PORT COMMISSION AUDIT COMMITTEE MEETING MINUTES Page 5 of 6
TUESDAY, MAY 3, 2011
Audit Committee Minutes of May 3, 2011, proposed for approval on June 7, 2011.
Ms. Kirangi described the following categories of audit:
Financial audits, which are typically conducted by an outside firm to provide an
independent assessment of whether an organization’s reported financial information is
presented fairly in accordance with applicable criteria, and may involve review of
processes applicable to internal controls, legal and regulatory compliance, and contract
or grant conditions;
Performance audits, which measure program effectiveness relative to an organization’s
stated goals and objectives or focus on economy and efficiency by addressing costs or
productivity, and may involve assessment of internal controls, compliance, and
prospective analysis;
Attestation audits, which involve an assertion about the organization’s subject matter by
a third party and therefore are not applicable to the Internal Audit Department by
definition;
Operational audits, which assess management controls to determine their effectiveness
and may involve evaluation of internal controls, operational strategies, processes,
policies, procedures, and measurement or monitoring systems;
Compliance audits, which are conducted to review compliance with governing
regulations and are aimed at increasing an organization’s fiscal transparency; and
IT audits, which review and assess design and effectiveness of computer general and
application controls.
In response to Ms. Gehrke, Ms. Kirangi described differences between attestation and operational
audits as related to lease and concession agreements, which Jack Hutchinson, Internal Audit
Manager, characterized as engaging approximately 47 percent of Internal Audit resources.
Mr. Hutchinson described the remaining 53 percent of Internal Audit efforts as comprised of various
systems audits, accountability audits, and performance audits. Ms. Gehrke asked for development
of short, common definitions to clarify internal audit terminology on a single-page resource, and
she described the Port’s internal audit efforts in terms of comprehensive and limited-scope
operational audits and lease and concession audits.
Further discussion ensued regarding the audit types represented in the Port’s current internal audit
efforts and the relationship of the internal auditing process with the establishment of performance
measurements.
Additional discussion following concerning the executive role of the Port Commission and its
delegation of authority to the Chief Executive Officer and the role of the Internal Audit Department
in fostering confidence in the organization’s compliance with Commission policies and informing
decision-making about appropriate thresholds for delegation of authority.
At the request of Commissioner Albro, Ms. Gehrke described the composition and role of the
Institute of Internal Auditors (IIA) to provide professional guidance worldwide to the auditing
profession. Mr. Hutchinson stated that the Port’s Internal Audit Department holds a group
membership in the IIA, which informs the performance of their duties and provides useful resources
and training opportunities.