An audio of the meeting proceedings and meeting materials are available on the Port of Seattle

in the Commission Chambers at Pier 69, 2711 Alaskan Way, Seattle, Washington. Committee

members Commissioner Albro, Commissioner Holland, and Christina Gehrke were present, as well

as Tay Yoshitani, Chief Executive Officer; Joyce Kirangi, Internal Audit Department Director; Rudy

Caluza, Accounting and Financial Reporting Director; Jack Hutchinson, Internal Audit Manager; Bill

Fovargue, Internal Auditor; Tom Barnard, Research and Policy Analyst; and Paul White,

Commission Records Coordinator.

Commissioner Albro participated by telephone.

CALL TO ORDER

Approval of Audit Committee Meeting Minutes of May 3, 2011:

On motion by Commissioner Albro, seconded by Commissioner Holland, the minutes of the

Audit Committee Special Meeting of May 3, 2011, were approved.

Approval of Audit Committee Meeting Minutes of April 5, 2011, as Amended:

On motion by Commissioner Albro, seconded by Commissioner Holland, the minutes of the

Audit Committee Special Meeting of April 5, 2011, were amended to reflect correct staff

attendance on April 5, 2011, and the correct previous meeting date of February 1, 2011, and

were approved, as amended.

Operational Audit Seattle-Tacoma International Airport Lost and Found:

program is an example of a third-party partnership and is operated currently by the YWCA, who

sent representatives to the Committee meeting today. She referred the Committee to the

information in the audit report, which noted that information relating to calendar years 2008, 2009,

and 2010 was reviewed, including fieldwork activity that concluded in May 2011. Ms Kirangi stated

that no findings resulted from the audit.

Commissioner Albro requested additional information regarding lost items released to authorities

Management Response to 2010 Moss Adams Audit:

Mr. Caluza reported on the 2010 audit of Port finances by the firm of Moss Adams, noting the

following:

(CAFR), regulatory compliance for federal grants (“Single Audit”), and Passenger Facility

Charge (PFC) Program;

net capital assets, $3.3 billion long-term debt, $470 million operating revenues, $414

of recommendations, no audit adjustments to financial statements required of

results of the audit;

findings relative to internal controls, Port compliance in all material respects with federal

grants regulatory requirements, and a minor compliance finding related to back-funding

procedures for checking for ineligible contractors; and

controls findings, and no findings with respect to Federal Aviation Administration (FAA)

regulatory requirements.

identify any ineligible contractors and that Moss Adams checked the Excluded Parties List System

(EPLS) for Port contractors as part of the Single Audit and found no violations.

Mr. Caluza announced that the Port’s CAFR will be submitted to the Government Finance Officers

Association of the United States and Canada for consideration to receive the Certificate of

Achievement for Excellence in Financial Reporting Award, which has been awarded to the Port

consistently since 2005.

Comprehensive Operational Audit Seattle-Tacoma International Airport Utilities:

with the tariff and to assure costs in the utility-rate calculation are relevant, reasonable, and

complete. He noted that no findings resulted from the audit.

Comprehensive Operational Audit Public Parking – Aviation Landside Operation:

provided a summary of parking revenues and operating expenses for the years 2008, 2009, and

2010, and noted that parking revenue has decreased during this period to $45 million.

Ms. Kirangi stated that the audit objectives were to determine whether management has adequate

controls to ensure effective parking operations in compliance with applicable requirements, and

specifically whether monitoring controls work effectively as intended in the areas of complete and

proper assessment of high-risk transactions and determining whether overtime compensation is

proper and reflects actual time worked.

Ms. Kirangi noted that information relating to calendar year 2010 was reviewed and described one

The presentation materials for this operational audit demonstrated the audit had concluded that

overtime compensation was proper and for actual time worked.

In response to Ms. Gehrke’s question about examination of the parking operation’s own internal

auditing process, Ms. Kirangi confirmed that the process was examined and noted that staffing

issues hindered its effectiveness. She added that the internal controls in this case are incomplete.

need for the parking operation to improve their own internal audit process. Ms. Kirangi responded

that because she considers the self-monitoring of parking controls a management function, greater

detail was not provided in the operational audit.

In response to Commissioner Holland, Ms. Kirangi stated that operating procedures are in place,

but there is room for improvement in the review process, which is not complete.

Commissioner Albro asked whether Port-issued prepaid parking access cards were included in the

Yoshitani stated that expired cards are deactivated regardless of whether they are physically

returned. He also commented that free parking access is a common issue at airports and stressed

that there are very tight controls on the issuance of these cards.

meeting, including review for appropriate card usage.

Limited Operational Audit Mobile Devices/Smartphones:

Mr. Fovargue reported on the limited operational audit of mobile devices and smartphones, and

outlined audit objectives based on review of billings and usage data from 2010 as related to

Mr. Fovargue commended the Information and Communications Technology (ICT) staff for

prudently managing smartphone rate structures to obtain the greatest benefit to the Port.

Mr. Fovargue described the Internal Audit Department’s finding that there were inadequate

management controls and unclear policy regarding smartphone usage, particularly with respect to

Commissioner Albro commented on the declining trend in smartphone rates for the Port. He also

stated that smartphones should be viewed as productivity tools and recommended articulating an

enterprise-wide strategy for using the technology to drive productivity.

Discussion and Recommendation for Audit Committee Improvements:

Mr. Barnard presented results from a self-assessment questionnaire distributed to members of the

Audit Committee, highlighting the following points: