Maintaining Financial Compliance in a Tribal Gaming Facility
Protect Assets While Complying with NIGC Regulations CFOs and controllers in the tribal gaming space keep a lot of plates spinning. Staying on top of all these tasks is critical, but one spinning plate may require a bit more attention than the others: maintaining financial compliance. According to the NIGC’s Audit Requirements for Gaming Operations, “Failure to obtain an annual audit and submit the required reports to the NIGC is a violation of the law that could subject the tribe to a civil fine of up to $25,000 per violation.” But passing financial audit requirements is, not just possible, but probable when your finance officers understand and comply with all NIGC regulations for tribal gaming. Establishing Internal Accounting Controls The first step toward ensuring compliance with NIGC requirements is establishing internal accounting controls. Investopedia defines these controls as the “mechanisms, rules, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.” There are two main types of internal controls: 1. Preventative Internal Controls Preventative internal controls focus on stopping errors and irregularities within accounting and financial teams. Some examples include instituting double-entry accounting to make sure the books are always balanced, controlling access to financial or accounting systems, and dividing duties among different members of the accounting team. 2. Corrective Internal Controls Should preventative internal controls fail and errors occur, the next step is employing corrective internal controls. These are pre-determined procedures that all team members must know and follow. Corrective internal controls may include manually counting money or inventory, standardizing accounting documents, requiring manager approvals for accounting transactions, and performing internal audits. In the tribal gaming context, trained NIGC auditors may conduct an on-site Internal Control Assessment (ICA), which can be either “a comprehensive review of a tribal gaming facility’s entire system of internal controls or a specific examination of a single gaming activity such as Bingo, Table Games, Gaming Machines, among others.” As CFO or controller at a gaming facility, you can request that an ICA be tailored to your Tribal Internal Control Standards (TICS), to Part 543 of the NIGC’s Minimum Internal Control Standards (MICS), or to “any other internal control standards” of your choice. An ICA can be a great benefit to a gaming facility because, after the assessment is complete, the tribe and tribal regulators receive a report detailing the facility’s regulatory compliance or lack thereof. Should onsite training and/or remediation be needed, the NIGC will be there to help. This will improve future compliance and keep your facility on an upward trajectory. Secure Assets with Increased Oversight Preventative and corrective internal controls protect assets significantly, but, on their own, they may not be enough to prepare for the annual NIGC audit. So, it is vital that a gaming facility appoint a trusted team member to oversee controls and review the financial statements of the gaming operation only. This doesn’t mean that CFOs or controllers should not also oversee other financial aspects of the business, such as accommodations, dining, golf, etc. It means that the financial statements for the gaming operation must be kept and analyzed separately from the statements for the rest of the business. This increased, detailed oversight helps regulate financial reporting and expose any concerning changes or trends. But the phrase “trusted team member” is critical here. Issues in a gaming environment may result from employee malfeasance, which is a common occurrence in SMBs, according to an article from accounting and business advisory firm Signature Analytics. The article notes that businesses employing fewer “than 100 people must trust their employees with more information compared to businesses with many more workers with the ability to have anti-fraud controls in place.” This concept may easily be generalized to the tribal gaming context. It may be difficult for leaders in tribal gaming facilities to imagine their employees committing fraud against them—particularly because tribal casinos aren’t “business casinos” but “community casinos”, according to Jason Salsman, communications director of the Muscogee Creek Nation. The revenues from tribal gaming facilities “supplement chronically underfunded health and education programs” on Native American land, and it is unpleasant to think about employees stealing money from their communities. Still, this makes it even more important for tribal casinos to have oversight policies and procedures in place—not only to pass NIGC audits, but also to prevent the breach of trust that is employee fraud. Perform Regular Self-Evaluations Finally, performing regular self-evaluations is a big step toward maintaining financial compliance and passing financial audit reviews. One effective self-evaluation method is to consistently review financial reports. This gives gaming facilities a firm grasp on their financial data so that, if unusual fluctuations or variances occur, they’ll be able to notice and address them immediately before falling out of compliance with the NIGC. Transaction tracing is another easy and effective way to perform self-evaluations, monitoring how transactions are being processed company wide. Tracing follows a transaction from start to finish, highlighting any recording errors, lack of disclosure, or noncompliance. The more self-evaluations a tribal gaming facility performs, the more it ensures financial compliance and the better it can keep concerning issues from becoming major, out-of-hand problems. How Acumatica Can Help Internal accounting controls, increased oversight, and regular self-evaluations are all proven methods for maintaining financial compliance, but there’s one more: implementing a comprehensive, adaptable cloud ERP solution, like Acumatica. Resting on a future-proof platform and offering best-in-class business and industry functionality, Acumatica’s cloud ERP software organizes data and automates routine, manual tasks—eliminating human error and providing an audit trail of all transactions. Acumatica is a complete solution that simplifies complex compliance requirements. Acumatica’s Corporate Controller, Hans Huang, addresses the differences between ERP and accounting software, such as QuickBooks, in a recent article. He explains that accounting software is a standalone solution that “allows businesses to handle their accounting transactions, from accounts receivable (AR), accounts payable (AP), and bank management to revenue tracking and financial reporting.” However, he goes on to say that an ERP solution … Read more
