Compliance Findings and Tribal Gaming Internal Audit

Compliance Findings and Tribal Gaming Internal Audit

The Internal Auditor needs to learn how to develop a checklist/schedule and how to integrate audit findings into the operation. These skills are important fundamental

Internal Auditor as defined by the Institute of Internal Auditors defines the internal audit function as: “Internal auditing is an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization”

The Role of Internal Audit

The Role of Internal Audit

The Role of Internal Audit

Must be independent of the operation so as to no retaliation for the Internal Audit staff for audit findings. Should not be involved in the developing of the policies and procedures except for review and recommendation. Cannot audit the department in which they work

In Tribal gaming, Tier A and Tier B operations as defined by the NIGC can have casino employees in the internal audit department as long as they do not work in the department being audit. Tier C operations must have an independent department with its own employees.

Independence is the key and Internal Audit is required to report to the Gaming Commission, Tribal Council or the Audit Committee/Board of Directors in order to maintain this independence.

The Three Main Functions of Internal Audit

Internal Audit determines that policies and procedures currently in place provide adequate control and protection over: Assets, Activities, Verifies Internal Audit verifies that there is proper compliance with: Policies and procedures, MICS and TICS, State Compacts. Internal Audit identifies areas where controls can be strengthened to: Tighten controls, Improve Operation deficiencies,

Audit Checklists

Audit Checklists

Checklists are invaluable when performing audits for a few reasons: don’t miss something, easy to follow, makes training easier and provides an organized process. MICS Checklists are a good starting point for checklists. Just a basic beginning (minimum) and need to be strengthened

Audit Checklists

List all steps no matter how minor you think they are. Internal Audit needs to pay attention to the little things. Internal Audit catches a thief. Audit Checklists need to cover all aspects of the process. Utilize the two step approach. Learn and understand the process in all aspects.

Develop the audit checklist to understand the process. Review and read the policies and procedures while asking the operation staff what is the process. Identify the gaps between what the policies and procedures say and what is happening in practice. Develop by Using the results to design and develop checklists and work papers. Integrate the NIGC MICS with your unique operation processes to cover all bases. Test transactions to verify what the staff said and what the policies and procedures say. Identify Discrepancies and Discussing the reports of the findings.

Audit Checklists

Start with an audit schedule by beginning with the checklists start to develop a plan. Start with the NIGC MICS required audits Add other departments to audit where it is deemed necessary. Then, decide the frequency of the audits. Audit Schedule is the blue print. Develop an annual audit schedule and stick to the schedule and plan. Keep the schedules confidential with minimal lead-time for the department being audited. Vary the schedule from year to year so trends are not recognizable.

NIGC

Audit Findings

Audit Findings

Needs to be communicated to the operation and to the Gaming Commission/Council/BOD. The written report format works the best. Audit Findings should be in a report and needs the following components; objective, scope, discussion, recommendations and management response.

Objective—states why the audit was being performed, site the regulations/requirements behind the audit. Scope—states the period covered, what was being audited, the number of transactions, and what is considered a discrepancy. Discussion—states the policy or procedure, states the finding and risk rating and states the consequence of the discrepancy. Recommendations—gives one or two recommendations regarding correction of the discrepancy. Management Response--the management’s response contains; corrective action, timetable for implementation.

Audit Findings and the operational discrepancies should be reviewed with management to verify that the findings are proper. Follow up with a good corrective action plan for remediation. Prevent surprises when report is issued and use the report to strengthen controls, not to punish the operation.

Audit Findings and the Operation

Once the report is issued, follow-up audit needs to be scheduled within four to six months. Repeat findings need to be addressed. Internal audit should be working with the operation not against it. Helping strengthen controls is the overall purpose. Identity gaps or weaknesses with a gap analysis. Protecting the assets will help preserve integrity of the gaming operation.

Conclusion

Better relationship the Internal Audit department has with the operation the more effective the audits will be. Protect you and your staff and the independence of the audit team. Protect the casino and Tribal Assets to help to ensure the integrity of the gaming operation will help with more peace of mind of all involved.

Contact Information

William Owen Logan

Wmologan@gmail.com

Appreciate