Nov 3 SCM Audit Min
An audio of the meeting proceedings and meeting materials are available on the Port of
Seattle web site -
http://www.portseattle.org/about/organization/commission/commission.shtml
APPROVED MINUTES
AUDIT COMMITTEE SPECIAL MEETING NOVEMBER 3, 2009
The Port of Seattle Commission Audit Committee met in a special meeting at 9:00 a.m.,
Tuesday, November 3, 2009 in the Commission Chambers at Pier 69, 2711 Alaskan Way,
Seattle, WA. Committee members Creighton, Hara and Miller were present, as well as
CEO Tay Yoshitani and Joyce Kirangi, Port Internal Audit Manager. Commissioner
Tarleton was also in attendance as an observer.
CALL TO ORDER
The committee special meeting was called to order at 9:07 a.m. by Commissioner Lloyd
Hara.
Approval of Minutes
Motion for approval of the Minutes of September 1, 2009 – Creighton
Motion carried by the following vote:
In Favor: Creighton, Hara (2)
Mr. Miller participates as a non-voting member of the Committee.
Note: As there was not a quorum for the October 6 meeting, it was not necessary to vote
on official minutes. Notes were taken regarding discussions held on that date, however.
Internal Audit Report of Human Resources and Development (HR&D) Department
Presentation documents: Computer slide presentation from Joyce Kirangi, Director,
Internal Audit Department and report titled, „Internal Audit Report – Human Resources
and Development Audit‟
Commissioners
Bill Bryant
Chair and President
John Creighton
Patricia Davis
Lloyd Hara
Gael Tarleton
P.O. Box 1209
Seattle, Washington 98111
www. portseattle.org
206.728.3000
Tay Yoshitani
Chief Executive Officer
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Presenters: Ms. Kirangi, Jack Hutchinson, Manger, Internal Audit, and Andy Medina,
Senior Internal Auditor
Beginning the presentation, the HR&D Mission Statement was reviewed, which follows:
“Human Resources & Development (HR&D) engages and equips employees to achieve
exceptional results. We partner with others to sustain the Port of Seattle as a vital, high-
performing organization.”
Ms. Kirangi noted that the HR&D Department consists of approximately thirty FTE‟s
which have an assortment of responsibilities including employee hiring, benefits,
compensation, consulting, diversity and training.
It was noted that the audit covered the 2-year period of 2007 through 2008 and that
objectives of the audit included assuring that the department regularly performs risk
assessments; that the department effectively monitors and maintains data regarding Other
Post-Employment Benefits (OPEB); and that the Pier 69 Flex Pass program, the commute
trip reduction program, is effectively monitored.
Ms. Kirangi stated that the department has an annual expense budget of approximately
$3.5 Million and provided highlights on major areas of expense within the department,
noting that as a service provider, the department‟s greatest expenses are related to
salaries/wages and benefits.
Ms. Kirangi stated that in general, this was a clean audit, and although no significant
issues were noted as a result, areas were identified in which existing controls could be
strengthened and these areas were communicated to management. It was suggested that
the department have a more formal plan for looking at risk assessment issues, and Ms.
Kirangi noted that this would be discussed further when Enterprise Risk Assessment as a
whole throughout the organization was addressed.
Another area identified for strengthening was regarding maintaining data on employees
who have retired and also on previous employees who are deceased. The final area
mentioned was regarding the Flex Pass program, where it was suggested that
management implement stronger controls over how many passes are purchased; how
many are sold; and how many are left unsold at the end of the year.
Ms. Kirangi noted that the department has been proactive in addressing items brought to
their attention as a result of the audit.
Rosalee Walz, Director, HR&D, stated her appreciation of the work done by the internal
audit team, noting that the work has been taken seriously. She reiterated that a formal
risk assessment plan would be implemented as part of the department‟s 2010 work plan.
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Commissioner Hara asked that a follow-up presentation be provided to the Audit
Committee within the next 90 days in order to inform the Committee of any actions
implemented in response to the audit.
Preliminary Discussion of 2010 Internal Audit Workplan
Presentation document: Computer slide presentation
Presenter: Ms. Kirangi
As introduction to discussion of the 2010 Workplan, Ms. Kirangi reviewed the status of
projects which were a part of the 2009 Workplan, noting those which have been
completed, those which are ongoing, and those still remaining.
Ms. Kirangi commented on the importance of continued communication with various
departments, of listening to the CEO, and of listening to concerns of the Audit Committee
regarding their concerns. She stated that the department will be doing some performance
auditing as well as focusing on risk assessment, and she noted that there will be continued
cycling of audits. Also noted was the need to conduct audits which add value to the
organization by being proactive.
Ms. Kirangi stated that she would like to have further input from the Committee, as well
as from management, regarding their areas of concern, as well as how they would like to
see the department‟s resources split in the conducting of future audits. She also
commented that she would like to see further discussion of what is expected of the
Internal Audit department regarding Enterprise Risk Management (ERM).
Dan Thomas, Chief Financial Officer, stated that although there is a great deal of
Enterprise Risk Management taking place throughout the organization, there has not
really been a formal framework used. He noted that part of the issue was a lack of
understanding of what a true ERM is and what the final work product would look like.
He also stated that Mr. Miller had shared with him the COSO framework for ERM. He
said that an ERM framework would likely be applied as a pilot program and then be
brought back to the Committee for review.
Mr. Miller suggested that as there will be a new Audit Committee as of January, 2010, it
would be important for them to discuss their views on where they think the function
should be in another five years in order to help facilitate the team as far as where it wants
to be as far as general concepts and allocating priorities.
Mr. Miller commented that it would be a good idea for the department to be fully up to
date on lease issues that had been reviewed by the State Auditor‟s Office (SAO), not
necessarily to duplicate any efforts, but to have appropriate information should the SAO
look into the Port‟s leases again next year.
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Mr. Miller encouraged staff to provide management with language for leases and what
information should be included going forward. Mr. Yoshitani mentioned another option,
which would be to provide „boilerplate‟ language to an outside attorney for review and
comment.
Following discussion of this year‟s Voluntary Separation Program (VSP), Mr. Miller
commented on the significance of the risk factor when there is significant organizational
change, noting that this would be a good area to look at.
Tom Barnard, Policy Analyst suggested to the Committee that an adequate length of time
be allowed for the Audit Department to prepare their reports to the Committee.
ADJOURNMENT
There being no further business, the meeting was adjourned at 10:55 a.m.
Lloyd Hara
Commissioner
