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

September 7, 2011, 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; Dan Thomas, Chief

Financial Officer; Joyce Kirangi, Internal Audit Department Director; Rudy Caluza, Accounting and

Financial Reporting Director; Jack Hutchinson, Internal Audit Manager; Lindsey Pulsifer, Marine

Maintenance General Manager; James Schone, Aviation Business Development and Management

Director; Sue Hansen Smith, Airport Customer Service Manager; Tom Barnard, Research and

Policy Analyst; and Paul White, Commission Records Coordinator.

Commissioner Holland was absent after 4:49 p.m.

Audit Committee special meeting of August 2, 2011, were approved.

Third-Party Operational Audit – Airport Club International Lounge:

Ms. Kirangi presented an Internal Audit report of a third-party operational audit of the Club

International Lounge in the South Satellite at the Seattle-Tacoma International Airport. She noted

that the lounge serves two airlines, Asiana and Condor, and the audit was requested by

management to determine compliance with the management agreement and adequate monitoring

of operating expenses.

The audit report indicated review of information related to the period from March 5, 2010, to the

In response to Commissioner Albro, Ms. Hansen Smith noted that prior to March 2010, Club

International was operated by the Port of Seattle, with airline use leased based on a per-use

payment. She noted that provision of a lounge is important to international carriers.

In response to Commissioner Albro, Mr. Schone explained the calculation of the club’s operating

January 1, 2010, total annual expenses for 2008-2010, and the audit objectives to ensure the

following:

Mr. Winchell commented on two findings, first that Maximo software is not used at optimal capacity

particularly with respect to asset identification, asset classification, and staff use of the software to

implement monitoring requirements, and second that some requirements of Policy EX-17 are not

commented on the challenges involved in transferring to use of new software from legacy systems.

Ms. Gehrke asked about the narrow focus of the audit scope on the EX-17 policy. Commissioner

Albro characterized the audit as a progress report on implementation of the Fleet Maintenance

Policy EX-17 and use of the Maximo software. He noted that a number of factors, such as

insurance and fuel costs, were not included in total fleet expenses. He requested that the audit

scope of assets reviewed for 2012 be broader in order to meaningfully assess the policies and

guidelines used to manage the fleet as an asset. Mr. Yoshitani described such a review as a

process audit.

January 1, 2009, to December 31, 2010, and concluded that there were no instances of

noncompliance or inaccurate calculation of rent or concessions payments.

Concession and Lease Audit – Enterprise Rent-A-Car:

Mr. Hutchinson reported on the concession and lease audit of Enterprise Rent-A-Car, noting the

audit objectives to ensure the reported concession was complete, properly calculated, and remitted

timely; compliance with provisions of the amended lease and concession agreement; and proper

collection and timely remission of customer facility charges to the Port. He stated that the audit

discrepancy.

2011 Work Plan Status Update and Initial 2012 Work Plan Discussion:

Ms. Kirangi presented an analysis of the Internal Audit Department work progress listed by audit

name and reported that there are approximately two audits to carry over to 2012. Discussion

followed on the ability to identify the audit names on the list and correlate them to audit reports

received to date and the nomenclature for “ongoing” audits.

and presented a calculation of remaining Internal Audit resources in 2011. She indicated the need

for $10,000 to $50,000 for peer review of Internal Audit function and approximately $100,000 for an

initial Information and Communications Technology (ICT) Department risk assessment and

recommendations for areas of audit focus.

Commissioner Holland was absent after 4:49 p.m.

Discussion followed on the merits of using the same firm to perform risk assessment and a

performance audit of the ICT Department, the desire not to duplicate effort needlessly, and the

certainty of an eventual ICT audit by the State Auditor’s Office.

development of the work plan.

2012 Quality Control and Assurance Review Status Update:

Ms. Kirangi presented options for conducting a peer review of the function of the Internal Audit

Department. Commissioner Albro requested inclusion at the October committee meeting of a

checklist describing the scope of a quality control review of Internal Audit. Commissioner Albro

further requested a briefing at the October committee meeting on the 2012 Internal Audit budget.

Discussion on Internal Audit Department Lease and Concession Audits:

The Audit Committee engaged in a discussion of lease and concession audits conducted by the

Internal Audit Department and considered the following factors surrounding audit of lease and

concessions agreements:

concessions audits;

risks;

Audit Committee;

order to allow the committee to provide input into more substantive issues and provide for

delegation of functions that are more operational in nature.

Commissioner Albro requested further discussion on lease and concession audits at the October

committee meeting.

Adjournment:

There being no further business, the special meeting was adjourned at 5:52 p.m.