INTERNAL AUDIT REPORT
OPERATIONAL AUDIT
Fishing & Commercial Operations - Maritime
January 01, 2016 - September 30, 2017
ISSUE DATE: February 23, 2018
REPORT NO. 2017-24

Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

TABLE OF CONTENTS

EXECUTIVE SUMMARY ................................................................................................................................................. 3
BACKGROUND .............................................................................................................................................................. 4
AUDIT SCOPE AND METHODOLOGY ........................................................................................................................... 5
SCHEDULE OF FINDINGS AND RECOMMENDATIONS............................................................................................... 6
APPENDIX A: RISK RATINGS ...................................................................................................................................... 11
EXHIBIT A: PROCESS FLOW ....................................................................................................................................... 12

2

Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

EXECUTIVE SUMMARY
Internal Audit (IA) completed an audit of Fishing & Commercial Operations (F&CO) - Maritime, at
Terminal 91, for the period January 01, 2016 - September 30, 2017. The audit was performed to
determine whether the billing process operated effectively and efficiently, and whether customer billing
was complete and accurate.
Terminal 91 has gone through new management and staffing challenges in 2016 and 2017 respectively.
This has resulted in new management undertaking the significant challenge of stabilizing processes,
hiring replacement staff, and training them on incumbent processes. By late 2017, the processes had
been stabilized, allowing us to focus on the existing process and provide appropriate recommendations.
IA identified the following key issues during the course of our audit:
1) The Maritime Operations Team and outsourced security personnel are responsible for manually
observing, counting and measuring a constantly rotating clientele of marine vessels, land vehicles (i.e.
trucks, cranes, fishnets, etc.) and storage. We observed this process to be manual, labor intensive
and occasionally prone to error. Revenue leakage can be exacerbated if an individual is sick or out of
the office, as limited observations/counts generally occur during that period.

2) Maritime Operations utilize a variety of internally developed Access databases and Excel
spreadsheets to record billable activities. The billing process is at risk of error due to, a manual
process and limited error checks. The process is also inefficient, labor intensive, and includes
redundancies.
We extend our appreciation to the management and staff of the Maritime Operations Department,
Seaport Finance and Budget Department, and Accounting and Financial Reporting Department for their
assistance and cooperation during the audit.

Glenn Fernandes, CPA
Director, Internal Audit
RESPONSIBLE MANAGEMENT TEAM

Stephanie Jones Stebbins, Managing Director, Maritime
Kenneth Lyles, Director, Fishing & Commercial Ops
Kelli Goodwin, Manager, Maritime Operations
Kelly Zupan, Director, Seaport Finance & Budget

3

Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

BACKGROUND

Maritime Operations manages Terminal 91, which includes: Pier 90, Pier 91, an upland area with leased
premises, and storage for trailers, containers, cranes, and fishing nets. The Terminal provides short-term
and long-term moorage for fishing and commercial vessels, including tugs, barges, ferries, research
vessels, and military and commercial vessels in lay-up or idle status; additionally, several leased buildings
are housed at the Terminal.
Customers with short-term moorage needs are subject to the Port of Seattle (Port) Terminal Tariff; while
those with long-term needs, who contract with the Port for a minimum number of berthing days in an
agreement year, generally have a Preferential Use Agreement (PUA) with reduced rates. Customers are
mainly billed for dockage, wharfage, consumption of electricity and water, forklift rental, security services,
and yard use at the uplands of Terminal 91. Currently, there are approximately 150 customers.
Maritime Operations also manages dockage at Terminals 18, 28, and 69, and Piers 34 and 46 which
provide additional commercial moorage.
Maritime Operations records vessel and billing activities in various Access databases and Excel
spreadsheets; the Billing Specialist prepares the billing spreadsheet on a monthly basis, and manually
enters the prepared information into PeopleSoft for invoicing upon the completion of Superintendents'
review.

FINANCIAL HIGHLIGHTS
REVENUE GENERATED BY BILLING CATEGORY
2016
Billing Category
2015
Dockage
$2,388,826
$2,246,035
Wharfage
405,963
509,262
Electrical
492,490
520,754
Water
52,347
53,453
Equipment Rental
211,635
181,070
Security
126,592
106,136
Yard Use
391,270
489,593
Miscellaneous
5,251
6,644
Total Revenue
$4,074,375
$4,112,945
Data Source: PeopleSoft Financial

4

2017
$2,271,232
432,283
555,230
68,099
252,515
101,736
658,331
9,469
$4,348,895

Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

AUDIT SCOPE AND METHODOLOGY
We conducted this performance audit in accordance with Generally Accepted Government Auditing
Standards and the International Standards for the Professional Practice of Internal Auditing. Those
standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide
a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the
evidence obtained provides a reasonable basis for our findings and conclusions based on our audit
objectives.
The period audited was January 2016 - September 2017. We utilized a risk-based approach from the
planning phase to the testing phase of our audit. We gathered information through document requests,
research, interviews, observations, and analytical procedures. Our audit included the following
procedures:
Customer Billing
•
•
•
•
•
•
•

Created flow charts to obtain a comprehensive understanding of the customer billing process
Reviewed customer aging reports to identify material delinquent balances
Performed analytical procedures to evaluate revenue trends and to identify billing periods to test
Agreed charge rates to various sources (e.g. tariff, Preferential Use Agreements, and City of
Seattle electric and water rates)
Validated charges had proper supporting documentation (e.g. electrical and water reading,
electrical hook-up request, forklift rental forms, and wharfage declaration forms)
Re-calculated charges to identify discrepancies
Reviewed revenue accounts to verify inappropriate revenue recording

Reconciliation between Accrual Spreadsheet and PeopleSoft
•
•

Created flow charts and identified reconciliations of spreadsheets to PeopleSoft
Compared total billing in the monthly accrual worksheets with those in PeopleSoft

Accuracy and Completeness of Accrual Spreadsheet
•
•

Created flow charts and identified spreadsheets that management uses to perform billing
Verified the monthly accrual worksheets captured all vessel movements and billing information
accurately

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Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

SCHEDULE OF FINDINGS AND RECOMMENDATIONS
1) RATING: HIGH

INEFFICIENT PROCESSES WHICH LACK SEGREGATION OF DUTIES
The Maritime Operations Superintendent normally counts inventories and nets in the uplands area once a
day during week days and measures storage usage at month end. Outsourced Security personnel
observe vessel arrivals and departures on an hourly basis and their observations are periodically
recorded into an access database, which is then validated and updated with additional vessel activity, by
the superintendent. Dockage at Terminal 18, 28, 34, 46 and 69 is self-reported and dependent on
customers notifying the Maritime Operations Team; no validation mechanisms exist for this. The security
personnel also count cranes and nets in the uplands on an hourly basis. For the uplands, the highest
number from the counts, by inventory type, are billed to customers 1. For further information refer to
Vessel Movement and Tariff Dockage process flows attached in Exhibit A.
The Superintendent also works normal business hours, thereby placing reliance on contracted security to
perform hourly observations/counts during non-business hours. Security personnel are minimally trained
employees with high turnover.
The Superintendent collects and reviews the counts from the security personnel along with the selfreported counts and measurement, prepares the monthly yard use billing, and reviews the invoicing once
the Billing Specialist enters the billing information into PeopleSoft. A lack of segregation in the functions
of collecting billing data, preparing billing, and authorizing billing can lead to manipulation and/or
unintentional errors. For further information refer to Tariff Yard Use process flow attached in Exhibit A.
Observing/counting vessels and vehicles in a dynamic sea and land terminal, requires a solid process,
experience, and physical presence or an equivalent electronic control. The current methodology is prone
to mistakes, lacks segregation of duties, and is dependent on outsourced third parties.
Recommendations:
• Assess options of redesigning the current process; consider options that Maritime Operations
deems reasonable and that would alleviate current burden/dependence on outsourced staff.
• Assess the appropriate staffing needs / roles and whether current staffing is adequate to perform
tasks. Assess the level of dependence on outsourced security.
• Separate job functions relating to billing data collection and review, and invoice review and
approval. (Segregation of Duties)

1

Revenue loss from trailers parked in the uplands is inevitable because they are counted only once a day due to staffing
limitations. The security personnel are not required to count trailers because it is not cost effective to train them to count due
to their high turn-over rate.

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Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

Management Response/Action Plan:
Management agrees with the recommendations.
Redesigning the current process could help alleviate the current dependence on outsourced staff.
Management has been working with Security and Information Communications & Technology (ICT)
departments on the "Maritime Cameras Project" to assess the cost and viability of upgrading a number of
existing cameras as well as installing new cameras in new locations. This discussion is underway and
site visits are planned for late February 2018 to identify the feasibility of locations.
Management also agrees that there is a need to assess staffing levels and related level of dependence
on outsourced security. The current security contract outlines several tasks that are beneficial to
supplementing the existing Port staff of one manager and two superintendents. We acknowledge that
there is risk should a future contract not include that same language. Management will conduct a
cost/benefit analysis by end Q3 2018 to see if more FTEs on the Maritime Operations team make
business sense. Management is also teaming up with other Port staff and evaluating the current security
contract to see if changes need to be made. This evaluation should be complete by the end of Q3 2018.
Regarding the Segregation of Duties concerns, management is in the process of hiring a new Maritime
Billing and Admin Specialist. Once this position is filled, procedures will be updated to implement the
Separation of Duties.

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Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

2) RATING: HIGH
MANUAL BILLING PROCESS AT RISK OF ERROR

Maritime Operations utilize a variety of internally developed Access databases and Excel spreadsheets to
record billable activities. Billing categories include: dockage, wharfage, electrical and water consumption,
forklift rental, and security services. The billing process is at risk of error due to:
•

Billable data kept in the Vessel Activity Log Access database is copied via a "cut & paste function"
to the monthly Vessel Log, an Excel spreadsheet used as a starting point for the monthly billing.
This could lead to incorrect and/or missing billable data in the spreadsheet if the database is
edited (e.g. changes to existing data, and new data entries) after the data is copied, and if the
spreadsheet is not updated accordingly. For further information refer to the Tariff or PUA Dockage
process flow attached in Exhibit A.

The process is inefficient and redundant in the following manner:
•
•
•

The daily Activity Count Access database maintains daily information relating fish nets, forklift
rentals, and vessel moves, which is duplicated from the other existing documentation (i.e. yard
use log, forklift rental forms, and Vessel Activity Log Access database).
Billing entries are manually entered into PeopleSoft for invoicing. In a given month, there can be
several hundred invoice lines.
Billing documentations (e.g. Wharfage Tonnage Declaration forms, Electrical Hookup forms, and
customer invoices) are saved on a shared drive and on the department SharePoint site. In
addition, each billing category from the monthly accrual spreadsheet is saved separately as an
individual spreadsheet in a SharePoint site. This increases the risk of inconsistent or incorrect
data and adds additional administration time to filing.

Recommendations:
Maritime Operations should continue with the planned implementation of new billing software. During this
implementation, we recommend that Maritime Operations:
•
•
•

Build the billable data source in the software, and have it directly linked to the monthly customer
billing to avoid any miscommunication between the data source and actual billing.
Enable an automated billing feed between the software and PeopleSoft to eliminate the manual
invoicing of entries to PeopleSoft.
Utilize the software as a depository to maintain necessary billing documentation, to reduce the
administrative effort and time to archive documents.

Depending on time frame for the above longer term solution, we recommend the following short-term
Opportunities:
•
•
•
•

Explore the possibility of linking the Vessel Activity Log Access database to the monthly Vessel
Log spreadsheet, so that the spreadsheet can be automatically updated when the databased is
changed.
Eliminate the Daily Activity Count Access database if the database is not used for any other
purpose.
Work with the AFR Billing department to design a mechanism of loading billing entries to
PeopleSoft.
Re-evaluate the archive process to determine what and where documents should be saved.

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Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

Management Response/Action Plan:
Management is working closely with the vendor, ICT and accounting in an effort to implement a holistic
new vessel management software system to replace our manual processes. The items identified above
in the recommendations will be highlighted to ensure every practical effort is made to incorporate the
recommendations into the new billing/software system. We are cautiously optimistic that the new system
will be implemented by Q1 2019.
Prior to implementation of the new vessel management system: Management is currently working with
AFR to explore opportunities to reduce manual processing where possible. Possibilities may include
uploading of information directly into PeopleSoft. We expect to have testing of this process completed no
later than end of Q3 2018.
Linking the Vessel Activity Log Access database to the monthly Vessel Log Spreadsheet for automatic
updating as the database is changed has been explored. The level of expertise required to change this
process is beyond the capabilities of on-site staff and would have to be outsourced. Management has
received an estimate that it would require months to create and test this link. No money has been
budgeted in 2018 to implement this change. With the promise of the new vessel management system
coming online within the next year, management has decided not to implement this recommendation.
Our team is currently in the process of hiring a new Maritime Billing & Admin Specialist. Once this
position is filled and the employee is proficient in performing billing duties, this person will perform an
overhaul and streamlining of our archiving process. We expect this will be completed by the end of Q1
2019.

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Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

3) RATING: MEDIUM

INCORRECT CUSTOMER BILLING
We tested 28 invoices from 20 customers (5 customers per month) for the months of May 2016, July
2016, June 2017 and July 2017, to verify billing completeness and accuracy. The table below highlights
discrepancies found:
Month
May 2016
May 2016
July 2016
July 2017

Customer
Foss Maritime
Aleutian Spray Fishers
Crowley Maritime
Crowley Maritime

Billing Type
Dockage
Dockage
Dockage
Forklift Rental

Under-Billed Amount
$254.50
$732.00
$688.00
$645.00

Cause
Incorrect berth days
Incorrect tariff rate
Incorrect tariff rate
Missed billing

Although the results of the above testing were from a small sample, the high error rate (14% of invoices
tested contained an error), indicated that an opportunity exists for a more effective review of data entered
by the Billing Specialist.
In addition, from the 28 invoices tested, we identified four yard use charges and one electrical
consumption charge that had billing discrepancies that we could not tie to the underlying supporting
documentation (e.g. yard use spreadsheet, electrician reading). This indicated that someone made a
mistake or a change without updating the source documents.
Recommendations:
•
•
•

Where reasonable and practical, seek recovery of the under-billed amounts.
Design appropriate new-hire training, emphasizing mistake-prone areas (e.g. counting of berth
days by customer types, applying tariff rates between monthly and daily rates, etc.) and
periodically re-enforce the billing rules to all staff.
Consider implementing billing software, which incorporates billing rules and houses supporting
documentation.

Management Response/Action Plan:
Management shall explore the viability of seeking recovery of the under-billed amounts.
Billing Training documentation has been created over Q3 & Q4 2017. This documentation is currently
being tested and improvements are continuing to be included / added into newer revisions. Billing rule
reinforcement for staff will be incorporated into staff touch-base meetings twice a year following the hire of
our new Billing Specialist.
As mentioned above, management is working closely with the vendor, ICT, and AFR in an effort to
implement a holistic new vessel management software system to replace our manual processes. Efforts
are being made to ensure every practical effort is made to incorporate the audit recommendations into the
new billing/software system. We are cautiously optimistic that the new system will be implemented by Q1
2019.

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Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

APPENDIX A: RISK RATINGS
Findings identified during the course of the audit are assigned a risk rating, as outlined in the table below. The
risk rating is based on the financial, operational, compliance or reputational impact the issue identified has on
the Port. Items deemed "Low Risk" will be considered "Exit Items" and will not be brought to the final report.
Rating

Financial

Internal Controls

Compliance

Missing, or inadequate
key internal controls

Noncompliance
with applicable
Federal, State,
and Local Laws,
or Port Policies

Large financial
impact
HIGH

Remiss in
responsibilities
of being a
custodian of
public trust

Partial controls
MEDIUM

LOW/
Exit Items

Efficiency
Opportunity

Moderate
financial impact

Not adequate to identify
noncompliance or
misappropriation timely

Inconsistent
compliance with
Federal, State,
and Local Laws,
or Port Policies

Public

High probability
for external audit
issues and/or
negative public
perception

Potential for
external audit
issues and/or
negative public
perception

Port Commission/
Management

Important
Requires immediate
attention

Relatively important
May or may not
require immediate
attention

Generally
Low probability
complies with
for external audit
Federal, State and
Lower significance
Low financial
issues and/or
Local Laws or Port
impact
negative public
Policies, but some
May not require
perception
Implementing/enhancing
minor
immediate attention
controls could prevent
discrepancies
future problems
exist
An efficiency opportunity is where controls are functioning as intended; however, a modification would make
the process more efficient
Internal controls in place
but not consistently
efficient or effective

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Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

EXHIBIT A: PROCESS FLOW

Daily Vessel Movement at Terminal 91

Security writes
down pier, berth,
type, vessel name, &
arrival or departure
time when
applicable in the
movement log

Start

Security takes the
Daily Vessel
Movement Log &
Patrol Log, & drives
along P90 & P91*

Superintendent
signs off upon the
completion of the
entries

Security notes P-LOA
or O-LOA for Foss
tugboats, & idle or
full/activity for IPC
fishing boats when
applicable in the
patrol log

Vessel Activity
Log database

Daily Vessel
Movement Log

Daily Security
Supervisor transfers
log info into the
Vessel Activity Log
Access database
Daily Patrol Log

Dockage

* Dependent on Security

12

Superintendent fills in
LOA, Security, Offload,
Hookup, billable
customer, dockage rate
type, & billing instruction
throughout the week

Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

Tariff Moorage/dockage: applicable to customers needing spot moorage who don't have leases. This type of moorage is typically available at T18, T28, P34,
P46, T69, and T91.

Start

Customer calls or
emails Maritime Ops
to check berth
availability*

Superintendent
reaches out to other
terminals for
availability

End

Superintendent
completes the Berth
Reservation Form with
available customer info,
pier/berth, stay, etc.
(including the calculated
dockage)

Superintendent
emails the
reservation form to
customer

No

Available?

Yes

Superintendent
calculates the potential
dockage charge based
on the length of stay

Berth Reservation
Form

Superintendent files
the form in the Berth
Reservation Forms
folder

* Potential revenue loss if customer does not self-report.

13

Customer fills in any
missing info, verifies
the reservation
form, and signs the
form

Billing Specialist scans
the form and saves it
under Documentation
by company, month,
and year

Customer berths its
vessel at the
assigned pier/berth

End

Vessel
Movement

Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

Tariff Yard Use
Superintendent
prints off a copy of
Marshalling Yard
Inventory
spreadsheet with
counts from the
previous day

Superintendent
drives to the
upland to count
inventories

Superintendent counts
quantity by item #,
company, and license
plate & state

Are items in
leased area?
No
Superintendent enters
new counts or leaves
the counts from the
previous day - billed by
the tariff

Yard Inventory

Daily Patrol
Logs

Start

Cranes &
Fishing Nets

Yes

Security
counts
cranes and
fishing nets

Superintendent marks
"LL"/Lease or leaves
"LL" from the previous
day - billed by term
rates

Security logs counts
manually: fishing nets
logged in Patrol Log by
number, company, &
light poles to indicate
length; Cranes are
logged in Crane Log by
number & company

Storage

On the last day of the
month,
Superintendent prints
off a copy of Yard Use
Log with customer # &
name

Daily Crane
Logs

Daily, Security
Supervisor enters net
count (highest number
for a day) into the Daily
Activity Count Access
Database by company,
date, #s of nets, &
locations
Monthly, Security
Supervisor enters crane
count (highest number
for a day) into a
spreadsheet by dates &
company, and emails the
screen print of the
monthly entries to
Maritime Ops

Superintendent drives
to the upland to
measure square
footage by customer
using a measurement
wheeler

Daily Marshalling
Yard Inventory
Spreadsheet

On the last day of
the month,
Superintendent
validates the daily
entry to identify any
abnormal entries
(e.g. trending)

Superintendent totals
daily net & crane
numbers by customer
# & name into Yard
Use Log (use type as
Net Repairs & Truck
Storage)

On the last day of the
month, Superintendent
totals daily trailer numbers
by customer # & name into
Yard Use Log (use type as
Truck Storage)

The log
automatically
calculates
monthly charge
(units * rate)

Superintendent
enter leasehold
tax (LH: >=30 days
or NLH: <30 days)
or sales tax (S) &
sub class
Monthly Yard
Use

Superintendent
updates the Yard Use
Log (use type as Open
Storage) based on the
measurements by
customer # & name

Billing Specialist
copies the entire
Yard Use to the Yard
Use worksheet

Total billing by sub
class is included in
the monthly accrual
& invoicing

AFR Accrual
& Invoicing

14

Fishing & Commercial Operations - Maritime
January 2016 - September 2017

INTERNAL AUDIT

Tariff or PUA Dockage - Manual Billing Process
Vsl Activity
Log

At the month-end, Billing
Specialist copies all vessels
left during the month or
staying at the end of the
month from the log to vessel
log spreadsheet via a
PivotTable

Billing Specialist
enters LOA under
corresponding
day(s) based on
arrival & departure
date & time in the
log

Billing Specialist copies the
vessel log information to
Dockage worksheet

Rate type = P

Billing Specialist fills
billable days (= days
on berth, a
minimum of 125
days required to get
PUA rate)

The worksheet
automatically
calculates billing rate
(LOA * PUA rate)

The worksheet
vlookups
corresponding billing
rate by LOA, T, TI, & TS

The worksheet
automatically calculates
total dockage (billable
days * billing rate)

Rate type = T

Billing Specialist compiles
the PivotTable to include
customer name & #, LOA
(Length Overall), pier/berth
by each vessel

Vessel Log by month

The worksheet
automatically
calculates Days on
Berth (count
function)

Billing Specialist
calculates billable
days by 24 hour
clock

Rate Type =
T/P

Billing Specialist fills out T (full
tariff), TI (idle tariff - no
activities), or TS (dolphins at
T18 & 34 - rate different from
regular dockage) per billing
instruction in the log

Billing Specialist enters
sub class and leasehold
tax (NLH < 30 days, or
LH >= 30 days)

Billing Specialist fills out
T(Tariff), P(PUA), or O
(Other) for each line based
on rate type filled by
Superintendent in the log

Dockage

Rate Type = O

Total billing by sub
class is included in
the monthly accrual
& invoicing

Term Leases - billed through
PropWrks

AFR Accrual
& Invoicing

End

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