Rule2022-20230
Audit Standards
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 21, 2022
Effective
October 21, 2022
Issuing agencies
Interior DepartmentNational Indian Gaming Commission
Abstract
The National Indian Gaming Commission (NIGC) is amending its Audit standards regulations. The amendments eliminate the Commission waiver requirement for reviewed financial statements and allow all operations grossing less than $2 million in the previous fiscal year to submit reviewed financial statements provided that the tribe or tribal gaming regulatory authority (TGRA) permits the gaming operation to submit reviewed financials. The amendments also create a third tier of financial reporting for charitable gaming operations with annual gross revenues of $50,000 or less where, if permitted by the tribe, a tribal or charitable gaming operation may submit financial information on a monthly basis to the tribe or the TGRA and in turn, the tribe or TGRA provides an annual certification to the NIGC regarding the gaming operation's compliance with the financial reporting requirements. The amendments also add a provision clarifying that the submission of an adverse opinion does not satisfy the regulation's reporting requirements.
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 182 (Wednesday, September 21, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 182 (Wednesday, September 21, 2022)]
[Rules and Regulations]
[Pages 57595-57598]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-20230]
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
National Indian Gaming Commission
25 CFR Part 571
RIN 3141-AA72
Audit Standards
AGENCY: National Indian Gaming Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The National Indian Gaming Commission (NIGC) is amending its
Audit standards regulations. The amendments eliminate the Commission
waiver requirement for reviewed financial statements and allow all
operations grossing less than $2 million in the previous fiscal year to
submit reviewed financial statements provided that the tribe or tribal
gaming regulatory authority (TGRA) permits the gaming operation to
submit reviewed financials. The amendments also create a third tier of
financial reporting for charitable gaming operations with annual gross
revenues of $50,000 or less where, if permitted by the tribe, a tribal
or charitable gaming operation may submit financial information on a
monthly basis to the tribe or the TGRA and in turn, the tribe or TGRA
provides an annual certification to the NIGC regarding the gaming
operation's compliance with the financial reporting requirements. The
amendments also add a provision clarifying that the submission of an
adverse opinion does not satisfy the regulation's reporting
requirements.
DATES: This rule is effective October 21, 2022.
FOR FURTHER INFORMATION CONTACT: Michael Hoenig, National Indian Gaming
Commission; Telephone: (202) 632-7003.
SUPPLEMENTARY INFORMATION:
I. Background
The Indian Gaming Regulatory Act (IGRA or Act), Public Law 100-497,
25 U.S.C. 2701 et seq., was signed into law on October 17, 1988. The
Act establishes the National Indian Gaming Commission (NIGC or
Commission) and sets out a comprehensive framework for the regulation
of gaming on Indian lands. On January 22, 1993, the Commission
promulgated Sec. 571.12 establishing audit standards for tribal gaming
facilities. On July 27, 2009, the Commission amended the regulation to
allow tribes with multiple facilities to consolidate their audit
statements into one and to allow operations earning less than $2
million in gross gaming revenue to file an abbreviated statement.
II. Development of the Rule
On June 9, 2021, the National Indian Gaming Commission sent a
Notice of Consultation announcing that the Agency intended to consult
on several topics, including proposed changes to the Audit standards.
Prior to consultation, the Commission released proposed discussion
drafts of the regulations for review. The amendments to the Audit
standards are designed to reduce the financial hurdles that small and
charitable gaming operations face regarding the audit requirement. They
also clarify which types of audit opinions satisfy the audit submission
requirements. The Commission held two virtual consultation sessions in
September and one virtual consultation in October of 2021 to receive
tribal input on any proposed changes.
The Commission then published a proposed rule for notice and
comments on June 1, 2022 at 87 FR 33091 and extended the comment period
to August 1, 2022 on July 13, 2022 at 87 FR 41637.
III. Review of Public Comments
The Commission received several general and specific comments on
the proposed amendments.
Comment: One commenter proposed changes to eliminate the ``prepared
by a certified public accountant'' language from the financial
statements element of audit submissions.
Response: Commission agrees and has revised the rule accordingly.
Comment: One commenter proposed changes to clarify that the
independent certified public accountant is the entity that may issue an
adverse opinion and that any adverse opinions must still be submitted
to the Commission.
Response: Commission agrees and has revised the rule accordingly.
Comment: One commenter expressed appreciation for the Commission's
proposal to continue accepting adverse opinions that result from
financial statements prepared in accordance with generally accepted
accounting principles as promulgated by the Financial Accounting
Standards Board rather than the Governmental Accounting Standards
Board.
Response: Commission appreciates the comment and has maintained the
exception in this rule.
Comment: Two commenters noted that the discussion draft circulated
during the consultation rounds addressed disclaimed audits, but the
proposed rule did not. They asked what the Commission's position is on
disclaimed audits.
Response: At this time, the Commission has chosen to continue to
accept disclaimed audit opinions, but may revisit the issue in the
future. The Compliance Division will continue to carefully review each
disclaimed opinion and the circumstances behind them.
Comment: One commenter expressed concern that tribes who go to the
effort and expense of conducting an audit only to receive an adverse
opinion are now subject to the same violation as a tribe that failed to
submit anything at all.
Response: The reasons for receiving an adverse opinion and the
difference in circumstances is more appropriately
[[Page 57596]]
considered in the Civil Fine Assessment process, which requires the
Chairman to weigh the unique facts and circumstances--including good
faith efforts toward compliance--for each violation.
Comment: Two commenters are concerned that this creates a new basis
for a violation without requiring an intermediate investigative or
technical assistance step.
Response: Under the amended rule, if a tribe submits an adverse
opinion, the Chair must still follow the procedures set forth in IGRA
and NIGC regulations before taking any enforcement action. The
Commission has determined that this amendment is necessary for the
Chairman to protect the tribal gaming industry and its assets.
Comment: One commenter has requested more detail on how a tribe or
TGRA must notify NIGC that it has given permission for a gaming
operation to submit reviewed financial statements.
Response: Upon reviewing this section of the regulation, the
Commission determined that notice is not necessary and has revised the
rule accordingly. The Commission presumes by submission of the reviewed
financial statements that the tribe or TGRA has given permission for
the review process. If any questions arise about a gaming operation's
authority to file reviewed statements, the Compliance Division will
contact the tribe or TGRA for confirmation.
Comment: Several commenters asked what constitutes a ``reason to
believe'' that a gaming operation's assets are at risk or are being
misused under IGRA, and suggest that it should be more clearly defined.
Response: The Commission disagrees. Nothing in IGRA or NIGC
regulations requires the Commission to reduce the audit requirements to
a review of financial statements or submission of financial records to
the TGRA. The Commission is taking this step to relieve the burden on
certain small and charitable gaming operations. That being said, the
Commission and the Chairman still have the regulatory responsibility
placed on it under IGRA to ensure that the Tribe is the primary
beneficiary of its gaming operations and that gaming revenues are used
for the purposes set forth in IGRA. The Commission believes the
standard set forth in this rule allows the NIGC to achieve both of
those goals and adequately limits the Chairman's discretion to a good
faith belief in a threat to gaming assets.
Comment: Several commenters noted that draft circulated during
consultations included changes to the language regarding gaming
operations consolidating audits for multiple places, facilities, or
locations, but the proposed rule did not contain these changes.
Response: In the draft submitted for consultation, the language in
Sec. 571.12(d) stated: ``If a tribe has multiple gaming facilities or
operations on the tribe's Indian lands, the tribe may choose to satisfy
the annual audit requirement of paragraph (b) with a consolidated audit
if the following requirements are satisfied. . . .'' This change was
inadvertently left out of the NPRM, and the language reverted back to
that in the existing regulation, ``If a gaming operation has multiple
gaming places. . . .'' The Commission is reinstating the language
proposed in the consultation draft, as it is more accurate.
Comment: One commenter expressed appreciation for the third tier of
financial reporting established for operations with gross gaming
revenue under $50,000.
Response: Commission appreciates this comment.
Comment: Several commenters requested that the Commission increase
the $50,000 threshold for reviewed financial statements to $100,000 or
higher.
Response: Commission disagrees. The reviewed financial statements
submitted to date do not indicate any benefit to raising the threshold
at this time. The Commission may revisit this in the future if
circumstances change.
IV. Regulatory Matters
Regulatory Flexibility Act
The rule will not have a significant impact on a substantial number
of small entities as defined under the Regulatory Flexibility Act, 5
U.S.C. 601, et seq. Moreover, Indian tribes are not considered to be
small entities for the purposes of the Regulatory Flexibility Act.
Small Business Regulatory Enforcement Fairness Act
The rule is not a major rule under 5 U.S.C. 804(2), the Small
Business Regulatory Enforcement Fairness Act. The rule does not have an
effect on the economy of $100 million or more. The rule will not cause
a major increase in costs or prices for consumers, individual
industries, Federal, State, local government agencies or geographic
regions. Nor will the rule have a significant adverse effect on
competition, employment, investment, productivity, innovation, or the
ability of the enterprises, to compete with foreign based enterprises.
Unfunded Mandate Reform Act
The Commission, as an independent regulatory agency, is exempt from
compliance with the Unfunded Mandates Reform Act, 2 U.S.C. 1502(1); 2
U.S.C. 658(1).
Takings
In accordance with Executive Order 12630, the Commission has
determined that the rule does not have significant takings
implications. A takings implication assessment is not required.
Civil Justice Reform
In accordance with Executive Order 12988, the Commission has
determined that the rule does not unduly burden the judicial system and
meets the requirements of section 3(a) and 3(b)(2) of the Order.
National Environmental Policy Act
The Commission has determined that the rule does not constitute a
major Federal action significantly affecting the quality of the human
environment and that no detailed statement is required pursuant to the
National Environmental Policy Act of 1969, 42 U.S.C. 4321, et seq.
Paperwork Reduction Act
The information collection requirements contained in this rule were
previously approved by the Office of Management and Budget (OMB) as
required by 44 U.S.C. 3501 et seq. and assigned OMB Control Number
3141- 0001.
Tribal Consultation
The National Indian Gaming Commission is committed to fulfilling
its tribal consultation obligations--whether directed by statute or
administrative action such as Executive Order (E.O.) 13175
(Consultation and Coordination with Indian Tribal Governments)--by
adhering to the consultation framework described in its Consultation
Policy published July 15, 2013. The NIGC's consultation policy
specifies that it will consult with tribes on Commission Action with
Tribal Implications, which is defined as: Any Commission regulation,
rulemaking, policy, guidance, legislative proposal, or operational
activity that may have a substantial direct effect on an Indian tribe
on matters including, but not limited to the ability of an Indian tribe
to regulate its Indian gaming; an Indian tribe's formal relationship
with the Commission; or the consideration of the Commission's trust
responsibilities to Indian tribes.
Pursuant to this policy, on June 9, 2021, the National Indian
Gaming
[[Page 57597]]
Commission sent a Notice of Consultation to the public, announcing the
Agency intended to consult on several topics, including proposed
amendments to NIGC audit standards. The Commission held two virtual
consultation sessions in September and one virtual consultation session
in October of 2021 to receive tribal input on proposed changes.
List of Subjects in 25 CFR Part 571
Gambling, Indian--lands, Indian--tribal government, Reporting and
recordkeeping requirements.
Therefore, for reasons stated in the preamble, 25 CFR part 571 is
amended as follows:
PART 571--MONITORING AND INVESTIGATIONS
0
1. The authority citation for part 571 continues to read as follows:
Authority: 25 U.S.C. 2706(b), 2710(b)(2)(C), 2715, 2716.
0
2. Revise Sec. 571.12 to read as follows:
Sec. 571.12 Audit standards.
(a) Each tribe shall prepare comparative financial statements
covering all financial activities of each class II and class III gaming
operation on the tribe's Indian lands for each fiscal year.
(b) A tribe shall engage an independent certified public accountant
to conduct an annual audit of the financial statements of each class II
and class III gaming operation on the tribe's Indian lands for each
fiscal year. The audit and auditor must meet the following standards:
(1) The independent certified public accountant must be licensed by
a state board of accountancy.
(2) Financial statements shall conform to generally accepted
accounting principles and the annual audit shall conform to generally
accepted auditing standards.
(3) The independent certified public accountant expresses an
opinion on the financial statements. If the independent certified
public accountant issues an adverse opinion, it still must be
submitted, but does not satisfy this requirement unless:
(i) It is the result of the gaming operation meeting the definition
of a state or local government and the gaming operation prepared its
financial statements in accordance with generally accepted accounting
principles (GAAP) as promulgated by Financial Accounting Standards
Board (FASB); or
(ii) The adverse opinion pertains to a consolidated audit pursuant
to paragraph (d) of this section and the operations not attributable to
the adverse opinion are clearly identified.
(c) If a gaming operation has gross gaming revenues of less than
$2,000,000 during the prior fiscal year, the annual audit requirement
of paragraph (b) of this section is satisfied if:
(1) The independent certified public accountant completes a review
of the financial statements conforming to the statements on standards
for accounting and review services of the gaming operation; and
(2) The tribe or tribal gaming regulatory authority (TGRA) permits
the gaming operation to submit a review of the financial statements
according to this paragraph (c); provided that
(3) If the Chair of the NIGC has reason to believe that the assets
of a gaming operation are not being appropriately safeguarded or the
revenues are being misused under the Indian Gaming Regulatory Act
(IGRA), the Chair may, at his or her discretion, require any gaming
operation subject to this paragraph (c) to submit additional
information or comply with the annual audit requirement of paragraph
(b) of this section.
(d) If a tribe has multiple gaming facilities or operations on the
tribe's Indian lands, the tribe may choose to satisfy the annual audit
requirement of paragraph (b) of this section with a consolidated audit
if the following requirements are satisfied:
(1) The tribe is the owner of all the facilities;
(2) The independent certified public accountant completes an audit
conforming to generally accepted auditing standards of the consolidated
financial statements;
(3) The consolidated financial statements include consolidating
schedules for each gaming place, facility, or location; and
(4) The independent certified public accountant expresses an
opinion on the consolidated financial statement as a whole and subjects
the accompanying financial information to the auditing procedures
applicable to the audit of consolidated financial statements.
(e) If there are multiple gaming operations on a tribe's Indian
lands and each operation has gross gaming revenues of less than
$2,000,000 during the prior fiscal year, the annual audit requirement
of paragraph (b) of this section is satisfied if:
(1) The tribe chooses to consolidate the financial statements of
the gaming operations;
(2) The consolidated financial statements include consolidating
schedules for each operation;
(3) The independent certified public accountant completes a review
of the consolidated schedules conforming to the statements on standards
for accounting and review services for each gaming facility or
location; and
(4) The independent certified public accountant expresses an
opinion on the consolidated financial statements as a whole and
subjects the accompanying financial information to the auditing
procedures applicable to the audit of consolidated financial
statements.
(f)(1) If a tribal or charitable gaming operation has gross gaming
revenues of less than $50,000 during the prior fiscal year, the annual
audit requirement of paragraph (b) of this section is satisfied if:
(i) The gaming operation creates, prepares, and maintains records
in accordance with Generally Accepted Accounting Principles;
(ii) At a minimum, the gaming operation provides the tribe or
tribal gaming regulatory authority (TGRA) with the following financial
information on a monthly basis:
(A) Each occasion when gaming was offered in a month;
(B) Gross gaming revenue for each month;
(C) Amounts paid out as, or paid for, prizes for each month;
(D) Amounts paid as operating expenses, providing each recipient's
name; the date, amount, and check number or electronic transfer
confirmation number of the payment; and a brief description of the
purpose of the operating expense;
(E) All deposits of gaming revenue;
(F) All withdrawals of gaming revenue;
(G) All expenditures of net gaming revenues, including the
recipient's name, the date, amount, and check number or electronic
transfer confirmation number of the payment; and a brief description of
the purpose of the expenditure; and
(H) The names of each employee and volunteer, and the salary or
other compensation paid to each person;
(iii) The tribe or TGRA permits the gaming operation to be subject
to this paragraph (f), and the tribe or TGRA informs the NIGC in
writing of such permission; and
(iv) Within 30 days of the gaming operation's fiscal year end, the
tribe or the TGRA provides a certification to the NIGC that the tribe
or TGRA reviewed the gaming operation's financial information, and
after such review, the tribe or TGRA concludes that the gaming
operation conducted the gaming in a manner that protected the integrity
of the games offered and safeguarded
[[Page 57598]]
the assets used in connection with the gaming operation, and the gaming
operation expended net gaming revenues in a manner consistent with
IGRA, NIGC regulations, the tribe's gaming ordinance or resolution, and
the tribe's gaming regulations.
(2) If the tribe or TGRA does not or cannot provide the NIGC with
the certification required by paragraph (f)(1)(v) of this section
within 30 days of the gaming operation's fiscal year end, the gaming
operation must otherwise comply with the annual audit requirement of
paragraph (b) of this section.
(3) The tribe or TGRA may impose additional financial reporting
requirements on gaming operations that otherwise qualify under this
paragraph (f).
(4) If the Chair of the NIGC has reason to believe that the assets
of a gaming operation are not being appropriately safeguarded or the
revenues are being misused under IGRA, the Chair may, at his or her
discretion, require any gaming operation subject to this paragraph (f)
to submit additional information or comply with the annual audit
requirement of paragraph (b) of this section.
(5) This paragraph (f) does not affect other requirements of IGRA
and NIGC regulations, including, but not limited to, fees and quarterly
fee statements (25 U.S.C. 2717; 25 CFR part 514); requirements for
revenue allocation plans (25 U.S.C. 2710(b)(3)); requirements for
individually-owned gaming (25 U.S.C. 2710(b)(4), (d); 25 CFR 522.10);
minimum internal control standards for Class II gaming and agreed-upon
procedures reports (25 CFR part 543); background and licensing for
primary management officials and key employees of a gaming operation
(25 U.S.C. 2710(b)(2)(F); 25 CFR parts 556, 558); and facility licenses
(25 CFR part 559).
Dated: September 14, 2022.
E. Sequoyah Simermeyer,
Chairman.
Jeannie Hovland,
Vice Chair.
[FR Doc. 2022-20230 Filed 9-20-22; 8:45 am]
BILLING CODE 7565-01-P
</pre></body>
</html>Indexed from Federal Register on September 21, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.