Indian Gaming
Audit Issues and Challenges
Presented by:
Craig L. Greene
McGovern & Greene LLP
Richard Ross
California Gambling Control Commission
Current Economy & Risks
• Increase in Employee Theft
– Is this being Addressed in Indian Country?
• Downsizing Often Results in:
– Loss of Significant Internal Controls
– Removal of Non Revenue Producing Elements May
Result in Loss of Revenue Protecting Elements
– Loss of Key Employees
Current Economy & Risks
• Overall Trend Observed by NIGC of
Deteriorating Financial Condition
– Many New Properties have Large Debt Load
• Risk of Default by Major Gaming Operations
– Large Casino Management Companies, i.e.
Stations Casino Bankruptcy Petition
– Gaming Vendors
– What is the Level of Due Diligence
Improved Corporate Governance
• Many Tribes have Developed into the Equivalent
of Large Corporations
• Is there a Need to Implement Improved
Corporate Governance Policies, such as:
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Audit Committees
Codes of Business Conduct
Fraud Policies
Risk Assessment Programs
Management Certifications of Financial Statements
Role of Tribal Gaming Regulators
• What is TGR’s Role?
– Is there a Blur between Management and TGR?
– Often we have found Management and TGR are at
Odds – is this an Issue?
– If so, how can we Bridge that Gap?
• Understanding the Evolving Electronic Gaming
Technology.
– Reliance on Industry Manufacturers & Testing Labs
Lack of Adequate Review
of IT Department
• Technology continues to drive Gaming Operations
Which Leads to Significant Risks
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Access Controls
Application Controls
Disaster Recovery
Archival Issues
• Is the MICS Testing Enough?
• Should there be a Required Security Audit of IT?
– Who are the Right Kind of People?
No Required MICS Review
of Financial Controls
• MICS Emphasizes Gaming Operations, but
does not Adequately Address Financial
Controls.
• Thus, we have Found Significant Deficiencies
that Provide Opportunities for Fraud & Abuse.
Inability to Attract Adequate &
Competent Internal Auditors
• Locations of Employment
• Demand for Internal Auditors in Other Parts of
the Economy
• Salary Issues
• Internal Auditors as Trusted Business
Consultants
Lack of Training of
Accounting Staff & Internal Audit
• Adequate Educational Background
• Technology Challenges
• Changes in Generally Accepted Accounting
Standards & Practices
– AICPA Proposed Audit & Accounting Guide for
Casinos
– International Financial Reporting Standards (IFRS)
Lack of Adequate Due Diligence
• Numerous Instances of Tribal Investment in
Business Ventures with Unethical Business
Partners
• Issue Seems to be a Lack of Due Diligence on
the Part of the Tribes
Potpourri
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Familial Relationships
Resentment of External Criticism
Tribal Politics and Issues
Audience Concerns
Final Questions/Comments
Craig L. Greene
McGovern & Greene LLP
Chicago & Las Vegas
312.692.1000
Richard Ross
California Gambling Control Commission
Sacramento
916.263.0700