Seattle, SaBM adds to the
existing portfolio of marinas owned and operated by the Port. 
One medium rated issue is listed below and discussed in more detail, beginning on page six of
this report. 
1. (Medium) - Billing and collection procedures at Fishermen’s Terminal were informal and
internal controls needed to be strengthened. We identified underbilling of revenue and a sizable
accounts receivables balance primarily managed by one individual. 


Glenn Fernandes, CPA 
Director, Internal Audit 

Responsible Management Team 
Stephanie Jones-Stebbins, Managing Director Maritime 
Kenny Lyles, Director Maritime Operations and Security 

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Background 
Fishermen’s Terminal 
Fishermen’s Terminal opened in 1914 and serves as the home port for Seattle’s commercial
fishing fleet. In  2002, it began accepting non-commercial pleasure craft. Today, it serves more
than 700 vessels and provides short-term and long-term freshwater mooring for both fishing and
commercial vessels, as well as pleasure crafts. The facility also includes 227,000 square feet of
office, retail, restaurant, and warehouse space. Reflected below is revenue for the last three
years: 
Revenue Source                                 2020          2021          2022
Berthage and Moorage                      $2,175,639    $2,175,067    $2,358,758
Concession Services                            657,232        614,430        663,961
Space Rental                                  148,541        107,867        120,390
Utility Sales Revenue                                88,596         144,947         128,817
Other Equipment Rental                           34,571         38,253         33,551
Maintenance Service Fees                        11,028         16,003         12,516
Other Services Revenue                          63,781         67,014         67,544
$3,179,388     $3,163,581     $3,385,537
Salmon Bay Marina 
Salmon Bay Marina offers covered and uncovered freshwater monthly moorage for recreational
boats. It is located just inside the Ballard Locks, next to the Ballard Bridge. Various services such
as restrooms, laundry facilities, storage and lockers, parking, access to electrical outlets, and
water/ garbage disposal, are available for customers. The facility is open all year-round with staff
available 24 hours a day, 7 days a week, and is walking distance to restaurants and shops at
Fishermen’s Terminal. Reflected below is revenue for the last three years: 
Revenue Source                                 2020          2021          2022
Berthage and Moorage                        $831,065      $871,038      $934,283
Concession Services                              6,728          6,888          7,003
Utility Sales Revenue                                28,351          28,236          30,692
Other Services Revenue                           6,251          6,756          6,643
$872,395      $912,918      $978,621
Maritime Industrial Center 
The Maritime Industrial Center offers short-term and daily moorage for vessels up to 250 feet
(76m) in length. It is located in freshwater, just inside the Ballard Locks. The center has over 1,500
linear feet of concrete dock space for loading and repair/ maintenance work. Shore power, potable
water, phone service, and waste / recycling services are available to customers as well. The
center is managed by Fishermen’s Terminal with staff available 24 hours a day, 7 days a week. 
Revenue Source                                 2020          2021          2022
Berthage and Moorage                         188,424        118,516        100,983
Space Rental                                    37,641         28,438        39,003 
Other Equipment Rental                             2,391            911           1,606
Other Services Revenue                           9,964         10,323         10,164
$238,420      $158,188      $151,756


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               Fishermen’s Terminal 
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. 
In some cases, we used a judgmental method to determine the samples selected for our audit
test work. The results of this work cannot be projected to the full population as we did not select
a statistical based random sample. 
The period audited was January 2022 through December 2022 and included the following
procedures: 
Billing Processes: 
• Conducted inquiries and performed walkthroughs to gain an understanding of the billing
process. 
• Reviewed customer payments within the Marina Management System (MMS) and
recalculated those, for accuracy. 
• Obtained material agreements and contracts to assure that amounts are being billed
appropriately and correctly. 
Standard Operating Procedures: 
• Obtained and reviewed Standard Operating Procedures available,  to assure  that
established and standardized processes exist and are being followed / implemented. 
Internal Controls: 
• Conducted inquiries and performed walkthroughs with key employees to gain an overall
understanding of internal controls present. 
• Obtained the User Account Review report for MMS and reviewed user roles and access
for employees, verifying appropriateness. 
Segregation of Duties: 
• Conducted inquiries and performed walkthroughs with key employees to gain an
understanding of the business’ operations. 







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Schedule of Findings and Recommendations 
1) Rating: Medium 
Billing and collection procedures at Fishermen’s Terminal were informal and internal
controls needed to be strengthened. We identified underbilling of revenue and a sizable
accounts receivables balance primarily managed by one individual. 
Billing 
Billing adjustments can be made in MMS by multiple people unilaterally, requiring no formal
approval. A fundamental internal control principle requires that someone other than the individual
who entered the adjustment, usually the person’s manager, review and release the adjustment.
This way, errors or internal fraud, can be identified and prevented. 
For example, our testing identified approximately $3,800 of underbilled revenue related to
auxiliary services. We tested five transactions for space rental and three had been billed using
outdated rates. The revenue billed for this service for the year 2022 was $116,013.92. Applying
the exception rate from our testing, an estimated $36,500 was underbilled for the year 2022. 
Management also identified that the rate billed for use of the Nordby conference room was not
accurate. Rather, an outdated rate on the Fishermen’s Terminal website was incorrectly used. As
a result, in 2022, management estimated approximately $1,700 was underbilled. 
These two examples highlight the need to have a formal and established review process over
billing. A formal review process is an internal control that could have identified and prevented the
errors. 
Collection 
The outstanding balance of accounts receivables at FT and Salmon Bay Marina as of January
31, 2023, was approximately $900,000 and represents about 600 customer accounts (see Table
I below). Of the $900,000 outstanding, about $263,000 has been outstanding for over 120 days.
The collections process, however, is primarily managed by only one person. With only one
individual performing this function, the operations are more susceptible to continuity risks, should
the person leave their position. 
While delinquencies are not uncommon, this person can also delete billing records in MMS
without detection, further compounding the risks within the business. Employees who collect cash
from customers should not also be able to delete customer billings. 
Table I 
Days Past Due
Current      1-30       31-60      61-90      91-120    over 120     Total
Fishermen's Terminal    $ 337,638  $   90,586  $   58,315  $   29,632  $   25,181  $ 254,688  $ 796,040
Salmon Bay Marina         74,154      10,405       5,112       3,413       2,380       8,760    104,224
Total                   $ 411,792  $ 100,991  $   63,427  $   33,045  $   27,561  $ 263,448  $ 900,264

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Recommendations: 
Billing and collection processes should be documented and include management reviews so that
oversight is well understood and required. They should also include who performs the review, 
when it is conducted, and what is reviewed. 
We also recommend evaluating permissions and access within MMS so that individuals can’t
delete or adjust charges to customer accounts. 
Management Response/Action Plan: 
This memo represents the Management Response/Action Plan to the 2023 Commercial Fishing
Internal Audit. The Maritime department that oversees the commercial fishing business unit,
Maritime Operations and Security, requested the Internal Audit to review business practices used
in the management of Fishermen’s Terminal, (F.T.); Salmon Bay Marina, (SaBM); and the
Maritime Industrial Center, (MIC). 
In November of 2021, a new Sr. Manager of commercial fishing was hired to lead the business
group. With the change in management in place after one year, the Director of Operations &
Security felt a review of practices was timely. 
Maritime Operations & Security accepts the findings of the 2023 Internal Audit, as well as the
associated recommendations. Based on these recommendations, Commercial Fishing will work
to create a structure that will accomplish a separation of duties to ensure integrity in the revenue
management program.
Areas identified in the revenue management program warranting structural enhancement are
Billing and Collection procedures. Currently, the program is informal and needs to be
strengthened. This has resulted in underbilling and a sizable accounts receivables balance.
Currently, these programs are managed by one individual, the business and operations
manager.
In 2002, the Seaport Division, (the precursor to the Maritime Division), reorganized, eliminating
a business manager position by one FTE or Full Time Equivalent. Since that time, one business
manager has been responsible for managing billing and collections. The resulting reduction in
financial oversight can be attributed to approximately $230,000 for overdue accounts of 120
days or more, YTD. To compound this exposure, should the business manager position be
vacated, records of customer collection management would be susceptible to loss. 
With the desire to competently manage revenue and accounts receivable, commercial fishing
management will work to design a structure that will achieve the recommended “separation of
duties”. Management is evaluating whether an additional position is needed or can be
accommodated with existing staff, to provide separation of customer intake, (assigning
moorage), and billing, to provide revenue management accountability. This position will also
provide the same separation of duties for the billing and collection management program
associated with the financial management process.
Processes will also be brought up to date by automating customer engagement tracking for the
collections process, as well as the incorporation and utilization of “Dashboards” for reporting
and information retention, and the soon to be completed Marine Vessel Management System or
“MVMS”, platform currently in the final stages of development by internal ICT developers. (The

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original launching of the MVMS system was delayed over a year as a result of circumstances
beyond the control of the ICT design and development team. Current schedule for launching 
MVMS is early Spring, 2023). These automated tools will provide a more reliable system of
customer assignment, revenue, billing and collections management.

Finally, the Maritime Division will launch the 2024 Capital program budget process this Spring.
In preparation of the capital budget project funding allocations and schedules, the SaBM Roof
program is scheduled to be in the review. The condition assessment and planning process
concluded for the roof at SaBM this past November and is ready for Capital Review funding
assignment. 

DUE DATE: 03/31/2024 















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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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