La. Admin. Code tit. 42 § VI-707

Current through Register Vol. 50, No. 11, November 20, 2024

Section VI-707 - Audits, Annual Review, and Periodic Reporting

A. Licensees or their operators shall comply with the provisions of the Act, Part III of this Title, and these regulations.

B. Annual financial statements shall be provided to the division not later than May 1 each year or 120 days after the end of the fiscal year if not December 31.

C. A licensee or operator shall submit to the division one copy of any report required to be filed with the Securities and Exchange Commission or other domestic or foreign securities regulatory agency by the licensee or operator, and their holding company, intermediate company, or parent company. These reports shall be delivered to the division within 15 days of the time of filing with such commission or agency or within 15 days of the due date prescribed by such commission or regulatory agency, whichever comes first.

D. Each operator shall submit to the division annual audited financial statements reflecting all financial activities of the sports book operations subjected to an examination conducted according to generally accepted auditing standards by an independent certified public accountant (CPA).

1. All audits and reports required by this Section shall be prepared at the sole expense of the operator.

E. Annual Review of Operations

1. Each licensee or, as applicable, their operator shall require the independent CPA, engaged for purposes of examining the financial statements, to submit to the operator two signed copies of a written report detailing the continuing effectiveness and adequacy of the internal controls.

2. Using the division's standard Minimum Internal Control questionnaire and guidelines, the auditor shall include in this report any items discovered by the auditor or brought to the auditor's attention where the operator does not act in accordance with the internal controls and procedures provided to the division. The report should also include notification and explanation for all occasions when the operator denies a player's request to withdraw funds and all occasions when the operator discovers the use of unauthorized scripts on its sports wagering platform.

a. Denial of a withdrawal means the operator or its agent issues the decision to deny a player's request to withdraw. Issues not controlled by the operator, such as banking system issues, incorrect deposit account numbers, or other issues not controlled by the operator are not included.

b. Reportable script items includes unauthorized scripts discovered on the sports wagering platform whether used or not.

3. This report is due no later than 30 days after the due date of the audited financial statements required in Subsection C of this Section.

F. Each licensee or operator shall engage an independent certified public accountant (CPA). The CPA shall examine the statements in accordance with generally accepted auditing standards. The CPA is prohibited from providing internal audit services. Should the CPA previously engaged as the principal accountant to audit the licensee's or operator's financial statements resign or be dismissed as the principal accountant, or if another CPA is engaged as principal accountant, the licensee or operator shall file a report with the division within 10 days following the end of the month in which the event occurs, setting forth the following:

1. the date of the resignation, dismissal, or engagement;

2. any disagreements with a former accountant, in connection with the audits of the two most recent years, on any matter of accounting principles, or practices, financial statement disclosure, auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the former accountant, would have caused him to make reference in connection with his report to the subject matter of the disagreement; including a description of each such disagreement; whether resolved or unresolved;

3. whether the principal accountant's report on the financial statements for any of the past two years contained an adverse opinion or a disclaimer of opinion or was qualified. The nature of such adverse opinion, disclaimer of opinion, or qualification shall be described; and

4. a letter from the former accountant furnished to the licensee or operator and addressed to the division stating whether the CPA agrees with the statements made by the licensee or operator in response to this Section.

G. Unless the division approves otherwise in writing, the statements required must be presented on a comparative basis. Consolidated financial statements may be filed by commonly owned or operated operations, but the consolidated statements must include consolidating financial information or consolidated schedules presenting separate financial statements for each licensee or operator. The CPA shall express an opinion on the consolidated financial statements as a whole and shall subject the accompanying consolidating financial information to the auditing procedures applied in the examination of the consolidated financial statements.

H. Each licensee or their operator shall submit to the division two originally signed copies of its audited financial statements and the applicable CPA's letter of engagement not later than May 1 or 120 days after the last day of the operator's business year if not December 31.

I. If a licensee or their operator changes its fiscal year, the licensee or their operator shall prepare and submit to the division audited financial statements covering the period from the end of the previous business year to the beginning of the new business year not later than 120 days after the end of the period.

J. Each operator shall provide a quarterly report verifying of its net gaming proceeds and taxes paid. Quarters shall be based on the licensee's fiscal year. The report shall be submitted to and received by the division not later than 60 days after the last day of the applicable quarter.

1. The audit for in-person sports wagering operations shall be performed by an independent CPA and may be incorporated into the work conducted during the quarterly audit of net gaming proceeds, gross gaming revenue, or net slot machine proceeds performed in accordance with §2711.I of Part III of this Title. The reports may be submitted in a single submission, but the information shall be separated between casino operations and sports wagering operations. The sports wagering operations audit shall include wagers accepted, eligible promotional play deducted from net proceeds, net gaming proceeds, and taxes paid. The auditor shall incorporate guidelines established by the division into current procedures for preparing the quarterly audit.

2. The required work for mobile sports wagering may be performed by an independent CPA, the operator's internal audit department, or other appropriate independent party approved by the division. The report shall include a reconciliation of amounts wagered, eligible promotional play deducted from revenue, net gaming proceeds, and taxes paid. The party performing the work shall incorporate guidelines established by the division into its procedures for preparing this quarterly report.

K. The division may request additional information and documents from either the licensee, operator, or their CPA, regarding the financial statements or the services performed by the CPA. The division may review any and all work papers of the CPA at a time and place determined by the division. These requirements shall be included in agreements between the licensee, the operator, or its affiliates and the CPA.

L. The licensee or operator shall submit to the division, postmarked by the United States Postal Service or deposited for delivery with a private or commercial interstate carrier, or in another manner approved by the division, any audit report prepared by the Internal Revenue Service (IRS) and issued to the licensee or operator. The report is due within 30 days of receipt from the IRS.

M. Impairments to the independence of a CPA to perform a financial audit include, but are not limited to:

1. during the period of professional engagement to perform an audit, or at the time the opinion was issued, the auditing person:

a. had or was committed to acquire any direct or indirect financial interest in the licensee or operator;

b. was a trustee of any trust or executor or administrator of any estate if the trust or estate had or was committed to acquire any direct or indirect financial interest in the licensee or operator;

c. had any joint closely held business investment with the licensee or operator or any key person or owner thereof that was material in relation to the auditing person or the auditing person's firm's net worth; or

d. had any loan to or from the licensee or operator or any key person or owner thereof, when made under normal lending procedures, terms, and requirements, except:

i. loans that are not material to the net worth of the borrower;

ii. home mortgages; or

iii. other secured loans, except loans guaranteed by the auditing person's firm that are otherwise unsecured;

2. during the period covered by the licensee's or operator's financial statements, during the period of the professional engagement to perform an audit, or at the time the opinion is issued, the auditing person was:

a. connected with the licensee or operator as a promoter, underwriter, voting trustee, key employee, or in any capacity equivalent to that of a key employee; or

b. a trustee for any pension or profit-sharing trust of the licensee or operator;

3. functioning as if a key employee of the licensee or operator;

4. performing an audit of the independent CPA or independent CPA's firm's own work;

5. advocacy for the licensee or operator; or

6. having any other role with the licensee or operator or its affiliates other than as independent auditor.

La. Admin. Code tit. 42, § VI-707

Promulgated by the Department of Public Safety and Corrections, Gaming Control Board, LR 471272, Promulgated by the Department of Public Safety and Corrections, Gaming Control Board, LR 4866 (1/1/2022), Amended LR 48, Amended LR 481862 (7/1/2022).

AUTHORITY NOTE: Promulgated in accordance with R.S. 27:15 and 24.