INTERNAL AUDIT REPORT
Limited Contract Compliance Audit
Concourse Concessions LLC
January 2024 - June 2024
Issue Date: March 5, 2025
Report No. 2025-03
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Concourse Concessions LLC
TABLE OF CONTENTS
Executive Summary ............................................................................................................................................................................... 3
Background .............................................................................................................................................................................................. 4
Audit Scope and Methodology ......................................................................................................................................................... 5
Appendix A: Risk Ratings ..................................................................................................................................................................... 6
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Concourse Concessions LLC
Executive Summary
Internal Audit (IA) completed a limited scope audit of the Lease and Concession Agreement (Agreement)
between Concourse Concessions LLC, and the Port of Seattle (Port). The period audited was January
1, 2024, through June 30, 2024.
The audit was performed to determine whether concession fees were complete, properly calculated,
and remitted timely to the Port.
We concluded that Concourse Concessions LLC materially complied with the terms of the
Agreement. No exceptions were identified.
We extend our appreciation to management and staff of Aviation Commercial Management 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, Director, Accounting and Financial Reporting
Khalia Moore, Assistant Director, Aviation Commercial Management
Jeff Wolf, Director, Aviation Commercial Management
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Concourse Concessions LLC
Background
On March 15, 2019, The Port of Seattle (Port) entered into a lease agreement (AIR002362) with
Concourse Concessions LLC. Concourse Concessions LLC operates Caffé D'arte.
According to ExploreSEA.org:
"As the premier Northwest artisan coffee roaster, Caffé D'arte was founded in Seattle in the 1980's [sic]
by Italian espresso master Mauro Cipolla. Along with offering award-winning coffee drinks, Caffé D'arte
features quality pastries from Macrina Bakery and Alki Bakery, and an Italian-inspired menu featuring
made-to-order pizza, grilled sandwiches, hot breakfast items, and fresh grab-to-go sandwiches and
salads, all prepared on-site every day with the highest quality."
The Minimum Annual Guarantee (MAG) is 85% of the total paid by the concessionaire to the Port, for
the previous calendar year. The annual MAG for 2024 was $806,311.97. At the end of the lease year, a
reconcilation is performed comparing the Percentage Fees due to the Port, to the Agreement Year's
MAG. Any amount of the Percentage Fees that fall below the MAG is due to the Port.
Percentage Fees:
15% of annual gross sales less than $3,000,000
15.5% of annual gross sales between $3,000,000 and $4,000,000
16% of annual gross sales greater than $4,000,000
The table below reflects 2024's Gross Sales and Percentage Fees:
Period
2024 January - June
2024 July - December
Gross Sales
$3,038,412
2,960,221
$5,998,633
Percentage Fee
$455,954
468,827
$924,781
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Concourse Concessions LLC
Audit Scope and Methodology
We conducted the engagement in accordance with Generally Accepted Government Auditing Standards
and the Global Internal Audit Standards. 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 instances, we used judgmental sampling methods to determine the samples selected for our
audit test work. In those cases, the results of the work cannot be projected to the entire population.
The period audited was January 2024, through June 2024 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 CFO of Concourse Concessions LLC's 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 was certified through the Office of Minority and Women's Business
Enterprises (OMWBE) and confirmed with management that they are reflected as such on the
Airport Concessions Disadvantaged Business Enterprise (ACDBE) participation report submitted
to the Federal Aviation Administration (FAA)
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Concourse Concessions LLC
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
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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