Ariz. Admin. Code § 19-4-111

Current through Register Vol. 30, No. 44, November 1, 2024

Section R19-4-111 - Internal Control System

A. Responsible parties shall operate event wagering, including each event wagering system, retail wagering area, kiosk, and/or event wagering platform, pursuant to a written internal control system approved by the Department. The internal control system shall be designed to reasonably assure that for the purposes of event wagering in the State:

1. Assets are safeguarded and accountability over assets is maintained;

2. Liabilities are properly recorded and contingent liabilities are properly disclosed;

3. Financial records including records relating to revenues, expenses, assets, liabilities, and equity/fund balances are accurate and reliable;

4. Transactions are performed in accordance with the responsible party's general or specific authorization;

5. Access to assets is permitted only in accordance with the responsible party's specific authorization;

6. Recorded accountability for assets is compared with actual assets at frequent intervals and appropriate action is taken with respect to any discrepancies; and

7. Functions, duties, and responsibilities are appropriately segregated and performed in accordance with sound practices by qualified personnel.

B. The internal control system shall include:

1. A description of, and the inter-relationships and dependencies of, the event wagering system, hardware, software, and all integrated supplier modules;

2. A description of, and physical/logical security for, event wagering servers;

3. Procedures for verifying geolocation services and establishing a patron's geographic location;

4. A detailed security and surveillance plan;

5. Procedures for the use, access, and security of all keys utilized in the operation of event wagering;

6. A description of the procedures for responding to a failure of the event wagering system and/or event wagering platform;

7. Automated and manual risk management procedures;

8. Change management procedures;

9. Procedures for identifying and reporting fraudulent and/or suspicious wagering activity, including identifying unusual betting patterns and reporting them to integrity monitoring providers;

10. Procedures for the mitigation of risk of fraud and cheating;

11. Bank Secrecy Act procedures;

12. Procedures for advertising and marketing in a responsible manner;

13. Procedures to mitigate problem gambling and curtail compulsive gambling;

14. A responsible gaming training and education program;

15. Procedures for the identification, notice, and removal of self-excluded or barred persons from event wagering facilities and event wagering platforms;

16. Procedures for selling tickets, cashing tickets, canceling event wagers, voiding tickets, handling lost tickets, and issuing tax or other required forms;

17. Procedures for, and definition of, obvious errors;

18. Procedures for setting and moving lines;

19. Procedures for the reconciliation of assets and documents contained in a cashier's drawer, kiosk, or player account, including drop, fill, and count procedures;

20. Procedures for the verification of player identification;

21. Procedures for the issuance and acceptance of promotional and/or bonus credit for event wagers;

22. Procedures for handling patron disputes;

23. Procedures for creating, updating, adjusting, and closing player accounts;

24. Procedures for internal audit;

25. Procedures for the retention of event wagering records;

26. Procedures for the disposition of claims arising from personal injury or property damage, loss of funds, and/or compromised personal or financial information alleged to have been suffered by patrons; and

27. Procedures for the identification and prohibition of prohibited participants from participation in event wagering.

C. Responsible parties shall have obtained written approval of the internal control system, or any changes to it, from the Department prior to implementation. The Department shall review the system, or any changes, and issue a written approval or disapproval of the system.

1. Prior to the commencement of operations in the State, the responsible party shall have obtained written approval from the Department for the internal control system.

2. After the commencement of operations in the State, the responsible party shall submit any changes to the internal control system to the Department for review and approval. If, after five days, the responsible party has not received a response from the Department regarding the changes to the internal control system, then the changes shall be deemed approved by the Department.

D. For event wagering under the Act, responsible parties shall maintain:

1. Accurate, complete, legible, and permanent records of all transactions in a manner suitable for audit under the standards of the American Institute of Certified Public Accountants;

2. General accounting records using a double entry system of accounting with transactions recorded on a basis consistent with generally accepted accounting principles;

3. Detailed supporting and subsidiary records;

4. Detailed records identifying revenues, expenses, assets, liabilities and fund balances or equity;

5. All records required by the internal control system including, but not limited to, those relating to any event wagering activity authorized by the Act;

6. Journal entries;

7. Detailed records sufficient to accurately reflect gross income and expenses relating to its operations;

8. Detailed records of any reviews or audits, whether internal or otherwise, performed in addition to the annual audit required in R19-4-111(E), including, but not limited to, management advisory letters, agreed upon procedure reviews, notices of non-compliance, and reports on the internal control system; and

9. Records of any proposed or adjusting entries made by an independent certified public accountant.

E. Financial statements, or a specific element financial statement related to event wagering operations in the State, shall be audited, not less than annually at its fiscal year end, by an independent certified public accountant at the expense of the responsible party. The audit shall also include, or be supplemented with, an attestation by the auditor that adjusted gross event wagering receipts are accurately reported.

F. The Department shall be authorized to confer with the independent certified public accountant at the conclusion of the audit process and to review all the independent certified public accountant's work papers and documentation relating to the responsible party.

G. Responsible parties shall notify the Department in writing of their fiscal year end and any changes to the fiscal year end within 10 days after deciding on a fiscal year end or a change to that year end. If the responsible party changes its fiscal year end, it may elect either to prepare financial statements for a short fiscal year or for an extended fiscal year, but in no event shall an extended fiscal year extend more than 15 months.

Ariz. Admin. Code § R19-4-111

Adopted by final exempt rulemaking at 27 A.A.R. 1167, effective 7/26/2021.