Financial statement audits for Tribal gaming operations

The annual audit requirement

Under 25 CFR 571.12, each Tribe must engage an independent certified public accountant to audit the financial statements of every Class II and Class III gaming operation on its Indian lands, every fiscal year. The statements are prepared under generally accepted accounting principles, the audit is performed under generally accepted auditing standards, and the CPA issues an opinion.

The rule allows some alternatives: a review in place of an audit for an operation with gross gaming revenue under $2,000,000 in the prior year, where the Tribe or regulatory authority permits it, and a consolidated audit with consolidating schedules when a Tribe owns several facilities.

Why gaming experience matters

A casino’s financial statements rest on its gaming controls. Our auditors already know how revenue moves from the floor through drop and count to the cage and the general ledger, so we can focus testing where gaming operations carry their risk.

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  Gaming revenue. Drop, win and hold by game, and the reconciliation of gaming activity to revenue reported.
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  Cage accountability. Cash on hand, cage and vault counts, and reconciliation to the accountability.
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  Gaming liabilities. Progressive jackpots, outstanding tickets and chips, and player loyalty obligations.
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  Complimentary services and promotions. How comps and promotional play are recorded and presented.

How this fits with our other work

Many of the controls tested in a financial statement audit are also covered by MICS and TICS compliance audits. Where we perform both, our understanding of your operation carries from one engagement to the next.

How the engagement runs

1. Planning

   We learn your operation’s revenue streams, prior-year results and areas of risk, set materiality, and agree a timeline that meets the NIGC’s 120-day deadline.

2. Interim work

   We walk through and test controls over gaming revenue, the cage and cash handling, payroll and disbursements.

3. Year-end fieldwork

   We observe cage and vault counts, confirm balances, analyze gaming revenue by game, and test gaming liabilities such as progressive jackpots and player loyalty points.

4. Reporting

   You receive our opinion on the financial statements and a management letter with recommendations, in time to submit to the NIGC within 120 days of fiscal year-end.

Questions