INTERNAL AUDIT REPORT
Limited Contract Compliance Audit
Gate Gourmet, Inc.
January 2023 - June 2023
Issue Date: December 20, 2024
Report No. 2025-01
This report is a matter of public record, and its distribution is not limited. Additionally, in accordance with
the Americans with Disabilities Act, this document is available in alternative formats on our website.
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 Gate Gourmet, Inc., and the Port of Seattle (Port). The period audited was January 1, 2023,
through June 30, 2023.
The audit was performed to determine whether concession fees were complete, properly calculated,
and remitted to the Port.
We concluded Gate Gourmet, Inc. 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
Geoffrey Foster, Assistant Director, AV Business Development
Jeff Wolf, Director, Aviation Commercial Management
3
Background
On August 8, 1989, the Port entered into the original lease agreement (AIR000042) with United Air
Lines, Inc. The term was established at 40 years with an ending date of July 31, 2029. In 1993, the lease
was assigned to Dobbs International Services, Inc. a subsidiary of parent company Gate Gourmet
Holding AG (Gate Gourmet).
A concession fee of seven percent (7%) was established on gross receipts from the sale of food catering
services. Gross receipts include whether paid or unpaid, cash or credit, without offset or deduction of
any kind, except for sales taxes or any other tax on merchandise and/or services rendered. A minimum
annual guarantee (MAG) is not used in this agreement.
The table below reflects 2022 and 2023 Gross Sales and Percentage Fees:
Year
Gross Sales
Percentage Fee
2022
$44,124,957
$3,088,747
2023
59,405,783
4,158,405
Total
$103,530,740
$7,247,152
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.
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 2023 through June 2023 and included the following procedures:
•
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 and compared the report to year-end gross sales data
reported to AFR
•
Reviewed the Profit & Loss statements for variances
•
Validated that concessionaire was not certified through OMWBE WA and confirmed with
management that they were not 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