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INTERNAL AUDIT REPORT
Limited Contract Compliance Audit
1915 KCHouse Concepts SeaTac, LLC
July 2023 – December 2023
Issue Date: June 5, 2024
Report No. 2024-05
1915 KCHouse Concepts Seatac, LLC
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TABLE OF CONTENTS
Executive Summary .............................................................................................................................................. 3
Responsible Management Team ........................................................................................................................ 3
Background ............................................................................................................................................................ 4
Audit Scope and Methodology ............................................................................................................................ 5
Appendix A: Risk Ratings..................................................................................................................................... 6
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Executive Summary
Internal Audit (IA) completed a limited scope audit of the Lease and Concession Agreement (Agreement)
between 1915 KCHouse Concepts SeaTac, LLC, and the Port of Seattle (Port). The period audited was
July 1, 2023, through December 31, 2023. The audit was performed to determine whether concession
fees were complete, properly calculated, and remitted timely to the Port.
We concluded that KCHouse Concepts SeaTac, LLC materially complied with the terms of the
Agreement. No exceptions were identified.
We extend our appreciation to management and staff of the Airport Dining and Retail, and the
Accounting & Financial Reporting Departments for their assistance and cooperation during the audit.
Glenn Fernandes, CPA
Director, Internal Audit
Responsible Management Team
Lisa Lam, Acting Director, Accounting and Financial Reporting
Khalia Moore, Senior Manager, Airport Dining and Retail
Jeff Wolf, Director, Aviation Commercial Management
1915 KCHouse Concepts Seatac, LLC
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Background
On October 10th, 2017, The Port of Seattle (Port) entered into a lease agreement (AIR002265) with
1915 KCHouse Concepts SeaTac LLC.
1915 KCHouse Concepts SeaTac LLC, operates Lucky Louie Fish Shack, who specializes in fish &
chips and other seafood items such as freshly prepared chowders, made to order salads, seafood
cocktails, seafood melts, breakfast items, children’s menu, gluten free items and beverages.
Percentage fees were due in arrears, to the extent the percentage fees are higher than the monthly
MAG (Minimum Annual Guarantee) which is paid in advance. Effective January 1, 2023, only the
percentage fee payments are made since the MAG is not considered until the end of the lease year.
Percentage Fees are 12.5% of annual gross sales. The 2023 MAG was $461,550.26.
The table below reflects 2021, 2022, and 2023 Gross Sales and Percentage Fees:
Year Gross Sales
Percentage Fees
2021
$3,914,713 $489,339
2022 4,338,340
542,293
2023 4,944,133
618,017
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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.
The period audited was July 2023 through December 2023 and included the following procedures:
• Validated that the percentage fees for non-specialty and specialty categories were calculated
correctly and in accordance with the lease revenue thresholds.
• Agreed Concessionaire’s monthly general ledger sales data to what was provided to the
Accounting & Financial Reporting Department.
• Agreed point of sale summary reports to the general ledger.
• Obtained the audited Schedules of Gross Sales Report from the Independent Certified Public
Accountant, and compared the report to year-end gross sales data reported to AFR.
• Reviewed the Profit & Loss statements for variances.
• Reviewed a random sample of invoices to determine if they were paid on time and for the full
amount charged.
• Validated that concessionaire was not certified through OMWBE WA and confirmed with
management that they were not reflected as such on the ACDBE participation report submitted
to the FAA.
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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
