§ 465a.2. Internal control systems and audit protocols.
(a) A slot machine licensee shall submit to the Board and the Department a written description of its initial system of administrative and accounting procedures, including its internal control systems and audit protocols (collectively referred to as its ‘‘internal controls’’) at least 90 days before slot or table game operations are to commence. A written system of internal controls must include:
(1) Records of direct and indirect ownership in the slot machine licensee, its affiliates, intermediaries, subsidiaries or holding companies.
(2) Organization charts depicting segregation of functions and responsibilities in accordance with § 465a.11 (relating to slot machine licensee’s organization; jobs compendium).
(3) A description of the duties and responsibilities of each licensed or permitted position shown on the organization charts and their respective lines of authority in accordance with § 465a.11.
(4) A detailed narrative description of the administrative and accounting procedures designed to satisfy the requirements of this subpart.
(5) A record retention policy in accordance with § 465a.6 (relating to retention, storage and destruction of books, records and documents).
(6) Procedures to ensure that assets are safeguarded, and counted in conformance with effective count procedures.
(7) Procedures governing the conduct of all gaming related promotions to be offered by the slot machine licensee.
(8) Policies to prevent political contributions in accordance with section 1513 of the act (relating to political influence) and an annual certification to the Board and the Department of State’s Bureau of Commissions, Elections and Legislation that the slot machine licensee has conducted a good faith investigation that has not revealed any violations of section 1513 of the act.
(9) Procedures to ensure that the slot machine licensee’s employees comply with Chapter 435a (relating to employees).
(10) Other items the Board may request in writing to be included in the internal controls.
(b) A submission must be accompanied by the following:
(1) An attestation by the chief executive officer or other delegated individual with a direct reporting relationship to the chief executive officer attesting that the officer believes, in good faith, that the submitted internal controls conform to the requirements of the act and this subpart.
(2) An attestation by the chief financial officer or other delegated individual with a direct reporting relationship to the chief financial officer attesting that the officer believes, in good faith, that the submitted internal controls are designed to provide reasonable assurance that the financial reporting conforms to generally accepted accounting principles in the United States and complies with applicable laws and regulations, including the act and this subpart.
(c) The initial submission must also be accompanied by a report from an independent registered public accounting firm licensed to practice in this Commonwealth. The report should express an opinion as to the effectiveness of the design of the submitted system of internal controls over financial reporting and should further express an opinion as to whether the submitted system of internal controls materially deviates from the requirements of applicable laws and regulations, including the act and this subpart.
(d) A submission by a slot machine licensee must include, at a minimum, the following:
(1) Administrative controls which include the procedures and records that relate to the decision making processes leading to management’s authorization of transactions.
(2) Accounting controls that safeguard assets and revenues and ensure the reliability of financial records. The accounting controls must be designed to provide reasonable assurance that:
(i) Transactions or financial events which occur in the operation of a slot machine or table game are executed in accordance with management’s general and specific authorization.
(ii) Transactions or financial events which occur in the operation of a slot machine or table game are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles in the United States, the act and this subpart.
(iii) Transactions or financial events which occur in the operation of a slot machine or table game are recorded in a manner which provides reliable records, accounts and reports, including the recording of cash and evidences of indebtedness, for use in the preparation of reports to the Board related to slot machines or table games.
(iv) Transactions or financial events which occur in the operation of a slot machine or table game are recorded to ensure accountability for assets and to permit the proper and timely reporting of gross terminal and gross table game revenue, fees and taxes.
(v) Access to assets is permitted only in accordance with management’s general and specific authorization.
(vi) The recorded accountability for assets is compared with existing physical assets at reasonable intervals and that appropriate action is taken with respect to any discrepancies.
(3) Procedures and controls for ensuring, in accordance with section 1323 of the act (relating to central control computer system), that each slot machine, electronic wagering terminal and fully automated electronic gaming table directly provides and communicates all required activities and financial details to the central control computer system as set by the Board.
(4) Procedures and controls for ensuring that all functions, duties and responsibilities are segregated and performed in accordance with sound financial practices by qualified personnel.
(5) Procedures and controls for ensuring, through the use of surveillance and security departments, that the licensed facility is secure during normal operations and during any emergencies due to malfunctioning equipment, loss of power, natural disaster or any other cause.
(e) The Board, in consultation with the Department, will review each initial submission made under subsection (a) and determine whether it conforms to the requirements of the act and this subpart and provides adequate and effective controls to insure the integrity of the operation of slot machines and table games at a licensed facility. If the Board determines that the submission is deficient in any area, the Board will provide written notice of the deficiency to the slot machine licensee and allow the slot machine licensee to submit a revision to its submission. A slot machine licensee is prohibited from commencing slot or table game operations until its system of internal controls is approved by the Board.
(f) If a slot machine licensee intends to make a change or amendment to its system of internal controls, it shall submit the change or amendment electronically to the Bureau of Gaming Operations using the Internal Controls & Table Games Submission Form posted on the Board’s web site. The slot machine licensee may implement the change or amendment on the 30th calendar day following the filing of a complete submission unless the slot machine licensee receives written notice tolling the change or amendment in accordance with subsection (g) or written notice from the Board’s Executive Director rejecting the change or amendment.
(g) If during the 30-day review period in subsection (f), the Bureau of Gaming Operations preliminarily determines that a procedure in a submission contains an insufficiency likely to negatively affect the integrity of slot or table game operations or the control of gross terminal or gross table game revenue, the Bureau of Gaming Operations, by written notice to the slot machine licensee, will:
(1) Specify the nature of the insufficiency and, when possible, an acceptable alternative procedure.
(2) Direct that the 30 calendar day review period in subsection (f) be tolled and that any internal controls at issue not be implemented until approved under subsection (i).
(h) Examples of submissions that may contain an insufficiency likely to negatively affect the integrity of slot or table game operations or the control of gross terminal or gross table game revenue may include the following:
(1) Submissions that fail to provide an audit trail sufficient to permit the review of gaming operations or the reconstruction of gross terminal or gross table game revenue transactions.
(2) Submissions that fail to provide for the segregation of incompatible functions so that no employee is in a position to both commit an error or perpetrate a fraud and to conceal the error or fraud in the normal course of the employee’s duties.
(3) Submissions that do not include forms or other materials referenced in the submission or required under the act or this part.
(4) Submissions that would implement operations or accounting procedures not authorized by the act or this part.
(5) Submissions that are dependent upon the use of equipment or related devices or software not approved by the Board or Board staff, unless the submissions are required as part of an authorized test of the equipment or related device or software.
(i) When a change or amendment has been tolled under subsection (g), the slot machine licensee may submit a revised change or amendment within 30 days of receipt of the written notice from the Bureau of Gaming Operations. The slot machine licensee may implement the revised change or amendment upon receipt of written notice of approval from the Board’s Executive Director or on the 30th calendar day following the filing of the revision unless the slot machine licensee receives written notice tolling the change or amendment in accordance with subsection (g) or written notice from the Board’s Executive Director rejecting the change or amendment.
(j) A current version of the internal controls of a slot machine licensee shall be maintained in or made available in electronic form through secure computer access to the accounting and surveillance departments of the slot machine licensee and the Board’s onsite facilities required under § 465a.8 (relating to licensed facility). The slot machine licensee shall also maintain a copy, either in paper or electronic form, of any superseded internal control procedures for a minimum of 5 years. The original signed two attestations required under subsection (b)(1) and (2) shall also be maintained for a minimum of 5 years. Each page of the internal controls must indicate the date on which it was approved by the Board.
Authority The provisions of this § 465a.2 amended under 4 Pa.C.S. § § 1202(b)(9)—(23) and (30), 1205, 1206(f) and (g), 1207, 1208(1)(iii), 1209(b), 1212, 1213, 1321, 1322, 13A02(1)—(6), 13A11, 13A12—13A14, 13A15, 13A25, 13A62(a) and 1802 and Chapter 13.
Source The provisions of this § 465a.2 amended October 10, 2008, effective October 11, 2008, 38 Pa.B. 5652; amended December 12, 2008, effective December 13, 2008, 38 Pa.B. 6749; amended August 28, 2009, effective August 29, 2009, 39 Pa.B. 5125; amended September 25, 2009, effective September 26, 2009, 39 Pa.B. 5562; amended February 26, 2010, effective February 27, 2010, 40 Pa.B. 1082; amended May 11, 2012, effective May 12, 2012, 42 Pa.B. 2585; amended January 31, 2014, effective February 1, 2014, 44 Pa.B. 599; amended June 12, 2015, effective June 13, 2015, 45 Pa.B. 2829; amended December 15, 2017, effective December 16, 2017, 47 Pa.B. 7563. Immediately preceding text appears at serial pages (362061) to (362062), (377541) to (377542) and (375781).
Cross References This section cited in 58 Pa. Code § 461a.8 (relating to gaming vouchers); 58 Pa. Code § 461a.9 (relating to coupons utilized in slot machine gaming); 58 Pa. Code § 461a.11 (relating to automated gaming voucher and coupon redemption machines: accounting controls); 58 Pa. Code § 461a.12 (relating to progressive slot machines); 58 Pa. Code § 461a.18 (relating to cashless funds transfer systems); 58 Pa. Code § 461a.19 (relating to remote system access); 58 Pa. Code § 461a.20 (relating to server supported slot systems); 58 Pa. Code § 461a.21 (relating to server based slot systems) 58 Pa. Code § 461a.22 (relating to automated jackpot payout machines); 58 Pa. Code § 465a.1 (relating to accounting records); 58 Pa. Code § 465a.7 (relating to complimentary services or items); 58 Pa. Code § 465a.9 (relating to surveillance system; surveillance department control; surveillance department restriction); 58 Pa. Code § 465a.11 (relating to slot machine licensee’s organization; jobs compendium); 58 Pa. Code § 465a.12 (relating to access badges and temporary access credentials); 58 Pa. Code § 465a.14 (relating to security department minimum staffing); 58 Pa. Code § 465a.20 (relating to personal check cashing); 58 Pa. Code § 465a.21 (relating to wire transfers); 58 Pa. Code § 465a.22 (relating to cash equivalents); 58 Pa. Code § 465a.23 (relating to customer deposits); 58 Pa. Code § 465a.25 (relating to counting and recording of slot cash storage boxes and table game drop boxes); 58 Pa. Code § 465a.26 (relating to jackpot and credit meter payouts); 58 Pa. Code § 465a.27 (relating to annuity jackpots); 58 Pa. Code § 465a.28 (relating to merchandise jackpots); 58 Pa. Code § 465a.31 (relating to gaming day); 58 Pa. Code § 465a.33 (relating to access areas containing central control computer equipment); 58 Pa. Code 465a.34 (relating to automated gaming voucher and coupon redemption machine accounting controls); 58 Pa. Code § 603a.5 (relating to Roulette chips; permitted uses, inventory and impressments); 58 Pa. Code § 603a.9 (relating to plaques; issuance and use, denominations and physical characteristics); 58 Pa. Code § 603a.10 (relating to permissible wagering; exchange and redemption of gaming chips and plaques); 58 Pa. Code § 603a.11 (relating to receipt of gaming chips or plaques from a manufacturer or supplier; inventory, security, storage and destruction of chips and plaques); 58 Pa. Code § 603a.13 (relating to dice); 58 Pa. Code § 603a.15 (relating to cards; physical characteristics); 58 Pa. Code § 603a.16 (relating to cards; receipt, storage, inspection and removal from use); 58 Pa. Code § 603a.19 (relating to Pai Gow tiles; receipt, storage, inspection and removal from use); 58 Pa. Code § 603a.20 (relating to Match Play Coupons; physical characteristics and issuance); 58 Pa. Code § 605a.7 (relating to progressive table games); 58 Pa. Code § 605a.8 (relating to linked progressive table games); 58 Pa. Code § 625a.1 (relating to Sic Bo table; Sic Bo Shaker; physical characteristics); 58 Pa. Code § 627a.5 (relating to shuffle and cut of the cards); 58 Pa Code § 633a.7 (relating to procedure for dealing the cards; completion of each round of play); 58 Pa. Code § 633b.9 (relating to Blazing 7’s Progressive wager); 58 Pa. Code § 639.11 (relating to procedure for completion of each round of play); 58 Pa. Code § 641a.11 (relating to procedures for completion of each round of play); 58 Pa. Code § 643a.11 (relating to procedures for completion of each round of play); 58 Pa. Code § 647a.11 (relating to procedure for completion of each round of play); 58 Pa. Code § 649a.11 (relating to procedures for completion of each round of play); 58 Pa. Code § 651a.5 (relating to shuffle and cut of the cards); 58 Pa. Code § 653a.11 (relating to procedures for completion of each round of play); 58 Pa. Code § 655a.11 (relating to procedures for completion of each round of play); 58 Pa. Code § 657a.11 (relating to procedures for completion of each round of play); and 58 Pa. Code § 1112a.12 (relating to remote system access).
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