Audit Committee Minutes of June 25, 2018, submitted for review on September 24, 2018, and proposed for approval on September 28, 2018.

Glenn Fernandes, Director, Internal Audit; Dan Chase, Internal Audit Manager; Olga Darlington, Audit

Partner, Moss Adams, LLP; Lisa Dion, Senior Audit Manager, Moss Adams, LLP; Anna Waldren, Audit

Senior, Moss Adams, LLP; Elizabeth Leavitt, Senior Director, Environment & Sustainability; George

England; Senior Capital Program Leader, Aviation Project Management; Rudy Caluza, Director, Accounting

and Financial Reporting; Duane Hill, Senior Manager, Disbursements; Jason Johnson, Aviation Property

Manager; Aaron Pritchard, Commission Issues and Policy Manager; and Amy Dressler, Deputy

Commission Clerk.

Call to Order:

The committee special meeting was called to order at 1:07 p.m. by Commissioner Felleman.

information:

 Moss Adams has issued clean reports for all areas audited, including:

o The Enterprise Fund.

o The Warehousemen’s Pension Trust Fund.

o The Schedule of Net Revenues Available for Revenue Bond Debt Service.

o Internal control and compliance over financial reporting.

o Compliance related to major federal award programs.

o The schedule of Passenger Facility Charge receipts and expenditures and related internal

controls.

o The Agreed Upon Procedures Report for the Washington State Department of Ecology.

technology general computer controls and Parkingsoft implementation, TSA surveillance, and

checked baggage screening programs.

The Committee received a presentation from Mr. Fernandes that contained the following information:

 Internal audit work for 2018 is proceeding according to plan; there are no delays or proposed

changes to the work plan.

 The recently-hired IT auditor will be completing one in-progress IT audit and will collaborate with

external firms to perform the others.

Update – Issue Follow-Up Process

The Committee received a presentation from Mr. Chase that contained the following information:

 Audit issues are generally being addressed in a timely and appropriate manner.

 There are some overdue issues that have explainable business reasons for delayed resolution.

 Work papers from three 2017 audits were reviewed to evaluate compliance with GAGAS and IPPF,

and it was determined from this sample that appropriate processes are in place.

 Some recommendations were made to streamline processes, conduct this review on an annual

basis, and to document official approval of the work plan prior to beginning work.

Update – Streamlined Limited Contract Compliance Report

The Committee received a presentation from Mr. Chase that contained the following information:

 The format of this report has been streamlined to include key findings only.

 Increasing the efficiency of this type of audit will allow for increased capacity.

alignment regarding scope was not adhered to. This resulted in changes that increased the cost of

the project by approximate $31.8 million and delayed the schedule by approximately 39 weeks.

 The audit also found that reimbursement process did not adequately ensure that the work

reimbursed was aligned with the value received by the Port.

 The management action plan indicates that future projects will:

o Require tenants to have sufficient in-house expertise;

 The Port began developing all concepts for Port-owned facilities through on-call planning

consultants in 2017, meaning that for future projects, tenants will not need to develop concepts on

their own with the expectation of reimbursement.

Operational Audit – Transportation Network Company (rideshare) Re-Match: Environmental Key

Performance Indicator (E-KPI):

The Committee received a presentation from Mr. Fernandes and Ms. Leavitt that included the following

information:

 The purpose of this program is to reduce deadheading by allowing TNC cars dropping off outgoing

passengers to pick up arriving passengers without waiting in the queue.

 E-KPI is a measurement tool for the environmental performance of TNCs in comparison to

outbound taxis at the airport and is expressed in units of carbon emissions per trip.

 The audit found that although the Re-Match program reduces deadheading, greenhouse gases,

that do not meet the Port’s environmental standards.

 This audit was to examine the performance of the COR360 accounts payable software

implemented in early 2017.

 It was found that policies granting authority for approving invoice payments should be reviewed

and documented as an executive policy.

 Internal control improvements were identified, including disabling unneeded user access and

validating invoice accuracy.

Limited Contract Compliance Audit – Sky Chefs Inc.:

The Committee received a presentation from Mr. Fernandes indicating that there were no significant

findings for this audit.

Limited Contract Compliance Audit – CMC Investments Inc./Dollar Rent-A-Car:

following information:

Management was asked to revise the action plan to indicate that this is a repeat finding. Repayment must

be collected, and the underlying issue needs to be resolved.

Doris Cassan, President, CMC/Investments Inc./Dollar Rent-A-Car, provided her response and a written

statement, which is included here as minutes Exhibit A.

Limited Contract Compliance Audit – Beecher’s Handmade Cheese:

The Committee received a presentation from Mr. Fernandes that included the following information:

 A change in the point-of-sale system caused source documentation to be unavailable for some of

the audit period. Data was provided via an Excel file instead.

 Management has reiterated to Beecher’s the requirement that register z-tapes be retained in their