John Keel, CPA
Texas State Auditor
An Audit Report on the Charitable Bingo Operations Division at the Texas Lottery Commission
Report Number 11-002
The State Auditor's Office verified that five bingo halls distributed game proceeds for charitable purposes and remitted 5 percent of prize fees to the State as required by statute and Texas Lottery Commission (Agency) rules for the quarter ending December 31, 2009. In addition, the Agency has policies and procedures to help ensure that it licenses only qualified entities to conduct bingo games.
However, the Agency should increase its financial monitoring of bingo halls to help ensure that they comply with all applicable laws and regulations. All 11 compliance audits and reviews the Agency conducted in calendar year 2009 were initiated by complaints, and the 337 game inspections the Agency conducted in calendar year 2009 did not include a review of bingo halls' financial information. The Agency's on-site monitoring reviews at bingo halls have concentrated on conducting game inspections, which focus on a limited review of bingo operations.
During the State Auditor's Office's on-site visits at five bingo halls, auditors identified discrepancies that indicate the Agency should increase its financial monitoring. For example:
- $29,369.95 (5 percent) of the $546,355.10 in expenditures tested at four bingo halls were not allowable under the Bingo Enabling Act.
- $27,659.81 (5 percent) of the $546,355.10 in expenditures tested at the five bingo halls were not supported by adequate documentation (although those expenditures appeared to be allowable based on the description of the expenditures provided to auditors).
- Two bingo halls' inventory records listed boxes of pull tab bingo games and/or bingo cards that the bingo halls could not locate.
Monitoring bingo halls' financial information and inventories would provide additional assurance that bingo halls report accurate information to the Agency and comply with requirements. Conducting this monitoring also could potentially increase the bingo halls' distributions to the charities for which they conduct bingo games. For example, identifying unallowable expenditures could potentially increase the amount of net proceeds from bingo games, which would ultimately lead to the bingo halls distributing more funds to the charities.
Auditors also identified other less significant issues that were communicated separately in writing to Agency management.
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