The following are recommendations for typical observations in the games of chance audits performed by the Racing and Charitable Gaming Commission auditors.
Source Documentation - Document all receipts and expenses of the organization related to the games of chance and retain supporting documentation for a minimum period of two years from the date of filing the financial reports with the Commission. It is the game operator employer's responsibility to keep records, for each licensed game date, of all persons who participate in the operation of any games of chance.
Nightly Reconciliation Sheets and Bank Deposits - An integral part of all control systems is effective monitoring to ensure that controls are in place and are operating as intended. For each game date an audit trail must be established that (1) identifies all the various sources of income and expenses related to the nightly activity and (2) can be tracked to the actual dollar amounts deposited into the appropriate bank account. Reconciliations are essential, not only to ensure that records contain consistent and accurate information, but also to detect errors, frauds, or other issues.
Game Schedule - A game schedule should not be altered without proper approval from the commission. Pari 1211.01 (a) states that "A games of chance licensee shall not play any games of chance on a licensed game date unless all games of chance to be played on that game date have been identified on a game schedule approved by the commission pursuant to this section."
Paying Expenses and Prizes - RSA 287-D: 2-c VI requires that game operators "maintain an account at a financial institution with at least one branch in New Hampshire solely in the name of the licensed game operator in which only the money collected from games of chance shall be deposited and withdrawn." All expenses and all prizes over $500.00 should be paid by consecutively numbered checks from this account All void checks and all receipts for all money paid out must be retained, thus maintaining a complete audit trail.
Co-mingling of Funds - Do not co-mingle funds. Only money collected from games of chance may be deposited and withdrawn from the account established per RSA 287-D: 2-c. Funds co-mingled form various sources, may cloud the banking activity and make it difficult to determine proper revenue and expenditures from games of chance activities.
Making Timely Deposits - Timely deposits ensure the security of funds. Daily deposits should be made whenever possible. At a minimum, deposits should be made within 48 hours of the end of games of chance activities.
Prize Check Cashing - When prize checks are cashed by a primary game operator, the check must be endorsed by both the prize recipient and the primary game operator who cashed the check. Both individuals must print and sign their names on the back of the check, as required by Pari 1210.01 (x).
House Rules - Games of Chance licensees must comply with the all of the requirements of Pari 1209.01 (c).
Written Procedures - All game procedures must be approved by the commission. Should a game operator employer wish to change any of their currently existing procedures, the licensee must submit in writing to the NHRCGC, a new request for approval, including any materials previously approved that require modification to address the difference.
Control over Non-Monetary Chips - The games of chance licensee must establish written procedures for determining and tracking the amount that a player has spent for buy-ins and re-buys for games of chance where the chips have no monetary value.
Control over Monetary Chips - The games of chance licensee must establish written procedures for determining and tracking chips with monetary value. Should chips be allowed to be used for purposes other than playing a cash game, sufficient controls must be in place to maintain accountably for the chips that are circulating the game room.
Proper Licensing of Primary Game Operators - Game operators must review the RCGC statutes and rules and ensure that all individuals meeting the criteria of a primary game operator are licensed by the RCGC.
Accurate Reporting - To ensure accuracy, review all reports for omissions and errors prior to submission to the RCGC.
Proper Federal Withholding - To avoid potential loss of non profit status with the Internal Revenue Service, game operators must be cognizant of federal rules and statutes relative to proper withholding from winnings and issuance of form W-2G to eligible winners.
Deficiencies That Weaken Safeguards and Internal Controls - Weak or nonexistent internal controls and several practices or situations that have the potential for problems have been observed. Many organizations have not instituted the proper internal controls and follow procedures that have been in place for years without re-examining their effectiveness or the potential hazards that exist. The following are some instances that have been noted.
- Storage of Supplies - supplies should be stored in a locked closet, or cabinet, inaccessible to unauthorized persons. The lock should be changed when there is a personnel change.
- Protection of Money - Exercise caution on both the visibility of cash and access to the cage to avoid potential loss of funds.
- Unwritten or "Understood" Agreements - All contracts or "agreements" should be in writing clarifying the expectations and responsibilities of each party.
- Segregation of Duties - All cash counts, recording of cash proceeds, prize calculations, and reconciliations of games of chance activity should be verified in writing by more than one individual.