Internal Audit Briefing
Presented to the Port of Seattle

Audit Committee and Tay Yoshitani, CEO
Joyce Kirangi, CPA
Director, Internal Audit
February 1, 2011

Agenda
• Audit Report
• Performance audit
 Travel and Entertainment - Current Practices
• Lease and Concession Audits
• Rent-A-Car Audits
 Dollar RAC
 Fox RAC
• Internal Audit 2011 Work Plan

Travel & Entertainment
Background
- The Port's travel and entertainment expenses are primarily
concentrated in the following accounts.
T&E Account
Airfare
Lodging
Food & Beverage
Registrations
Total

2008

2009

$466,327 $195,504
581,749
256,890
303,652
188,612
977,056
520,826
2,328,784 1,161,832

Total
2010 (as of
December)
$304,114 $965,946
383,074 1,221,713
176,288
668,552
988,322 2,486,204
1,851,799 5,342,415

Travel & Entertainment
Audit Objectives
The purpose was to determine if:
1) The Port has implemented effective monitoring controls to ensure that travel
and entertainment expenses are necessary and reasonable.
2) Port policies and procedures are adequate to ensure compliance with local,
state, and federal laws and regulations.

Travel & Entertainment
Audit Result



Clean Audit Report
Management Letter Items

Lease and Concession
Audits
Background
 Dollar
 Concession of 80% of the total amount paid to the Port in the
previous agreement year.

2007
2008
2009
Reported Gross $12,157,119 $13,700,673 $15,371,427
Concession Paid $ 1,200,905 $ 1,428,315 $ 1,504,796

 Fox
 4% of the annual gross revenue over $480,000 which is to be
adjusted annually by the Consumer Price Index (CPI).
Reported Gross
Concession Paid

2008
2009
$ 6,603,567 $ 5,976,073
$ 217,979 $ 234,926

Lease and Concession
Audits
Audit Objectives
The purpose of the Lease and Concession audits was to determine whether:
1) Reported concession was complete, properly calculated and remitted timely
to the Port.
2) Port and the lessee complied with provisions of the Lease and Concession
Agreement.
3) Lease and Concession Agreement, as amended, complies with applicable
state and Port requirements.
4) Customer Facility Charges (CFC) were properly collected and remitted
timely to the Port.

Lease and Concession
Audits
Audit Result
 Dollar



Underreported Gross Revenue
Untimely Payments

 Fox




Underreported Gross Revenue
Underreported Customer Facility Charge (CFC)
Untimely Payments

2011 Work Plan
Internal Audit 2011 Work Plan
• Risk Assessment Slides
• Proposed 2011 Audits (see attached)

2011 Work Plan

Millions

5-Year Operating Revenue Trend
600

500

400

300

200

100

0
2006
Space Rental

2007
Landing Fees

2008
Parking Revenue

Car Rental Revenues

2009
Aviation Fees

2010
Other

2011 Work Plan
Operating Revenue by Dept. Node
(in millions)

Node Description
Aeronautical
Landside
Seaport Container Operations
Concessions
Seaport Container Support Properties
Cruise Services
Third Party Management
Airport Properties
Recreational Boating
Fuel Hydrant Special Facility

2006
$179
96
50
28
12
5
13
17
6
8

2007
$186
102
49
31
12
7
14
12
6
8

2008
$195
105
53
28
13
9
15
13
8
3

2009
$174
93
56
29
13
11
10
13
9
8

2010
$193
87
57
28
13
11
9
9
9
8

2011 Work Plan
Top 10 Dept. Nodes in Operating Expenses
(in millions)

Node Description
Aviation Maintenance
Aeronautical
Police Department
ICT
Aviation Exec/AVEX
Aviation Utilities
Marine Maintenance
Landside
Aviation Facilities
Third Party Management

2006
$40
20
17
11
13
16
9
10
5

2007
$41
22
19
13
15
13
10
10
6

2008
$49
24
19
14
20
13
12
10
7

2009
$46
22
18
17
13
15
11
8
6

2010
$45
24
19
18
13
13
12
8
6

10

10

10

7

6

2011 Work Plan
Operating Expenses by Account Category
(in millions)

GL Category
Salaries & Benefits
Wages & Benefits
Outside Services
Utilities
General Expenses
Equipment Expense
Supplies & Stock
Travel & Other Employee Exp
Telecommunications
other

2006
$73
51
50
21
2
6
9
3
1
4

2007
$79
63
48
19
12
6
6
3
1
4

2008
$89
69
64
19
13
7
8
4
1
6

2009
$96
57
42
21
8
5
7
3
2
4

2010
$95
65
39
18
8
6
6
3
1
3

2011 Work Plan
Full Time Equivalent (FTE) Count by Division
Division Description
Aviation
Capital Development
Corporate
Real Estate
Seaport

2006
827
256
444
194
55

2007
876
227
442
187
60

2008
879
313
474
196
71

2009
838
264
470
180
66

2010
781
257
456
184
64

2011 Work Plan
Top 5 Vendors in Operating Expenses
Ranking
1
2
3
4
5

Vendors
ABM JANITORIAL SERVICES
SEATTLE CITY LIGHT
BONNEVILLE POWER
KONE INC
KING COUNTY TREASURER

2010
$8,281,144
6,262,744
4,908,962
3,259,386
3,072,556

2011 Work Plan
Agreement-driven Revenue
(in millions)

Total Operating Revenue
(PeopleSoft G/L)
Agreement-driven Revenue
(PROPWorks system)
% of Agmt-driven revenue to
the Port Operating Revenue

2006

2007

2008

2009

2010

$447

$461

$484

$444

$452

$264

$302

$302

$362

$366

59%

66%

62%

82%

81%

2011 Work Plan
Top 20 Customers in Total Billings
(in millions)

No.
Name
1 ALASKA AIRLINES
2 SSA TERMINALS
3 DELTA AIR LINES
4 UNITED AIRLINES
5 EAGLE MARINE
6 HORIZON AIR
7 SOUTHWEST AIR
8 CTA
9 SEATAC FUEL
10 CONTINENTAL AIR

2009 2010 No.
Name
$62 $61 11 HERTZ
26
29 12 AMERICAN AIR
12
24 13 HOST INT'L
20
20 14 AIRPORT MGMT
20
20 15 US AIRWAYS
18
19 16 AVIS
12
12 17 LOUIS DREYFUS
11
12 18 NATIONAL RAC
9
9 19 CLEAR CHANNEL
8
8 20 ALAMO RAC

2009 2010
$8
$8
8
8
7
8
7
7
7
6
6
6
6
6
5
4
4
4
5
4