Port of Seattle Internal Audit Department Charter
I. INTRODUCTION
The Port of Seattle maintains an active internal audit function that has a dual reporting
responsibility. This Charter defines the Internal Audit Department’s authority and accountability;
mission and scope; responsibility; independence and objectivity; and commitment to quality.
II. AUTHORITY AND ACCOUNTABILITY
The Internal Audit Department derives its authority from the Port of Seattle Commission. The
Audit Committee represents the Commission and provides review and oversight authority on
matters relating to the Port’s internal control environment. Two Port Commissioners serve as
members of the Audit Committee. In discharging their duty, the Internal Audit Director and his
or her staff are accountable to the Audit Committee and to the Executive Director.
Internal Audit conducts audits and reviews of Port departments, programs, functions, systems,
contracts, and activities based on the department’s approved audit plan or specific requests that
have been approved by the Audit Committee.
The Director and his or her staff are authorized to:
• Have full, free and unrestricted access to all Port functions, activities, personnel, records,
property, and other relevant materials necessary to accomplish their work.
• Access information from contracted third parties and handle the information in
accordance with contractual terms.
• Handle documents provided to Internal Audit in the same prudent manner as by those
employees who are normally accountable for them.
• Have full access to the Audit Committee and to the Port Commission, as needed.
• Allocate resources, set frequencies, select subjects, determine scope of work, and apply
the techniques required to accomplish audit objectives.
• Obtain the necessary assistance of personnel in units of the Port where they perform
audits, as well as other specialized services from within or outside the Port.
• Report issues related to the processes for controlling the activities of the Port and its
tenants, customers and vendors, including potential improvements to those processes,
and provide information concerning such issues through resolution.
III. MISSION AND SCOPE OF WORK
The Internal Audit Department’s mission is to conduct independent, objective, risk-based audits,
of the Port’s operations, activities, and vendors. Audits add value by helping advance the Port’s
mission, and result in:
Financial Stewardship Safeguarding of public resources through detection and
deterrence of fraud, waste, and abuse.
Accountability Complying with laws and regulations; meeting strategic and
operational performance goals.
Transparency Clear and accurate information provided to our stakeholders
and to the public.
Governance Stronger oversight and enhanced decision making.
Operational Excellence Enhanced efficiency and effectiveness of management
practices.
A key part of the Internal Audit Department’s scope of work is to determine whether the Port's
network of controls, as designed and represented by management, are adequate and
functioning effectively.
Opportunities for improving management control, streamlining processes, and improving public
perception may be identified during audits. These will be communicated to the appropriate level
of management.
Internal Audit also conducts advisory services (consulting) where the internal audit staff’s
expertise is leveraged to provide recommendations on improving processes and practices.
IV.
RESPONSIBILITY
A.
The Director and His or Her Staff Have Responsibility To:
• Develop a flexible annual audit plan using an appropriate risk-based methodology;
include any risks or control concerns identified by management and submit that plan
to the Audit Committee for review and approval.
• Implement the annual audit plan, as approved by the Audit Committee, including any
special tasks or projects requested by management and the Audit Committee.
• Maintain a professional audit staff with sufficient knowledge, skills, experience and
professional certifications to meet the requirements of this Charter.
• Establish a quality assurance program, by which the Director monitors the operation
of internal audit activities. Additionally, obtain an external peer review at least once
every three years.
• Provide advisory services (consulting) beyond core audit services, to assist
management in meeting its objectives (e.g., facilitation, process design, training),
provided the services do not impair the auditor's independence.
• Evaluate and assess significant functions and new or changing services, processes,
operations, and control processes coincident with their development,
implementation and/or expansion.
• Issue quarterly reports to the Audit Committee and management summarizing
results of audit activities.
• Keep the Audit Committee informed of emerging trends and successful practices in
internal auditing.
• Provide information periodically on the status and results of the annual audit plan,
and the sufficiency of department resources.
• Assist in the investigation of suspected fraudulent activities within the organization
and notify management of the results.
• Consider the scope of work of the external auditors and regulators, as appropriate,
for the purpose of providing optimal audit coverage to the organization at a
reasonable overall cost.
• Follow up on audits to assure agreed-upon corrective actions have been taken.
• Exercise due professional care in the conduct of the audits.
• In March of every year, the Director will provide to the Audit Committee, the
mandatory annual communication required by the Institute of Internal Auditors’ (IIA)
standards; specifically, on organizational independence, the department charter
review, and the results of the last departmental quality assurance program.
B.
Port Management is Responsible To:
•
Maintain an effective system of internal controls, document policies and
procedures, and assure information is accurate and reliable.
•
Comply with laws and regulations including Port policies and procedures.
•
Cooperate fully with auditors during the discharge of their duties, including making
available, personnel and material, or information requested.
•
Provide a timely response to audit findings and recommendations.
•
Assure the timely implementation of agreed-upon corrective action(s) to audit
recommendations.
V.
INDEPENDENCE AND OBJECTIVITY
Independence is the freedom from conditions that threaten the ability of the internal audit
activity or the chief audit executive to carry out internal audit responsibilities in an unbiased
manner. To achieve the degree of independence necessary to effectively carry out the
responsibilities of the internal audit activity, the chief audit executive has direct and unrestricted
access to senior management and the board.
1
Objectivity is an unbiased mental attitude that allows internal auditors to perform engagements
in such a manner that they believe in their work product and that no quality compromises are
made. Objectivity requires that internal auditors do not subordinate their judgment on audit
1
International Standards for the Professional Practice of Internal Auditing (Standards).
matters to others.
1
To permit the rendering of impartial and unbiased judgment essential to the proper conduct of
audits, internal auditors will be independent of the activities they audit. Because objectivity is
essential to the audit function, Internal Audit staff will not develop and install procedures,
prepare records, or engage in any other activity which the auditor would normally audit, and
which could reasonably be construed to compromise the auditor’s independence. The auditor’s
objectivity is not adversely affected, however, by determining or recommending standards of
control to be adopted in the development of systems and procedures under review. The audit
staff is responsible for maintaining their independence and integrity in all services they provide.
This directive will not preclude Internal Audit’s proactive involvement with management in
planning processes, committees or special projects.
All internal audit activities shall remain free from interference relative to matters of audit
selection, scope, procedures, frequency, timing, or report content to maintain independence
and objectivity. The Director shall report any impairment to independence, or unjustified
restriction or limitation to audit selection, scope, procedures, frequency, timing or report
content promptly to the Audit Committee and to the Executive Director.
To provide for the independence of the Internal Audit Department, its staff reports to the
Internal Audit Director. The Director reports administratively to the Executive Director and
functionally to the Audit Committee. This structure permits the rendering of impartial and
unbiased judgment, essential to the proper conduct of audits.
The Audit Committee will regularly review the Internal Audit Department’s staffing
requirements, including its annual budget and make recommendations for approval to the full
Commission.
As necessary, the Audit Committee will review the need to appoint, replace or dismiss the
Internal Audit Director and make recommendations for action to the full Commission.
VI.
COMMITMENT TO QUALITY -- STANDARDS OF AUDIT PRACTICE
Internal Audit staff commits to providing outstanding audit service through timely, unbiased,
value-added audit and advisory (consulting) services.
Internal Audit will work as a team with Port management to assist with process improvements
aimed at achievement of the strategic goals and objectives.
Internal Audit will work to enhance the services they provide by continuously improving their
audit and advisory processes.
The Internal Audit Staff Will Adhere to the Following Professional Standards and Codes:
•
The International Standards for the Professional Practice of Internal Auditing (the
Standards) of the Institute of Internal Auditors (Red Book).
•
Government Auditing Standards promulgated by the Comptroller General of the
United States (Yellow Book).
•
ISACA Audit and Assurance Standards (IT Audit).
•
The Port of Seattle Employee's Code of Conduct.
•
The Institute of Internal Auditors Code of Ethics.
•
The Port of Seattle Internal Audit Handbook, including its protocols, policies, and
procedures.
The Internal Audit Department Charter may be modified by a written document executed by all
of the participating parties. This Charter will be effective upon execution and will continue
indefinitely until it is modified.
IN WITNESS WHEREOF, the parties hereto have caused this Internal Audit Charter to be executed
by their proper officers thereunto duly authorized, and their official seals to be affixed as of
_____________, 2020.
__________________________________ Date: _____________________
Commissioner Peter Steinbrueck
Port Commission President
__________________________________ Date: _____________________
Commissioner Ryan Calkins
Audit Committee Chair
__________________________________ Date: _____________________
Commissioner Stephanie Bowman
Audit Committee Secretary
__________________________________ Date: _____________________
Steve Metruck
Executive Director
__________________________________ Date: _____________________
Glenn Fernandes
Internal Audit Director
