DATE: December 10, 2020

TO: Commissioner Ryan Calkins

Commissioner Stephanie Bowman

Request Commission Audit Committee authorization for the Executive Director to proceed and

request approval from the Port Commission to extend the current External Audit Services Contract

one additional year through May 2022.

EXECUTIVE SUMMARY

This request to extend the contract is to defer for one year the issuance of a Request for Proposal

to establish a new 5-year audit services contract. The purpose is to avoid the challenges involved

with on-boarding new auditors and initial year audit coordination during a mandatory stay safe

work-remote environment, should a new Certified Public Accounting firm be selected. The

timeline for recovery toward full on-site operation remains unpredictable given the up-spike and

The current external audit services contract (P-00318441) covers the financial periods 2016

through 2020 with $2,195,000 for the full contract term. The base contract is for one year with

four, one-year renewal options. Annual independent audits are required for the financial statements

of the Port’s Enterprise Fund and the Fiduciary Fund for purposes of obtaining an independent

auditor’s opinion as to the fairness in presentation of the financial results and position. Independent

audits are also required for the Port’s administration of Federal grants and Passenger Facility

Commission Audit Committee

External Audit Services Contract Extension for the Port’s 2021 Financial Period

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audit services for the 2020 financial period are completed.

The annual external audit services include the following deliverables:

• Independent Audit and Opinion – Financial Statements of the Port’s Enterprise Fund

• Independent Audit and Opinion – Financial Statements of the Port’s Fiduciary Fund

• Independent Audit and Opinion – Net Revenues Available for Revenue Bond Debt Service

• “Single Audit”(Federal grants regulatory compliance) and Report of Federal Grants

Awarded

• Passenger Facility Charge (PFC) Program Audit and Report

• Agreed Upon Procedures Report for Washington State Department of Ecology

risks. Various business processes needed to adjust accordingly and swiftly, and the Port followed

the Washington State’s mandate from on-site to remote work. At the same time, external audits

were interrupted and the auditors are also adapting to performing audits remotely. Members of the

Port’s procurement team, AFR, and divisional finance & budget find it prudent to pause to initiate

the procurement until more safe and stable business conditions return. There are several reasons

to support not changing auditors during the pandemic: such as changes in the internal control

environment; changes in the business environment due to disruptions of the airline, cruise, and real

estate industry; and the need to address competing priorities of Port’s staff resources in a remote-

work environment. These all create challenges in both performing and supporting external audits.

External auditors will undoubtedly face different audit risks, need to adapt to their client’s new

for the proposals and the Port team to focus on the procurement without also having to address the

operational logistics and orchestration woes during the pandemic.

FINANCIAL IMPLICATIONS

For the 2020 financial period under audit, Moss Adams provided the Port with a $20,000 cost

reduction in consideration of the financial challenges that the Port is facing in the midst of the

pandemic. For the 2021 financial period to be covered under this requested contract extension,

Moss Adams indicated a willingness to forgo the contractual annual fee increase and reduce audit

fees again, resulting in a continued $20,000 reduction in audit costs. The funding of $450,000 will

Commission Audit Committee

External Audit Services Contract Extension for the Port’s 2021 Financial Period

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services, which is conducted during the second half of 2021 and the first half of 2022, is included