Audit Committee Minutes of March 1, 2019, submitted for review on April 12, 2019, and proposed for approval on June 28, 2019.

APPROVED MINUTES

Information Technology Auditor; Spencer Bright, Senior Internal Auditor; Ritika Marwaha, Senior Internal

Auditor; Rudy Caluza, Director, Accounting and Financial Reporting; Debbie Browning, Assistant Director of

General Accounting, Accounting and Financial Reporting; Joseph Simmons, Audit Manager State Auditor’s

Office; Sandy Nguyen, Audit Lead, State Auditor’s Office; Katie Gerard, Senior Director, Human

Resources; Jim Schone, Director, Aviation Business Development; 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 11:04 a.m. by Commissioner Steinbrueck.

External Audit – Office of the Washington State Auditor Accountability Audit for 2017

The Committee received a presentation from Joseph Simmons, Audit Manager, and Sandy Nguyen,

Assistant State Auditor, Washington State Auditor’s Office, that contained the following relevant

information:

 It was found that Port operations complied with applicable requirements, state laws, and the Port’s

own policies and procedures, and had adequate safeguarding controls in most areas audited.

 A management letter was issued related to communication of compensation increases.

o It was recommended that when jobs are evaluated and Exhibit A to the Salary and

Benefits Resolution is modified, changes are communicated to the Commission.

o This would not be an approval process, simply an opportunity for the Commission to

o Ms. Gerard noted that Human Resources plans to notify the Commission of changes on a

quarterly basis so that any concerns may be addressed.

 Internal controls and revenue transactions were reviewed at Salmon Bay Marina, acquired in 2018,

to determine that fees were calculated in compliance with established tariffs and revenue was

 Areas of focus were determined by current events, prior audits, and with the guidance of the SAO’s

Port specialist.

Update – 2016-2018 External Peer Review Results

The Committee received a presentation from Glenn Fernandes, Director of Internal Audit, that included the

following relevant information:

 Standards require an external peer review every three years. Independent parties review

workpapers and reports.

 The Port’s most recent peer review was completed in January, covering the period of November 1,

Update – Audit Work Plan Status

The Committee received a presentation from Glenn Fernandes, Director of Internal Audit, that included the

following relevant information:

 Three audits on the 2019 work plan are carryovers from 2018; Personally Identifiable Information

and Sixt Rent-a-Car were added late in 2019, and the auditor originally assigned to Marine

Maintenance left the Port, so the audit had to be reassigned.

 For 2019, there is a contingency list; if there is capacity to take on additional projects late in the

year, they can be added without new plan approval and would carry over automatically to 2020 if

they were not completed.

Information Technology Audit – Security of Personally Identifiable Information

The Committee received a presentation from Bruce Klouzal, Senior Information Technology Auditor, that

included the following relevant information:

 Personally Identifiable Information (PII) is defined as a first name or first initial and last name in

combination with a social security number, driver’s license number, state identification number,

etc., a financial account number in combination with a security code, access code, or password,

and medical or health insurance information.

 This information should be restricted to authorized personnel.

 Four issues, which are deemed security sensitive and are exempt from public disclosure, were

Limited Contract Compliance Audit – Airport Tenant Marketing Program

The Committee received a presentation from Glenn Fernandes, Director of Internal Audit, that included the

following relevant information:

 This program was established in 2005 to increase awareness of Airport Dining and Retail locations.

 It is funded by the concessionaires, who contribute 0.05 percent of gross sales.

 It was found that:

o formal processes have not been established;

o the marketing advisory group does not have concessionaire representation;

o the budget is not formally approved; and

Limited Contract Compliance Audit – Sixt Rent-a-Car

The Committee received a presentation from Glenn Fernandes, Director of Internal Audit, that included the

following relevant information:

 It was found that Sixt did not report $432,991 in incidental gross revenue, resulting in an additional

$43,299 in additional percentage fees owed to the Port.

 There has been a trend of incidental revenue (cancellation fees, administrative fees for tolls and

tickets, vehicle upkeep recovery, etc.) not being reported by rental car companies, although the

lease terms are very clear about which items are exempt from gross revenue reporting. This matter

will be addressed in an annual meeting with rental car companies.

Committee Comments

Prepared: Attest:

Amy Dressler, Deputy Commission Clerk Peter Steinbrueck, Audit Committee Chair

Minutes approved: June 28, 2019.