INTERNAL AUDIT REPORT
Limited Contract Compliance Audit
Seattle Food Partners, LLC
July 2023 - December 2023
Issue Date: September 4, 2024
Report No. 2024-08
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TABLE OF CONTENTS
Executive Summary .............................................................................................................................................. 3
Responsible Management Team ........................................................................................................................ 3
Background ............................................................................................................................................................ 4
Audit Scope and Methodology ............................................................................................................................ 5
Appendix A: Risk Ratings..................................................................................................................................... 6
2
Executive Summary
Internal Audit (IA) completed a limited scope audit of the Lease and Concession Agreement (Agreement)
between Seattle Food Partners, LLC, and the Port of Seattle (Port). The period audited was July 1, 2023
through December 31, 2023. The audit was performed to determine whether concession fees were
complete, properly calculated, and remitted timely to the Port.
We concluded that Seattle Food Partners, LLC materially complied with the terms of the Agreement. No
exceptions were identified.
We extend our appreciation to management and staff of the Airport Dining and Retail, and the
Accounting & Financial Reporting Departments for their assistance and cooperation during the audit.
Glenn Fernandes, CPA
Director, Internal Audit
Responsible Management Team
Lisa Lam, Acting Director, Accounting and Financial Reporting
Khalia Moore, Senior Manager, Airport Dining and Retail
Jeff Wolf, Director, Aviation Commercial Management
3
Background
On January 23, 2019, The Port of Seattle (Port) entered into a lease agreement (AIR002427) with
Seattle Food Partners, LLC. Seattle Food Partners began operations in December 2022.
Seattle Food Partners, LLC, operates Salty's at SEA and BrewTop Social. Salty's at SEA is a sit-down
restaurant serving seafood with a true Pacific Northwest menu featuring fresh and local ingredients.
BrewTop Social is above Salty's and is an open-air concept bar that features local to international
beverages with an emphasis on the Pacific Northwest region.
Percentage fees were due in arrears, to the extent the percentage fees are higher than the monthly
MAG (Minimum Annual Guarantee) which is paid in advance. Effective January 1, 2023, only the
percentage fee payments are made since the MAG is not considered until the end of the lease year.
Percentage Fees are:
14.5% of annual gross sales less than $20,000,000
16% of annual gross sales between $20,000,000 and $30,000,000
17.5% of annual gross sales greater than $30,000,000
The table below reflects 2023's Gross Sales and Percentage Fees:
Year
2023
Gross Sales
$20,737,489
Percentage Fee *
$2,917,800
*Contract provision 1.5.9 allows for a two month reduction of percentage fees.
4
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 July 2023 through December 2023 and included the following procedures:
•
Validated that the percentage fees were calculated correctly and in accordance with the lease
revenue thresholds.
•
Agreed Concessionaire's monthly general ledger sales data to what was provided to the
Accounting & Financial Reporting Department.
•
Agreed point of sale summary reports to the general ledger.
•
Obtained the Annual Gross Sales Report from the SVP of Seattle Food Partners, and compared
the report to year-end gross sales data reported to AFR.
•
Reviewed the Profit & Loss statements for variances.
•
Reviewed a random sample of invoices to determine if they were paid on time and for the full
amount charged.
•
Validated that concessionaire is certified through OMWBE WA and confirmed with
management that they are reflected as such on the ACDBE participation report submitted to
the FAA.
5
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.
Rating
High
Financial
Internal
Stewardship Controls
Significant
Missing or not
followed
Partial controls
Medium
Low
Moderate
Minimal
Not functioning
effectively
Functioning as
intended but
could be
enhanced
Compliance
Non-compliance
with Laws, Port
Policies,
Contracts
Partial
compliance with
Laws, Port
Policies
Contracts
Mostly complies
with Laws, Port
Policies,
Contracts
6
Public
High probability
for external audit
issues and / or
negative public
perception
Moderate
probability for
external audit
issues and / or
negative public
perception
Low probability
for external audit
issues and/or
negative public
perception
Commission/
Management
Requires
immediate
attention
Requires
attention
Does not
require
immediate
attention