Annual MICS agreed-upon procedures (AUP)
Each year an independent CPA must perform agreed-upon procedures on your gaming operation’s compliance with the MICS and your TICS and SICS. We plan the procedures with you, perform the testing and deliver the report in time for your 120-day submission.
What the regulations require
Class II. Under 25 CFR 543.23(d), the Tribe must engage a CPA independent of the gaming operation each year to verify whether the operation complies with the MICS, or with TICS and SICS that provide at least the same level of control. The work follows the AICPA Statements on Standards for Attestation Engagements for agreed-upon procedures. The Tribe submits two copies of the report to the NIGC within 120 days of the operation’s fiscal year-end, together with the audited financial statements required under 25 CFR Part 571.
Class III. Most Tribal-State compacts and TICS require a similar annual engagement, commonly performed in the manner set out in 25 CFR 542.3(f), with the report going to the parties the compact and TICS name. Operations offering both classes can receive one combined report, with the Class II portions performed under 543.23(d).
What the engagement covers
- Compliance testing by gaming area against the MICS and your TICS and SICS, on a sample basis, with observations and inquiries of the procedures in effect.
- A review of your internal audit function: whether each department was audited as required, whether findings were documented, and whether corrective action was verified.
- Use of your internal auditors’ work where the regulations and professional standards allow, with reperformance of a sample of their testing.
- A report of findings that lists each exception with the standard it relates to, ready for management’s responses.
How the engagement runs
Planning
We confirm your fiscal year, gaming class, revenue tier and the standards that apply, agree the procedures and timing, and send a document request.
Fieldwork
We test each applicable area, observe procedures in effect and review the year’s internal audit work, keeping the evidence with the workpapers.
Findings
Exceptions are listed by area with the related standard, and shared in draft so management can respond before the report is final.
Report
The final report is delivered with time to submit it to the NIGC with your audited financial statements within 120 days of year-end.
Questions
Can the CPA that audits our financial statements also perform the AUP?
Yes. The agreed-upon procedures may be performed in conjunction with the annual financial statement audit, and the two reports are submitted together. We can perform both or the AUP alone.
Does an AUP report give an opinion on our controls?
No. In an agreed-upon procedures engagement the CPA performs specified procedures and reports the findings, including each exception. It is not an examination and does not express an opinion.
Is the AUP the same as our internal audits?
No. Internal audits of each department are a separate, recurring requirement under 25 CFR 543.23(c). The AUP is performed once a year by an independent CPA, and part of it is reviewing whether the internal audit function met its requirements.
Our operation offers both Class II and Class III gaming. Do we need two reports?
Not necessarily. A combined report can cover both, but the Class II portions must be performed under 25 CFR 543.23(d). We confirm the reporting your compact and TICS call for during planning.