INTERNAL AUDIT REPORT

OPERATIONAL AUDIT

EMPLOYEE PARKING – AIRPORT GARAGE

November 1, 2015 – October 31, 2017

ISSUE DATE: March 9, 2018

REPORT NO. 2017-25

Employee Parking Audit – Airport

Garage

11/1/2015 – 10/31/2017

INTERNAL AUDIT

TABLE OF CONTENTS

EXECUTIVE SUMMARY ................................................................................................................................................. 3

BACKGROUND .............................................................................................................................................................. 4

AUDIT SCOPE AND METHODOLOGY ........................................................................................................................... 5

SCHEDULE OF FINDINGS AND RECOMMENDATIONS............................................................................................... 7

APPENDIX A – RISK RATINGS ………………………………………………………………………………………………………………………... 10

Employee Parking Audit – Airport

Garage

11/1/2015 – 10/31/2017

INTERNAL AUDIT

EXECUTIVE SUMMARY

Internal Audit (IA) completed an audit of Employee Parking at the Seattle-Tacoma International Airport

(STIA) for the period November 2015 through October 2017. The audit was performed to evaluate

internal controls and compliance with Port Policy.

Employee Parking encompasses parking for Port employees, contractors, consultants, and tenants (i.e.

Concessionaires). Revenue generated from Employee Parking was approximately $9.3 million in 2016

and increased to $9.6 million in 2017.

In general, we concluded that management needs to evaluate processes and identify controls to reduce

the likelihood of exceptions. Because policy documents provide useful information and are the foundation

of an internal control environment, we recommend memorializing requirements into policy documentation.

We identified one medium rated issue related to internal controls and one medium rated issue regarding

motorcycle parking. These issues are discussed in more detail on page(s) seven through nine of the

report.

1) Processes related to Employee Parking at the STIA Garage do not always incorporate internal controls

to reduce the likelihood of errors and policy exceptions. Opportunities also exist to streamline

processes, thereby increasing efficiencies.

2) A process for motorcycle parking needs to be developed and consistently enforced.

We extend our appreciation to the management and staff of Landside Operations for their assistance and

cooperation during the audit.

Glenn Fernandes, CPA

Director, Internal Audit

RESPONSIBLE MANAGEMENT TEAM

Jeff Hoevett, Senior Manager Airport Operation Landside

Michael Ehl, Director Airport Operations

Lance Lyttle, Managing Director Aviation

Employee Parking Audit – Airport

Garage

11/1/2015 – 10/31/2017

INTERNAL AUDIT

BACKGROUND

The Seattle-Tacoma International Airport (STIA) Parking Garage is owned and operated by the Port of

Seattle, a municipal corporation, organized under statutory authority of the State of Washington. The

garage is the largest parking facility in the region with more than 13,000 stalls. The garage offers General

parking and Terminal Direct parking. General parking is available on floors one through three and five

through eight. Terminal Direct parking is available on the fourth floor and provides direct access to the

main terminal via sky bridges at a slightly higher cost.

In 2017, ParkingSoft was implemented replacing the Scheidt & Bachmann parking system. ParkingSoft

includes automated entrance and exit gates and processes prepaid tickets and credit cards. It also

monitors the available parking capacity.

Landside Operations includes four business units:

- Employee Parking

- Public Parking

- Ground Transportation

- Airport Transit Operations

Employee Parking encompasses parking for Port employees, contractors, consultants, and tenants (i.e.

Concessionaires). As of November 2017, a total of 2,671 parking access cards were issued. Revenue

generated from Employee Parking was approximately $9.3 million in 2016 and increased to $9.6 million in

2017.

Landside’s Public Parking business operates a facility with approximately 13,000 spaces and is a primary

contributor of non-aeronautical revenues. Public parking revenue was $70 million in 2016 and increased

to $75 million in 2017. The garage generates 2.1 million public parking transactions annually.

The Ground Transportation operation oversees transportation service including taxi, airporters, and

technology network companies. In 2017, the business managed more than three million trips with

revenues of more than $15 million.

Airport Transit Operations is responsible for transporting rental car customers between the Airport’s main

terminal and the consolidated Rental Car Facility. This operation transported more than five million

customers in 2017.

Employee Parking Audit – Airport

Garage

11/1/2015 – 10/31/2017

INTERNAL AUDIT

AUDIT SCOPE AND METHODOLOGY

We conducted this operational 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 November 1, 2015 through October 31, 2017. We utilized a risk-based audit

approach from planning to testing. We gathered information through interviews, observations, and

reviews of Department policies and procedures. Our audit included the following procedures:

1) Deactivation of Access Cards

• Performed testing procedures around 86 terminated Port employees to determine if parking cards

issued to these employees were deactivated and collected upon termination.

• Tested a sample of 10 contractors, eight consultants, and eight tenants whose contract or lease

had ended with the Port, to determine if the parking cards assigned to them had been deactivated

and collected.

2) Inactive Access Cards

• Tested a sample of 15 employees, 15 contractors/consultants and 15 tenants to determine if

inactive parking cards (cards not used within 30 consecutive days) were deactivated as stated in

the Port’s Parking Policy.

3) Parking Policy Guidelines

• Tested a sample of 15 contractors/consultants and 15 tenants, to determine if they had parked

overnight for two or more consecutive nights by reviewing their daily parking activity during the

period January 1, 2017 through October 31, 2017.

• Tested a sample of 15 contractors/consultants to determine if the expiration date of the parking

cards assigned to these card holders were restricted to 12 months as stated in Port Policy.

4) Motorcycle Parking

• Toured the STIA Parking Facility, including the third floor non-designated motorcycle parking area,

employee parking lots, and toll plaza.

Employee Parking Audit – Airport

Garage

11/1/2015 – 10/31/2017

INTERNAL AUDIT

• Compared the amount, if any, charged for motorcycle parking by contacting the following Airports:

 Los Angeles Internal Airport (LAX)

 Hollywood Burbank Airport (BUR)

 McCarran Internal Airport (LAS)

 Vancouver International Airport (YVR)

 George Bush Intercontinental Airport (IAH)

 San Francisco International Airport (SFO)

 Portland International Airport (PDX)

Employee Parking Audit – Airport

Garage

11/1/2015 – 10/31/2017

INTERNAL AUDIT

SCHEDULE OF FINDINGS AND RECOMMENDATIONS

Processes related to Employee Parking at the STIA Garage do not always incorporate

internal controls to reduce the likelihood of errors and policy exceptions.

Opportunities also exist to streamline processes thereby increasing efficiencies.

In general, we identified opportunities for management to enhance processes to increase accuracy and

efficiency. We also observed that management oversight, review, and approval, is generally not

incorporated into processes.

Below we provide three examples that illustrate opportunities to refine procedures:

1) Overnight or extended parking (vacation, training) is limited to Port employees. However, we

identified contractors, consultants and tenants who had parked at the Garage for an extended

period. Management indicated that monitoring to verify that this benefit is limited to employees,

is not performed. We noted that:

• Two contractors out of a sample of 15 selected for testing, had parked their vehicles at the

Garage for more than two consecutive nights on multiple occasions.

• Three tenants out of a sample of 15 selected for testing, had parked their vehicles at the

Garage for more than two consecutive nights on multiple occasions.

2) Although not captured formally into Policy documents, management indicated that parking

cards for Contractors and Consultants are issued for a 12 month term. However, we identified

one contractor out of the 15 samples tested; whose parking card had an initial term of 36

months.

3) When an individual’s employment with the Port has ended, parking cards are not always

deactivated. We identified seven individuals, out of a sample of 86, who no longer worked at

the Port, but whose parking cards were still active. Also, three contractors from a sample of

10 contractors, still had an active access card though their contract with the Port had ended.

Recommendation:

Management should evaluate the Parking Policies and revise them to include provisions that are current

and relevant.

Once Policy requirements have been established, internal controls including management review should

be implemented.

1) RATING: MEDIUM

Employee Parking Audit – Airport

Garage

11/1/2015 – 10/31/2017

INTERNAL AUDIT

Management Response/Action Plan:

1. Complimentary parking cards are available to a variety of Port partners, including tenants,

contractors, and consultants. The reporting system that indicates card presence is unable to

define how a card is being used. We have restrictions on personal travel for consultants and

contractors. Access control system limitations make it difficult to monitor extended parking stays.

Since cards are assigned to vehicles as well as individuals, at times the vehicle presence (with

cards) exceeds 24 hours even though a person is not at the worksite.

2. Consultant and contractor parking privileges are requested by Port staff sponsors. There is a

procedure in place wherein the Port staff member makes a formal request on behalf of the

consultant or contractor which includes details such as:

a. Company

b. Vehicle identification

c. Duration of contract or project

Some consultants or contractors have defined projects that commit the Port for more than a 12-

month period. As such, the Employee Parking team generally honors requests that exceed 12

months even with a preference for a shorter term.

3. Employee Parking has a process in place to deactivate cards after an employee’s separation from

service. This process requires the Landside Customer Service Specialists to manually deactivate

the card. Operations identified five of the seven tested cards as being active, but not in use. The

two remaining cards had either been deactivated as required, or available to an active employee.

We acknowledge that this manual cancellation is prone to error and would benefit from additional

oversight. We will implement a Billing Specialist review over this process by March 31, 2018 to

reduce the likelihood of future errors.

Employee Parking Audit – Airport

Garage

11/1/2015 – 10/31/2017

INTERNAL AUDIT

A process for motorcycle parking needs to be developed and consistently enforced.

When approaching the airport, signage guiding motorcyclists to enter the garage does not exist. As a

result, not all motorcyclists enter the garage the same way. Some enter on the first floor, and pay $30,

while others bypass the gated entry and enter via Arrivals on the third floor, thus not paying a fee. During

the audit, we researched how other airports charge motorcyclists. What we found was some airports

charged a reduced fee, while others provided complimentary motorcycle parking. However, free

motorcycle parking could be considered a violation of the Washington State Constitution and Federal

Regulations.

Once in the garage, motorcyclists use two unofficial parking locations. These locations require the owner

to either drive their motorcycle over a curb, use a small asphalt ramp, or enter using access points

designed for individuals with luggage carts. Additionally, motorcycles entering and exiting, at the south

end of the third floor, are at risk of accidents with TNC’s, taxicabs and courtesy vehicles. Although

unlikely, if an accident were to occur, the Port would most likely be liable for not providing an easily

accessible and official parking space.

Establishing a sustainable and repeatable process is important as airport parking demand grows and

space becomes increasingly limited.

Recommendation:

Management should consider a reduced fee for motorcycle parking after assessing the impact on

revenue. Regardless of the decision, a consistent point of entry should be established. Most likely,

signage will need to be added when approaching the garage to guide motorcyclists to the correct point of

entry.

Management should also consult with Risk Management. This consultation should evaluate the likelihood

and financial impact if an accident were to occur in an unofficial motorcycle parking area.

Management Response/Action Plan:

The recommendation of the Auditor is appreciated. Current policy provides that public customers are

responsible to pay appropriate parking fees as indicated by entry, and exit signs, as well as the tariff

associated with the airport’s parking facility. Port Legal had previously provided an opinion that there is

no legal justification for complimentary public motorcycle parking. At issue is the area on the third floor of

the garage where access controls are lacking. This area had been authorized for tenant and employee

motorcycle parking. It is assumed that these motorcycle parkers are included in other parking programs

(complimentary or fee-based) and have access to the parking garage. Management will consult with the

Port’s Risk Department and review previous recommendations to register tenant motorcyclists in a more

formalized program by April 30, 2018.

2) RATING: MEDIUM

Employee Parking Audit – Airport

Garage

11/1/2015 – 10/31/2017

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 Public

Port Commission/

Management

HIGH

Large financial

impact

Remiss in

responsibilities

of being a

custodian of

public trust

Missing, or inadequate

key internal controls

Noncompliance

with applicable

Federal, State,

and Local Laws,

or Port Policies

High probability

for external audit

issues and/or

negative public

perception

Important

Requires immediate

attention

MEDIUM

Moderate

financial impact

Partial controls

Not adequate to identify

noncompliance or

misappropriation timely

Inconsistent

compliance with

Federal, State,

and Local Laws,

or Port Policies

Potential for

external audit

issues and/or

negative public

perception

Relatively important

May or may not

require immediate

attention

LOW/

Exit Items

Low financial

impact

Internal controls in place

but not consistently

efficient or effective

Implementing/enhancing

controls could prevent

future problems

Generally

complies with

Federal, State and

Local Laws or Port

Policies, but some

minor

discrepancies

exist

Low probability

for external audit

issues and/or

negative public

perception

Lower significance

May not require

immediate attention

Efficiency

Opportunity

An efficiency opportunity is where controls are functioning as intended; however, a modification would make

the process more efficient