Internal Audit Department
An asterisk indicates services currently provided by IA Page 1
Types of Audits
All audits engagements begin with an audit objective. The audit objective or the audit question
determines the type of the audit and the audit standards to follow.
Internal auditing is an important part of overall governance, accountability, and internal control.
Per government auditing standards, a key role of many internal audit organizations is to provide
assurance that internal controls are in place to adequately mitigate risks in order to achieve
organization goals and objectives.
The Institute of Internal Auditors (IIA’s) International Professional Practices Framework (IPPF)
defines Internal Auditing as follows:
• Internal auditing is an independent, objective assurance and consulting activity designed
to add value and improve an organization’s operations.
• It helps an organization accomplish its objectives by bringing a systematic, disciplined
approach to evaluate and improve the effectiveness of risk management, control, and
governance processes.
Port of Seattle Framework for Audit Consideration
Commission
CEO/Port Management
Port Staff
Overall Desired
Results (Outcomes
and Outputs)
Sets the overall
direction and
Policy
Establish governance structure/
functions/departments to carry out the
objectives
Operate systems as
designed by
management
Outcomes, outputs,
Desired Results
Design and establish strategies and
systems for accomplishing goals and
objectives
Carry out processes
as designed by
management
Outcomes, outputs
Desired Results
Establish processes for each
function/department
Maintain financial
records and
documents actions
taken
Outcomes, outputs
Desired Results
Develop policies and procedures for
each process
Carry out the
established
processes and
policies.
Desired Results
Ensures established processes/
infrastructure meet requirements
Report results to
management
Desired Results
Internal Audit Department
An asterisk indicates services currently provided by IA Page 2
Port of Seattle Mission Statement: Create Economic Vitality HERE
Port of Seattle Organization Chart and Framework for Audit Consideration
King County Voters
Commission
Executive Office
Aviation
Seaport
Cruise &
Maritime
Operations
Real Estate
Development &
Planning
Facilities
Management
Maintenance
Portfolio
Management
Real Estate
Administration
Capital
Development
Aviation Project
Management
Capital
Development
Administration
Engineering
Port Construction
Services
Seaport Project
Management
Corporate
Airport
Operations
Aeronautical
Landside
Utilities
Business
Development
Airport
Properties
Concessions
Business
Development &
Management
Lease & Asset
Management
Harbor Services
Fishing &
Commercial
Vessels
Recreational
Boating
Central
Procurement
Office
Airport Office
Building
Management
Aviation
Facilities
Building
Department
Facilities &
Infrastructure
Maintenance
Aviation
Executive
Aviation
Director’s Office
Finance &
Budget
Fire Department
Environmental
Management and
Planning
Community
Development
Security
Human Resources
& Development
Information &
Communications
Technology
Health & Safety
Accounting &
Financial
Reporting
Legal
Risk Services
Internal Audit Labor Relations
Office of Social
Responsibility
Finance & Budget
Public Affairs
Regional
Transportation
Police
Department
External Affairs
Commercial
Strategy
Environmental &
Planning
Finance & Budget
Seaport
Administration
Internal Audit Department
An asterisk indicates services currently provided by IA Page 3
Government Auditing Standards (GAGAS) classifies audits into three broad categories as
follows:
Financial Audits
Performance Audits, and
Attestation
1. Financial audits – Financial audits provide an independent assessment of whether an
organization’s reported financial information (e.g., financial condition, results, and use of
resources) are presented fairly in accordance with recognized criteria (for example, FASB or
GASB pronouncements). The auditor issues an independent opinion on the fair presentation
of the financial statements.
As part of the financial audit, the auditor also reviews the following processes only to the
extent that the systems are significant over financial reporting:
Internal control system and process*
Compliance with laws and regulations*
Provisions of contracts and grants*
Professional firms outside the organization typically conduct these types of audits.
Currently, Moss Adams conducts the Port financial audit.
2. Performance audits – Performance audit objectives may vary widely and include
assessments of program effectiveness, economy, and efficiency; internal control; compliance;
and prospective analyses. Performance audits are intended to improve organizations
performance, operations, reduce costs, facilitate decision-making, and contribute to public
accountability.
*The audit objectives that focus on program effectiveness and results typically measure the
extent to which an organization is achieving its goals and objectives. Example, how well is
the program/department working? Is it achieving the intended results? Is it meeting the
target?
The audit objectives that focus on economy and efficiency address the costs and resources
used to achieve organization results. Example, why does it cost this much? Would it cost
less…? How can we do the same for less (economy)? How can we produce more with the
same resource (productivity)?
Internal Audit Department
An asterisk indicates services currently provided by IA Page 4
Performance audit objectives vary widely and may include review and assessment of the
following:
Organizations/Programs effectiveness*
Organizations or Program economy/efficiency --includes development of
benchmarks criteria against which performance is evaluated against
Internal controls*
Compliance*
Prospective analyses and other information* – analysis and conclusions based on
assumptions about events that may occur in the future
Typical questions in performance audits
Is this organization/program accomplishing what it’s supposed to?
(program results/effectiveness)*
Are the procedures adequate or sufficient to…? (process results/effectiveness)*
Does it have to cost this much? (program/service efficiency)
Can we produce more with the same resources? (productivity)
Is this agency doing what’s required? (compliance)*
Is the agency handling resources responsibly? (compliance*/efficiency)
What really happened? (investigation)*
How much, how many, what if…? (information)*
Currently, the Washington State Auditor’s Office (SAO) conducts Port’s performance audits
at the Port.
3. Attestation Audits - An attest engagement is an engagement in which a practitioner is
engaged to issue, or does issue, an examination, a review, or an agreed-upon procedures
report on specified subject matter, or an assertion about the subject matter, that is the
responsibility of another party. The responsible party in attest engagements is the person,
individual or representative of the entity, who is responsible for the subject matter.
Internal Audit, conducts a combination of many elements of audit attestations as outlined on
the operational audits section.
Other Types of Audits
4. Operational Audits –Operational auditing involves an objective review and assessment
of the control (strategies, processes, systems, and other operating activities) that management
has designed and implemented in order to achieve organizational goals and objectives. The
auditor’s objective is to provide independent assurance on the effectiveness of management
Internal Audit Department
An asterisk indicates services currently provided by IA Page 5
controls. The auditor gives an assurance of the end-results that management is trying to
accomplish. For example, if management objective is to create jobs, the auditor gives an
assurance whether the established (infrastructure) controls are effective to allow the creation
of jobs. An operational auditor can also audit to determine whether such jobs were created.
As part of the audit, an operational auditor evaluates and assesses the following:
Management efforts such as established internal controls which includes the
overall governance, plan, operational strategies, policies, methods, and procedures
adopted by management to meet its missions, goals, and objectives. *
The processes implemented by management for planning, organizing, directing,
and controlling business unit/department operations. *
The systems put in place for measuring, reporting, and verifying the reliability
and relevance of information, including monitoring business units/ or departments
performance. *
Internal control is critical as it serves as a defense in safeguarding assets and in
preventing and detecting errors; fraud; noncompliance with provisions of laws,
regulations, contracts and grant agreements; and abuse. Part of operational
auditing involves assessing and evaluating the following areas which are an
integral part of internal control:
Risk assessment/Risk management efforts*
IT governance/information systems controls
Controls over compliance with applicable laws, regulations, contracts,
and grant agreements*
Accountability*
Fraud*
Analysis of financial activities and non-financial information*
5. Compliance Audits* – reviews for compliance with governance regulations and
policies aimed at increasing fiscal transparency of an organization. At the Port, this
includes compliance audit of over 600+ lease and concession agreements. Currently,
Internal Audit spends a great deal of time auditing Port contracts and concessions. In
addition, other Washington State agencies like Department of Revenue and Department
of Retirement audit various compliance requirements within the Port. Compliance
requirements can be financial or non-financial.
6. IT Audits –reviews and assesses the design and effectiveness of computer general and
application controls.
