Audits

PURPOSE: This rule establishes standards for audits. (1) Independent certified public accountants (C.P.A.s) registered or licensed in Missouri under Chapter 326, RSMo, shall conduct quarterly and annual audits of each licensee, as follows: (A) On a quarterly calendar basis, except as noted— 1. Audit the respective quarter’s adjusted gross receipts and related taxes from gambling games, and total number and amount of fees received from admissions in order to report on the fair presentation of such amounts. A reconcilement of these audited amounts to similar amounts in monthly financial reports required by 11 CSR 45-8.050 shall be provided; 2. Consider, in connection with the audit of adjusted gross receipts and admission fees referred to in paragraph (1)(A)1., the related internal control structure and report whether there exists any material weaknesses and report any reportable conditions identified. This evaluation shall include, at a minimum, walk-throughs of the internal control system, inquiries of licensee personnel, examination of supporting documents and unannounced observations of pit activity and table games and electronic gaming device drop and count procedures. For purposes of these procedures, unannounced means that no officers, directors, or employees of the licensee are given advance information regarding the dates or times of the observations; and 3. Report on compliance of the licensee’s operating procedures and written system of internal controls with the requirements of 11 CSR 45-9. Whenever, in the opinion of the independent C.P.A., the licensee’s operating procedures or written system of internal controls has deviated from the minimum internal control standards or variations to the standards approved by the commission, the report shall enumerate these deviations, regardless of materiality; and (B) On an annual basis— 1. Report on reportable conditions found during the annual audit of the licensee’s financial statements. A reportable condition shall be defined as a significant deficiency in the design or operation of the internal control structure, which would adversely affect the licensee’s ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Reportable conditions that are also material weaknesses shall be identified as such in the report; and 2. Audit, in accordance with generally accepted auditing standards, the licensee’s annual financial statements covering all financial activities of the licensee’s operation, including a physical count of all assets inventoried on the Main Bank/Vault Accountability form in order to report on the fair presentation of the financial statements in conformity with generally accepted accounting principles. The annual count of assets shall be performed within thirty (30) days of the fiscal year end. The commission shall be notified at least thirty (30) days prior to the annual count. The audited annual financial statements must be prepared in a format consistent with the reporting requirements under 11 CSR 45-8.050(2). Unless the commission approves otherwise in writing, these statements must be prepared on a comparative basis. If the licensee or a person controlling, controlled by, or under common control with the licensee owns or operates room, food or beverage facilities at the establishment, the financial statements must cover those operations as well as gaming operations; (C) Sixty (60) days prior to the commencement of the annual financial audit, the independent C.P.A. shall submit to the commission a detailed written audit plan. The audit plan shall include a complete description of procedures to be performed by the licensee’s internal auditor, if applicable. At its discretion, the commission may require the independent C.P.A. to perform additional testing and/or procedures; and (D) The licensee’s internal auditor may provide direct assistance to the independent C.P.A. during the annual financial audit only pursuant to commission approval of the audit plan. (2) The licensee shall prepare and send to the commission a written response to the independent C.P.A. reports required by paragraphs (1)(A)2. and 3., (1)(B)1. and 2. The response shall indicate in detail the licensee’s statement addressing each item and corrective actions taken. (3) One (1) hard copy or an electronic copy of the reports required by section (1) shall be received by the commission or postmarked, no later than the required filing date. (A) Quarterly reports shall be due not later than ninety (90) calendar days after the last day of the quarter; and (B) Annual reports shall be due not later than ninety (90) calendar days after the last day of the licensee’s fiscal year or ten (10) days after Form 10-K is filed with the Securities and Exchange Commission, whichever comes first. (4) In the event of a license termination, change in business entity, or a change in the percentage of ownership of more than twenty percent (20%), the licensee or former licensee, not later than ninety (90) days after the event, shall submit to the commission four (4) copies of audited financial statements covering the period since the period covered by the previous statement. If a license termination, change in business entity, or a change in the percentage of ownership of more than twenty percent (20%) occurs within ninety (90) days after the end of business year for which a statement has not been submitted, the licensee may submit statements covering both the business year and the final period of business. (5) If a licensee changes its business year, the licensee shall prepare and submit audited financial statements to the commission covering the stub period from the end of the previous business year to the beginning of the new business year not later than ninety (90) days after the end of the stub period or incorporate the financial results of the stub period in the statements for the new business year. (6) Delays in mailing, mail pickup, and postmarkings are the licensee’s responsibility. (7) The commission may request additional information and documents from either the licensee or the licensee’s C.P.A., through the licensee, regarding the financial statements or the services performed by the accountant. Failure to submit the requested information or documents is an unsuitable method of operation. (8) All of the audits and reports required by this rule, and any special audits of a licensee required by the commission or its director, shall be prepared at the sole expense of the licensee. (9) Any audits conducted in accordance with this rule shall be conducted by independent C.P.A.s registered or licensed in Missouri under Chapter 326, RSMo. (10) The term independent as used in section (9) of this rule is consistent with definitions set forth by the American Institute of Certified Public Accountants or the rules of the Securities and Exchange Commission, or both, to the extent applicable. AUTHORITY: sections 313.004, 313.805, and 313.825, RSMo 2016.* Emergency rule filed Sept. 1, 1993, effective Sept. 20, 1993, expired Jan. 17, 1994. Emergency rule filed Jan. 5, 1994, effective Jan. 18, 1994, expired Jan. 30, 1994. Original rule filed Sept. 1, 1993, effective Jan. 31, 1994. Emergency amendment filed June 14, 1994, effective June 24, 1994, expired Oct. 21, 1994. Amended: Filed May 4, 1994, effective Sept. 30, 1994. Amended: Filed June 25, 1996, effective Feb. 28, 1997. Amended: Filed March 21, 2006, effective Nov. 30, 2006. Amended: Filed March 28, 2013, effective Nov. 30, 2013. Amended: Filed April 26, 2018, effective Dec. 30, 2018. *Original authority: 313.004, RSMo 1993, amended 1994, 2014; 313.805, RSMo 1991, amended 1993, 1994, 2000, 2008, 2010; and 313.825, RSMo 1991, amended 1993, 2000.