INTERNAL AUDIT REPORT
Limited Contract Compliance Audit
Louis Dreyfus Company Washington LLC
January 2020 – December 2022
Issue Date: August 18, 2023
Report No. 2023-11
Louis Dreyfus Company Washington LLC
2
TABLE OF CONTENTS
Executive Summary ................................................................................................................................................ 3
Background ............................................................................................................................................................. 4
Audit Scope and Methodology ............................................................................................................................... 6
Appendix A: Risk Ratings ....................................................................................................................................... 7
Louis Dreyfus Company Washington LLC
3
Executive Summary
Internal Audit (IA) completed an audit of the Lease Agreement (Agreement) between LDC Washington
LLC (Louis Dreyfus Company) and the Port of Seattle (Port). The period audited was January 1, 2020,
through December 31, 2022. The audit was performed to determine whether Louis Dreyfus Company
(Louis Dreyfus) reported Concession Fees related to Tonnage Rent were complete, properly calculated,
and remitted timely to the Port.
Louis Dreyfus is the operator of the Port of Seattle’s (Port’s) Grain Facility at Terminal 86. The terminal
is a completely automated grain facility due to a wide array of sophisticated electronic controls and
mechanical devices in place. This assures the quick and efficient movement of commodities from trucks
and/or rail cars to silos for storage and ships’ holds for export. Total grain storage capacity is almost 4
million bushels, which is over 101,000 metric tons. Vessels are loaded using two belt conveyor systems
with five loading sprouts, which allows for a maximum load rate of approximately 20,000 metric tons in
a 10-hour shift. The Washington State Department of Agriculture is responsible for independent
certification of the grain quality and quantity.
We concluded that Louis Dreyfus had materially complied with the terms of Agreement, specifically that
Concession Fees were accurate, complete, and remitted timely to the Port. No issues were identified
requiring a management response.
We extend our appreciation to management and staff of the Economic Development and Accounting &
Financial Reporting (AFR) Departments for their assistance and cooperation during the audit.
Glenn Fernandes, CPA
Director, Internal Audit
Responsible Management Team
Rudy Caluza, Director, Accounting and Financial Reporting
Lisa Lam, Assistant Director, Accounting and Financial Reporting
Jennifer Maietta, Director Real Estate Asset Management
Dave McFadden, Managing Director Economic Development
Louis Dreyfus Company Washington LLC
4
Background
Louis Dreyfus Company (Louis Dreyfus) is a French merchant firm founded in 1851. Today, the
company is involved in diverse industries worldwide which includes agriculture, food processing,
international shipping, and finance. Since 1909, Louis Dreyfus has had an active presence in the US
and currently employs over 1,000 people nationwide. The company is a top exporter of various
agricultural commodities, such as cotton, soybeans, wheat, and corn.
As for its local presence in Seattle, Louis Dreyfus is the operator of the Port of Seattle’s (Port’s) Grain
Facility at Terminal 86. The terminal is a completely automated grain facility due to a wide array of
sophisticated electronic controls and mechanical devices in place. This assures the quick and efficient
movement of commodities from trucks and/or rail cars to silos for storage and ships’ holds for export.
Total grain storage capacity is almost 4 million bushels, which is over 101,000 metric tons. Vessels are
loaded using two belt conveyor systems with five loading sprouts, which allows for a maximum load rate
of approximately 20,000 metric tons in a 10-hour shift. The Washington State Department of Agriculture
is responsible for independent certification of the grain quality and quantity.
Under the lease agreement between the Port and Louis Dreyfus signed November 1, 2014, Louis
Dreyfus operates the terminal and pays the Port a monthly base rental fee plus a concession fee
(tonnage rent) based on loaded ship tonnage. Monthly tonnage rent is calculated based upon the total
number of bushels of grain, corn, soybeans, and other commodities, exported in a crop year (September
1st to August 31st of the following year). Currently, tonnage fee rate per metric ton ranges from
approximately $0.47 to $1.16 depending on total volume for the year.
The table below reflects the yearly base rent and tonnage rent during the years being audited:
Year
Tonnage Rent
Base Rent
Total
2020
$ 4,273,743
$ 1,097,511
$ 5,371,254
2021
$ 5,451,248
$ 1,082,405
$ 6,533,652
2022
$ 5,077,095
$ 1,085,105
$ 6,162,200
Total
$ 14,802,086
$ 3,265,021
$ 18,067,106
In terms of the billing process, a written report based upon Louis Dreyfus’ crop year forecast is submitted
to the Port on or before August 20th of each year to determine the tonnage fee to be applied during the
forthcoming crop year. At the end of each crop year, a reconciliation is then subsequently performed
based upon the actual volume exported for said year. If any adjustment is necessary, whether it be for
the Port or Louis Dreyfus, this is settled within 60 days after the end of each crop year. Lastly, payment
is due within 10 business days from receipt by Louis Dreyfus. Otherwise, a late fee of $1,000 is imposed,
in addition to the owed installment of rent, after the 10
th
day.
Louis Dreyfus Company Washington LLC
5
The table below reflects the breakdown of commodities exported during the years being audited:
Commodity
(in Metric Tons)
Year
2020
2022
Yellow Corn
1,240,437
1,859,757
Soybeans
2,751,841
1,870,459
Grain Sorghum
247,526
660,395
Total
4,239,804
4,390,611
Louis Dreyfus Company Washington LLC
6
Audit Scope and Methodology
We conducted the engagement 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 conduct an engagement to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our engagement objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and conclusions based on our
engagement objectives.
In some instances, we used non-statistical random and/or judgmental sampling methods to determine
the samples selected for our audit test work. In those cases, the results of the work cannot be projected
to the population as a whole.
The period audited was January 2020 through December 2022 and included the following procedures:
Concession Fees Completeness, Accuracy, and Timeliness
• Reviewed relevant documents (e.g., Lease Agreement, Grain Billing Adjustment Worksheets,
Rates Schedule, etc.) to gain an understanding of the calculation of Concession Fee (Tonnage
Fee) payments.
• Tested a sample of 18 vessels (6 for each audit year, across three different types of commodities:
Yellow Corn, Soybeans, and Grain Sorghum). These 18 vessels account for 30%, 40%, and
50% of loaded Yellow Corn, Soybeans, and Grain Sorghum tonnage for the three years,
respectively.
o Agreed the Mate’s Receipt to the respective WA Official Grain Weight Certificate.
o Verified and ensured Port Invoice was complete and accurate, matching the terms on the
Mate’s Receipt and Grain Weight Certificate.
o Investigated and reconciled any differences, as necessary.
• Recalculated and verified tonnage rate being billed during the 9/1/2020 to 8/31/2021 crop year,
based upon the total volume of commodities loaded for said year.
• Traced concession payments to Port records to verify payments were received timely, and if not,
late fees were assessed appropriately.
Louis Dreyfus Company Washington LLC
7
Appendix A: Risk Ratings
Findings identified during the audit are assigned a risk rating, as outlined in the table below. Only one
of the criteria needs to be met for a finding to be rated High, Medium, or Low. Findings rated Low will
be evaluated and may or may not be reflected in the final report.
Rating
Financial
Stewardship
Internal
Controls
Compliance Public
Commission/
Management
High Significant
Missing or not
followed
Non-compliance
with Laws, Port
Policies,
Contracts
High probability
for external audit
issues and / or
negative public
perception
Requires
immediate
attention
Medium Moderate
Partial controls
Not functioning
effectively
Partial
compliance with
Laws, Port
Policies
Contracts
Moderate
probability for
external audit
issues and / or
negative public
perception
Requires
attention
Low Minimal
Functioning as
intended but
could be
enhanced
Mostly complies
with Laws, Port
Policies,
Contracts
Low probability
for external audit
issues and/or
negative public
perception
Does not
require
immediate
attention