PORT OF SEATTLE

MEMORANDUM

COMMISSION AGENDA

Item No.

Date of Meeting

June 28, 2011

DATE: June 20, 2011

TO: Tay Yoshitani, Chief Executive Officer

FROM: Tom Barnard, Research and Policy Analyst

SUBJECT: Review of the Work of Audit Committee

SYNOPSIS:

The Port of Seattle Audit Committee is required to report to the Port of Seattle Commission

periodically to review its work and results. The period covered for this briefing is from January

2011 through June 2011.

This review will cover the following activities:

 Internal Audit reports reviewed by the Audit Committee

 Other work reviewed by the Audit Committee

 Discussion on improvements to the work of the Audit Committee

BACKGROUND:

The Audit Committee was created to “represent the Commission and have review and oversight

authority on matters relating to the Port's auditing process and procedures.” Its main tasks are to:

 Review and recommend to the Commission the independent auditors to be selected to

audit the financial statements, the federal grant and Passenger Facilities Charge programs

of the Port of Seattle, and other audit services;

 Meet with independent auditors and financial management to review proposed audits for

the current year and review such audits at their completion, including any

recommendations of the independent auditor;

 Review the adequacy and effectiveness of the accounting and financial controls of the

Port of Seattle, and recommend improvement of such internal controls or establish new

controls, assisted by the independent auditors, the Internal Audit Manager, and Port staff;

and

COMMISSION AGENDA

T. Yoshitani, Chief Executive Officer

June 20, 2011

Page 2 of 3

 Perform oversight over periodic independent performance audits to be conducted on the

Port of Seattle, and report the results of such audits to the Commission when completed.

AUDIT COMMITTEE ACHIEVEMENTS FOR JANUARY - JUNE 2011:

The Audit Committee reviewed eleven reports prepared by the Internal Audit Manager during

the January-June 2011 period, which covers five meetings of the Audit Committee. These

include:

 Three lease audits of rental car companies at Sea-Tac Airport;

 Six operational audits including:

o Two limited audits of the Capital Improvement Program and Mobile/Smartphone

usage;

o Two comprehensive operational audits including Sea-Tac Airport Utilities and

Public Parking;

o A third-party operational audit of the Lost & Found Department at Sea-Tac

Airport; and

o A review of current practices - Port’s Travel and Entertainment Expenses;

 An audit of overtime in the Aviation Division; and

 An update of the Airline Landing Fee program.

In addition, the Audit Committee:

 Reviewed and approved the 2011 Internal Audit work plan;

 Reviewed the 2010 Comprehensive Annual Financial Review, and the associated

financial audits; and

 Reviewed the selection process and proposed for Commission approval the 2011-2015

contract for future financial audit work to be performed by Moss Adams.

The Audit Committee also has spent considerable time reviewing possible changes to the

program and work of the Audit Committee. Although the existing Long-Range Goals and

Objectives document has provided some insight into the on-going mission of the Audit

Committee, this year it was felt there was a need to improve and further develop the work of the

Committee in a more comprehensive manner. Some issues the Audit Committee has discussed

so far include:

 A review of the risk analysis process conducted by the Internal Audit Department that is

used to develop the annual Internal Audit work plan;

COMMISSION AGENDA

T. Yoshitani, Chief Executive Officer

June 20, 2011

Page 3 of 3

 A review of audit typology, aimed at understanding better what type of auditing the

Internal Audit Department spends most of its resources on;

 Research on standards for Audit Committees in organizations like the Port as

recommended by the Institute of Internal Auditors (IIA) and other auditing associations;

and

 Review and use of self-assessment tools Audit Committee members could use to assess

their own work.

This work continues, and it may generate possible changes to the work of the Audit Committee,

including:

 The Audit Committee may request Commission approval in August for a particular

budget recommendation to be included in the 2012 budget to augment the current work of

the Internal Audit Department.

 Further changes to the Audit Committee Charter may be brought forward to bring the

Charter into compliance with IIA and governmental auditing standards, unless precluded

by the unique nature of the organization, at the recommendation of the Audit Committee.

 Vickie Rawlins, the Port’s Workplace Responsibility Officer, is briefing the Audit

Committee at its July meeting on the Port’s “whistleblower” protection provision.

 The Audit Committee may request a quality control review of the Internal Audit

Department. Joyce Kirangi, Director of Internal Audit, is also actively considering

bringing in an outside firm for such a review.

 The Audit Committee may develop a method to insure that all basic financial information

provided to the Commission in briefings be provided to the public member of the Audit

Committee. This would include quarterly reports, budget materials as requested, and

other measures of financial performance.

 Finally, the Audit Committee would come to an agreement on what kinds of auditing risk

and business risk it believes the Committee wishes itself and Internal Audit to focus on,

and incorporate the inclusion of these risks into a 2011-2013 Long-Range Goals and

Objectives Plan.

OTHER DOCUMENTS ASSOCIATED WITH THIS BRIEFING:

None.