The Division's goal is to audit 80 percent of adjusted gross proceeds over a three-year cycle. In Fiscal Year 1999 the audit section completed about half its planned audits. We believe one reason all scheduled audits are not completed is that the audit section does not devote sufficient staff resources to revenue audits. According to staff plans for Fiscal Year 2000, only about one-third of audit staff time is scheduled for revenue audits, while about 40 to 50 percent of audit staff time is assigned to conducting compliance reviews. In addition, in some cases separate revenue and compliance audits are done on the same casino in the same year.
Audits serve as an important tool to promote accurate reporting of gaming proceeds.
Failure to audit a significant portion of revenues or number of casinos may diminish the regulatory effect of audit oversight. We recommend the Division examine the allocation of audit resources and improve its revenue audit coverage by changing its approach to eliminate or reduce separate compliance reviews and revenue audits on the same casino in a 12-month period, contracting out some audits, and moving toward a shorter audit cycle. The system was intended to be completed by the summer of 1997. However, the project was not completed as of August 1998, and the Division subsequently hired a private firm to install an automated licensing system along with imaging and administrative tracking systems. There was little evidence that a system requirements document had been developed or discussed by the Division or IT for the original project effort, making it difficult to determine the specific problems that arose.