Port of Seattle
Internal Audit Report
Human Resources and Development
Department Audit
Audit Period January 1, 2007 through December 31, 2008
Issue Date: November 3, 2009
Report No.: 2009-16
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Internal Audit Report
Human Resources and Development
Audit Period: January 1, 2007 – December 31, 2008
Audit Audit
Compliance Audit
Compliance Audit
Table of Contents
Internal Auditor’s Report .............................................................................................................................................. 3
Executive Summary ....................................................................................................................................................... 4
Background ...................................................................................................................................................................... 5
Audit Objective ................................................................................................................................................................ 6
Scope of the Audit .......................................................................................................................................................... 6
Audit Approach ............................................................................................................................................................... 6
Conclusion ....................................................................................................................................................................... 6
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Internal Audit Report
Human Resources and Development
Audit Period: January 1, 2007 – December 31, 2008
Audit Audit
Compliance Audit
Compliance Audit
Internal Auditor’s Report
We have completed an audit of the Human Resources and Development department. The purpose of
the audit was to determine if Human Resources and Development:
1. Performs a regular risk assessment that adequately addresses the risks impacting their
department, as well as the controls necessary to mitigate those risks to an acceptable level.
2. Effectively monitors and maintains data relied upon for the proper calculation and disclosure of
other post-employment benefits in accordance with GASB 45 - Accounting and Financial
Reporting by Employers for Postemployment Benefits Other Than Pensions.
3. Effectively monitors Pier 69 Flex Passes in accordance with the Port’s Commute Trip Reduction
policy and procedures.
Management has the primary responsibility to establish and implement effective controls. Our audit
objective was to assess and test those controls in order to establish whether the controls were
adequate and operating effectively.
We conducted the audit using due professional care. We planned and performed the audit to obtain
reasonable assurance that department controls relating to risks, postemployment benefits, and Flex
Passes are adequate and operating as intended.
We found no significant issues during the review; however, we identified opportunities to strengthen
existing controls over the department’s risk assessment process, OPEB eligibility list, and Pier 69
Flex Passes, which have been communicated to management in a separate letter.
We extend our appreciation to the Human Resources and Development department for their assistance
and cooperation during the audit.
Joyce Kirangi, CPA
Director, Internal Audit
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Internal Audit Report
Human Resources and Development
Audit Period: January 1, 2007 – December 31, 2008
Audit Audit
Compliance Audit
Compliance Audit
Executive Summary
Audit Scope and Objective The purpose of the audit was to determine if Human Resources and
Development:
Performs a regular risk assessment that adequately addresses the risks impacting their
department, as well as the controls necessary to mitigate those risks to an acceptable level.
Effectively monitors and maintains data relied upon for the proper calculation and disclosure of
other post-employment benefits in accordance with GASB 45 - Accounting and Financial
Reporting by Employers for Postemployment Benefits Other Than Pensions.
Effectively monitors Pier 69 Flex Passes in accordance with the Port’s Commute Trip Reduction
policy and procedures.
We reviewed information relating to fiscal years 2007 and 2008.
Background HRD is part of the Port’s Corporate Division and has offices located at both Pier 69 and
the airport. Like any other organization HRD is primarily responsible for hiring employees. However,
the Port’s HRD department is rather large and responsible for many other functions at the Port
including benefits and compensation, consulting, diversity, training, and communication. In respect to
communication, HRD is responsible for educating employees on numerous issues affecting the Port
and its staff; including changes to health insurance plans and wellness programs, furlough
requirements and rules, the voluntary separation program, the telecommuting pilot program, the
implementation of a new Human Capital Management System, and the creation of the Resource Center
in response to the Port’s reduction in workforce.
Audit Result Summary We found no significant issues during the review; however, we identified
opportunities to strengthen existing controls over the department’s risk assessment process, OPEB
eligibility list, and Pier 69 Flex Passes, which have been communicated to management in a separate
letter.
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Internal Audit Report
Human Resources and Development
Audit Period: January 1, 2007 – December 31, 2008
Audit Audit
Compliance Audit
Compliance Audit
Background
The Human Resources & Development department engages and equips employees to achieve
exceptional results thus sustaining the Port of Seattle as a vital, high performing organization. With
offices located both at the airport and Pier 69, this large department consists of 30 full time employees
operating with a wide spectrum of responsibilities. Aside from HRD’s primary responsibility of hiring
employees, the department is also responsible for benefits and compensation, consulting, diversity,
training, and communication. In regards to communication, HRD is responsible for educating employees
on numerous issues affecting the Port and its staff such as changes to health insurance plans and
wellness programs, furlough requirements and rules, the voluntary separation program, the
telecommuting pilot program, the implementation of a new Human Capital Management System, and
the creation of the Resource Center in response to the Port’s reduction in workforce.
The department does not generate revenue but is responsible for collecting funds from employees who
choose to purchase Flex Passes.
Department expenses for 2006 through 2008 are as follows:
(in thousands)
2006
2007
2008
GL Category
Expense
%
Expense
%
Expense
%
Salaries, Wages & Benefits
$ 1,537
67%
$ 2,652
73%
$ 2,255
74%
General Expenses
138
6%
161
4%
149
5%
Outside Services
230
10%
510
14%
348
12%
Supplies & Stock
48
2%
27
1%
31
1%
Equipment Expense
69
3%
32
1%
25
1%
Worker's Compensation
4
0%
6
0%
5
0%
Telecommunications
9
0%
9
0%
9
0%
Travel & Other Employee
266
12%
246
7%
209
7%
Promotional Expense
1
0%
9
0%
1
0%
Property Rentals
7
0%
0
0%
0
0%
Grand Total
$ 2,309
100%
$ 3,652
100%
$ 3,032
100%
Source: PeopleSoft
The department’s top expense accounts at fiscal year-end (excluding those expenses associated with
salaries and benefits) are as follows:
Expense Account
2006
2007
2008
Non-Architectural & Engineering Services
$ 121,133.70
$ 337,789.37
$ 206,668.70
Registration Fees/Tuition
148,310.52
124,133.79
102,819.04
Metro/Ferry Pass Expense *
61,647.76
56,472.10
77,459.74
Advertising
69,247.45
93,314.78
73,841.01
Source: PeopleSoft
The year-end balance of the Metro/Ferry Pass Expense account is net of any adjustments and Flex Pass sales. The actual
amount of Flex Pass Purchases was $77,406, $80,995 and $94,423for 2006, 2007 and 2008, respectively.
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Internal Audit Report
Human Resources and Development
Audit Period: January 1, 2007 – December 31, 2008
Audit Audit
Compliance Audit
Compliance Audit
One of the department’s employee benefit related responsibility involves compiling and maintaining a
list of Other Post-Employment Benefits (OPEB) eligible employees. The Port is required by
Government Accounting Standards Board (GASB) under statement 45 to compute and disclose
financial liability associated with OPEB. Based on the list by Human Resources and Development,
Accounting and Financial Reporting (AFR) calculates and discloses the liability on its annual financial
statements. Below is the Port’s OPEB liability as of December 31, 2008.
GASB 45 Plan Name
Net OPEB
Obligation
# of Plan
Participants
LEOFF Plan 1 Members’ Medical Services Plan
$ 6,919,000
33
Retiree Medical Insurance Plan
$ 5,624,000
229
Retiree Life Insurance Plan
$ 593,000
346
Source: Comprehensive Annual Financial Report for the Year Ended December 31, 2008
Audit Objective
The audit objective was to determine if Human Resources and Development:
1) Performs a regular risk assessment that adequately addresses the risks impacting their
department, as well as the controls necessary to mitigate those risks to an acceptable level,
2) Effectively monitors and maintains data relied upon for the proper calculation and disclosure of
other post-employment benefits in accordance with GASB 45 - Accounting and Financial
Reporting by Employers for Postemployment Benefits Other Than Pensions, and
3) Effectively monitors Pier 69 Flex Passes in accordance with the Port’s Commute Trip Reduction
policy and procedures.
Scope of the Audit
The scope of this audit included information relating to fiscal years 2007 and 2008.
Audit Approach
To achieve the audit objective, we performed the following procedures:
Obtained an understanding of the department’s operations and the significant compliance
requirements.
Reviewed department controls related to the audit areas.
Obtained and analyzed relevant financial and non-financial data.
Performed audit procedures to achieve the audit objective.
Conclusion
We found no significant issues during the review; however, we identified opportunities to strengthen
existing controls over the department’s risk assessment process, OPEB eligibility list, and Pier 69
Flex Passes, which have been communicated to management in a separate letter.
