25 CFR Part 542 — Minimum Internal Control Standards

PART 542—MINIMUM INTERNAL CONTROL STANDARDS Authority: 25 U.S.C. 2706(b)(10). Source: 67 FR 43400, June 27, 2002, unless otherwise noted. Effective Date Note: At 83 FR 39879, Aug. 13, 2018, part 542 was stayed indefinitely. § 542.1 What does this part cover? (a) This part previously established the minimum internal control standards for gaming operations on Indian land. (b) This part is suspended pursuant to the decision in Colorado River Indian Tribes Nat'l Indian Gaming Comm'n, www.nigc.gov. [83 FR 39878, Aug. 13, 2018] § 542.2 What are the definitions for this part? The definitions in this section shall apply to all sections of this part unless otherwise noted. Account access card Accountability Accumulated credit payout Actual hold percentage Ante Betting station Betting ticket Bill acceptor Bill acceptor canister Bill acceptor canister release key Bill acceptor canister storage rack key Bill acceptor drop Bill-in meter Boxperson Breakage Cage Cage accountability form Cage credit Cage marker form Calibration module Call bets Card game Card room bank Cash-out ticket Chips Coin-in meter Coin meter count machine Coin room Coin room inventory Commission Complimentary Count Count room Count team Counter check Counter Game Credit Credit limit Credit slip (1) The return of chips from a gaming table to the cage; or (2) The transfer of IOUs, markers, or negotiable checks from a gaming table to a cage or bankroll. Customer deposits Deal Dealer Dedicated camera Deskman Draw ticket Drop (for gaming machines) Drop (for table games) Drop box Drop box contents keys Drop box release keys Drop box storage rack keys Drop bucket Drop cabinet Drop period Earned and unearned take EPROM Fill Fill slip Flare (1) Name of the game; (2) Manufacturer name or manufacturer's logo; (3) Ticket count; and (4) Prize structure, which shall include the number of winning pull tabs by denomination, with their respective winning symbols, numbers, or both. Future wagers Game server Gaming machine Gaming machine analysis report Gaming machine booths and change banks Gaming machine count Gaming machine pay table Gaming operation accounts receivable (for gaming operation credit) Gross gaming revenue Hold Hub Internal audit Issue slip Jackpot payout Lammer button Linked electronic game Main card room bank Marker Marker credit play Marker inventory form Marker transfer form Master credit record Master game program number Master game sheet Mechanical coin counter Meter MICS Motion activated dedicated camera Multi-game machine Multi-race ticket On-line gaming machine monitoring system Order for credit Outstation Par percentage Par sheet Pari-mutuel wagering Payment slip Payout PIN Pit podium Pit supervisor Player tracking system Post time Primary and secondary jackpots Progressive gaming machine Progressive jackpot Progressive table game Promotional payout Promotional progressive pots and/or pools Rabbit ears Rake Rake circle Random number generator Reel symbols Rim credit Runner SAM Series number Shift Shill Short pay Soft count Statistical drop Statistical win Sufficient clarity Surveillance room Surveillance system Table games Table inventory Table inventory form Table tray Take Theoretical hold Theoretical hold worksheet Tier A Tier B Tier C Tokens Tribal gaming regulatory authority Vault Weigh/count Weigh scale calibration module Weigh scale interface Weigh tape Wide area progressive gaming machine Win Win-to-write hold percentage Wrap Write Writer [67 FR 43400, June 27, 2002, as amended at 70 FR 23021, May 4, 2005; 71 FR 27391, May 11, 2006] § 542.3 How do I comply with this part? (a) Compliance based upon tier. (2) Tier B gaming operations must comply with §§ 542.1 through 542.18, and §§ 542.30 through 542.33. (3) Tier C gaming operations must comply with §§ 542.1 through 542.18, and §§ 542.40 through 542.43. (b) Determination of tier. (2) The Tribal gaming regulatory authority may extend the deadline by an additional six (6) months if written notice is provided to the Commission no later than two weeks before the expiration of the nine (9) month period. (c) Tribal internal control standards. (1) Provide a level of control that equals or exceeds those set forth in this part; (2) Contain standards for currency transaction reporting that comply with 31 CFR part 103; (3) Establish standards for games that are not addressed in this part; and (4) Establish a deadline, which shall not exceed nine (9) months from June 27, 2002, by which a gaming operation must come into compliance with the tribal internal control standards. However, the Tribal gaming regulatory authority may extend the deadline by an additional six (6) months if written notice is provided to the Commission no later than two weeks before the expiration of the nine (9) month period. (d) Gaming operations. (1) Existing gaming operations. (2) New gaming operations. (e) Submission to Commission. (f) CPA testing. (i) As a prerequisite to the evaluation of the gaming operation's internal control systems, it is recommended that the CPA obtain and review an organization chart depicting segregation of functions and responsibilities, a description of the duties and responsibilities of each position shown on the organization chart, and an accurate, detailed narrative description of the gaming operation's procedures in effect that demonstrate compliance. (ii) Complete the CPA NIGC MICS Compliance checklists or other comparable testing procedures. The checklists should measure compliance on a sampling basis by performing walk-throughs, observations and substantive testing. The CPA shall complete separate checklists for each gaming revenue center, cage and credit, internal audit, surveillance, information technology and complimentary services or items. All questions on each applicable checklist should be completed. Work-paper references are suggested for all “no” responses for the results obtained during testing (unless a note in the “W/P Ref” can explain the exception). (iii) The CPA shall perform, at a minimum, the following procedures in conjunction with the completion of the checklists: (A) At least one unannounced observation of each of the following: Gaming machine coin drop, gaming machine currency acceptor drop, table games drop, gaming machine coin count, gaming machine currency acceptor count, and table games count. The AICPA's “Audits of Casinos” Audit and Accounting Guide states that “observations of operations in the casino cage and count room should not be announced in advance * * *” For purposes of these procedures, “unannounced” means that no officers, directors, or employees are given advance information regarding the dates or times of such observations. The independent accountant should make arrangements with the gaming operation and Tribal gaming regulatory authority to ensure proper identification of the CPA's personnel and to provide for their prompt access to the count rooms. ( 1 ( 2 (B) Observations of the gaming operation's employees as they perform their duties. (C) Interviews with the gaming operation's employees who perform the relevant procedures. (D) Compliance testing of various documents relevant to the procedures. The scope of such testing should be indicated on the checklist where applicable. (E) For new gaming operations that have been in operation for three months or less at the end of their business year, performance of this regulation, section 542.3(f), is not required for the partial period. ( 2 (i) The CPA shall compare the Tribal internal control standards to the MICS to ascertain whether the criteria set forth in the MICS or Commission approved variances are adequately addressed. (ii) The CPA may utilize personnel of the Tribal gaming regulatory authority to cross-reference the Tribal internal control standards to the MICS, provided the CPA performs a review of the Tribal gaming regulatory authority personnel's work and assumes complete responsibility for the proper completion of the work product. (iii) The CPA shall report each procedure discovered by or brought to the CPA's attention that the CPA believes does not satisfy paragraph (f)(2)(i) of this section. (3) Reliance on Internal Auditors. (ii) Agreed-upon procedures are to be performed by the CPA to determine that the internal audit procedures performed for a past 12-month period (includes two 6-month periods) encompassing a portion or all of the most recent business year has been properly completed. The CPA will apply the following Agreed-Upon Procedures to the gaming operation's written assertion: (A) Obtain internal audit department work-papers completed for a 12-month period (includes two 6-month periods) encompassing a portion or all of the most recent business year and determine whether the CPA NIGC MICS Compliance Checklists or other comparable testing procedures were included in the internal audit work-papers and all steps described in the checklists were initialed or signed by an internal audit representative. (B) For the internal audit work-papers obtained in paragraph (f)(3)(ii)(A) of this section, on a sample basis, reperform the procedures included in CPA NIGC MICS Compliance Checklists or other comparable testing procedures prepared by internal audit and determine if all instances of noncompliance noted in the sample were documented as such by internal audit. The CPA NIGC MICS Compliance Checklists or other comparable testing procedures for the applicable Drop and Count procedures are not included in the sample reperformance of procedures because the CPA is required to perform the drop and count observations as required under paragraph (f)(1)(iii)(A) of this section of the Agreed-Upon Procedures. The CPA's sample should comprise a minimum of 3 percent of the procedures required in each CPA NIGC MICS Compliance Checklist or other comparable testing procedures for the gaming machine and table game departments and 5 percent for the other departments completed by internal audit in compliance with the internal audit MICS. The reperformance of procedures is performed as follows: ( 1 ( 2 ( 3 (C) The CPA is to investigate and resolve any differences between their reperformance results and the internal audit results. (D) Documentation is maintained for 5 years by the CPA indicating the procedures reperformed along with the results. (E) When performing the procedures for paragraph (f)(3)(ii)(B) of this section in subsequent years, the CPA must select a different sample so that the CPA will reperform substantially all of the procedures after several years. (F) Any additional procedures performed at the request of the Commission, the Tribal gaming regulatory authority or management should be included in the Agreed-Upon Procedures report transmitted to the Commission. (4) Report Format. (A) The report must describe all instances of procedural noncompliance regardless of materiality) with the MICS or approved variations, and all instances where the Tribal gaming regulatory authority's regulations do not comply with the MICS. When describing the agreed-upon procedures performed, the CPA should also indicate whether procedures performed by other individuals were utilized to substitute for the procedures required to be performed by the CPA. For each instance of noncompliance noted in the CPA's agreed-upon procedures report, the following information must be included: ( 1 ( 2 (5) Report Submission Requirements. (ii) The CPA should maintain the work-papers supporting the report for a minimum of five years. Digital storage is acceptable. The Commission may request access to these work-papers, through the Tribe. (6) CPA NIGC MICS Compliance Checklists. (g) Enforcement of Commission Minimum Internal Control Standards. (2) Recognizing that Tribes are the primary regulator of their gaming operation(s), enforcement action by the Commission will not be initiated under this part without first informing the Tribe and Tribal gaming regulatory authority of deficiencies in the internal controls of its gaming operation and allowing a reasonable period of time to address such deficiencies. Such prior notice and opportunity for corrective action is not required where the threat to the integrity of the gaming operation is immediate and severe. [67 FR 43400, June 27, 2002, as amended at 70 FR 47104, Aug. 12, 2005] § 542.4 How do these regulations affect minimum internal control standards established in a Tribal-State compact? (a) If there is a direct conflict between an internal control standard established in a Tribal-State compact and a standard or requirement set forth in this part, then the internal control standard established in a Tribal-State compact shall prevail. (b) If an internal control standard in a Tribal-State compact provides a level of control that equals or exceeds the level of control under an internal control standard or requirement set forth in this part, then the Tribal-State compact standard shall prevail. (c) If an internal control standard or a requirement set forth in this part provides a level of control that exceeds the level of control under an internal control standard established in a Tribal-State compact, then the internal control standard or requirement set forth in this part shall prevail. § 542.5 How do these regulations affect state jurisdiction? Nothing in this part shall be construed to grant to a state jurisdiction in class II gaming or extend a state's jurisdiction in class III gaming. § 542.6 Does this part apply to small and charitable gaming operations? (a) Small gaming operations. (1) The Tribal gaming regulatory authority permits the operation to be exempt from this part; (2) The annual gross gaming revenue of the operation does not exceed $1 million; and (3) The Tribal gaming regulatory authority develops and the operation complies with alternate procedures that: (i) Protect the integrity of games offered; and (ii) Safeguard the assets used in connection with the operation. (b) Charitable gaming operations. (1) All proceeds are for the benefit of a charitable organization; (2) The Tribal gaming regulatory authority permits the charitable organization to be exempt from this part; (3) The charitable gaming operation is operated wholly by the charitable organization's employees or volunteers; (4) The annual gross gaming revenue of the charitable gaming operation does not exceed $100,000; (i) Where the annual gross gaming revenues of the charitable gaming operation exceed $100,000, but are less than $1 million, paragraph (a) of this section shall also apply; and (ii) [Reserved] (5) The Tribal gaming regulatory authority develops and the charitable gaming operation complies with alternate procedures that: (i) Protect the integrity of the games offered; and (ii) Safeguard the assets used in connection with the gaming operation. (c) Independent operators. § 542.7 [Reserved] § 542.8 What are the minimum internal control standards for pull tabs? (a) Computer applications. (b) Pull tab inventory. (2) Purchased pull tabs shall be inventoried and secured by a person or persons independent of the pull tab sales. (3) The issue of pull tabs to the cashier or sales location shall be documented and signed for by the person responsible for inventory control and the cashier. The document log shall include the serial number of the pull tabs issued. (4) Appropriate documentation shall be given to the redemption booth for purposes of determining if the winner purchased the pull tab from the pull tabs issued by the gaming operation. Electronic verification satisfies this requirement. (5) At the end of each month, a person or persons independent of pull tab sales and inventory control shall verify the accuracy of the ending balance in the pull tab control by reconciling the pull tabs on hand. (6) A monthly comparison for reasonableness shall be made of the amount of pull tabs sold from the pull tab control log to the amount of revenue recognized. (c) Access. (d) Transfers. (e) Winning pull tabs. (i) Payouts in excess of a dollar amount determined by the gaming operation, as approved by the Tribal gaming regulatory authority, shall be verified by at least two employees. (ii) Total payout shall be computed and recorded by shift. (iii) The winning pull tabs shall be voided so that they cannot be presented for payment again. (2) Personnel independent of pull tab operations shall verify the amount of winning pull tabs redeemed each day. (f) Accountability form. (2) All funds used to operate the pull tab game shall be counted independently by at least two persons and reconciled to the recorded amounts at the end of each shift or session. Unverified transfers of cash and/or cash equivalents are prohibited. (g) Standards for statistical reports. (i) Each shift; (ii) Each day; (iii) Month-to-date; and (iv) Year-to-date or fiscal year-to-date as applicable. (2) A manager independent of the pull tab operations shall review statistical information at least on a monthly basis and shall investigate any large or unusual statistical fluctuations. These investigations shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request. (3) Each month, the actual hold percentage shall be compared to the theoretical hold percentage. Any significant variations (3%) shall be investigated. (h) Electronic equipment. (i) If the electronic equipment contains a bill acceptor, then § 542.21(e) and (f), § 542.31(e) and (f), or § 542.41(e) and (f) (as applicable) shall apply. (ii) If the electronic equipment uses a bar code or microchip reader, the reader shall be tested periodically to determine that it is correctly reading the bar code or microchip. (iii) If the electronic equipment returns a voucher or a payment slip to the player, then § 542.13(n)(as applicable) shall apply. (iv) If the electronic equipment utilizes patron account access cards for activation of play, then § 542.13(o) (as applicable) shall apply. (2) [Reserved] [67 FR 43400, June 27, 2002, as amended at 70 FR 23021, May 4, 2005; 70 FR 47106, Aug. 12, 2005; 71 FR 27392, May 11, 2006] § 542.9 What are the minimum internal control standards for card games? (a) Computer applications. (b) Standards for drop and count. (c) Standards for supervision. (2) Exchanges between table banks and the main card room bank (or cage, if a main card room bank is not used) in excess of $100.00 shall be authorized by a supervisor. All exchanges shall be evidenced by the use of a lammer unless the exchange of chips, tokens, and/or cash takes place at the table. (3) Exchanges from the main card room bank (or cage, if a main card room bank is not used) to the table banks shall be verified by the card room dealer and the runner. (4) If applicable, transfers between the main card room bank and the cage shall be properly authorized and documented. (5) A rake collected or ante placed shall be done in accordance with the posted rules. (d) Standards for playing cards. (2) Used cards shall be maintained in a secure location until marked, scored, or destroyed, in a manner approved by the Tribal gaming regulatory authority, to prevent unauthorized access and reduce the possibility of tampering. (3) The Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with a reasonable time period, which shall not exceed seven (7) days, within which to mark, cancel, or destroy cards from play. (i) This standard shall not apply where playing cards are retained for an investigation. (ii) [Reserved] (4) A card control log shall be maintained that documents when cards and dice are received on site, distributed to and returned from tables and removed from play by the gaming operation. (e) Plastic cards. (f) Standards for shills. (2) Shill returns shall be recorded and verified on the shill sign-out form. (3) The replenishment of shill funds shall be documented. (g) Standards for reconciliation of card room bank. (2) At least once per shift, the table banks that were opened during that shift shall be counted, recorded, and reconciled by a dealer or other person, and a supervisor, and shall be attested to by their signatures on the check-out form. (h) Standards for promotional progressive pots and pools. (2) Rules governing promotional pools shall be conspicuously posted and designate: (i) The amount of funds to be contributed from each pot; (ii) What type of hand it takes to win the pool (e.g., what constitutes a “bad beat”); (iii) How the promotional funds will be paid out; (iv) How/when the contributed funds are added to the jackpots; and (v) Amount/percentage of funds allocated to primary and secondary jackpots, if applicable. (3) Promotional pool contributions shall not be placed in or near the rake circle, in the drop box, or commingled with gaming revenue from card games or any other gambling game. (4) The amount of the jackpot shall be conspicuously displayed in the card room. (5) At least once a day, the posted pool amount shall be updated to reflect the current pool amount. (6) At least once a day, increases to the posted pool amount shall be reconciled to the cash previously counted or received by the cage by personnel independent of the card room. (7) All decreases to the pool must be properly documented, including a reason for the decrease. (i) Promotional progressive pots and pools where funds are displayed in the card room. (2) Persons authorized to transport the locked container shall be precluded from having access to the contents keys. (3) The contents key shall be maintained by personnel independent of the card room. (4) At least once a day, the locked container shall be removed by two persons, one of whom is independent of the card games department, and transported directly to the cage or other secure room to be counted, recorded, and verified. (5) The locked container shall then be returned to the card room where the posted pool amount shall be updated to reflect the current pool amount. (j) Promotional progressive pots and pools where funds are maintained in the cage. (2) Persons authorized to transport the locked container shall be precluded from having access to the contents keys. (3) The contents key shall be maintained by personnel independent of the card room. (4) At least once a day, the locked container shall be removed by two persons, one of whom is independent of the card games department, and transported directly to the cage or other secure room to be counted, recorded, and verified, prior to accepting the funds into cage accountability. (5) The posted pool amount shall then be updated to reflect the current pool amount. § 542.10 What are the minimum internal control standards for keno? (a) Computer applications. (b) Game play standards. (2) The information on the ticket shall be recorded on a restricted transaction log or computer storage media concurrently with the generation of the ticket. (3) Keno personnel shall be precluded from having access to the restricted transaction log or computer storage media. (4) When it is necessary to void a ticket, the void information shall be inputted in the computer and the computer shall document the appropriate information pertaining to the voided wager (e.g., void slip is issued or equivalent documentation is generated). (5) Controls shall exist to prevent the writing and voiding of tickets after a game has been closed and after the number selection process for that game has begun. (6) The controls in effect for tickets prepared in outstations (if applicable) shall be identical to those in effect for the primary keno game. (c) Rabbit ear or wheel system. (i) A dedicated camera shall be utilized to monitor the following both prior to, and subsequent to, the calling of a game: (A) Empty rabbit ears or wheel; (B) Date and time; (C) Game number; and (D) Full rabbit ears or wheel. (ii) The film of the rabbit ears or wheel shall provide a legible identification of the numbers on the balls drawn. (iii) Keno personnel shall immediately input the selected numbers in the computer and the computer shall document the date, the game number, the time the game was closed, and the numbers drawn. (iv) The Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with procedures that prevent unauthorized access to keno balls in play. (v) Back-up keno ball inventories shall be secured in a manner to prevent unauthorized access. (vi) The Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with procedures for inspecting new keno balls put into play as well as for those in use. (2) [Reserved] (d) Random number generator. (i) The random number generator shall be linked to the computer system and shall directly relay the numbers selected into the computer without manual input. (ii) Keno personnel shall be precluded from access to the random number generator. (2) [Reserved] (e) Winning tickets. (1) The sequence number of tickets presented for payment shall be inputted into the computer, and the payment amount generated by the computer shall be given to the customer. (2) The Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with procedures that preclude payment on tickets previously presented for payment, unclaimed winning tickets (sleepers) after a specified period of time, voided tickets, and tickets that have not been issued yet. (3) All payouts shall be supported by the customer (computer-generated) copy of the winning ticket (payout amount is indicated on the customer ticket or a payment slip is issued). (4) A manual report or other documentation shall be produced and maintained documenting any payments made on tickets that are not authorized by the computer. (5) Winning tickets over a specified dollar amount (not to exceed $10,000 for locations with more than $5 million annual keno write and $3,000 for all other locations) shall also require the following: (i) Approval of management personnel independent of the keno department, evidenced by their signature; (ii) Review of the video recording and/or digital record of the rabbit ears or wheel to verify the legitimacy of the draw and the accuracy of the draw ticket (for rabbit ear or wheel systems only); (iii) Comparison of the winning customer copy to the computer reports; (iv) Regrading of the customer copy using the payout schedule and draw information; and (v) Documentation and maintenance of the procedures in this paragraph. (6) When the keno game is operated by one person, all winning tickets in excess of an amount to be determined by management (not to exceed $1,500) shall be reviewed and authorized by a person independent of the keno department. (f) Check out standards at the end of each keno shift. (i) Computation of net cash proceeds for the shift and the cash turned in; and (ii) Signatures of two employees who have verified the net cash proceeds for the shift and the cash turned in. Unverified transfers of cash and/or cash equivalents are prohibited. (2) [Reserved] (g) Promotional payouts or awards. (i) Date and time; (ii) Dollar amount of payout or description of personal property (e.g., jacket, toaster, car, etc.), including fair market value; (iii) Type of promotion; and (iv) Signature of at least one employee authorizing and completing the transaction. (2) [Reserved] (h) Standards for statistical reports. (2) Records shall be maintained that include win, write, and win-to-write hold percentage for: (i) Each shift; (ii) Each day; (iii) Month-to-date; and (iv) Year-to-date or fiscal year-to-date as applicable. (3) A manager independent of the keno department shall review keno statistical data at least on a monthly basis and investigate any large or unusual statistical variances. (4) At a minimum, investigations shall be performed for statistical percentage fluctuations from the base level for a month in excess of ±3%. The base level shall be defined as the gaming operation's win percentage for the previous business year or the previous twelve (12) months. (5) Such investigations shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request. (i) System security standards. (2) Personnel independent of the keno department shall be required to accompany such keys to the keno area and shall observe changes or repairs each time the sensitive areas are accessed. (j) Documentation standards. (2) This documentation shall be restricted to authorized personnel. (3) The documentation shall include, at a minimum: (i) Ticket information (as described in paragraph (b)(1) of this section); (ii) Payout information (date, time, ticket number, amount, etc.); (iii) Game information (number, ball draw, time, etc.); (iv) Daily recap information, including: (A) Write; (B) Payouts; and (C) Gross revenue (win); (v) System exception information, including: (A) Voids; (B) Late pays; and (C) Appropriate system parameter information (e.g., changes in pay tables, ball draws, payouts over a predetermined amount, etc.); and (vi) Personnel access listing, including: (A) Employee name or employee identification number; and (B) Listing of functions employee can perform or equivalent means of identifying same. (k) Keno audit standards. (2) At least annually, keno audit shall foot the write on the restricted copy of the keno transaction report for a minimum of one shift and compare the total to the total as documented by the computer. (3) For at least one shift every other month, keno audit shall perform the following: (i) Foot the customer copy of the payouts and trace the total to the payout report; and (ii) Regrade at least 1% of the winning tickets using the payout schedule and draw ticket. (4) Keno audit shall perform the following: (i) For a minimum of five games per week, compare the video recording and/or digital record of the rabbit ears or wheel to the computer transaction summary; (ii) Compare net cash proceeds to the audited win/loss by shift and investigate any large cash overages or shortages ( i.e., (iii) Review and regrade all winning tickets greater than or equal to $1,500, including all forms that document that proper authorizations and verifications were obtained and performed; (iv) Review the documentation for payout adjustments made outside the computer and investigate large and frequent payments; (v) Review personnel access listing for inappropriate functions an employee can perform; (vi) Review system exception information on a daily basis for propriety of transactions and unusual occurrences including changes to the personnel access listing; (vii) If a random number generator is used, then at least weekly review the numerical frequency distribution for potential patterns; and (viii) Investigate and document results of all noted improper transactions or unusual occurrences. (5) When the keno game is operated by one person: (i) The customer copies of all winning tickets in excess of $100 and at least 5% of all other winning tickets shall be regraded and traced to the computer payout report; (ii) The video recording and/or digital record of rabbit ears or wheel shall be randomly compared to the computer game information report for at least 10% of the games during the shift; and (iii) Keno audit personnel shall review winning tickets for proper authorization pursuant to paragraph (e)(6) of this section. (6) In the event any person performs the writer and deskman functions on the same shift, the procedures described in paragraphs (k)(5)(i) and (ii) of this section (using the sample sizes indicated) shall be performed on tickets written by that person. (7) Documentation (e.g., a log, checklist, etc.) that evidences the performance of all keno audit procedures shall be maintained. (8) A manager independent of the keno department shall review keno audit exceptions, and perform and document investigations into unresolved exceptions. These investigations shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request. (9) When a multi-game ticket is part of the sample in paragraphs (k)(3)(ii), (k)(5)(i) and (k)(6) of this section, the procedures may be performed for ten (10) games or ten percent (10%) of the games won, whichever is greater. (l) Access. (m) Equipment standards. (2) Keno equipment maintenance (excluding keno balls) shall be independent of the operation of the keno game. (3) Keno maintenance personnel shall report irregularities to management personnel independent of the keno department. (4) If the gaming operation utilizes a barcode or microchip reader in connection with the play of keno, the reader shall be tested at least annually by personnel independent of the keno department to determine that it is correctly reading the barcode or microchip. (n) Document retention. (i) Video recordings and/or digital records of rabbit ears or wheel; (ii) All copies of winning keno tickets of less than $1,500.00. (2) [Reserved] (o) Multi-race tickets. (2) Procedures shall be established to ensure that keno personnel are aware of multi-race tickets still in process at the end of a shift. (p) Manual keno. [67 FR 43400, June 27, 2002, as amended at 70 FR 47106, Aug. 12, 2005] § 542.11 What are the minimum internal control standards for pari-mutuel wagering? (a) Exemptions. (i) The simulcast service provider utilizes its own employees for all aspects of the pari-mutuel wagering operation; (ii) The gaming operation posts, in a location visible to the public, that the simulcast service provider and its employees are wholly responsible for the conduct of pari-mutuel wagering offered at that location; (iii) The gaming operation receives a predetermined fee from the simulcast service provider; and (iv) In addition, the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with standards that ensure that the gaming operation receives, from the racetrack, its contractually guaranteed percentage of the handle. (2) Gaming operations that contract directly with a state regulated racetrack as a simulcast service provider, but whose on-site pari-mutuel operations are conducted wholly or in part by tribal gaming operation employees, shall not be required to comply with paragraphs (h)(5) thru (h)(9) of this section. (i) If any standard contained within this section conflicts with state law, a tribal-state compact, or a contract, then the gaming operation shall document the basis for noncompliance and shall maintain such documentation for inspection by the Tribal gaming regulatory authority and the Commission. (ii) In addition, the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with standards that ensure that the gaming operation receives, from the racetrack, its contractually guaranteed percentage of the handle. (b) Computer applications. (c) Betting ticket and equipment standards. (2) Whenever a betting station is opened for wagering or turned over to a new writer/cashier, the writer/cashier shall sign on and the computer shall document gaming operation name (or identification number), station number, the writer/cashier identifier, and the date and time. (3) A betting ticket shall consist of at least two parts: (i) An original, which shall be transacted and issued through a printer and given to the customer; and (ii) A copy that shall be recorded concurrently with the generation of the original ticket either on paper or other storage media (e.g., tape or diskette). (4) Upon accepting a wager, the betting ticket that is created shall contain the following: (i) A unique transaction identifier; (ii) Gaming operation name (or identification number) and station number; (iii) Race track, race number, horse identification or event identification, as applicable; (iv) Type of bet(s), each bet amount, total number of bets, and total take; and (v) Date and time. (5) All tickets shall be considered final at post time. (6) If a gaming operation voids a betting ticket written prior to post time, it shall be immediately entered into the system. (7) Future wagers shall be accepted and processed in the same manner as regular wagers. (d) Payout standards. (2) The computer shall be incapable of authorizing payment on a ticket that has been previously paid, a voided ticket, a losing ticket, or an unissued ticket. (e) Checkout standards. (2) For each writer/cashier station a summary report shall be completed at the conclusion of each shift including: (i) Computation of cash turned in for the shift; and (ii) Signature of two employees who have verified the cash turned in for the shift. Unverified transfers of cash and/or cash equivalents are prohibited. (f) Employee wagering. (g) Computer reports standards. (2) This documentation shall be restricted to authorized personnel. (3) The documentation shall be created for each day's operation and shall include, but is not limited to: (i) Unique transaction identifier; (ii) Date/time of transaction; (iii) Type of wager; (iv) Animal identification or event identification; (v) Amount of wagers (by ticket, writer/SAM, track/event, and total); (vi) Amount of payouts (by ticket, writer/SAM, track/event, and total); (vii) Tickets refunded (by ticket, writer, track/event, and total); (viii) Unpaid winners/vouchers (“outs”) (by ticket/voucher, track/event, and total); (ix) Voucher sales/payments (by ticket, writer/SAM, and track/event); (x) Voids (by ticket, writer, and total); (xi) Future wagers (by ticket, date of event, total by day, and total at the time of revenue recognition); (xii) Results (winners and payout data); (xiii) Breakage data (by race and track/event); (xiv) Commission data (by race and track/event); and (xv) Purged data (by ticket and total). (4) The system shall generate the following reports: (i) A reconciliation report that summarizes totals by track/event, including write, the day's winning ticket total, total commission and breakage due the gaming operation, and net funds transferred to or from the gaming operation's bank account; (ii) An exception report that contains a listing of all system functions and overrides not involved in the actual writing or cashing of tickets, including sign-on/off, voids, and manually input paid tickets; and (iii) A purged ticket report that contains a listing of the unique transaction identifier(s), description, ticket cost and value, and date purged. (h) Accounting and auditing functions. (1) The parimutuel audit shall be conducted by personnel independent of the parimutuel operation. (2) Documentation shall be maintained evidencing the performance of all parimutuel accounting and auditing procedures. (3) An accounting employee shall review handle, commission, and breakage for each day's play and recalculate the net amount due to or from the systems operator on a weekly basis. (4) The accounting employee shall verify actual cash/cash equivalents turned in to the system's summary report for each cashier's drawer (Beginning balance, (+) fills (draws), (+) net write (sold less voids), (−) payouts (net of IRS withholding), (−) cashbacks (paids), (=) cash turn-in). (5) An accounting employee shall produce a gross revenue recap report to calculate gross revenue for each day's play and for a month-to-date basis, including the following totals: (i) Commission; (ii) Positive breakage; (iii) Negative breakage; (iv) Track/event fees; (v) Track/event fee rebates; and (vi) Purged tickets. (6) All winning tickets and vouchers shall be physically removed from the SAM's for each day's play. (7) In the event a SAM does not balance for a day's play, the auditor shall perform the following procedures: (i) Foot the winning tickets and vouchers deposited and trace to the totals of SAM activity produced by the system; (ii) Foot the listing of cashed vouchers and trace to the totals produced by the system; (iii) Review all exceptions for propriety of transactions and unusual occurrences; (iv) Review all voids for propriety; (v) Verify the results as produced by the system to the results provided by an independent source; (vi) Regrade 1% of paid (cashed) tickets to ensure accuracy and propriety; and (vii) When applicable, reconcile the totals of future tickets written to the totals produced by the system for both earned and unearned take, and review the reports to ascertain that future wagers are properly included on the day of the event. (8) At least annually, the auditor shall foot the wagers for one day and trace to the total produced by the system. (9) At least one day per quarter, the auditor shall recalculate and verify the change in the unpaid winners to the total purged tickets. [67 FR 43400, June 27, 2002, as amended at 70 FR 47106, Aug. 12, 2005] § 542.12 What are the minimum internal control standards for table games? (a) Computer applications. (b) Standards for drop and count. (c) Fill and credit standards. (2) Unissued and issued fill/credit slips shall be safeguarded and adequate procedures shall be employed in their distribution, use, and control. Personnel from the cashier or pit departments shall have no access to the secured (control) copies of the fill/credit slips. (3) When a fill/credit slip is voided, the cashier shall clearly mark “void” across the face of the original and first copy, the cashier and one other person independent of the transactions shall sign both the original and first copy, and shall submit them to the accounting department for retention and accountability. (4) Fill transactions shall be authorized by pit supervisory personnel before the issuance of fill slips and transfer of chips, tokens, or cash equivalents. The fill request shall be communicated to the cage where the fill slip is prepared. (5) At least three parts of each fill slip shall be utilized as follows: (i) One part shall be transported to the pit with the fill and, after the appropriate signatures are obtained, deposited in the table game drop box; (ii) One part shall be retained in the cage for reconciliation of the cashier bank; and (iii) For computer systems, one part shall be retained in a secure manner to insure that only authorized persons may gain access to it. For manual systems, one part shall be retained in a secure manner in a continuous unbroken form. (6) For Tier C gaming operations, the part of the fill slip that is placed in the table game drop box shall be of a different color for fills than for credits, unless the type of transaction is clearly distinguishable in another manner (the checking of a box on the form shall not be a clearly distinguishable indicator). (7) The table number, shift, and amount of fill by denomination and in total shall be noted on all copies of the fill slip. The correct date and time shall be indicated on at least two copies. (8) All fills shall be carried from the cashier's cage by a person who is independent of the cage or pit. (9) The fill slip shall be signed by at least the following persons (as an indication that each has counted the amount of the fill and the amount agrees with the fill slip): (i) Cashier who prepared the fill slip and issued the chips, tokens, or cash equivalent; (ii) Runner who carried the chips, tokens, or cash equivalents from the cage to the pit; (iii) Dealer or boxperson who received the chips, tokens, or cash equivalents at the gaming table; and (iv) Pit supervisory personnel who supervised the fill transaction. (10) Fills shall be broken down and verified by the dealer or boxperson in public view before the dealer or boxperson places the fill in the table tray. (11) A copy of the fill slip shall then be deposited into the drop box on the table by the dealer, where it shall appear in the soft count room with the cash receipts for the shift. (12) Table credit transactions shall be authorized by a pit supervisor before the issuance of credit slips and transfer of chips, tokens, or other cash equivalent. The credit request shall be communicated to the cage where the credit slip is prepared. (13) At least three parts of each credit slip shall be utilized as follows: (i) Two parts of the credit slip shall be transported by the runner to the pit. After signatures of the runner, dealer, and pit supervisor are obtained, one copy shall be deposited in the table game drop box and the original shall accompany transport of the chips, tokens, markers, or cash equivalents from the pit to the cage for verification and signature of the cashier. (ii) For computer systems, one part shall be retained in a secure manner to insure that only authorized persons may gain access to it. For manual systems, one part shall be retained in a secure manner in a continuous unbroken form. (14) The table number, shift, and the amount of credit by denomination and in total shall be noted on all copies of the credit slip. The correct date and time shall be indicated on at least two copies. (15) Chips, tokens, and/or cash equivalents shall be removed from the table tray by the dealer or boxperson and shall be broken down and verified by the dealer or boxperson in public view prior to placing them in racks for transfer to the cage. (16) All chips, tokens, and cash equivalents removed from the tables and markers removed from the pit shall be carried to the cashier's cage by a person who is independent of the cage or pit. (17) The credit slip shall be signed by at least the following persons (as an indication that each has counted or, in the case of markers, reviewed the items transferred): (i) Cashier who received the items transferred from the pit and prepared the credit slip; (ii) Runner who carried the items transferred from the pit to the cage; (iii) Dealer who had custody of the items prior to transfer to the cage; and (iv) Pit supervisory personnel who supervised the credit transaction. (18) The credit slip shall be inserted in the drop box by the dealer. (19) Chips, tokens, or other cash equivalents shall be deposited on or removed from gaming tables only when accompanied by the appropriate fill/credit or marker transfer forms. (20) Cross fills (the transfer of chips between table games) and even cash exchanges are prohibited in the pit. (d) Table inventory forms. (i) The table's chip, token, coin, and marker inventory shall be counted and recorded on a table inventory form; or (ii) If the table banks are maintained on an imprest basis, a final fill or credit shall be made to bring the bank back to par. (2) If final fills are not made, beginning and ending inventories shall be recorded on the master game sheet for shift win calculation purposes. (3) The accuracy of inventory forms prepared at shift end shall be verified by the outgoing pit supervisor and the dealer. Alternatively, if the dealer is not available, such verification may be provided by another pit supervisor or another supervisor from another gaming department. Verifications shall be evidenced by signature on the inventory form. (4) If inventory forms are placed in the drop box, such action shall be performed by a person other than a pit supervisor. (e) Table games computer generated documentation standards. (2) This documentation shall be restricted to authorized personnel. (3) The documentation shall include, at a minimum: (i) System exception information ( e.g., (ii) Personnel access listing, which includes, at a minimum: (A) Employee name or employee identification number (if applicable); and (B) Listing of functions employees can perform or equivalent means of identifying the same. (f) Standards for playing cards and dice. (2) Used cards and dice shall be maintained in a secure location until marked, scored, or destroyed, in a manner as approved by the Tribal gaming regulatory authority, to prevent unauthorized access and reduce the possibility of tampering. (3) The Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with a reasonable time period, which shall not exceed seven (7) days, within which to mark, cancel, or destroy cards and dice from play. (i) This standard shall not apply where playing cards or dice are retained for an investigation. (ii) [Reserved] (4) A card control log shall be maintained that documents when cards and dice are received on site, distributed to and returned from tables and removed from play by the gaming operation. (g) Plastic cards. (h) Standards for supervision. (i) Analysis of table game performance standards. (2) Records reflecting hold percentage by table and type of game shall be maintained by shift, by day, cumulative month-to-date, and cumulative year-to-date. (3) This information shall be presented to and reviewed by management independent of the pit department on at least a monthly basis. (4) The management in paragraph (i)(3) of this section shall investigate any unusual fluctuations in hold percentage with pit supervisory personnel. (5) The results of such investigations shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request. (j) Accounting/auditing standards. (2) If a table game has the capability to determine drop ( e.g., (3) Accounting/auditing employees shall review exception reports for all computerized table games systems at least monthly for propriety of transactions and unusual occurrences. (4) All noted improper transactions or unusual occurrences shall be investigated with the results documented. (5) Evidence of table games auditing procedures and any follow-up performed shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request. (6) A daily recap shall be prepared for the day and month-to-date, which shall include the following information: (i) Drop; (ii) Win; and (iii) Gross revenue. (k) Marker credit play. (i) A marker system shall allow for credit to be both issued and repaid in the pit. (ii) Prior to the issuance of gaming credit to a player, the employee extending the credit shall contact the cashier or other independent source to determine if the player's credit limit has been properly established and there is sufficient remaining credit available for the advance. (iii) Proper authorization of credit extension in excess of the previously established limit shall be documented. (iv) The amount of credit extended shall be communicated to the cage or another independent source and the amount documented within a reasonable time subsequent to each issuance. (v) The marker form shall be prepared in at least triplicate form (triplicate form being defined as three parts performing the functions delineated in the standard in paragraph (k)(1)(vi) of this section), with a preprinted or concurrently printed marker number, and utilized in numerical sequence. (This requirement shall not preclude the distribution of batches of markers to various pits.) (vi) At least three parts of each separately numbered marker form shall be utilized as follows: (A) Original shall be maintained in the pit until settled or transferred to the cage; (B) Payment slip shall be maintained in the pit until the marker is settled or transferred to the cage. If paid in the pit, the slip shall be inserted in the table game drop box. If not paid in the pit, the slip shall be transferred to the cage with the original; (C) Issue slip shall be inserted into the appropriate table game drop box when credit is extended or when the player has signed the original. (vii) When marker documentation (e.g., issue slip and payment slip) is inserted in the drop box, such action shall be performed by the dealer or boxperson at the table. (viii) A record shall be maintained that details the following (e.g., master credit record retained at the pit podium): (A) The signature or initials of the person(s) approving the extension of credit (unless such information is contained elsewhere for each issuance); (B) The legible name of the person receiving the credit; (C) The date and shift of granting the credit; (D) The table on which the credit was extended; (E) The amount of credit issued; (F) The marker number; (G) The amount of credit remaining after each issuance or the total credit available for all issuances; (H) The amount of payment received and nature of settlement (e.g., credit slip number, cash, chips, etc.); and (I) The signature or initials of the person receiving payment/settlement. (ix) The forms required in paragraphs (k)(1)(v), (vi), and (viii) of this section shall be safeguarded, and adequate procedures shall be employed to control the distribution, use, and access to these forms. (x) All credit extensions shall be initially evidenced by lammer buttons, which shall be displayed on the table in public view and placed there by supervisory personnel. (xi) Marker preparation shall be initiated and other records updated within approximately one hand of play following the initial issuance of credit to the player. (xii) Lammer buttons shall be removed only by the dealer or boxperson employed at the table upon completion of a marker transaction. (xiii) The original marker shall contain at least the following information: (A) Marker number; (B) Player's name and signature; (C) Date; and (D) Amount of credit issued. (xiv) The issue slip or stub shall include the same marker number as the original, the table number, date and time of issuance, and amount of credit issued. The issue slip or stub shall also include the signature of the person extending the credit, and the signature or initials of the dealer or boxperson at the applicable table, unless this information is included on another document verifying the issued marker. (xv) The payment slip shall include the same marker number as the original. When the marker is paid in full in the pit, it shall also include the table number where paid, date and time of payment, nature of settlement (cash, chips, etc.), and amount of payment. The payment slip shall also include the signature of pit supervisory personnel acknowledging payment, and the signature or initials of the dealer or boxperson receiving payment, unless this information is included on another document verifying the payment of the marker. (xvi) When partial payments are made in the pit, a new marker shall be completed reflecting the remaining balance and the marker number of the marker originally issued. (xvii) When partial payments are made in the pit, the payment slip of the marker that was originally issued shall be properly cross-referenced to the new marker number, completed with all information required by paragraph (k)(1)(xv) of this section, and inserted into the drop box. (xviii) The cashier's cage or another independent source shall be notified when payments (full or partial) are made in the pit so that cage records can be updated for such transactions. Notification shall be made no later than when the customer's play is completed or at shift end, whichever is earlier. (xix) All portions of markers, both issued and unissued, shall be safeguarded and procedures shall be employed to control the distribution, use and access to the forms. (xx) An investigation shall be performed to determine the cause and responsibility for loss whenever marker forms, or any part thereof, are missing. These investigations shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request. (xxi) When markers are transferred to the cage, marker transfer forms or marker credit slips (or similar documentation) shall be utilized and such documents shall include, at a minimum, the date, time, shift, marker number(s), table number(s), amount of each marker, the total amount transferred, signature of pit supervisory personnel releasing instruments from the pit, and the signature of cashier verifying receipt of instruments at the cage. (xxii) All markers shall be transferred to the cage within twenty-four (24) hours of issuance. (xxiii) Markers shall be transported to the cashier's cage by a person who is independent of the marker issuance and payment functions (pit clerks may perform this function). (2) [Reserved] (l) Name credit instruments accepted in the pit. (2) The following standards shall apply if name credit instruments are accepted in the pit: (i) A name credit system shall allow for the issuance of credit without using markers; (ii) Prior to accepting a name credit instrument, the employee extending the credit shall contact the cashier or another independent source to determine if the player's credit limit has been properly established and the remaining credit available is sufficient for the advance; (iii) All name credit instruments shall be transferred to the cashier's cage (utilizing a two-part order for credit) immediately following the acceptance of the instrument and issuance of chips (if name credit instruments are transported accompanied by a credit slip, an order for credit is not required); (iv) The order for credit (if applicable) and the credit slip shall include the customer's name, amount of the credit instrument, the date, time, shift, table number, signature of pit supervisory personnel releasing instrument from pit, and the signature of the cashier verifying receipt of instrument at the cage; (v) The procedures for transacting table credits at standards in paragraphs (c)(12) through (19) of this section shall be strictly adhered to; and (vi) The acceptance of payments in the pit for name credit instruments shall be prohibited. (m) Call bets. (i) A call bet shall be evidenced by the placement of a lammer button, chips, or other identifiable designation in an amount equal to that of the wager in a specific location on the table; (ii) The placement of the lammer button, chips, or other identifiable designation shall be performed by supervisory/boxperson personnel. The placement may be performed by a dealer only if the supervisor physically observes and gives specific authorization; (iii) The call bet shall be settled at the end of each hand of play by the preparation of a marker, repayment of the credit extended, or the payoff of the winning wager. Call bets extending beyond one hand of play shall be prohibited; and (iv) The removal of the lammer button, chips, or other identifiable designation shall be performed by the dealer/ boxperson upon completion of the call bet transaction. (2) [Reserved] (n) Rim credit. (i) Rim credit shall be evidenced by the issuance of chips to be placed in a neutral zone on the table and then extended to the customer for the customer to wager, or to the dealer to wager for the customer, and by the placement of a lammer button or other identifiable designation in an amount equal to that of the chips extended; and (ii) Rim credit shall be recorded on player cards, or similarly used documents, which shall be: (A) Prenumbered or concurrently numbered and accounted for by a department independent of the pit; (B) For all extensions and subsequent repayments, evidenced by the initials or signatures of a supervisor and the dealer attesting to the validity of each credit extension and repayment; (C) An indication of the settlement method (e.g., serial number of marker issued, chips, cash); (D) Settled no later than when the customer leaves the table at which the card is prepared; (E) Transferred to the accounting department on a daily basis; and (F) Reconciled with other forms utilized to control the issuance of pit credit (e.g., master credit records, table cards). (2) [Reserved] (o) Foreign currency. (i) Foreign currency transactions shall be authorized by a pit supervisor/ boxperson who completes a foreign currency exchange form before the exchange for chips or tokens; (ii) Foreign currency exchange forms include the country of origin, total face value, amount of chips/token extended ( i.e., (iii) Foreign currency exchange forms and the foreign currency shall be inserted in the drop box by the dealer; and (iv) Alternate procedures specific to the use of foreign valued gaming chips shall be developed by the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority. (2) [Reserved] [67 FR 43400, June 27, 2002, as amended at 70 FR 23021, May 4, 2005] § 542.13 What are the minimum internal control standards for gaming machines? (a) Standards for gaming machines. (2) Coins shall include tokens. (3) For all computerized gaming machine systems, a personnel access listing shall be maintained, which includes at a minimum: (i) Employee name or employee identification number (or equivalent); and (ii) Listing of functions employee can perform or equivalent means of identifying same. (b) Computer applications. (c) Standards for drop and count. (d) Jackpot payouts, gaming machines fills, short pays and accumulated credit payouts standards. (i) Date and time; (ii) Machine number; (iii) Dollar amount of cash payout or gaming machine fill (both alpha and numeric) or description of personal property awarded, including fair market value. Alpha is optional if another unalterable method is used for evidencing the amount of the payout; (iv) Game outcome (including reel symbols, card values, suits, etc.) for jackpot payouts. Game outcome is not required if a computerized jackpot/fill system is used; (v) Preprinted or concurrently printed sequential number; and (vi) Signatures of at least two employees verifying and witnessing the payout or gaming machine fill (except as otherwise provided in paragraphs (d)(1)(vi)(A), (B), and (C) of this section). (A) Jackpot payouts over a predetermined amount shall require the signature and verification of a supervisory or management employee independent of the gaming machine department (in addition to the two signatures required in paragraph (d)(1)(vi) of this section). Alternatively, if an on-line accounting system is utilized, only two signatures are required: one employee and one supervisory or management employee independent of the gaming machine department. This predetermined amount shall be authorized by management (as approved by the Tribal gaming regulatory authority), documented, and maintained. (B) With regard to jackpot payouts and hopper fills, the signature of one employee is sufficient if an on-line accounting system is utilized and the jackpot or fill is less than $1,200. (C) On graveyard shifts (eight-hour maximum) payouts/fills less than $100 can be made without the payout/fill being witnessed by a second person. (2) For short pays of $10.00 or more, and payouts required for accumulated credits, the payout form shall include the following information: (i) Date and time; (ii) Machine number; (iii) Dollar amount of payout (both alpha and numeric); and (iv) The signature of at least one (1) employee verifying and witnessing the payout. (A) Where the payout amount is $50 or more, signatures of at least two (2) employees verifying and witnessing the payout. Alternatively, the signature of one (1) employee is sufficient if an on-line accounting system is utilized and the payout amount is less than $3,000. (B) [Reserved] (3) Computerized jackpot/fill systems shall be restricted so as to prevent unauthorized access and fraudulent payouts by one person as required by § 542.16(a). (4) Payout forms shall be controlled and routed in a manner that precludes any one person from producing a fraudulent payout by forging signatures or by altering the amount paid out subsequent to the payout and misappropriating the funds. (e) Promotional payouts or awards. (i) Date and time; (ii) Machine number and denomination; (iii) Dollar amount of payout or description of personal property ( e.g., (iv) Type of promotion ( e.g., (v) Signature of at least one employee authorizing and completing the transaction. (2) [Reserved] (f) Gaming machine department funds standards. (2) The wrapping of loose gaming machine booth and cage cashier coin shall be performed at a time or location that does not interfere with the hard count/wrap process or the accountability of that process. (3) A record shall be maintained evidencing the transfers of wrapped and unwrapped coins and retained for seven (7) days. (g) EPROM control standards. (2) The Tribal gaming regulatory authority, or the gaming operation subject to the approval of the Tribal gaming regulatory authority, shall develop and implement procedures for the following: (i) Removal of EPROMs, or other equivalent game software media, from devices, the verification of the existence of errors as applicable, and the correction via duplication from the master game program EPROM, or other equivalent game software media; (ii) Copying one gaming device program to another approved program; (iii) Verification of duplicated EPROMs before being offered for play; (iv) Receipt and destruction of EPROMs, or other equivalent game software media; and (v) Securing the EPROM, or other equivalent game software media, duplicator, and master game EPROMs, or other equivalent game software media, from unrestricted access. (3) The master game program number, par percentage, and the pay table shall be verified to the par sheet when initially received from the manufacturer. (4) Gaming machines with potential jackpots in excess of $100,000 shall have the game software circuit boards locked or physically sealed. The lock or seal shall necessitate the presence of a person independent of the gaming machine department to access the device game program EPROM, or other equivalent game software media. If a seal is used to secure the board to the frame of the gaming device, it shall be pre-numbered. (5) Records that document the procedures in paragraph (g)(2)(i) of this section shall include the following information: (i) Date; (ii) Machine number (source and destination); (iii) Manufacturer; (iv) Program number; (v) Personnel involved; (vi) Reason for duplication; (vii) Disposition of any permanently removed EPROM, or other equivalent game software media; (viii) Seal numbers, if applicable; and (ix) Approved testing lab approval numbers, if available. (6) EPROMS, or other equivalent game software media, returned to gaming devices shall be labeled with the program number. Supporting documentation shall include the date, program number, information identical to that shown on the manufacturer's label, and initials of the person replacing the EPROM, or other equivalent game software media. (h) Standards for evaluating theoretical and actual hold percentages. (1) Accurate and current theoretical hold worksheets shall be maintained for each gaming machine. (2) For multi-game/multi-denominational machines, an employee or department independent of the gaming machine department shall: (i) Weekly, record the total coin-in meter; (ii) Quarterly, record the coin-in meters for each paytable contained in the machine; and (iii) On an annual basis, adjust the theoretical hold percentage in the gaming machine statistical report to a weighted average based upon the ratio of coin-in for each game paytable. (3) For those gaming operations that are unable to perform the weighted average calculation as required by paragraph (h)(2) of this section, the following procedures shall apply: (i) On at least an annual basis, calculate the actual hold percentage for each gaming machine; (ii) On at least an annual basis, adjust the theoretical hold percentage in the gaming machine statistical report for each gaming machine to the previously calculated actual hold percentage; and (iii) The adjusted theoretical hold percentage shall be within the spread between the minimum and maximum theoretical payback percentages. (4) The adjusted theoretical hold percentage for multi-game/multi-denominational machines may be combined for machines with exactly the same game mix throughout the year. (5) The theoretical hold percentages used in the gaming machine analysis reports should be within the performance standards set by the manufacturer. (6) Records shall be maintained for each machine indicating the dates and type of changes made and the recalculation of theoretical hold as a result of the changes. (7) Records shall be maintained for each machine that indicate the date the machine was placed into service, the date the machine was removed from operation, the date the machine was placed back into operation, and any changes in machine numbers and designations. (8) All of the gaming machines shall contain functioning meters that shall record coin-in or credit-in, or on-line gaming machine monitoring system that captures similar data. (9) All gaming machines with bill acceptors shall contain functioning billing meters that record the dollar amounts or number of bills accepted by denomination. (10) Gaming machine in-meter readings shall be recorded at least weekly (monthly for Tier A and Tier B gaming operations) immediately prior to or subsequent to a gaming machine drop. On-line gaming machine monitoring systems can satisfy this requirement. However, the time between readings may extend beyond one week in order for a reading to coincide with the end of an accounting period only if such extension is for no longer than six (6) days. (11) The employee who records the in-meter reading shall either be independent of the hard count team or shall be assigned on a rotating basis, unless the in-meter readings are randomly verified quarterly for all gaming machines and bill acceptors by a person other than the regular in-meter reader. (12) Upon receipt of the meter reading summary, the accounting department shall review all meter readings for reasonableness using pre-established parameters. (13) Prior to final preparation of statistical reports, meter readings that do not appear reasonable shall be reviewed with gaming machine department employees or other appropriate designees, and exceptions documented, so that meters can be repaired or clerical errors in the recording of meter readings can be corrected. (14) A report shall be produced at least monthly showing month-to-date, year-to-date (previous twelve (12) months data preferred), and if practicable, life-to-date actual hold percentage computations for individual machines and a comparison to each machine's theoretical hold percentage previously discussed. (15) Each change to a gaming machine's theoretical hold percentage, including progressive percentage contributions, shall result in that machine being treated as a new machine in the statistical reports ( i.e. (16) If promotional payouts or awards are included on the gaming machine statistical reports, it shall be in a manner that prevents distorting the actual hold percentages of the affected machines. (17) The statistical reports shall be reviewed by both gaming machine department management and management employees independent of the gaming machine department on at least a monthly basis. (18) For those machines that have experienced at least 100,000 wagering transactions, large variances (three percent (3%) recommended) between theoretical hold and actual hold shall be investigated and resolved by a department independent of the gaming machine department with the findings documented and provided to the Tribal gaming regulatory authority upon request in a timely manner. (19) Maintenance of the on-line gaming machine monitoring system data files shall be performed by a department independent of the gaming machine department. Alternatively, maintenance may be performed by gaming machine supervisory employees if sufficient documentation is generated and it is randomly verified on a monthly basis by employees independent of the gaming machine department. (20) Updates to the on-line gaming machine monitoring system to reflect additions, deletions, or movements of gaming machines shall be made at least weekly prior to in-meter readings and the weigh process. (i) Gaming machine hopper contents standards. (2) When machines are permanently removed from the floor, the gaming machine drop and hopper contents shall be counted and recorded by at least two employees with appropriate documentation being routed to the accounting department for proper recording and accounting for initial hopper loads. (j) Player tracking system. (i) The player tracking system shall be secured so as to prevent unauthorized access (e.g., changing passwords at least quarterly and physical access to computer hardware, etc.). (ii) The addition of points to members' accounts other than through actual gaming machine play shall be sufficiently documented (including substantiation of reasons for increases) and shall be authorized by a department independent of the player tracking and gaming machines. Alternatively, addition of points to members' accounts may be authorized by gaming machine supervisory employees if sufficient documentation is generated and it is randomly verified by employees independent of the gaming machine department on a quarterly basis. (iii) Booth employees who redeem points for members shall be allowed to receive lost players club cards, provided that they are immediately deposited into a secured container for retrieval by independent personnel. (iv) Changes to the player tracking system parameters, such as point structures and employee access, shall be performed by supervisory employees independent of the gaming machine department. Alternatively, changes to player tracking system parameters may be performed by gaming machine supervisory employees if sufficient documentation is generated and it is randomly verified by supervisory employees independent of the gaming machine department on a monthly basis. (v) All other changes to the player tracking system shall be appropriately documented. (2) [Reserved] (k) In-house progressive gaming machine standards. (2) At least once each day, each gaming operation shall record the amount shown on each progressive jackpot meter at the gaming operation except for those jackpots that can be paid directly from the machine's hopper; (3) Explanations for meter reading decreases shall be maintained with the progressive meter reading sheets, and where the payment of a jackpot is the explanation for a decrease, the gaming operation shall record the jackpot payout number on the sheet or have the number reasonably available; and (4) Each gaming operation shall record the base amount of each progressive jackpot the gaming operation offers. (5) The Tribal gaming regulatory authority shall approve procedures specific to the transfer of progressive amounts in excess of the base amount to other gaming machines. Such procedures may also include other methods of distribution that accrue to the benefit of the gaming public via an award or prize. (l) Wide area progressive gaming machine standards. (2) As applicable to participating gaming operations, the wide area progressive gaming machine system shall be adequately restricted to prevent unauthorized access (e.g., changing passwords at least quarterly, restrict access to EPROMs or other equivalent game software media, and restrict physical access to computer hardware, etc.). (3) The Tribal gaming regulatory authority shall approve procedures for the wide area progressive system that: (i) Reconcile meters and jackpot payouts; (ii) Collect/drop gaming machine funds; (iii) Verify jackpot, payment, and billing to gaming operations on pro-rata basis; (iv) System maintenance; (v) System accuracy; and (vi) System security. (4) Reports, where applicable, adequately documenting the procedures required in paragraph (l)(3) of this section shall be generated and retained. (m) Accounting/auditing standards. (2) For on-line gaming machine monitoring systems, procedures shall be performed at least monthly to verify that the system is transmitting and receiving data from the gaming machines properly and to verify the continuing accuracy of the coin-in meter readings as recorded in the gaming machine statistical report. (3) For weigh scale and currency interface systems, for at least one drop period per month accounting/auditing employees shall make such comparisons as necessary to the system generated count as recorded in the gaming machine statistical report. Discrepancies shall be resolved prior to generation/distribution of gaming machine reports. (4) For each drop period, accounting/auditing personnel shall compare the coin-to-drop meter reading to the actual drop amount. Discrepancies should be resolved prior to generation/distribution of on-line gaming machine monitoring system statistical reports. (5) Follow-up shall be performed for any one machine having an unresolved variance between actual coin drop and coin-to-drop meter reading in excess of three percent (3%) and over $25.00. The follow-up performed and results of the investigation shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request. (6) For each drop period, accounting/auditing employees shall compare the bill-in meter reading to the total bill acceptor drop amount for the period. Discrepancies shall be resolved before the generation/distribution of gaming machine statistical reports. (7) Follow-up shall be performed for any one machine having an unresolved variance between actual currency drop and bill-in meter reading in excess of an amount that is both more than $25 and at least three percent (3%) of the actual currency drop. The follow-up performed and results of the investigation shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request. (8) At least annually, accounting/auditing personnel shall randomly verify that EPROM or other equivalent game software media changes are properly reflected in the gaming machine analysis reports. (9) Accounting/auditing employees shall review exception reports for all computerized gaming machine systems on a daily basis for propriety of transactions and unusual occurrences. (10) All gaming machine auditing procedures and any follow-up performed shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request. (n) Cash-out tickets. (1) In addition to the applicable auditing and accounting standards in paragraph (m) of this section, on a quarterly basis, the gaming operation shall foot all jackpot cash-out tickets equal to or greater than $1,200 and trace totals to those produced by the host validation computer system. (2) The customer may request a cash-out ticket from the gaming machine that reflects all remaining credits. The cash-out ticket shall be printed at the gaming machine by an internal document printer. The cash-out ticket shall be valid for a time period specified by the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority. Cash-out tickets may be redeemed for payment or inserted in another gaming machine and wagered, if applicable, during the specified time period. (3) The customer shall redeem the cash-out ticket at a change booth or cashiers' cage. Alternatively, if a gaming operation utilizes a remote computer validation system, the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall develop alternate standards for the maximum amount that can be redeemed, which shall not exceed $2,999.99 per cash-out transaction. (4) Upon presentation of the cash-out ticket(s) for redemption, the following shall occur: (i) Scan the bar code via an optical reader or its equivalent; or (ii) Input the cash-out ticket validation number into the computer. (5) The information contained in paragraph (n)(4) of this section shall be communicated to the host computer. The host computer shall verify the authenticity of the cash-out ticket and communicate directly to the redeemer of the cash-out ticket. (6) If valid, the cashier (redeemer of the cash-out ticket) pays the customer the appropriate amount and the cash-out ticket is electronically noted “paid” in the system. The “paid” cash-out ticket shall remain in the cashiers” bank for reconciliation purposes. The host validation computer system shall electronically reconcile the cashier's banks for the paid cashed-out tickets. (7) If invalid, the host computer shall notify the cashier (redeemer of the cash-out ticket). The cashier (redeemer of the cash-out ticket) shall refuse payment to the customer and notify a supervisor of the invalid condition. The supervisor shall resolve the dispute. (8) If the host validation computer system temporarily goes down, cashiers may redeem cash-out tickets at a change booth or cashier's cage after recording the following: (i) Serial number of the cash-out ticket; (ii) Date and time; (iii) Dollar amount; (iv) Issuing gaming machine number; (v) Marking ticket “paid”; and (vi) Ticket shall remain in cashier's bank for reconciliation purposes. (9) Cash-out tickets shall be validated as expeditiously as possible when the host validation computer system is restored. (10) The Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with procedures to control cash-out ticket paper, which shall include procedures that: (i) Mitigate the risk of counterfeiting of cash-out ticket paper; (ii) Adequately control the inventory of the cash-out ticket paper; and (iii) Provide for the destruction of all unused cash-out ticket paper. (iv) Alternatively, if the gaming operation utilizes a computer validation system, this standard shall not apply. (11) If the host validation computer system is down for more than four (4) hours, the gaming operation shall promptly notify the Tribal gaming regulatory authority or its designated representative. (12) These gaming machine systems shall comply with all other standards (as applicable) in this part including: (i) Standards for bill acceptor drop and count; (ii) Standards for coin drop and count; and (iii) Standards concerning EPROMS or other equivalent game software media. (o) Account access cards. (1) Equipment. (ii) A network of contiguous player terminals with touch-screen or button-controlled video monitors connected to an electronic selection device and the central computer via a communications network; (iii) One or more electronic selection devices, utilizing random number generators, each of which selects any combination or combinations of numbers, colors, and/or symbols for a network of player terminals. (2) Player terminals standards. (ii) The game server shall generate and transmit to the bank of player terminals a set of random numbers, colors, and/or symbols at regular intervals. The subsequent game results are determined at the player terminal and the resulting information is transmitted to the account server; (iii) The game server shall be housed in a game server room or a secure locked cabinet. (3) Customer account maintenance standards. (ii) Customers may access their accounts on the computer system by means of an account access card at the player terminal. Each player terminal may be equipped with a card reader and personal identification number (PIN) pad or touch screen array for this purpose; (iii) All communications between the player terminal, or bank of player terminals, and the account server shall be encrypted for security reasons. (4) Customer account generation standards. (ii) For each customer file, an employee shall: (A) Record the customer's name and current address; (B) The date the account was opened; and (C) At the time the initial deposit is made, account opened, or credit extended, the identity of the customer shall be verified by examination of a valid driver's license or other reliable identity credential. (iii) The clerk shall sign-on with a unique password to a terminal equipped with peripherals required to establish a customer account. Passwords are issued and can only be changed by information technology personnel at the discretion of the department director. (iv) After entering a specified number of incorrect PIN entries at the cage or player terminal, the customer shall be directed to proceed to a clerk to obtain a new PIN. If a customer forgets, misplaces or requests a change to their PIN, the customer shall proceed to a clerk for assistance. (5) Deposit of credits standards. (ii) The customer shall present cash, chips, coin or coupons along with their account access card to a cashier to deposit credits. (iii) The cashier shall complete the transaction by utilizing a card scanner that the cashier shall slide the customer's account access card through. (iv) The cashier shall accept the funds from the customer and enter the appropriate amount on the cashier terminal. (v) A multi-part deposit slip shall be generated by the point of sale receipt printer. The cashier shall direct the customer to sign the deposit slip receipt. One copy of the deposit slip shall be given to the customer. The other copy of the deposit slip shall be secured in the cashier's cash drawer. (vi) The cashier shall verify the customer's balance before completing the transaction. The cashier shall secure the funds in their cash drawer and return the account access card to the customer. (vii) Alternatively, if a kiosk is utilized to accept a deposit of credits, the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with procedures that safeguard the integrity of the kiosk system. (6) Prize standards. (ii) If merchandise prizes are to be awarded, the specific type of prize or prizes that may be won shall be disclosed to the player before the game begins. (iii) The redemption period of account access cards, as approved by the Tribal gaming regulatory authority, shall be conspicuously posted in the gaming operation. (7) Credit withdrawal. (i) Scan the account access card; (ii) Request the customer to enter their PIN, if the PIN was selected by the customer; (iii) The cashier shall ascertain the amount the customer wishes to withdraw and enter the amount into the computer; (iv) A multi-part withdrawal slip shall be generated by the point of sale receipt printer. The cashier shall direct the customer to sign the withdrawal slip; (v) The cashier shall verify that the account access card and the customer match by: (A) Comparing the customer to image on the computer screen; (B) Comparing the customer to image on customer's picture ID; or (C) Comparing the customer signature on the withdrawal slip to signature on the computer screen. (vi) The cashier shall verify the customer's balance before completing the transaction. The cashier shall pay the customer the appropriate amount, issue the customer the original withdrawal slip and return the account access card to the customer; (vii) The copy of the withdrawal slip shall be placed in the cash drawer. All account transactions shall be accurately tracked by the account server computer system. The copy of the withdrawal slip shall be forwarded to the accounting department at the end of the gaming day; and (viii) In the event the imaging function is temporarily disabled, customers shall be required to provide positive ID for cash withdrawal transactions at the cashier stations. (p) Smart cards. [67 FR 43400, June 27, 2002, as amended at 70 FR 23021, May 4, 2005; 70 FR 47106, Aug. 12, 2005; 71 FR 27392, May 11, 2006] § 542.14 What are the minimum internal control standards for the cage? (a) Computer applications. (b) Personal checks, cashier's checks, payroll checks, and counter checks. (2) The Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with procedures for the acceptance of personal checks, collecting and recording checks returned to the gaming operation after deposit, re-deposit, and write-off authorization. (3) When counter checks are issued, the following shall be included on the check: (i) The customer's name and signature; (ii) The dollar amount of the counter check (both alpha and numeric); (iii) Customer's bank name and bank account number; (iv) Date of issuance; and (v) Signature or initials of the person approving the counter check transaction. (4) When traveler's checks or other guaranteed drafts such as cashier's checks are presented, the cashier shall comply with the examination and documentation procedures as required by the issuer. (c) Customer deposited funds. (1) The receipt or withdrawal of a customer deposit shall be evidenced by at least a two-part document with one copy going to the customer and one copy remaining in the cage file. (2) The multi-part receipt shall contain the following information: (i) Same receipt number on all copies; (ii) Customer's name and signature; (iii) Date of receipt and withdrawal; (iv) Dollar amount of deposit/withdrawal; and (v) Nature of deposit (cash, check, chips); however, (vi) Provided all of the information in paragraph (c)(2)(i) through (v) is available, the only required information for all copies of the receipt is the receipt number. (3) The Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with procedures that: (i) Maintain a detailed record by customer name and date of all funds on deposit; (ii) Maintain a current balance of all customer cash deposits that are in the cage/vault inventory or accountability; and (iii) Reconcile this current balance with the deposits and withdrawals at least daily. (4) The gaming operation, as approved by the Tribal gaming regulatory authority, shall describe the sequence of the required signatures attesting to the accuracy of the information contained on the customer deposit or withdrawal form ensuring that the form is signed by the cashier. (5) All customer deposits and withdrawal transactions at the cage shall be recorded on a cage accountability form on a per-shift basis. (6) Only cash, cash equivalents, chips, and tokens shall be accepted from customers for the purpose of a customer deposit. (7) The Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with procedures that verify the customer's identity, including photo identification. (8) A file for customers shall be prepared prior to acceptance of a deposit. (d) Cage and vault accountability standards. (2) The cage and vault (including coin room) inventories shall be counted by the oncoming and outgoing cashiers. These employees shall make individual counts for comparison for accuracy and maintenance of individual accountability. Such counts shall be recorded at the end of each shift during which activity took place. All discrepancies shall be noted and investigated. Unverified transfers of cash and/or cash equivalents are prohibited. (3) The Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with a minimum bankroll formula to ensure the gaming operation maintains cash or cash equivalents (on hand and in the bank, if readily accessible) in an amount sufficient to satisfy obligations to the gaming operation's customers as they are incurred. A suggested bankroll formula will be provided by the Commission upon request. (e) Chip and token standards. (f) Coupon standards. (g) Accounting/auditing standards. (2) A trial balance of gaming operation accounts receivable, including the name of the customer and current balance, shall be prepared at least monthly for active, inactive, settled or written-off accounts. (3) The trial balance of gaming operation accounts receivable shall be reconciled to the general ledger each month. The reconciliation and any follow-up performed shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request. (4) On a monthly basis an evaluation of the collection percentage of credit issued to identify unusual trends shall be performed. (5) All cage and credit accounting procedures and any follow-up performed shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request. (h) Extraneous items. [67 FR 43400, June 27, 2002, as amended at 70 FR 47107, Aug. 12, 2005] § 542.15 What are the minimum internal control standards for credit? (a) Computer applications. (b) Credit standards. (1) At least the following information shall be recorded for customers that have credit limits or are issued credit (excluding personal checks, payroll checks, cashier's checks, and traveler's checks): (i) Customer's name, current address, and signature; (ii) Identification verifications; (iii) Authorized credit limit; (iv) Documentation of authorization by a person designated by management to approve credit limits; and (v) Credit issuances and payments. (2) Prior to extending credit, the customer's gaming operation credit record and/or other documentation shall be examined to determine the following: (i) Properly authorized credit limit; (ii) Whether remaining credit is sufficient to cover the credit issuance; and (iii) Identity of the customer (except for known customers). (3) Credit extensions over a specified dollar amount shall be approved by personnel designated by management. (4) Proper approval of credit extensions over ten percent (10%) of the previously established limit shall be documented. (5) The job functions of credit approval (i.e., establishing the customer's credit worthiness) and credit extension ( i.e., (6) If cage credit is extended to a single customer in an amount exceeding $2,500, appropriate gaming personnel shall be notified on a timely basis of the customers playing on cage credit, the applicable amount of credit issued, and the available balance. (7) Cage marker forms shall be at least two parts (the original marker and a payment slip), prenumbered by the printer or concurrently numbered by the computerized system, and utilized in numerical sequence. (8) The completed original cage marker shall contain at least the following information: (i) Marker number; (ii) Player's name and signature; and (iii) Amount of credit issued (both alpha and numeric). (9) The completed payment slip shall include the same marker number as the original, date and time of payment, amount of payment, nature of settlement (cash, chips, etc.), and signature of cashier receiving the payment. (c) Payment standards. (2) When partial payments are made on credit instruments, they shall be evidenced by a multi-part receipt (or another equivalent document) that contains: (i) The same preprinted number on all copies; (ii) Customer's name; (iii) Date of payment; (iv) Dollar amount of payment (or remaining balance if a new marker is issued), and nature of settlement (cash, chips, etc.); (v) Signature of employee receiving payment; and (vi) Number of credit instrument on which partial payment is being made. (3) Unless account balances are routinely confirmed on a random basis by the accounting or internal audit departments, or statements are mailed by a person independent of the credit transactions and collections thereon, and the department receiving payments cannot access cash, then the following standards shall apply: (i) The routing procedures for payments by mail require that they be received by a department independent of credit instrument custody and collection; (ii) Such receipts by mail shall be documented on a listing indicating the customer's name, amount of payment, nature of payment (if other than a check), and date payment received; and (iii) The total amount of the listing of mail receipts shall be reconciled with the total mail receipts recorded on the appropriate accountability form by the accounting department on a random basis (for at least three (3) days per month). (d) Access to credit documentation. (i) The credit information shall be restricted to those positions that require access and are so authorized by management; (ii) Outstanding credit instruments shall be restricted to persons authorized by management; and (iii) Written-off credit instruments shall be further restricted to persons specified by management. (2) [Reserved] (e) Maintenance of credit documentation. (2) Records of all correspondence, transfers to and from outside agencies, and other documents related to issued credit instruments shall be maintained. (f) Write-off and settlement standards. (2) Such authorizations shall be made by at least two management officials who are from departments independent of the credit transaction. (g) Collection agency standards. (2) A person independent of credit transactions and collections shall periodically review the documents in paragraph (g)(1) of this section. (h) Accounting/auditing standards. (i) Ascertain compliance with credit limits and other established credit issuance procedures; (ii) Randomly reconcile outstanding balances of both active and inactive accounts on the accounts receivable listing to individual credit records and physical instruments; (iii) Examine credit records to determine that appropriate collection efforts are being made and payments are being properly recorded; and (iv) For a minimum of five (5) days per month, partial payment receipts shall be subsequently reconciled to the total payments recorded by the cage for the day and shall be numerically accounted for. (2) [Reserved] § 542.16 [Reserved] § 542.17 What are the minimum internal control standards for complimentary services or items? (a) Each Tribal gaming regulatory authority or gaming operation shall establish and the gaming operation shall comply with procedures for the authorization, issuance, and tracking of complimentary services and items, including cash and non-cash gifts. Such procedures must be approved by the Tribal gaming regulatory authority and shall include, but shall not be limited to, the procedures by which the gaming operation delegates to its employees the authority to approve the issuance of complimentary services and items, and the procedures by which conditions or limits, if any, which may apply to such authority are established and modified (including limits based on relationships between the authorizer and recipient), and shall further include effective provisions for audit purposes. (b) At least monthly, accounting, information technology, or audit personnel that cannot grant or receive complimentary privileges shall prepare reports that include the following information for all complimentary items and services equal to or exceeding $100 or an amount established by the Tribal gaming regulatory authority, which shall not be greater than $100: (1) Name of customer who received the complimentary service or item; (2) Name(s) of authorized issuer of the complimentary service or item; (3) The actual cash value of the complimentary service or item; (4) The type of complimentary service or item (i.e., food, beverage, etc.); and (5) Date the complimentary service or item was issued. (c) The internal audit or accounting departments shall review the reports required in paragraph (b) of this section at least monthly. These reports shall be made available to the Tribe, Tribal gaming regulatory authority, audit committee, other entity designated by the Tribe, and the Commission upon request. [67 FR 43400, June 27, 2002, as amended at 70 FR 47107, Aug. 12, 2005] § 542.18 How does a gaming operation apply for a variance from the standards of the part? (a) Tribal gaming regulatory authority approval. (2) For each enumerated standard for which the Tribal gaming regulatory authority approves a variance, it shall submit to the Chairman of the NIGC, within thirty (30) days, a detailed report, which shall include the following: (i) A detailed description of the variance; (ii) An explanation of how the variance achieves a level of control sufficient to accomplish the purpose of the standard it is to replace; and (iii) Evidence that the Tribal gaming regulatory authority has approved the variance. (3) In the event that the Tribal gaming regulatory authority or the Tribe chooses to submit a variance request directly to the Chairman, it may do so without the approval requirement set forth in paragraph (a)(2)(iii) of this section and such request shall be deemed as having been approved by the Tribal gaming regulatory authority. (b) Review by the Chairman. (2) Any objection raised by the Chairman shall be in the form of a written explanation based upon the following criteria: (i) There is no valid explanation of why the gaming operation should have received a variance approval from the Tribal gaming regulatory authority on the enumerated standard; or (ii) The variance as approved by the Tribal gaming regulatory authority does not provide a level of control sufficient to accomplish the purpose of the standard it is to replace. (3) If the Chairman fails to object in writing within sixty (60) days after the date of receipt of a complete submission, the variance shall be considered concurred with by the Chairman. (4) The 60-day deadline may be extended, provided such extension is mutually agreed upon by the Tribal gaming regulatory authority and the Chairman. (c) Curing Chairman's objections. (2) A Tribal gaming regulatory authority may cure the objections raised by the Chairman by: (i) Rescinding its initial approval of the variance; or (ii) Rescinding its initial approval, revising the variance, approving it, and re-submitting it to the Chairman. (3) Upon any re-submission of a variance approval, the Chairman shall have thirty (30) days to concur with or object to the re-submitted variance. (4) If the Chairman fails to object in writing within thirty (30) days after the date of receipt of the re-submitted variance, the re-submitted variance shall be considered concurred with by the Chairman. (5) The thirty (30) day deadline may be extended, provided such extension is mutually agreed upon by the Tribal gaming regulatory authority and the Chairman. (d) Appeals. (i) Within thirty (30) days of receiving an objection to a re-submission, the Tribal gaming regulatory authority shall file its notice of appeal. (ii) Failure to file an appeal within the time provided by this section shall result in a waiver of the opportunity for an appeal. (iii) An appeal under this section shall specify the reasons why the Tribal gaming regulatory authority believes the Chairman's objections should be reviewed, and shall include supporting documentation, if any. (iv) The Tribal gaming regulatory authority shall be provided with any comments offered by the Chairman to the Commission on the substance of the appeal by the Tribal gaming regulatory authority and shall be offered the opportunity to respond to any such comments. (v) Within thirty (30) days after receipt of the appeal, the Commission shall render a decision based upon the criteria contained within paragraph (b)(2) of this section unless the Tribal gaming regulatory authority elects to wave the thirty (30) day requirement and to provide the Commission additional time, not to exceed an additional thirty (30) days, to render a decision. (vi) In the absence of a decision within the time provided, the Tribal gaming regulatory authority's resubmission shall be considered concurred with by the Commission and become effective. (2) The Tribal gaming regulatory authority may appeal the Chairman's objection to the approval of a variance to the full Commission without resubmitting the variance by filling a notice of appeal with the full Commission within thirty (30) days of the Chairman's objection and complying with the procedures described in paragraph (d)(1) of this section. (e) Effective date of variance. [70 FR 23022, May 4, 2005] § 542.19 What are the minimum internal control standards for accounting? (a) Each gaming operation shall prepare accurate, complete, legible, and permanent records of all transactions pertaining to revenue and gaming activities. (b) Each gaming operation shall prepare general accounting records according to Generally Accepted Accounting Principles on a double-entry system of accounting, maintaining detailed, supporting, subsidiary records, including, but not limited to: (1) Detailed records identifying revenues, expenses, assets, liabilities, and equity for each gaming operation; (2) Detailed records of all markers, IOU's, returned checks, hold checks, or other similar credit instruments; (3) Individual and statistical game records to reflect statistical drop, statistical win, and the percentage of statistical win to statistical drop by each table game, and to reflect statistical drop, statistical win, and the percentage of statistical win to statistical drop for each type of table game, by shift, by day, cumulative month-to-date and year-to-date, and individual and statistical game records reflecting similar information for all other games; (4) Gaming machine analysis reports which, by each machine, compare actual hold percentages to theoretical hold percentages; (5) The records required by this part and by the Tribal internal control standards; (6) Journal entries prepared by the gaming operation and by its independent accountants; and (7) Any other records specifically required to be maintained. (c) Each gaming operation shall establish administrative and accounting procedures for the purpose of determining effective control over a gaming operation's fiscal affairs. The procedures shall be designed to reasonably ensure that: (1) Assets are safeguarded; (2) Financial records are accurate and reliable; (3) Transactions are performed only in accordance with management's general and specific authorization; (4) Transactions are recorded adequately to permit proper reporting of gaming revenue and of fees and taxes, and to maintain accountability of assets; (5) Recorded accountability for assets is compared with actual assets at reasonable intervals, and appropriate action is taken with respect to any discrepancies; and (6) Functions, duties, and responsibilities are appropriately segregated in accordance with sound business practices. (d) Gross gaming revenue computations. (2) For gaming machines, gross revenue equals drop, less fills, jackpot payouts and personal property awarded to patrons as gambling winnings. Additionally, the initial hopper load is not a fill and does not affect gross revenue. The difference between the initial hopper load and the total amount that is in the hopper at the end of the gaming operation's fiscal year should be adjusted accordingly as an addition to or subtraction from the drop for the year. (3) For each counter game, gross revenue equals: (i) The money accepted by the gaming operation on events or games that occur during the month or will occur in subsequent months, less money paid out during the month to patrons on winning wagers (“cash basis”); or (ii) The money accepted by the gaming operation on events or games that occur during the month, plus money, not previously included in gross revenue, that was accepted by the gaming operation in previous months on events or games occurring in the month, less money paid out during the month to patrons as winning wagers (“modified accrual basis”). (4) For each card game and any other game in which the gaming operation is not a party to a wager, gross revenue equals all money received by the operation as compensation for conducting the game. (i) A gaming operation shall not include either shill win or loss in gross revenue computations. (ii) In computing gross revenue for gaming machines, keno and bingo, the actual cost to the gaming operation of any personal property distributed as losses to patrons may be deducted from winnings (other than costs of travel, lodging, services, food, and beverages), if the gaming operation maintains detailed documents supporting the deduction. (e) Each gaming operation shall establish internal control systems sufficient to ensure that currency (other than tips or gratuities) received from a patron in the gaming area is promptly placed in a locked box in the table, or, in the case of a cashier, in the appropriate place in the cashier's cage, or on those games which do not have a locked drop box, or on card game tables, in an appropriate place on the table, in the cash register or in another approved repository. (f) If the gaming operation provides periodic payments to satisfy a payout resulting from a wager, the initial installment payment, when paid, and the actual cost of a payment plan, which is funded by the gaming operation, may be deducted from winnings. The gaming operation is required to obtain the approval of all payment plans from the TGRA. For any funding method which merely guarantees the gaming operation's performance, and under which the gaming operation makes payments out of cash flow (e.g. irrevocable letters of credits, surety bonds, or other similar methods), the gaming operation may only deduct such payments when paid to the patron. (g) For payouts by wide-area progressive gaming machine systems, a gaming operation may deduct from winnings only its pro rata share of a wide-area gaming machine system payout. (h) Cash-out tickets issued at a gaming machine or gaming device shall be deducted from gross revenue as jackpot payouts in the month the tickets are issued by the gaming machine or gaming device. Tickets deducted from gross revenue that are not redeemed within a period, not to exceed 180 days of issuance, shall be included in gross revenue. An unredeemed ticket previously included in gross revenue may be deducted from gross revenue in the month redeemed. (i) A gaming operation may not deduct from gross revenues the unpaid balance of a credit instrument extended for purposes other than gaming. (j) A gaming operation may deduct from gross revenue the unpaid balance of a credit instrument if the gaming operation documents, or otherwise keeps detailed records of, compliance with the following requirements. Such records confirming compliance shall be made available to the TGRA or the Commission upon request: (1) The gaming operation can document that the credit extended was for gaming purposes; (2) The gaming operation has established procedures and relevant criteria to evaluate a patron's credit reputation or financial resources and to then determine that there is a reasonable basis for extending credit in the amount or sum placed at the patron's disposal; (3) In the case of personal checks, the gaming operation has established procedures to examine documentation, which would normally be acceptable as a type of identification when cashing checks, and has recorded the patron's bank check guarantee card number or credit card number, or has satisfied paragraph (j)(2) of this section, as management may deem appropriate for the check-cashing authorization granted; (4) In the case of third-party checks for which cash, chips, or tokens have been issued to the patron, or which were accepted in payment of another credit instrument, the gaming operation has established procedures to examine documentation, normally accepted as a means of identification when cashing checks, and has, for the check's maker or drawer, satisfied paragraph (j)(2) of this section, as management may deem appropriate for the check-cashing authorization granted; (5) In the case of guaranteed drafts, procedures should be established to ensure compliance with the issuance and acceptance procedures prescribed by the issuer; (6) The gaming operation has established procedures to ensure that the credit extended is appropriately documented, not least of which would be the patron's identification and signature attesting to the authenticity of the individual credit transactions. The authorizing signature shall be obtained at the time credit is extended. (7) The gaming operation has established procedures to effectively document its attempt to collect the full amount of the debt. Such documentation would include, but not be limited to, letters sent to the patron, logs of personal or telephone conversations, proof of presentation of the credit instrument to the patron's bank for collection, settlement agreements, or other documents which demonstrate that the gaming operation has made a good faith attempt to collect the full amount of the debt. Such records documenting collection efforts shall be made available to the TGRA or the commission upon request. (k) Maintenance and preservation of books, records and documents. (1) All original books, records and documents pertaining to the conduct of wagering activities shall be retained by a gaming operation in accordance with the following schedule. A record that summarizes gaming transactions is sufficient, provided that all documents containing an original signature(s) attesting to the accuracy of a gaming related transaction are independently preserved. Original books, records or documents shall not include copies of originals, except for copies that contain original comments or notations on parts of multi-part forms. The following original books, records and documents shall be retained by a gaming operation for a minimum of five (5) years: (i) Casino cage documents; (ii) Documentation supporting the calculation of table game win; (iii) Documentation supporting the calculation of gaming machine win; (iv) Documentation supporting the calculation of revenue received from the games of keno, pari-mutuel, bingo, pull-tabs, card games, and all other gaming activities offered by the gaming operation; (v) Table games statistical analysis reports; (vi) Gaming machine statistical analysis reports; (vii) Bingo, pull-tab, keno and pari-mutuel wagering statistical reports; (viii) Internal audit documentation and reports; (ix) Documentation supporting the write-off of gaming credit instruments and named credit instruments; (x) All other books, records and documents pertaining to the conduct of wagering activities that contain original signature(s) attesting to the accuracy of the gaming related transaction. (2) Unless otherwise specified in this part, all other books, records, and documents shall be retained until such time as the accounting records have been audited by the gaming operation's independent certified public accountants. (3) The above definition shall apply without regards to the medium by which the book, record or document is generated or maintained (paper, computer-generated, magnetic media, etc.). [71 FR 27392, May 11, 2006] § 542.20 What is a Tier A gaming operation? A Tier A gaming operation is one with annual gross gaming revenues of more than $1 million but not more than $5 million. § 542.21 What are the minimum internal control standards for drop and count for Tier A gaming operations? (a) Computer applications. (b) Table game drop standards. (2) At the end of each shift: (i) All locked table game drop boxes shall be removed from the tables by a person independent of the pit shift being dropped; (ii) A separate drop box shall be placed on each table opened at any time during each shift or a gaming operation may utilize a single drop box with separate openings and compartments for each shift; and (iii) Upon removal from the tables, table game drop boxes shall be transported directly to the count room or other equivalently secure area with comparable controls and locked in a secure manner until the count takes place. (3) If drop boxes are not placed on all tables, then the pit department shall document which tables were open during the shift. (4) The transporting of table game drop boxes shall be performed by a minimum of two persons, at least one of whom is independent of the pit shift being dropped. (5) All table game drop boxes shall be posted with a number corresponding to a permanent number on the gaming table and marked to indicate game, table number, and shift. (c) Soft count room personnel. (2) Count room personnel shall not be allowed to exit or enter the count room during the count except for emergencies or scheduled breaks. At no time during the count, shall there be fewer than two employees in the count room until the drop proceeds have been accepted into cage/vault accountability. (3) Count team members shall be rotated on a routine basis such that the count team is not consistently the same two persons more than four (4) days per week. This standard shall not apply to gaming operations that utilize a count team of more than two persons. (4) The count team shall be independent of transactions being reviewed and counted. The count team shall be independent of the cage/vault departments, however, a dealer or a cage cashier may be used if this person is not allowed to perform the recording function. An accounting representative may be used if there is an independent audit of all soft count documentation. (d) Table game soft count standards. (2) Access to the count room during the count shall be restricted to members of the drop and count teams, with the exception of authorized observers, supervisors for resolution of problems, and authorized maintenance personnel. (3) If counts from various revenue centers occur simultaneously in the count room, procedures shall be in effect that prevent the commingling of funds from different revenue centers. (4) The table game drop boxes shall be individually emptied and counted in such a manner to prevent the commingling of funds between boxes until the count of the box has been recorded. (i) The count of each box shall be recorded in ink or other permanent form of recordation. (ii) A second count shall be performed by an employee on the count team who did not perform the initial count. (iii) Corrections to information originally recorded by the count team on soft count documentation shall be made by drawing a single line through the error, writing the correct figure above the original figure, and then obtaining the initials of at least two count team members who verified the change, unless the count team only has two (2) members in which case the initials of only one (1) verifying member is required. (5) If cash counters are utilized and the count room table is used only to empty boxes and sort/stack contents, a count team member shall be able to observe the loading and unloading of all cash at the cash counter, including rejected cash. (6) Table game drop boxes, when empty, shall be shown to another member of the count team, or to another person who is observing the count, or to surveillance. (7) Orders for fill/credit (if applicable) shall be matched to the fill/credit slips. Fills and credits shall be traced to or recorded on the count sheet. (8) Pit marker issue and payment slips (if applicable) removed from the table game drop boxes shall either be: (i) Traced to or recorded on the count sheet by the count team; or (ii) Totaled by shift and traced to the totals documented by the computerized system. Accounting personnel shall verify the issue/payment slip for each table is accurate. (9) Foreign currency exchange forms (if applicable) removed from the table game drop boxes shall be reviewed for the proper daily exchange rate and the conversion amount shall be recomputed by the count team. Alternatively, this may be performed by accounting/auditing employees. (10) The opening/closing table and marker inventory forms (if applicable) shall either be: (i) Examined and traced to or recorded on the count sheet; or (ii) If a computerized system is used, accounting personnel can trace the opening/closing table and marker inventory forms to the count sheet. Discrepancies shall be investigated with the findings documented and maintained for inspection. (11) The count sheet shall be reconciled to the total drop by a count team member who shall not function as the sole recorder. (12) All members of the count team shall sign the count document or a summary report to attest to their participation in the count. (13) All drop proceeds and cash equivalents that were counted shall be turned over to the cage or vault cashier (who shall be independent of the count team) or to an authorized person/employee independent of the revenue generation and the count process for verification. Such person shall certify by signature as to the accuracy of the drop proceeds delivered and received. (14) The count sheet, with all supporting documents, shall be delivered to the accounting department by a count team member or a person independent of the cashiers department. Alternatively, it may be adequately secured (e.g., locked container to which only accounting personnel can gain access) until retrieved by the accounting department. (15) Access to stored, full table game drop boxes shall be restricted to authorized members of the drop and count teams. (e) Gaming machine bill acceptor drop standards. (2) All bill acceptor canisters shall be removed only at the time previously designated by the gaming operation and reported to the Tribal gaming regulatory authority, except for emergency drops. (3) The bill acceptor canisters shall be removed by a person independent of the gaming machine department then transported directly to the count room or other equivalently secure area with comparable controls and locked in a secure manner until the count takes place. (i) Security shall be provided over the bill acceptor canisters removed from the gaming machines and awaiting transport to the count room. (ii) The transporting of bill acceptor canisters shall be performed by a minimum of two persons, at least one of whom is independent of the gaming machine department. (4) All bill acceptor canisters shall be posted with a number corresponding to a permanent number on the gaming machine. (f) Gaming machine bill acceptor count standards. (2) Access to the count room during the count shall be restricted to members of the drop and count teams, with the exception of authorized observers, supervisors for resolution of problems, and authorized maintenance personnel. (3) If counts from various revenue centers occur simultaneously in the count room, procedures shall be in effect that prevent the commingling of funds from different revenue centers. (4) The bill acceptor canisters shall be individually emptied and counted in such a manner to prevent the commingling of funds between canisters until the count of the canister has been recorded. (i) The count of each canister shall be recorded in ink or other permanent form of recordation. (ii) Corrections to information originally recorded by the count team on soft count documentation shall be made by drawing a single line through the error, writing the correct figure above the original figure, and then obtaining the initials of at least two count team members who verified the change. (5) If cash counters are utilized and the count room table is used only to empty canisters and sort/stack contents, a count team member shall be able to observe the loading and unloading of all cash at the cash counter, including rejected cash. (6) Canisters, when empty, shall be shown to another member of the count team, or to another person who is observing the count, or to surveillance. (7) The count sheet shall be reconciled to the total drop by a count team member who shall not function as the sole recorder. (8) All members of the count team shall sign the count document or a summary report to attest to their participation in the count. (9) All drop proceeds and cash equivalents that were counted shall be turned over to the cage or vault cashier (who shall be independent of the count team) or to an authorized person/employee independent of the revenue generation and the count process for verification. Such person shall certify by signature as to the accuracy of the drop proceeds delivered and received. (10) The count sheet, with all supporting documents, shall be delivered to the accounting department by a count team member or a person independent of the cashiers department. Alternatively, it may be adequately secured (e.g., locked container to which only accounting personnel can gain access) until retrieved by the accounting department. (11) Access to stored bill acceptor canisters, full or empty, shall be restricted to: (i) Authorized members of the drop and count teams; and (ii) Authorized personnel in an emergency for resolution of a problem. (g) Gaming machine coin drop standards. (2) All drop buckets shall be removed only at the time previously designated by the gaming operation and reported to the Tribal gaming regulatory authority, except for emergency drops. (3) Security shall be provided over the buckets removed from the gaming machine drop cabinets and awaiting transport to the count room. (4) As each machine is opened, the contents shall be tagged with its respective machine number if the bucket is not permanently marked with the machine number. The contents shall be transported directly to the area designated for the counting of such drop proceeds. If more than one trip is required to remove the contents of the machines, the filled carts of coins shall be securely locked in the room designed for counting or in another equivalently secure area with comparable controls. There shall be a locked covering on any carts in which the drop route includes passage out of doors. (i) Alternatively, a smart bucket system that electronically identifies and tracks the gaming machine number, and facilitates the proper recognition of gaming revenue, shall satisfy the requirements of this paragraph. (ii) [Reserved] (5) Each drop bucket in use shall be: (i) Housed in a locked compartment separate from any other compartment of the gaming machine and keyed differently than other gaming machine compartments; and (ii) Identifiable to the gaming machine from which it is removed. If the gaming machine is identified with a removable tag that is placed in the bucket, the tag shall be placed on top of the bucket when it is collected. (6) Each gaming machine shall have drop buckets into which coins or tokens that are retained by the gaming machine are collected. Drop bucket contents shall not be used to make change or pay hand-paid payouts. (7) The collection procedures may include procedures for dropping gaming machines that have trays instead of drop buckets. (h) Hard count room personnel. (2) At no time during the weigh/count shall there be fewer than two employees in the count room until the drop proceeds have been accepted into cage/vault accountability. (i) If the gaming machine count is conducted with a continuous mechanical count meter that is not reset during the count and is verified in writing by at least two employees at the start and end of each denomination count, then one employee may perform the wrap. (ii) [Reserved] (3) Count team members shall be rotated on a routine basis such that the count team is not consistently the same two persons more than four (4) days per week. This standard shall not apply to gaming operations that utilize a count team of more than two persons. (4) The count team shall be independent of transactions being reviewed and counted. The count team shall be independent of the cage/vault departments, unless they are non-supervisory gaming machine employees and perform the laborer function only (A non-supervisory gaming machine employee is defined as a person below the level of gaming machine shift supervisor). A cage cashier may be used if this person is not allowed to perform the recording function. An accounting representative may be used if there is an independent audit of all count documentation. (i) Gaming machine coin count and wrap standards. (2) The gaming machine coin count and wrap shall be performed in a count room or other equivalently secure area with comparable controls. (i) Alternatively, an on-the-floor drop system utilizing a mobile scale shall satisfy the requirements of this paragraph, subject to the following conditions: (A) The gaming operation shall utilize and maintain an effective on-line gaming machine monitoring system, as described in § 542.13(m)(3); (B) Components of the on-the-floor drop system shall include, but not be limited to, a weigh scale, a laptop computer through which weigh/count applications are operated, a security camera available for the mobile scale system, and a VCR to be housed within the video compartment of the mobile scale. The system may include a mule cart used for mobile weigh scale system locomotion. (C) The gaming operation must obtain the security camera available with the system, and this camera must be added in such a way as to eliminate tampering. (D) Prior to the drop, the drop/count team shall ensure the scale batteries are charged; (E) Prior to the drop, a videotape shall be inserted into the VCR used to record the drop in conjunction with the security camera system and the VCR shall be activated; (F) The weigh scale test shall be performed prior to removing the unit from the hard count room for the start of the weigh/drop/count; (G) Surveillance shall be notified when the weigh/drop/count begins and shall be capable of monitoring the entire process; (H) An observer independent of the weigh/drop/count teams (independent observer) shall remain by the weigh scale at all times and shall observe the entire weigh/drop/count process; (I) Physical custody of the key(s) needed to access the laptop and video compartment shall require the involvement of two persons, one of whom is independent of the drop and count team; (J) The mule key (if applicable), the laptop and video compartment keys, and the remote control for the VCR shall be maintained by a department independent of the gaming machine department. The appropriate personnel shall sign out these keys; (K) A person independent of the weigh/drop/count teams shall be required to accompany these keys while they are checked out, and observe each time the laptop compartment is opened; (L) The laptop access panel shall not be opened outside the hard count room, except in instances when the laptop must be rebooted as a result of a crash, lock up, or other situation requiring immediate corrective action; (M) User access to the system shall be limited to those employees required to have full or limited access to complete the weigh/drop/count; and (N) When the weigh/drop/count is completed, the independent observer shall access the laptop compartment, end the recording session, eject the videotape, and deliver the videotape to surveillance. (ii) [Reserved] (3) Access to the count room during the count shall be restricted to members of the drop and count teams, with the exception of authorized observers, supervisors for resolution of problems, and authorized maintenance personnel. (4) If counts from various revenue centers occur simultaneously in the count room, procedures shall be in effect that prevent the commingling of funds from different revenue centers. (5) The following functions shall be performed in the counting of the gaming machine drop: (i) Recorder function, which involves the recording of the gaming machine count; and (ii) Count team supervisor function, which involves the control of the gaming machine weigh and wrap process. The supervisor shall not perform the initial recording of the weigh/count unless a weigh scale with a printer is used. (6) The gaming machine drop shall be counted, wrapped, and reconciled in such a manner to prevent the commingling of gaming machine drop coin with coin (for each denomination) from the next gaming machine drop until the count of the gaming machine drop has been recorded. If the coins are not wrapped immediately after being weighed or counted, they shall be secured and not commingled with other coins. (i) The amount of the gaming machine drop from each machine shall be recorded in ink or other permanent form of recordation on a gaming machine count document by the recorder or mechanically printed by the weigh scale. (ii) Corrections to information originally recorded by the count team on gaming machine count documentation shall be made by drawing a single line through the error, writing the correct figure above the original figure, and then obtaining the initials of at least two count team members who verified the change. (A) If a weigh scale interface is used, corrections to gaming machine count data shall be made using either of the following: ( 1 ( 2 (B) [Reserved] (7) If applicable, the weight shall be converted to dollar amounts prior to the reconciliation of the weigh to the wrap. (8) If a coin meter is used, a count team member shall convert the coin count for each denomination into dollars and shall enter the results on a summary sheet. (9) The recorder and at least one other count team member shall sign the weigh tape and the gaming machine count document attesting to the accuracy of the weigh/count. (10) All members of the count team shall sign the count document or a summary report to attest to their participation in the count. (11) All drop proceeds and cash equivalents that were counted shall be turned over to the cage or vault cashier (who shall be independent of the count team) or to an authorized person/employee independent of the revenue generation and the count process for verification. Such person shall certify by signature as to the accuracy of the drop proceeds delivered and received. (12) All gaming machine count and wrap documentation, including any applicable computer storage media, shall be delivered to the accounting department by a count team member or a person independent of the cashier's department. Alternatively, it may be adequately secured ( e.g., (13) If the coins are transported off the property, a second (alternative) count procedure shall be performed before the coins leave the property. Any variances shall be documented. (14) Variances. Large (by denomination, either $1,000 or 2% of the drop, whichever is less) or unusual ( e.g., (j) Security of the coin room inventory during the gaming machine coin count and wrap. (i) At the commencement of the gaming machine count the following requirements shall be met: (A) The coin room inventory shall be counted by at least two employees, one of whom is a member of the count team and the other is independent of the weigh/count and wrap procedures; (B) The count in paragraph (j)(1)(i)(A) of this section shall be recorded on an appropriate inventory form; (ii) Upon completion of the wrap of the gaming machine drop: (A) At least two members of the count team (wrap team), independently from each other, shall count the ending coin room inventory; (B) The counts in paragraph (j)(1)(ii)(A) of this section shall be recorded on a summary report(s) that evidences the calculation of the final wrap by subtracting the beginning inventory from the sum of the ending inventory and transfers in and out of the coin room; (C) The same count team members shall compare the calculated wrap to the weigh/count, recording the comparison and noting any variances on the summary report; (D) A member of the cage/vault department shall count the ending coin room inventory by denomination and shall reconcile it to the beginning inventory, wrap, transfers, and weigh/count; and (E) At the conclusion of the reconciliation, at least two count/wrap team members and the verifying employee shall sign the summary report(s) attesting to its accuracy. (iii) The functions described in paragraph (j)(1)(ii)(A) and (C) of this section may be performed by only one count team member. That count team member must then sign the summary report, along with the verifying employee, as required under paragraph (j)(1)(ii)(E). (2) If the count room is segregated from the coin room, or if the coin room is used as a count room and the coin room inventory is secured to preclude access by the count team, all of the following requirements shall be completed, at the conclusion of the count: (i) At least two members of the count/wrap team shall count the final wrapped gaming machine drop independently from each other; (ii) The counts shall be recorded on a summary report; (iii) The same count team members (or the accounting department) shall compare the final wrap to the weigh/count, recording the comparison, and noting any variances on the summary report; (iv) A member of the cage/vault department shall count the wrapped gaming machine drop by denomination and reconcile it to the weigh/count; (v) At the conclusion of the reconciliation, at least two count team members and the cage/vault employee shall sign the summary report attesting to its accuracy; and (vi) The wrapped coins (exclusive of proper transfers) shall be transported to the cage, vault or coin vault after the reconciliation of the weigh/count to the wrap. (k) Transfers during the gaming machine coin count and wrap. (2) Each transfer shall be recorded on a separate multi-part form with a preprinted or concurrently-printed form number (used solely for gaming machine count transfers) that shall be subsequently reconciled by the accounting department to ensure the accuracy of the reconciled gaming machine drop. (3) Each transfer must be counted and signed for by at least two members of the count team and by a person independent of the count team who is responsible for authorizing the transfer. (l) Gaming machine drop key control standards. (2) The physical custody of the keys needed to access gaming machine coin drop cabinets, including duplicates, shall require the involvement of two persons, one of whom is independent of the gaming machine department. (3) Two employees (separate from key custodian) shall be required to accompany such keys while checked out and observe each time gaming machine drop cabinets are accessed. (m) Table game drop box key control standards. (2) Procedures shall be developed and implemented to insure that unauthorized access to empty table game drop boxes shall not occur from the time the boxes leave the storage racks until they are placed on the tables. (3) The involvement of at least two persons independent of the cage department shall be required to access stored empty table game drop boxes. (4) The release keys shall be separately keyed from the contents keys. (5) At least two count team members are required to be present at the time count room and other count keys are issued for the count. (6) All duplicate keys shall be maintained in a manner that provides the same degree of control as is required for the original keys. Records shall be maintained for each key duplicated that indicate the number of keys made and destroyed. (7) Logs shall be maintained by the custodian of sensitive keys to document authorization of personnel accessing keys. (n) Table game drop box release keys. (2) The table game drop box release keys shall be maintained by a department independent of the pit department. (3) Only the person(s) authorized to remove table game drop boxes from the tables shall be allowed access to the table game drop box release keys; however, the count team members may have access to the release keys during the soft count in order to reset the table game drop boxes. (4) Persons authorized to remove the table game drop boxes shall be precluded from having simultaneous access to the table game drop box contents keys and release keys. (5) For situations requiring access to a table game drop box at a time other than the scheduled drop, the date, time, and signature of employee signing out/in the release key must be documented. (o) Bill acceptor canister release keys. (2) The bill acceptor canister release keys shall be maintained by a department independent of the gaming machine department. (3) Only the person(s) authorized to remove bill acceptor canisters from the gaming machines shall be allowed access to the release keys. (4) Persons authorized to remove the bill acceptor canisters shall be precluded from having simultaneous access to the bill acceptor canister contents keys and release keys. (5) For situations requiring access to a bill acceptor canister at a time other than the scheduled drop, the date, time, and signature of employee signing out/in the release key must be documented. (p) Table game drop box storage rack keys. (2) Persons authorized to obtain table game drop box storage rack keys shall be precluded from having simultaneous access to table game drop box contents keys, with the exception of the count team. (q) Bill acceptor canister storage rack keys. (2) Persons authorized to obtain bill acceptor canister storage rack keys shall be precluded from having simultaneous access to bill acceptor canister contents keys, with the exception of the count team. (r) Table game drop box contents keys. (2) The physical custody of the keys needed for accessing stored, full table game drop box contents shall require the involvement of persons from at least two separate departments, with the exception of the count team. (3) Access to the table game drop box contents key at other than scheduled count times shall require the involvement of at least two persons from separate departments, including management. The reason for access shall be documented with the signatures of all participants and observers. (4) Only count team members shall be allowed access to table game drop box contents keys during the count process. (s) Bill acceptor canister contents keys. (2) The physical custody of the keys needed for accessing stored, full bill acceptor canister contents shall require involvement of persons from two separate departments, with the exception of the count team. (3) Access to the bill acceptor canister contents key at other than scheduled count times shall require the involvement of at least two persons from separate departments, one of whom must be a supervisor. The reason for access shall be documented with the signatures of all participants and observers. (4) Only the count team members shall be allowed access to bill acceptor canister contents keys during the count process. (t) Gaming machine computerized key security systems. (2) For computerized key security systems, the following additional gaming machine key control procedures apply: (i) Management personnel independent of the gaming machine department assign and control user access to keys in the computerized key security system ( i.e. (ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the gaming machine drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (iii) The custody of the keys issued pursuant to paragraph (t)(2)(ii) of this section requires the presence of two persons from separate departments from the time of their issuance until the time of their return. (iv) Routine physical maintenance that requires accessing the emergency manual key(s) (override key) and does not involve the accessing of the gaming machine drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (3) For computerized key security systems controlling access to gaming machine drop and count keys, accounting/audit personnel, independent of the system administrator, will perform the following procedures: (i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user's access within the system ( i.e. (ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual gaming machine drop and count key removals or key returns occurred. (iii) At least quarterly, review a sample of users that are assigned access to the gaming machine drop and count keys to determine that their access to the assigned keys is adequate relative to their job position. (iv) All noted improper transactions or unusual occurrences are investigated with the results documented. (4) Quarterly, an inventory of all count room, drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys unaccounted for, with the investigation being documented. (u) Table games computerized key security systems. (2) For computerized key security systems, the following additional table game key control procedures apply: (i) Management personnel independent of the table game department assign and control user access to keys in the computerized key security system ( i.e. (ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the table game drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (iii) The custody of the keys issued pursuant to paragraph (u)(2)(ii) of this section requires the presence of two persons from separate departments from the time of their issuance until the time of their return. (iv) Routine physical maintenance that requires accessing the emergency manual key(s) (override key) and does not involve the accessing of the table games drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (3) For computerized key security systems controlling access to table games drop and count keys, accounting/audit personnel, independent of the system administrator, will perform the following procedures: (i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user's access within the system ( i.e. (ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual table games drop and count key removals or key returns occurred. (iii) At least quarterly, review a sample of users that are assigned access to the table games drop and count keys to determine that their access to the assigned keys is adequate relative to their job position. (iv) All noted improper transactions or unusual occurrences are investigated with the results documented. (4) Quarterly, an inventory of all count room, table game drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys unaccounted for, with the investigations being documented. (v) Emergency drop procedures. (w) Equipment standards for gaming machine count. (2) A person independent of the cage, vault, gaming machine, and count team functions shall be required to be present whenever the calibration module is accessed. Such access shall be documented and maintained. (3) If a weigh scale interface is used, it shall be adequately restricted so as to prevent unauthorized access (passwords, keys, etc.). (4) If the weigh scale has a zero adjustment mechanism, it shall be physically limited to minor adjustments ( e.g., (5) The weigh scale and weigh scale interface (if applicable) shall be tested by a person or persons independent of the cage, vault, and gaming machine departments and count team at least quarterly. At least annually, this test shall be performed by internal audit in accordance with the internal audit standards. The result of these tests shall be documented and signed by the person or persons performing the test. (6) Prior to the gaming machine count, at least two employees shall verify the accuracy of the weigh scale with varying weights or with varying amounts of previously counted coin for each denomination to ensure the scale is properly calibrated (varying weights/coin from drop to drop is acceptable). (7) If a mechanical coin counter is used (instead of a weigh scale), the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply, with procedures that are equivalent to those described in paragraphs (u)(4), (u)(5), and (u)(6) of this section. (8) If a coin meter count machine is used, the count team member shall record the machine number denomination and number of coins in ink on a source document, unless the meter machine automatically records such information. (i) A count team member shall test the coin meter count machine prior to the actual count to ascertain if the metering device is functioning properly with a predetermined number of coins for each denomination. (ii) [Reserved] [67 FR 43400, June 27, 2002, as amended at 70 FR 23021, May 4, 2005; 70 FR 47107, Aug. 12, 2005] § 542.22 What are the minimum internal control standards for internal audit for Tier A gaming operations? (a) Internal audit personnel. (2) The internal audit personnel shall report directly to the Tribe, Tribal gaming regulatory authority, audit committee, or other entity designated by the Tribe in accordance with the definition of internal audit in § 542.2. (b) Audits. (i) Bingo, including but not limited to, bingo card control, payout procedures, and cash reconciliation process; (ii) Pull tabs, including but not limited to, statistical records, winner verification, perpetual inventory, and accountability of sales versus inventory; (iii) Card games, including but not limited to, card games operation, cash exchange procedures, shill transactions, and count procedures; (iv) Keno, including but not limited to, game write and payout procedures, sensitive key location and control, and a review of keno auditing procedures; (v) Pari-mutual wagering, including write and payout procedures, and pari-mutual auditing procedures; (vi) Table games, including but not limited to, fill and credit procedures, pit credit play procedures, rim credit procedures, soft drop/count procedures and the subsequent transfer of funds, unannounced testing of count room currency counters and/or currency interface, location and control over sensitive keys, the tracing of source documents to summarized documentation and accounting records, and reconciliation to restricted copies; (vii) Gaming machines, including but not limited to, jackpot payout and gaming machine fill procedures, gaming machine drop/count and bill acceptor drop/count and subsequent transfer of funds, unannounced testing of weigh scale and weigh scale interface, unannounced testing of count room currency counters and/or currency interface, gaming machine drop cabinet access, tracing of source documents to summarized documentation and accounting records, reconciliation to restricted copies, location and control over sensitive keys, compliance with EPROM duplication procedures, and compliance with MICS procedures for gaming machines that accept currency or coin(s) and issue cash-out tickets or gaming machines that do not accept currency or coin(s) and do not return currency or coin(s); (viii) Cage and credit procedures including all cage, credit, and collection procedures, and the reconciliation of trial balances to physical instruments on a sample basis. Cage accountability shall be reconciled to the general ledger; (ix) Information technology functions, including review for compliance with information technology standards; (x) Complimentary service or item, including but not limited to, procedures whereby complimentary service items are issued, authorized, and redeemed; and (xi) Any other internal audits as required by the Tribe, Tribal gaming regulatory authority, audit committee, or other entity designated by the Tribe. (2) In addition to the observation and examinations performed under paragraph (b)(1) of this section, follow-up observations and examinations shall be performed to verify that corrective action has been taken regarding all instances of noncompliance cited by internal audit, the independent accountant, and/or the Commission. The verification shall be performed within six (6) months following the date of notification. (3) Whenever possible, internal audit observations shall be performed on an unannounced basis (i.e., without the employees being forewarned that their activities will be observed). Additionally, if the independent accountant also performs the internal audit function, the accountant shall perform separate observations of the table games/gaming machine drops and counts to satisfy the internal audit observation requirements and independent accountant tests of controls as required by the American Institute of Certified Public Accountants guide. (c) Documentation. e.g., (2) The internal audit department shall operate with audit programs, which, at a minimum, address the MICS. Additionally, the department shall properly document the work performed, the conclusions reached, and the resolution of all exceptions. Institute of Internal Auditors standards are recommended but not required. (d) Reports. (2) Such audit reports shall include the following information: (i) Audit objectives; (ii) Audit procedures and scope; (iii) Findings and conclusions; (iv) Recommendations, if applicable; and (v) Management's response. (e) Material exceptions. (f) Role of management. (2) Management shall be required to respond to internal audit findings stating corrective measures to be taken to avoid recurrence of the audit exception. (3) Such management responses shall be included in the internal audit report that will be delivered to management, the Tribe, Tribal gaming regulatory authority, audit committee, or other entity designated by the Tribe. (g) Internal Audit Guidelines. [67 FR 43400, June 27, 2002, as amended at 70 FR 47107, Aug. 12, 2005] § 542.23 What are the minimum internal control standards for surveillance for Tier A gaming operations? (a) Tier A gaming operations must, at a minimum, maintain and operate an unstaffed surveillance system in a secured location whereby the areas under surveillance are continually recorded. (b) The entrance to the secured location shall be located so that it is not readily accessible by either gaming operation employees who work primarily on the casino floor, or the general public. (c) Access to the secured location shall be limited to surveillance personnel, designated employees, and other persons authorized in accordance with the surveillance department policy. Such policy shall be approved by the Tribal gaming regulatory authority. (d) The surveillance system shall include date and time generators that possess the capability to display the date and time of recorded events on video and/or digital recordings. The displayed date and time shall not significantly obstruct the recorded view. (e) The surveillance department shall strive to ensure staff is trained in the use of the equipment, knowledge of the games, and house rules. (f) Each camera required by the standards in this section shall be installed in a manner that will prevent it from being readily obstructed, tampered with, or disabled by customers or employees. (g) Each camera required by the standards in this section shall possess the capability of having its picture recorded. The surveillance system shall include sufficient numbers of recorders to simultaneously record multiple gaming and count room activities, and record the views of all dedicated cameras and motion activated dedicated cameras. (h) Reasonable effort shall be made to repair each malfunction of surveillance system equipment required by the standards in this section within seventy-two (72) hours after the malfunction is discovered. The Tribal gaming regulatory authority shall be notified of any camera(s) that has malfunctioned for more than twenty-four (24) hours. (1) In the event of a dedicated camera malfunction, the gaming operation and/or the surveillance department shall, upon identification of the malfunction, provide alternative camera coverage or other security measures, such as additional supervisory or security personnel, to protect the subject activity. (2) [Reserved] (i) Bingo. (j) Card games. (k) Keno. (l) Table games Operations with four (4) or more table games. (i) With sufficient clarity to identify customers and dealers; and (ii) With sufficient coverage and clarity to simultaneously view the table bank and determine the configuration of wagers, card values, and game outcome. (iii) One (1) dedicated camera per table and one (1) pan-tilt-zoom camera per four (4) tables may be an acceptable alternative procedure to satisfy the requirements of this paragraph. (2) Operations with three (3) or fewer table games. (i) Comply with the requirements of paragraph (l)(1) of this section; or (ii) Have one (1) overhead camera at each table. (3) Craps. (4) Roulette. (5) Big wheel. (m) Progressive table games. (i) The table surface, sufficient that the card values and card suits can be clearly identified; (ii) An overall view of the entire table with sufficient clarity to identify customers and dealer; and (iii) A view of the progressive meter jackpot amount. If several tables are linked to the same progressive jackpot meter, only one meter need be recorded. (2) [Reserved] (n) Gaming machines. (i) All customers and employees at the gaming machine; and (ii) The face of the gaming machine, with sufficient clarity to identify the payout line(s) of the gaming machine. (2) In-house progressive machine. (i) All customers and employees at the gaming machine; and (ii) The face of the gaming machine, with sufficient clarity to identify the payout line(s) of the gaming machine. (3) Wide-area progressive machine. (i) All customers and employees at the gaming machine; and (ii) The face of the gaming machine, with sufficient clarity to identify the payout line(s) of the gaming machine. (4) Notwithstanding paragraph (n)(1) of this section, if the gaming machine is a multi-game machine, the Tribal gaming regulatory authority, or the gaming operation subject to the approval of the Tribal gaming regulatory authority, may develop and implement alternative procedures to verify payouts. (o) Currency and coin. (p) Video recording and/or digital record retention. (2) Recordings involving suspected or confirmed gaming crimes, unlawful activity, or detentions by security personnel, must be retained for a minimum of thirty (30) days. (3) Duly authenticated copies of video recordings and/or digital records shall be provided to the Commission upon request. (q) Video library log. (r) Malfunction and repair log. (2) The log shall state the time, date, and nature of each malfunction, the efforts expended to repair the malfunction, and the date of each effort, the reasons for any delays in repairing the malfunction, the date the malfunction is repaired, and where applicable, any alternative security measures that were taken. [67 FR 43400, June 27, 2002, as amended at 70 FR 47107, Aug. 12, 2005] § 542.30 What is a Tier B gaming operation? A Tier B gaming operation is one with gross gaming revenues of more than $5 million but not more than $15 million. § 542.31 What are the minimum internal control standards for drop and count for Tier B gaming operations? (a) Computer applications. (b) Table game drop standards. (2) At the end of each shift: (i) All locked table game drop boxes shall be removed from the tables by a person independent of the pit shift being dropped; (ii) A separate drop box shall be placed on each table opened at any time during each shift or a gaming operation may utilize a single drop box with separate openings and compartments for each shift; and (iii) Upon removal from the tables, table game drop boxes shall be transported directly to the count room or other equivalently secure area with comparable controls and locked in a secure manner until the count takes place. (3) If drop boxes are not placed on all tables, then the pit department shall document which tables were open during the shift. (4) The transporting of table game drop boxes shall be performed by a minimum of two persons, at least one of whom is independent of the pit shift being dropped. (5) All table game drop boxes shall be posted with a number corresponding to a permanent number on the gaming table and marked to indicate game, table number, and shift. (6) Surveillance shall be notified when the drop is to begin so that surveillance may monitor the activities. (c) Soft count room personnel. (i) The count shall be viewed live, or on video recording and/or digital record, within seven (7) days by an employee independent of the count. (ii) [Reserved] (2) Count room personnel shall not be allowed to exit or enter the count room during the count except for emergencies or scheduled breaks. At no time during the count, shall there be fewer than two employees in the count room until the drop proceeds have been accepted into cage/vault accountability. Surveillance shall be notified whenever count room personnel exit or enter the count room during the count. (3) Count team members shall be rotated on a routine basis such that the count team is not consistently the same two persons more than four (4) days per week. This standard shall not apply to gaming operations that utilize a count team of more than two persons. (4) The count team shall be independent of transactions being reviewed and counted. The count team shall be independent of the cage/vault departments, however, a dealer or a cage cashier may be used if this person is not allowed to perform the recording function. An accounting representative may be used if there is an independent audit of all soft count documentation. (d) Table game soft count standards. (2) Access to the count room during the count shall be restricted to members of the drop and count teams, with the exception of authorized observers, supervisors for resolution of problems, and authorized maintenance personnel. (3) If counts from various revenue centers occur simultaneously in the count room, procedures shall be in effect that prevent the commingling of funds from different revenue centers. (4) The table game drop boxes shall be individually emptied and counted in such a manner to prevent the commingling of funds between boxes until the count of the box has been recorded. (i) The count of each box shall be recorded in ink or other permanent form of recordation. (ii) A second count shall be performed by an employee on the count team who did not perform the initial count. (iii) Corrections to information originally recorded by the count team on soft count documentation shall be made by drawing a single line through the error, writing the correct figure above the original figure, and then obtaining the initials of at least two count team members who verified the change, unless the count team only has two (2) members in which case the initials of only one (1) verifying count team member is required. (5) If currency counters are utilized and the count room table is used only to empty boxes and sort/stack contents, a count team member shall be able to observe the loading and unloading of all currency at the currency counter, including rejected currency. (6) Table game drop boxes, when empty, shall be shown to another member of the count team, or to another person who is observing the count, or to surveillance, provided the count is monitored in its entirety by a person independent of the count. (7) Orders for fill/credit (if applicable) shall be matched to the fill/credit slips. Fills and credits shall be traced to or recorded on the count sheet. (8) Pit marker issue and payment slips (if applicable) removed from the table game drop boxes shall either be: (i) Traced to or recorded on the count sheet by the count team; or (ii) Totaled by shift and traced to the totals documented by the computerized system. Accounting personnel shall verify the issue/payment slip for each table is accurate. (9) Foreign currency exchange forms (if applicable) removed from the table game drop boxes shall be reviewed for the proper daily exchange rate and the conversion amount shall be recomputed by the count team. Alternatively, this may be performed by accounting/auditing employees. (10) The opening/closing table and marker inventory forms (if applicable) shall either be: (i) Examined and traced to or recorded on the count sheet; or (ii) If a computerized system is used, accounting personnel can trace the opening/closing table and marker inventory forms to the count sheet. Discrepancies shall be investigated with the findings documented and maintained for inspection. (11) The count sheet shall be reconciled to the total drop by a count team member who shall not function as the sole recorder. (12) All members of the count team shall sign the count document or a summary report to attest to their participation in the count. (13) All drop proceeds and cash equivalents that were counted shall be turned over to the cage or vault cashier (who shall be independent of the count team) or to an authorized person/employee independent of the revenue generation and the count process for verification. Such person shall certify by signature as to the accuracy of the drop proceeds delivered and received. (14) The count sheet, with all supporting documents, shall be delivered to the accounting department by a count team member or a person independent of the cashiers department. Alternatively, it may be adequately secured (e.g., locked container to which only accounting personnel can gain access) until retrieved by the accounting department. (15) Access to stored, full table game drop boxes shall be restricted to authorized members of the drop and count teams. (e) Gaming machine bill acceptor drop standards. (2) All bill acceptor canisters shall be removed only at the time previously designated by the gaming operation and reported to the Tribal gaming regulatory authority, except for emergency drops. (3) Surveillance shall be notified when the drop is to begin so that surveillance may monitor the activities. (4) The bill acceptor canisters shall be removed by a person independent of the gaming machine department then transported directly to the count room or other equivalently secure area with comparable controls and locked in a secure manner until the count takes place. (i) Security shall be provided over the bill acceptor canisters removed from the gaming machines and awaiting transport to the count room. (ii) The transporting of bill acceptor canisters shall be performed by a minimum of two persons, at least one of who is independent of the gaming machine department. (5) All bill acceptor canisters shall be posted with a number corresponding to a permanent number on the gaming machine. (f) Gaming machine bill acceptor count standards. (2) Access to the count room during the count shall be restricted to members of the drop and count teams, with the exception of authorized observers, supervisors for resolution of problems, and authorized maintenance personnel. (3) If counts from various revenue centers occur simultaneously in the count room, procedures shall be in effect that prevent the commingling of funds from different revenue centers. (4) The bill acceptor canisters shall be individually emptied and counted in such a manner to prevent the commingling of funds between canisters until the count of the canister has been recorded. (i) The count of each canister shall be recorded in ink or other permanent form of recordation. (ii) Corrections to information originally recorded by the count team on soft count documentation shall be made by drawing a single line through the error, writing the correct figure above the original figure, and then obtaining the initials of at least two count team members who verified the change. (5) If currency counters are utilized and the count room table is used only to empty canisters and sort/stack contents, a count team member shall be able to observe the loading and unloading of all currency at the currency counter, including rejected currency. (6) Canisters, when empty, shall be shown to another member of the count team, to another person who is observing the count, or to surveillance, provided that the count is monitored in its entirety by a person independent of the count. (7) The count sheet shall be reconciled to the total drop by a count team member who shall not function as the sole recorder. (8) All members of the count team shall sign the count document or a summary report to attest to their participation in the count. (9) All drop proceeds and cash equivalents that were counted shall be turned over to the cage or vault cashier (who shall be independent of the count team) or to an authorized person/employee independent of the revenue generation and the count process for verification. Such person shall certify by signature as to the accuracy of the drop proceeds delivered and received. (10) The count sheet, with all supporting documents, shall be delivered to the accounting department by a count team member or a person independent of the cashiers department. Alternatively, it may be adequately secured (e.g., locked container to which only accounting personnel can gain access) until retrieved by the accounting department. (11) Access to stored bill acceptor canisters, full or empty, shall be restricted to: (i) Authorized members of the drop and count teams; and (ii) Authorized personnel in an emergency for the resolution of a problem. (g) Gaming machine coin drop standards. (2) All drop buckets shall be removed only at the time previously designated by the gaming operation and reported to the Tribal gaming regulatory authority, except for emergency drops. (3) Surveillance shall be notified when the drop is to begin in order that surveillance may monitor the activities. (4) Security shall be provided over the buckets removed from the gaming machine drop cabinets and awaiting transport to the count room. (5) As each machine is opened, the contents shall be tagged with its respective machine number if the bucket is not permanently marked with the machine number. The contents shall be transported directly to the area designated for the counting of such drop proceeds. If more than one trip is required to remove the contents of the machines, the filled carts of coins shall be securely locked in the room designed for counting or in another equivalently secure area with comparable controls. There shall be a locked covering on any carts in which the drop route includes passage out of doors. (i) Alternatively, a smart bucket system that electronically identifies and tracks the gaming machine number, and facilitates the proper recognition of gaming revenue, shall satisfy the requirements of this paragraph. (ii) [Reserved] (6) Each drop bucket in use shall be: (i) Housed in a locked compartment separate from any other compartment of the gaming machine and keyed differently than other gaming machine compartments; and (ii) Identifiable to the gaming machine from which it is removed. If the gaming machine is identified with a removable tag that is placed in the bucket, the tag shall be placed on top of the bucket when it is collected. (7) Each gaming machine shall have drop buckets into which coins or tokens that are retained by the gaming machine are collected. Drop bucket contents shall not be used to make change or pay hand-paid payouts. (8) The collection procedures may include procedures for dropping gaming machines that have trays instead of drop buckets. (h) Hard count room personnel. (i) The count shall be viewed either live, or on video recording and/or digital record within seven (7) days by an employee independent of the count. (ii) [Reserved] (2) At no time during the weigh/count shall there be fewer than two employees in the count room until the drop proceeds have been accepted into cage/vault accountability. Surveillance shall be notified whenever count room personnel exit or enter the count room during the count. (i) If the gaming machine count is conducted with a continuous mechanical count meter that is not reset during the count and is verified in writing by at least two employees at the start and end of each denomination count, then one employee may perform the wrap. (ii) [Reserved] (3) Count team members shall be rotated on a routine basis such that the count team is not consistently the same two persons more than four (4) days per week. This standard shall not apply to gaming operations that utilize a count team of more than two persons. (4) The count team shall be independent of transactions being reviewed and counted. The count team shall be independent of the cage/vault departments, unless they are non-supervisory gaming machine employees and perform the laborer function only (A non-supervisory gaming machine employee is defined as a person below the level of gaming machine shift supervisor). A cage cashier may be used if this person is not allowed to perform the recording function. An accounting representative may be used if there is an independent audit of all count documentation. (i) Gaming machine coin count and wrap standards. (2) The gaming machine coin count and wrap shall be performed in a count room or other equivalently secure area with comparable controls. (i) Alternatively, an on-the-floor drop system utilizing a mobile scale shall satisfy the requirements of this paragraph, subject to the following conditions: (A) The gaming operation shall utilize and maintain an effective on-line gaming machine monitoring system, as described in § 542.13(m)(3); (B) Components of the on-the-floor drop system shall include, but not be limited to, a weigh scale, a laptop computer through which weigh/count applications are operated, a security camera available for the mobile scale system, and a VCR to be housed within the video compartment of the mobile scale. The system may include a mule cart used for mobile weigh scale system locomotion. (C) The gaming operation must obtain the security camera available with the system, and this camera must be added in such a way as to eliminate tampering. (D) Prior to the drop, the drop/count team shall ensure the scale batteries are charged; (E) Prior to the drop, a videotape shall be inserted into the VCR used to record the drop in conjunction with the security camera system and the VCR shall be activated; (F) The weigh scale test shall be performed prior to removing the unit from the hard count room for the start of the weigh/drop/count; (G) Surveillance shall be notified when the weigh/drop/count begins and shall be capable of monitoring the entire process; (H) An observer independent of the weigh/drop/count teams (independent observer) shall remain by the weigh scale at all times and shall observe the entire weigh/drop/count process; (I) Physical custody of the key(s) needed to access the laptop and video compartment shall require the involvement of two persons, one of whom is independent of the drop and count team; (J) The mule key (if applicable), the laptop and video compartment keys, and the remote control for the VCR shall be maintained by a department independent of the gaming machine department. The appropriate personnel shall sign out these keys; (K) A person independent of the weigh/drop/count teams shall be required to accompany these keys while they are checked out, and observe each time the laptop compartment is opened; (L) The laptop access panel shall not be opened outside the hard count room, except in instances when the laptop must be rebooted as a result of a crash, lock up, or other situation requiring immediate corrective action; (M) User access to the system shall be limited to those employees required to have full or limited access to complete the weigh/drop/count; and (N) When the weigh/drop/count is completed, the independent observer shall access the laptop compartment, end the recording session, eject the videotape, and deliver the videotape to surveillance. (ii) [Reserved] (3) Access to the count room during the count shall be restricted to members of the drop and count teams, with the exception of authorized observers, supervisors for resolution of problems, and authorized maintenance personnel. (4) If counts from various revenue centers occur simultaneously in the count room, procedures shall be in effect that prevent the commingling of funds from different revenue centers. (5) The following functions shall be performed in the counting of the gaming machine drop: (i) Recorder function, which involves the recording of the gaming machine count; and (ii) Count team supervisor function, which involves the control of the gaming machine weigh and wrap process. The supervisor shall not perform the initial recording of the weigh/count unless a weigh scale with a printer is used. (6) The gaming machine drop shall be counted, wrapped, and reconciled in such a manner to prevent the commingling of gaming machine drop coin with coin (for each denomination) from the next gaming machine drop until the count of the gaming machine drop has been recorded. If the coins are not wrapped immediately after being weighed or counted, they shall be secured and not commingled with other coin. (i) The amount of the gaming machine drop from each machine shall be recorded in ink or other permanent form of recordation on a gaming machine count document by the recorder or mechanically printed by the weigh scale. (ii) Corrections to information originally recorded by the count team on gaming machine count documentation shall be made by drawing a single line through the error, writing the correct figure above the original figure, and then obtaining the initials of at least two count team members who verified the change. (A) If a weigh scale interface is used, corrections to gaming machine count data shall be made using either of the following: ( 1 ( 2 (B) [Reserved] (7) If applicable, the weight shall be converted to dollar amounts before the reconciliation of the weigh to the wrap. (8) If a coin meter is used, a count team member shall convert the coin count for each denomination into dollars and shall enter the results on a summary sheet. (9) The recorder and at least one other count team member shall sign the weigh tape and the gaming machine count document attesting to the accuracy of the weigh/count. (10) All members of the count team shall sign the count document or a summary report to attest to their participation in the count. (11) All drop proceeds and cash equivalents that were counted shall be turned over to the cage or vault cashier (who shall be independent of the count team) or to an authorized person/employee independent of the revenue generation and the count process for verification. Such person shall certify by signature as to the accuracy of the drop proceeds delivered and received. (12) All gaming machine count and wrap documentation, including any applicable computer storage media, shall be delivered to the accounting department by a count team member or a person independent of the cashier's department. Alternatively, it may be adequately secured (e.g., locked container to which only accounting personnel can gain access) until retrieved by the accounting department. (13) If the coins are transported off the property, a second (alternative) count procedure shall be performed before the coins leave the property. Any variances shall be documented. (14) Variances. Large (by denomination, either $1,000 or 2% of the drop, whichever is less) or unusual (e.g., zero for weigh/count or patterned for all counts) variances between the weigh/count and wrap shall be investigated by management personnel independent of the gaming machine department, count team, and the cage/vault functions on a timely basis. The results of such investigation shall be documented, maintained for inspection, and provided to the Tribal gaming regulatory authority upon request. (j) Security of the coin room inventory during the gaming machine coin count and wrap. (i) At the commencement of the gaming machine count the following requirements shall be met: (A) The coin room inventory shall be counted by at least two employees, one of whom is a member of the count team and the other is independent of the weigh/count and wrap procedures; (B) The count in paragraph (j)(1)(i)(A) of this section shall be recorded on an appropriate inventory form; (ii) Upon completion of the wrap of the gaming machine drop: (A) At least two members of the count team (wrap team), independently from each other, shall count the ending coin room inventory; (B) The counts in paragraph (j)(1)(ii)(A) of this section shall be recorded on a summary report(s) that evidences the calculation of the final wrap by subtracting the beginning inventory from the sum of the ending inventory and transfers in and out of the coin room; (C) The same count team members shall compare the calculated wrap to the weigh/count, recording the comparison and noting any variances on the summary report; (D) A member of the cage/vault department shall count the ending coin room inventory by denomination and shall reconcile it to the beginning inventory, wrap, transfers and weigh/count; and (E) At the conclusion of the reconciliation, at least two count/wrap team members and the verifying employee shall sign the summary report(s) attesting to its accuracy. (iii) The functions described in paragraph (j)(1)(ii)(A) and (C) of this section may be performed by only one count team member. That count team member must then sign the summary report, along with the verifying employee, as required under paragraph (j)(1)(ii)(E). (2) If the count room is segregated from the coin room, or if the coin room is used as a count room and the coin room inventory is secured to preclude access by the count team, all of the following requirements shall be completed, at the conclusion of the count: (i) At least two members of the count/wrap team shall count the final wrapped gaming machine drop independently from each other; (ii) The counts shall be recorded on a summary report; (iii) The same count team members (or the accounting department) shall compare the final wrap to the weigh/count, recording the comparison, and noting any variances on the summary report; (iv) A member of the cage/vault department shall count the wrapped gaming machine drop by denomination and reconcile it to the weigh/count; (v) At the conclusion of the reconciliation, at least two count team members and the cage/vault employee shall sign the summary report attesting to its accuracy; and (vi) The wrapped coins (exclusive of proper transfers) shall be transported to the cage, vault or coin vault after the reconciliation of the weigh/count to the wrap. (k) Transfers during the gaming machine coin count and wrap. (2) Each transfer shall be recorded on a separate multi-part form with a preprinted or concurrently-printed form number (used solely for gaming machine count transfers) that shall be subsequently reconciled by the accounting department to ensure the accuracy of the reconciled gaming machine drop. (3) Each transfer must be counted and signed for by at least two members of the count team and by a person independent of the count team who is responsible for authorizing the transfer. (l) Gaming machine drop key control standards. (2) The physical custody of the keys needed to access gaming machine coin drop cabinets, including duplicates, shall require the involvement of two persons, one of whom is independent of the gaming machine department. (3) Two employees (separate from key custodian) shall be required to accompany such keys while checked out and observe each time gaming machine drop cabinets are accessed, unless surveillance is notified each time keys are checked out and surveillance observes the person throughout the period the keys are checked out. (m) Table game drop box key control standards. (2) The involvement of at least two persons independent of the cage department shall be required to access stored empty table game drop boxes. (3) The release keys shall be separately keyed from the contents keys. (4) At least two count team members are required to be present at the time count room and other count keys are issued for the count. (5) All duplicate keys shall be maintained in a manner that provides the same degree of control as is required for the original keys. Records shall be maintained for each key duplicated that indicate the number of keys made and destroyed. (6) Logs shall be maintained by the custodian of sensitive keys to document authorization of personnel accessing keys. (n) Table game drop box release keys. (2) Only the person(s) authorized to remove table game drop boxes from the tables shall be allowed access to the table game drop box release keys; however, the count team members may have access to the release keys during the soft count in order to reset the table game drop boxes. (3) Persons authorized to remove the table game drop boxes shall be precluded from having simultaneous access to the table game drop box contents keys and release keys. (4) For situations requiring access to a table game drop box at a time other than the scheduled drop, the date, time, and signature of employee signing out/in the release key must be documented. (o) Bill acceptor canister release keys. (2) Only the person(s) authorized to remove bill acceptor canisters from the gaming machines shall be allowed access to the release keys. (3) Persons authorized to remove the bill acceptor canisters shall be precluded from having simultaneous access to the bill acceptor canister contents keys and release keys. (4) For situations requiring access to a bill acceptor canister at a time other than the scheduled drop, the date, time, and signature of employee signing out/in the release key must be documented. (p) Table game drop box storage rack keys. (q) Bill acceptor canister storage rack keys. (r) Table game drop box contents keys. (2) Access to the table game drop box contents key at other than scheduled count times shall require the involvement of at least two persons from separate departments, including management. The reason for access shall be documented with the signatures of all participants and observers. (3) Only count team members shall be allowed access to table game drop box contents keys during the count process. (s) Bill acceptor canister contents keys. (2) Access to the bill acceptor canister contents key at other than scheduled count times shall require the involvement of at least two persons from separate departments, one of whom must be a supervisor. The reason for access shall be documented with the signatures of all participants and observers. (3) Only the count team members shall be allowed access to bill acceptor canister contents keys during the count process. (t) Gaming machine computerized key security systems. (2) For computerized key security systems, the following additional gaming machine key control procedures apply: (i) Management personnel independent of the gaming machine department assign and control user access to keys in the computerized key security system ( i.e. (ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the gaming machine drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (iii) The custody of the keys issued pursuant to paragraph (t)(2)(ii) of this section, requires the presence of two persons from separate departments from the time of their issuance until the time of their return. (iv) Routine physical maintenance that requires accessing the emergency manual key(s) (override key) and does not involve the accessing of the gaming machine drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (3) For computerized key security systems controlling access to gaming machine drop and count keys, accounting/audit personnel, independent of the system administrator, will perform the following procedures: (i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user's access within the system ( i.e. (ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual gaming machine drop and count key removals or key returns occurred. (iii) At least quarterly, review a sample of users that are assigned access to the gaming machine drop and count keys to determine that their access to the assigned keys is adequate relative to their job position. (iv) All noted improper transactions or unusual occurrences are investigated with the results documented. (4) Quarterly, an inventory of all count room, drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys unaccounted for, with the investigation being documented. (u) Table games computerized key security systems. (2) For computerized key security systems, the following additional table game key control procedures apply: (i) Management personnel independent of the table game department assign and control user access to keys in the computerized key security system ( i.e. (ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the table game drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (iii) The custody of the keys issued pursuant to paragraph (u)(2)(ii) of this section, requires the presence of two persons from separate departments from the time of their issuance until the time of their return. (iv) Routine physical maintenance that requires accessing the emergency manual key(s) (override key) and does not involve the accessing of the table games drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (3) For computerized key security systems controlling access to table games drop and count keys, accounting/audit personnel, independent of the system administrator, will perform the following procedures: (i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user's access within the system ( i.e. (ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual table games drop and count key removals or key returns occurred. (iii) At least quarterly, review a sample of users that are assigned access to the table games drop and count keys to determine that their access to the assigned keys is adequate relative to their job position. (iv) All noted improper transactions or unusual occurrences are investigated with the results documented. (4) Quarterly, an inventory of all count room, table game drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys unaccounted for, with the investigations being documented. (v) Emergency drop procedures. (w) Equipment standards for gaming machine count. (2) A person independent of the cage, vault, gaming machine, and count team functions shall be required to be present whenever the calibration module is accessed. Such access shall be documented and maintained. (3) If a weigh scale interface is used, it shall be adequately restricted so as to prevent unauthorized access (passwords, keys, etc.). (4) If the weigh scale has a zero adjustment mechanism, it shall be physically limited to minor adjustments (e.g., weight of a bucket) or physically situated such that any unnecessary adjustments to it during the weigh process would be observed by other count team members. (5) The weigh scale and weigh scale interface (if applicable) shall be tested by a person or persons independent of the cage, vault, and gaming machine departments and count team at least quarterly. At least annually, this test shall be performed by internal audit in accordance with the internal audit standards. The result of these tests shall be documented and signed by the person or persons performing the test. (6) Prior to the gaming machine count, at least two employees shall verify the accuracy of the weigh scale with varying weights or with varying amounts of previously counted coin for each denomination to ensure the scale is properly calibrated (varying weights/coin from drop to drop is acceptable). (7) If a mechanical coin counter is used (instead of a weigh scale), the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with procedures that are equivalent to those described in paragraphs (u)(4), (u)(5), and (u)(6) of this section. (8) If a coin meter count machine is used, the count team member shall record the machine number denomination and number of coins in ink on a source document, unless the meter machine automatically records such information. (i) A count team member shall test the coin meter count machine before the actual count to ascertain if the metering device is functioning properly with a predetermined number of coins for each denomination. (ii) [Reserved] [67 FR 43400, June 27, 2002, as amended at 70 FR 23024, May 4, 2005; 70 FR 47107, Aug. 12, 2005] § 542.32 What are the minimum internal control standards for internal audit for Tier B gaming operations? (a) Internal audit personnel. (2) The internal audit personnel shall report directly to the Tribe, Tribal gaming regulatory authority, audit committee, or other entity designated by the Tribe in accordance with the definition of internal audit in § 542.2. (b) Audits. (i) Bingo, including but not limited to, bingo card control, payout procedures, and cash reconciliation process; (ii) Pull tabs, including but not limited to, statistical records, winner verification, perpetual inventory, and accountability of sales versus inventory; (iii) Card games, including but not limited to, card games operation, cash exchange procedures, shill transactions, and count procedures; (iv) Keno, including but not limited to, game write and payout procedures, sensitive key location and control, and a review of keno auditing procedures; (v) Pari-mutual wagering, including write and payout procedures, and pari-mutual auditing procedures; (vi) Table games, including but not limited to, fill and credit procedures, pit credit play procedures, rim credit procedures, soft drop/count procedures and the subsequent transfer of funds, unannounced testing of count room currency counters and/or currency interface, location and control over sensitive keys, the tracing of source documents to summarized documentation and accounting records, and reconciliation to restricted copies; (vii) Gaming machines, including but not limited to, jackpot payout and gaming machine fill procedures, gaming machine drop/count and bill acceptor drop/count and subsequent transfer of funds, unannounced testing of weigh scale and weigh scale interface, unannounced testing of count room currency counters and/or currency interface, gaming machine drop cabinet access, tracing of source documents to summarized documentation and accounting records, reconciliation to restricted copies, location and control over sensitive keys, compliance with EPROM duplication procedures, and compliance with MICS procedures for gaming machines that accept currency or coin(s) and issue cash-out tickets or gaming machines that do not accept currency or coin(s) and do not return currency or coin(s); (viii) Cage and credit procedures including all cage, credit, and collection procedures, and the reconciliation of trial balances to physical instruments on a sample basis. Cage accountability shall be reconciled to the general ledger; (ix) Information technology functions, including review for compliance with information technology standards; (x) Complimentary service or item, including but not limited to, procedures whereby complimentary service items are issued, authorized, and redeemed; and (xi) Any other internal audits as required by the Tribe, Tribal gaming regulatory authority, audit committee, or other entity designated by the Tribe. (2) In addition to the observation and examinations performed under paragraph (b)(1) of this section, follow-up observations and examinations shall be performed to verify that corrective action has been taken regarding all instances of noncompliance cited by internal audit, the independent accountant, and/or the Commission. The verification shall be performed within six (6) months following the date of notification. (3) Whenever possible, internal audit observations shall be performed on an unannounced basis (i.e., without the employees being forewarned that their activities will be observed). Additionally, if the independent accountant also performs the internal audit function, the accountant shall perform separate observations of the table games/gaming machine drops and counts to satisfy the internal audit observation requirements and independent accountant tests of controls as required by the American Institute of Certified Public Accountants guide. (c) Documentation. (2) The internal audit department shall operate with audit programs, which, at a minimum, address the MICS. Additionally, the department shall properly document the work performed, the conclusions reached, and the resolution of all exceptions. Institute of Internal Auditors standards are recommended but not required. (d) Reports. (2) Such audit reports shall include the following information: (i) Audit objectives; (ii) Audit procedures and scope; (iii) Findings and conclusions; (iv) Recommendations, if applicable; and (v) Management's response. (e) Material exceptions. (f) Role of management. (2) Management shall be required to respond to internal audit findings stating corrective measures to be taken to avoid recurrence of the audit exception. (3) Such management responses shall be included in the internal audit report that will be delivered to management, the Tribe, Tribal gaming regulatory authority, audit committee, or other entity designated by the Tribe. (g) Internal Audit Guidelines. [67 FR 43400, June 27, 2002, as amended at 70 FR 47107, Aug. 12, 2005] § 542.33 What are the minimum internal control standards for surveillance for Tier B gaming operations? (a) The surveillance system shall be maintained and operated from a staffed surveillance room and shall provide surveillance over gaming areas. (b) The entrance to the surveillance room shall be located so that it is not readily accessible by either gaming operation employees who work primarily on the casino floor, or the general public. (c) Access to the surveillance room shall be limited to surveillance personnel, designated employees, and other persons authorized in accordance with the surveillance department policy. Such policy shall be approved by the Tribal gaming regulatory authority. The surveillance department shall maintain a sign-in log of other authorized persons entering the surveillance room. (d) Surveillance room equipment shall have total override capability over all other satellite surveillance equipment located outside the surveillance room. (e) The surveillance system shall include date and time generators that possess the capability to display the date and time of recorded events on video and/or digital recordings. The displayed date and time shall not significantly obstruct the recorded view. (f) The surveillance department shall strive to ensure staff is trained in the use of the equipment, knowledge of the games, and house rules. (g) Each camera required by the standards in this section shall be installed in a manner that will prevent it from being readily obstructed, tampered with, or disabled by customers or employees. (h) Each camera required by the standards in this section shall possess the capability of having its picture displayed on a monitor and recorded. The surveillance system shall include sufficient numbers of monitors and recorders to simultaneously display and record multiple gaming and count room activities, and record the views of all dedicated cameras and motion activated dedicated cameras. (i) Reasonable effort shall be made to repair each malfunction of surveillance system equipment required by the standards in this section within seventy-two (72) hours after the malfunction is discovered. The Tribal gaming regulatory authority shall be notified of any camera(s) that has malfunctioned for more than twenty-four (24) hours. (1) In the event of a dedicated camera malfunction, the gaming operation and/or surveillance department shall immediately provide alternative camera coverage or other security measures, such as additional supervisory or security personnel, to protect the subject activity. (2) [Reserved] (j) Bingo. (2) The surveillance system shall monitor and record the game board and the activities of the employees responsible for drawing, calling, and entering the balls drawn or numbers selected. (k) Card games. (l) Progressive card games. (i) The table surface, sufficient that the card values and card suits can be clearly identified; (ii) An overall view of the entire table with sufficient clarity to identify customers and dealer; and (iii) A view of the posted jackpot amount. (2) [Reserved] (m) Keno. (2) The surveillance system shall monitor and record general activities in each keno game area with sufficient clarity to identify the employees performing the different functions. (n) Pari-mutuel. (o) Table games Operations with four (4) or more table games. (i) With sufficient clarity to identify customers and dealers; and (ii) With sufficient coverage and clarity to simultaneously view the table bank and determine the configuration of wagers, card values, and game outcome. (iii) One (1) dedicated camera per table and one (1) pan-tilt-zoom camera per four (4) tables may be an acceptable alternative procedure to satisfy the requirements of this paragraph. (2) Operations with three (3) or fewer table games. (i) Comply with the requirements of paragraph (o)(1) of this section; or (ii) Have one (1) overhead camera at each table. (3) Craps. (4) Roulette. (5) Big wheel. (p) Progressive table games. (i) The table surface, sufficient that the card values and card suits can be clearly identified; (ii) An overall view of the entire table with sufficient clarity to identify customers and dealer; and (iii) A view of the progressive meter jackpot amount. If several tables are linked to the same progressive jackpot meter, only one meter need be recorded. (2) [Reserved] (q) Gaming machines. (i) All customers and employees at the gaming machine, and (ii) The face of the gaming machine, with sufficient clarity to identify the payout line(s) of the gaming machine. (2) In-house progressive machine. (i) All customers and employees at the gaming machine; and (ii) The face of the gaming machine, with sufficient clarity to identify the payout line(s) of the gaming machine. (3) Wide-area progressive machine. (i) All customers and employees at the gaming machine; and (ii) The face of the gaming machine, with sufficient clarity to identify the payout line(s) of the gaming machine. (4) Notwithstanding paragraph (q)(1) of this section, if the gaming machine is a multi-game machine, the Tribal gaming regulatory authority, or the gaming operation subject to the approval of the Tribal gaming regulatory authority, may develop and implement alternative procedures to verify payouts. (r) Cage and vault. (2) Each cashier station shall be equipped with one (1) dedicated overhead camera covering the transaction area. (3) The surveillance system shall provide an overview of cash transactions. This overview should include the customer, the employee, and the surrounding area. (s) Fills and credits. (2) Controls provided by a computerized fill and credit system may be deemed an adequate alternative to viewing the fill and credit slips. (t) Currency and coin. (2) The surveillance system shall provide for: (i) Coverage of scales shall be sufficiently clear to view any attempted manipulation of the recorded data. (ii) Monitoring and recording of the table game drop box storage rack or area by either a dedicated camera or a motion-detector activated camera. (iii) Monitoring and recording of all areas where coin may be stored or counted, including the hard count room, all doors to the hard count room, all scales and wrapping machines, and all areas where uncounted coin may be stored during the drop and count process. (iv) Monitoring and recording of soft count room, including all doors to the room, all table game drop boxes, safes, and counting surfaces, and all count team personnel. The counting surface area must be continuously monitored and recorded by a dedicated camera during the soft count. (v) Monitoring and recording of all areas where currency is sorted, stacked, counted, verified, or stored during the soft count process. (u) Change booths. The surveillance system shall monitor and record a general overview of the activities occurring in each gaming machine change booth. (v) Video recording and/or digital record retention. (2) Recordings involving suspected or confirmed gaming crimes, unlawful activity, or detentions by security personnel, must be retained for a minimum of thirty (30) days. (3) Duly authenticated copies of video recordings and/or digital records shall be provided to the Commission upon request. (w) Video library log. (x) Malfunction and repair log. (2) The log shall state the time, date, and nature of each malfunction, the efforts expended to repair the malfunction, and the date of each effort, the reasons for any delays in repairing the malfunction, the date the malfunction is repaired, and where applicable, any alternative security measures that were taken. (y) Surveillance log. (2) Such log shall be maintained by surveillance room personnel and shall be stored securely within the surveillance department. (3) At a minimum, the following information shall be recorded in a surveillance log: (i) Date; (ii) Time commenced and terminated; (iii) Activity observed or performed; and (iv) The name or license credential number of each person who initiates, performs, or supervises the surveillance. (4) Surveillance personnel shall also record a summary of the results of the surveillance of any suspicious activity. This summary may be maintained in a separate log. [67 FR 43400, June 27, 2002, as amended at 70 FR 47107, Aug. 12, 2005] § 542.40 What is a Tier C gaming operation? A Tier C gaming operation is one with annual gross gaming revenues of more than $15 million. § 542.41 What are the minimum internal control standards for drop and count for Tier C gaming operations? (a) Computer applications. (b) Table game drop standards. (2) At the end of each shift: (i) All locked table game drop boxes shall be removed from the tables by a person independent of the pit shift being dropped; (ii) A separate drop box shall be placed on each table opened at any time during each shift or a gaming operation may utilize a single drop box with separate openings and compartments for each shift; and (iii) Upon removal from the tables, table game drop boxes shall be transported directly to the count room or other equivalently secure area with comparable controls and locked in a secure manner until the count takes place. (3) If drop boxes are not placed on all tables, then the pit department shall document which tables were open during the shift. (4) The transporting of table game drop boxes shall be performed by a minimum of two persons, at least one of whom is independent of the pit shift being dropped. (5) All table game drop boxes shall be posted with a number corresponding to a permanent number on the gaming table and marked to indicate game, table number, and shift. (6) Surveillance shall be notified when the drop is to begin so that surveillance may monitor the activities. (c) Soft count room personnel. (2) Count room personnel shall not be allowed to exit or enter the count room during the count except for emergencies or scheduled breaks. At no time during the count, shall there be fewer than three employees in the count room until the drop proceeds have been accepted into cage/vault accountability. Surveillance shall be notified whenever count room personnel exit or enter the count room during the count. (3) Count team members shall be rotated on a routine basis such that the count team is not consistently the same three persons more than four (4) days per week. This standard shall not apply to gaming operations that utilize a count team of more than three persons. (4) The count team shall be independent of transactions being reviewed and counted. The count team shall be independent of the cage/vault departments, however, an accounting representative may be used if there is an independent audit of all soft count documentation. (d) Table game soft count standards. (2) Access to the count room during the count shall be restricted to members of the drop and count teams, with the exception of authorized observers, supervisors for resolution of problems, and authorized maintenance personnel. (3) If counts from various revenue centers occur simultaneously in the count room, procedures shall be in effect that prevent the commingling of funds from different revenue centers. (4) The table game drop boxes shall be individually emptied and counted in such a manner to prevent the commingling of funds between boxes until the count of the box has been recorded. (i) The count of each box shall be recorded in ink or other permanent form of recordation. (ii) A second count shall be performed by an employee on the count team who did not perform the initial count. (iii) Corrections to information originally recorded by the count team on soft count documentation shall be made by drawing a single line through the error, writing the correct figure above the original figure, and then obtaining the initials of at least two count team members who verified the change. (5) If currency counters are utilized and the count room table is used only to empty boxes and sort/stack contents, a count team member shall be able to observe the loading and unloading of all currency at the currency counter, including rejected currency. (6) Table game drop boxes, when empty, shall be shown to another member of the count team, or to another person who is observing the count, or to surveillance, provided the count is monitored in its entirety by a person independent of the count. (7) Orders for fill/credit (if applicable) shall be matched to the fill/credit slips. Fills and credits shall be traced to or recorded on the count sheet. (8) Pit marker issue and payment slips (if applicable) removed from the table game drop boxes shall either be: (i) Traced to or recorded on the count sheet by the count team; or (ii) Totaled by shift and traced to the totals documented by the computerized system. Accounting personnel shall verify the issue/payment slip for each table is accurate. (9) Foreign currency exchange forms (if applicable) removed from the table game drop boxes shall be reviewed for the proper daily exchange rate and the conversion amount shall be recomputed by the count team. Alternatively, this may be performed by accounting/auditing employees. (10) The opening/closing table and marker inventory forms (if applicable) shall either be: (i) Examined and traced to or recorded on the count sheet; or (ii) If a computerized system is used, accounting personnel can trace the opening/closing table and marker inventory forms to the count sheet. Discrepancies shall be investigated with the findings documented and maintained for inspection. (11) The count sheet shall be reconciled to the total drop by a count team member who shall not function as the sole recorder. (12) All members of the count team shall sign the count document or a summary report to attest to their participation in the count. (13) All drop proceeds and cash equivalents that were counted shall be turned over to the cage or vault cashier (who shall be independent of the count team) or to an authorized person/employee independent of the revenue generation and the count process for verification. Such person shall certify by signature as to the accuracy of the drop proceeds delivered and received. (14) The count sheet, with all supporting documents, shall be delivered to the accounting department by a count team member or a person independent of the cashiers department. Alternatively, it may be adequately secured ( e.g., (15) Access to stored, full table game drop boxes shall be restricted to authorized members of the drop and count teams. (e) Gaming machine bill acceptor drop standards. (2) All bill acceptor canisters shall be removed only at the time previously designated by the gaming operation and reported to the Tribal gaming regulatory authority, except for emergency drops. (3) Surveillance shall be notified when the drop is to begin so that surveillance may monitor the activities. (4) The bill acceptor canisters shall be removed by a person independent of the gaming machine department then transported directly to the count room or other equivalently secure area with comparable controls and locked in a secure manner until the count takes place. (i) Security shall be provided over the bill acceptor canisters removed from the gaming machines and awaiting transport to the count room. (ii) The transporting of bill acceptor canisters shall be performed by a minimum of two persons, at least one of who is independent of the gaming machine department. (5) All bill acceptor canisters shall be posted with a number corresponding to a permanent number on the gaming machine. (f) Gaming machine bill acceptor count standards. (2) Access to the count room during the count shall be restricted to members of the drop and count teams, with the exception of authorized observers, supervisors for resolution of problems, and authorized maintenance personnel. (3) If counts from various revenue centers occur simultaneously in the count room, procedures shall be in effect that prevent the commingling of funds from different revenue centers. (4) The bill acceptor canisters shall be individually emptied and counted in such a manner to prevent the commingling of funds between canisters until the count of the canister has been recorded. (i) The count of each canister shall be recorded in ink or other permanent form of recordation. (ii) Corrections to information originally recorded by the count team on soft count documentation shall be made by drawing a single line through the error, writing the correct figure above the original figure, and then obtaining the initials of at least two count team members who verified the change. (5) If currency counters are utilized and the count room table is used only to empty canisters and sort/stack contents, a count team member shall be able to observe the loading and unloading of all currency at the currency counter, including rejected currency. (6) Canisters, when empty, shall be shown to another member of the count team, or to another person who is observing the count, or to surveillance, provided that the count is monitored in its entirety by a person independent of the count. (7) The count sheet shall be reconciled to the total drop by a count team member who shall not function as the sole recorder. (8) All members of the count team shall sign the count document or a summary report to attest to their participation in the count. (9) All drop proceeds and cash equivalents that were counted shall be turned over to the cage or vault cashier (who shall be independent of the count team) or to an authorized person/employee independent of the revenue generation and the count process for verification. Such person shall certify by signature as to the accuracy of the drop proceeds delivered and received. (10) The count sheet, with all supporting documents, shall be delivered to the accounting department by a count team member or a person independent of the cashiers department. Alternatively, it may be adequately secured (e.g., locked container to which only accounting personnel can gain access) until retrieved by the accounting department. (11) Access to stored bill acceptor canisters, full or empty, shall be restricted to: (i) Authorized members of the drop and count teams; and (ii) Authorized personnel in an emergency for the resolution of a problem. (g) Gaming machine coin drop standards. (2) All drop buckets shall be removed only at the time previously designated by the gaming operation and reported to the Tribal gaming regulatory authority, except for emergency drops. (3) Surveillance shall be notified when the drop is to begin in order that surveillance may monitor the activities. (4) Security shall be provided over the buckets removed from the gaming machine drop cabinets and awaiting transport to the count room. (5) As each machine is opened, the contents shall be tagged with its respective machine number if the bucket is not permanently marked with the machine number. The contents shall be transported directly to the area designated for the counting of such drop proceeds. If more than one trip is required to remove the contents of the machines, the filled carts of coins shall be securely locked in the room designed for counting or in another equivalently secure area with comparable controls. There shall be a locked covering on any carts in which the drop route includes passage out of doors. (i) Alternatively, a smart bucket system that electronically identifies and tracks the gaming machine number, and facilitates the proper recognition of gaming revenue, shall satisfy the requirements of this paragraph. (ii) [Reserved] (6) Each drop bucket in use shall be: (i) Housed in a locked compartment separate from any other compartment of the gaming machine and keyed differently than other gaming machine compartments; and (ii) Identifiable to the gaming machine from which it is removed. If the gaming machine is identified with a removable tag that is placed in the bucket, the tag shall be placed on top of the bucket when it is collected. (7) Each gaming machine shall have drop buckets into which coins or tokens that are retained by the gaming machine are collected. Drop bucket contents shall not be used to make change or pay hand-paid payouts. (8) The collection procedures may include procedures for dropping gaming machines that have trays instead of drop buckets. (h) Hard count room personnel. (2) At no time during the weigh/count shall there be fewer than three employees in the count room until the drop proceeds have been accepted into cage/vault accountability. Surveillance shall be notified whenever count room personnel exit or enter the count room during the count. (i) If the gaming machine count is conducted with a continuous mechanical count meter that is not reset during the count and is verified in writing by at least three employees at the start and end of each denomination count, then one employee may perform the wrap. (ii) [Reserved] (3) Count team members shall be rotated on a routine basis such that the count team is not consistently the same three persons more than four (4) days per week. This standard shall not apply to gaming operations that utilize a count team of more than three persons. (4) The count team shall be independent of transactions being reviewed and counted. The count team shall be independent of the cage/vault departments, unless they are non-supervisory gaming machine employees and perform the laborer function only (A non-supervisory gaming machine employee is defined as a person below the level of gaming machine shift supervisor). A cage cashier may be used if this person is not allowed to perform the recording function. An accounting representative may be used if there is an independent audit of all count documentation. (i) Gaming machine coin count and wrap standards. (2) The gaming machine coin count and wrap shall be performed in a count room or other equivalently secure area with comparable controls. (i) Alternatively, an on-the-floor drop system utilizing a mobile scale shall satisfy the requirements of this paragraph, subject to the following conditions: (A) The gaming operation shall utilize and maintain an effective on-line gaming machine monitoring system, as described in § 542.13(m)(3); (B) Components of the on-the-floor drop system shall include, but not be limited to, a weigh scale, a laptop computer through which weigh/count applications are operated, a security camera available for the mobile scale system, and a VCR to be housed within the video compartment of the mobile scale. The system may include a mule cart used for mobile weigh scale system locomotion. (C) The gaming operation must obtain the security camera available with the system, and this camera must be added in such a way as to eliminate tampering. (D) Prior to the drop, the drop/count team shall ensure the scale batteries are charged; (E) Prior to the drop, a videotape shall be inserted into the VCR used to record the drop in conjunction with the security camera system and the VCR shall be activated; (F) The weigh scale test shall be performed prior to removing the unit from the hard count room for the start of the weigh/drop/count; (G) Surveillance shall be notified when the weigh/drop/count begins and shall be capable of monitoring the entire process; (H) An observer independent of the weigh/drop/count teams (independent observer) shall remain by the weigh scale at all times and shall observe the entire weigh/drop/count process; (I) Physical custody of the key(s) needed to access the laptop and video compartment shall require the involvement of two persons, one of whom is independent of the drop and count team; (J) The mule key (if applicable), the laptop and video compartment keys, and the remote control for the VCR shall be maintained by a department independent of the gaming machine department. The appropriate personnel shall sign out these keys; (K) A person independent of the weigh/drop/count teams shall be required to accompany these keys while they are checked out, and observe each time the laptop compartment is opened; (L) The laptop access panel shall not be opened outside the hard count room, except in instances when the laptop must be rebooted as a result of a crash, lock up, or other situation requiring immediate corrective action; (M) User access to the system shall be limited to those employees required to have full or limited access to complete the weigh/drop/count; and (N) When the weigh/drop/count is completed, the independent observer shall access the laptop compartment, end the recording session, eject the videotape, and deliver the videotape to surveillance. (ii) [Reserved] (3) Access to the count room during the count shall be restricted to members of the drop and count teams, with the exception of authorized observers, supervisors for resolution of problems, and authorized maintenance personnel. (4) If counts from various revenue centers occur simultaneously in the count room, procedures shall be in effect that prevent the commingling of funds from different revenue centers. (5) The following functions shall be performed in the counting of the gaming machine drop: (i) Recorder function, which involves the recording of the gaming machine count; and (ii) Count team supervisor function, which involves the control of the gaming machine weigh and wrap process. The supervisor shall not perform the initial recording of the weigh/count unless a weigh scale with a printer is used. (6) The gaming machine drop shall be counted, wrapped, and reconciled in such a manner to prevent the commingling of gaming machine drop coin with coin (for each denomination) from the next gaming machine drop until the count of the gaming machine drop has been recorded. If the coins are not wrapped immediately after being weighed or counted, they shall be secured and not commingled with other coin. (i) The amount of the gaming machine drop from each machine shall be recorded in ink or other permanent form of recordation on a gaming machine count document by the recorder or mechanically printed by the weigh scale. (ii) Corrections to information originally recorded by the count team on gaming machine count documentation shall be made by drawing a single line through the error, writing the correct figure above the original figure, and then obtaining the initials of at least two count team members who verified the change. (A) If a weigh scale interface is used, corrections to gaming machine count data shall be made using either of the following: ( 1 ( 2 (B) [Reserved] (7) If applicable, the weight shall be converted to dollar amounts before the reconciliation of the weigh to the wrap. (8) If a coin meter is used, a count team member shall convert the coin count for each denomination into dollars and shall enter the results on a summary sheet. (9) The recorder and at least one other count team member shall sign the weigh tape and the gaming machine count document attesting to the accuracy of the weigh/count. (10) All members of the count team shall sign the count document or a summary report to attest to their participation in the count. (11) All drop proceeds and cash equivalents that were counted shall be turned over to the cage or vault cashier (who shall be independent of the count team) or to an authorized person/employee independent of the revenue generation and the count process for verification. Such person shall certify by signature as to the accuracy of the drop proceeds delivered and received. (12) All gaming machine count and wrap documentation, including any applicable computer storage media, shall be delivered to the accounting department by a count team member or a person independent of the cashier's department. Alternatively, it may be adequately secured ( e.g., (13) If the coins are transported off the property, a second (alternative) count procedure shall be performed before the coins leave the property. Any variances shall be documented. (14) Variances. Large (by denomination, either $1,000 or 2% of the drop, whichever is less) or unusual ( e.g., (j) Security of the count room inventory during the gaming machine coin count and wrap. (i) At the commencement of the gaming machine count the following requirements shall be met: (A) The coin room inventory shall be counted by at least two employees, one of whom is a member of the count team and the other is independent of the weigh/count and wrap procedures; (B) The count in paragraph (j)(1)(i)(A) of this section shall be recorded on an appropriate inventory form; (ii) Upon completion of the wrap of the gaming machine drop: (A) At least two members of the count team (wrap team), independently from each other, shall count the ending coin room inventory; (B) The counts in paragraph (j)(1)(ii)(A) of this section shall be recorded on a summary report(s) that evidences the calculation of the final wrap by subtracting the beginning inventory from the sum of the ending inventory and transfers in and out of the coin room; (C) The same count team members shall compare the calculated wrap to the weigh/count, recording the comparison and noting any variances on the summary report; (D) A member of the cage/vault department shall count the ending coin room inventory by denomination and shall reconcile it to the beginning inventory, wrap, transfers, and weigh/count; and (E) At the conclusion of the reconciliation, at least two count/wrap team members and the verifying employee shall sign the summary report(s) attesting to its accuracy. (2) If the count room is segregated from the coin room, or if the coin room is used as a count room and the coin room inventory is secured to preclude access by the count team, all of the following requirements shall be completed, at the conclusion of the count: (i) At least two members of the count/wrap team shall count the final wrapped gaming machine drop independently from each other; (ii) The counts shall be recorded on a summary report; (iii) The same count team members (or the accounting department) shall compare the final wrap to the weigh/count, recording the comparison and noting any variances on the summary report; (iv) A member of the cage/vault department shall count the wrapped gaming machine drop by denomination and reconcile it to the weigh/count; (v) At the conclusion of the reconciliation, at least two count team members and the cage/vault employee shall sign the summary report attesting to its accuracy; and (vi) The wrapped coins (exclusive of proper transfers) shall be transported to the cage, vault or coin vault after the reconciliation of the weigh/count to the wrap. (k) Transfers during the gaming machine coin count and wrap. (2) Each transfer shall be recorded on a separate multi-part form with a preprinted or concurrently-printed form number (used solely for gaming machine count transfers) that shall be subsequently reconciled by the accounting department to ensure the accuracy of the reconciled gaming machine drop. (3) Each transfer must be counted and signed for by at least two members of the count team and by a person independent of the count team who is responsible for authorizing the transfer. (l) Gaming machine drop key control standards. (2) The physical custody of the keys needed to access gaming machine coin drop cabinets, including duplicates, shall require the involvement of two persons, one of whom is independent of the gaming machine department. (3) Two employees (separate from key custodian) shall be required to accompany such keys while checked out and observe each time gaming machine drop cabinets are accessed, unless surveillance is notified each time keys are checked out and surveillance observes the person throughout the period the keys are checked out. (m) Table game drop box key control standards. (2) The involvement of at least two persons independent of the cage department shall be required to access stored empty table game drop boxes. (3) The release keys shall be separately keyed from the contents keys. (4) At least three (two for table game drop box keys in operations with three tables or fewer) count team members are required to be present at the time count room and other count keys are issued for the count. (5) All duplicate keys shall be maintained in a manner that provides the same degree of control as is required for the original keys. Records shall be maintained for each key duplicated that indicate the number of keys made and destroyed. (6) Logs shall be maintained by the custodian of sensitive keys to document authorization of personnel accessing keys. (n) Table game drop box release keys. (2) Only the person(s) authorized to remove table game drop boxes from the tables shall be allowed access to the table game drop box release keys; however, the count team members may have access to the release keys during the soft count in order to reset the table game drop boxes. (3) Persons authorized to remove the table game drop boxes shall be precluded from having simultaneous access to the table game drop box contents keys and release keys. (4) For situations requiring access to a table game drop box at a time other than the scheduled drop, the date, time, and signature of employee signing out/in the release key must be documented. (o) Bill acceptor canister release keys. (2) Only the person(s) authorized to remove bill acceptor canisters from the gaming machines shall be allowed access to the release keys. (3) Persons authorized to remove the bill acceptor canisters shall be precluded from having simultaneous access to the bill acceptor canister contents keys and release keys. (4) For situations requiring access to a bill acceptor canister at a time other than the scheduled drop, the date, time, and signature of employee signing out/in the release key must be documented. (p) Table game drop box storage rack keys. (2) Persons authorized to obtain table game drop box storage rack keys shall be precluded from having simultaneous access to table game drop box contents keys with the exception of the count team. (q) Bill acceptor canister storage rack keys. (2) Persons authorized to obtain bill acceptor canister storage rack keys shall be precluded from having simultaneous access to bill acceptor canister contents keys with the exception of the count team. (r) Table game drop box contents keys. (2) Access to the table game drop box contents key at other than scheduled count times shall require the involvement of at least three persons from separate departments, including management. The reason for access shall be documented with the signatures of all participants and observers. (3) Only count team members shall be allowed access to table game drop box content keys during the count process. (s) Bill acceptor canister contents keys. (2) Access to the bill acceptor canister contents key at other than scheduled count times shall require the involvement of at least three persons from separate departments, one of whom must be a supervisor. The reason for access shall be documented with the signatures of all participants and observers. (3) Only the count team members shall be allowed access to bill acceptor canister contents keys during the count process. (t) Gaming machine computerized key security systems. (2) For computerized key security systems, the following additional gaming machine key control procedures apply: (i) Management personnel independent of the gaming machine department assign and control user access to keys in the computerized key security system ( i.e. (ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the gaming machine drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (iii) The custody of the keys issued pursuant to paragraph (t)(2)(ii) of this section requires the presence of two persons from separate departments from the time of their issuance until the time of their return. (iv) Routine physical maintenance that requires accessing the emergency manual key(s) (override key) and does not involve the accessing of the gaming machine drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (3) For computerized key security systems controlling access to gaming machine drop and count keys, accounting/audit personnel, independent of the system administrator, will perform the following procedures: (i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user's access within the system ( i.e. (ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual gaming machine drop and count key removals or key returns occurred. (iii) At least quarterly, review a sample of users that are assigned access to the gaming machine drop and count keys to determine that their access to the assigned keys is adequate relative to their job position. (iv) All noted improper transactions or unusual occurrences are investigated with the results documented. (4) Quarterly, an inventory of all count room, drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys unaccounted for, with the investigation being documented. (u) Table games computerized key security systems. (2) For computerized key security systems, the following additional table game key control procedures apply: (i) Management personnel independent of the table game department assign and control user access to keys in the computerized key security system ( i.e. (ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the table game drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (iii) The custody of the keys issued pursuant to paragraph (u)(2)(ii) of this section requires the presence of two persons from separate departments from the time of their issuance until the time of their return. (iv) Routine physical maintenance that requires accessing the emergency manual key(s) override key) and does not involve the accessing of the table games drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (3) For computerized key security systems controlling access to table games drop and count keys, accounting/audit personnel, independent of the system administrator, will perform the following procedures: (i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user's access within the system ( i.e. (ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual table games drop and count key removals or key returns occurred. (iii) At least quarterly, review a sample of users that are assigned access to the table games drop and count keys to determine that their access to the assigned keys is adequate relative to their job position. (iv) All noted improper transactions or unusual occurrences are investigated with the results documented. (4) Quarterly, an inventory of all count room, table game drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys unaccounted for, with the investigations being documented. (v) Emergency drop procedures. (w) Equipment standards for gaming machine count. (2) A person independent of the cage, vault, gaming machine, and count team functions shall be required to be present whenever the calibration module is accessed. Such access shall be documented and maintained. (3) If a weigh scale interface is used, it shall be adequately restricted so as to prevent unauthorized access (passwords, keys, etc.). (4) If the weigh scale has a zero adjustment mechanism, it shall be physically limited to minor adjustments ( e.g., (5) The weigh scale and weigh scale interface (if applicable) shall be tested by a person or persons independent of the cage, vault, and gaming machine departments and count team at least quarterly. At least annually, this test shall be performed by internal audit in accordance with the internal audit standards. The result of these tests shall be documented and signed by the person or persons performing the test. (6) Prior to the gaming machine count, at least two employees shall verify the accuracy of the weigh scale with varying weights or with varying amounts of previously counted coin for each denomination to ensure the scale is properly calibrated (varying weights/coin from drop to drop is acceptable). (7) If a mechanical coin counter is used (instead of a weigh scale), the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply with procedures that are equivalent to those described in paragraphs (u)(4), (u)(5), and (u)(6) of this section. (8) If a coin meter count machine is used, the count team member shall record the machine number denomination and number of coins in ink on a source document, unless the meter machine automatically records such information. (i) A count team member shall test the coin meter count machine before the actual count to ascertain if the metering device is functioning properly with a predetermined number of coins for each denomination. (ii) [Reserved] [67 FR 43400, June 27, 2002, as amended at 70 FR 23026, May 4, 2005; 70 FR 47107, Aug. 12, 2005] § 542.42 What are the minimum internal control standards for internal audit for Tier C gaming operations? (a) Internal audit personnel. (2) The internal audit personnel shall report directly to the Tribe, Tribal gaming regulatory authority, audit committee, or other entity designated by the Tribe in accordance with the definition of internal audit in § 542.2. (b) Audits. (i) Bingo, including but not limited to, bingo card control, payout procedures, and cash reconciliation process; (ii) Pull tabs, including but not limited to, statistical records, winner verification, perpetual inventory, and accountability of sales versus inventory; (iii) Card games, including but not limited to, card games operation, cash exchange procedures, shill transactions, and count procedures; (iv) Keno, including but not limited to, game write and payout procedures, sensitive key location and control, and a review of keno auditing procedures; (v) Pari-mutual wagering, including write and payout procedures, and pari-mutual auditing procedures; (vi) Table games, including but not limited to, fill and credit procedures, pit credit play procedures, rim credit procedures, soft drop/count procedures and the subsequent transfer of funds, unannounced testing of count room currency counters and/or currency interface, location and control over sensitive keys, the tracing of source documents to summarized documentation and accounting records, and reconciliation to restricted copies; (vii) Gaming machines, including but not limited to, jackpot payout and gaming machine fill procedures, gaming machine drop/count and bill acceptor drop/count and subsequent transfer of funds, unannounced testing of weigh scale and weigh scale interface, unannounced testing of count room currency counters and/or currency interface, gaming machine drop cabinet access, tracing of source documents to summarized documentation and accounting records, reconciliation to restricted copies, location and control over sensitive keys, compliance with EPROM duplication procedures, and compliance with MICS procedures for gaming machines that accept currency or coin(s) and issue cash-out tickets or gaming machines that do not accept currency or coin(s) and do not return currency or coin(s); (viii) Cage and credit procedures including all cage, credit, and collection procedures, and the reconciliation of trial balances to physical instruments on a sample basis. Cage accountability shall be reconciled to the general ledger; (ix) Information technology functions, including review for compliance with information technology standards; (x) Complimentary service or item, including but not limited to, procedures whereby complimentary service items are issued, authorized, and redeemed; and (xi) Any other internal audits as required by the Tribe, Tribal gaming regulatory authority, audit committee, or other entity designated by the Tribe. (2) In addition to the observation and examinations performed under paragraph (b)(1) of this section, follow-up observations and examinations shall be performed to verify that corrective action has been taken regarding all instances of noncompliance cited by internal audit, the independent accountant, and/or the Commission. The verification shall be performed within six (6) months following the date of notification. (3) Whenever possible, internal audit observations shall be performed on an unannounced basis (i.e., without the employees being forewarned that their activities will be observed). Additionally, if the independent accountant also performs the internal audit function, the accountant shall perform separate observations of the table games/gaming machine drops and counts to satisfy the internal audit observation requirements and independent accountant tests of controls as required by the American Institute of Certified Public Accountants guide. (c) Documentation. e.g., (2) The internal audit department shall operate with audit programs, which, at a minimum, address the MICS. Additionally, the department shall properly document the work performed, the conclusions reached, and the resolution of all exceptions. Institute of Internal Auditors standards are recommended but not required. (d) Reports. (2) Such audit reports shall include the following information: (i) Audit objectives; (ii) Audit procedures and scope; (iii) Findings and conclusions; (iv) Recommendations, if applicable; and (v) Management's response. (e) Material exceptions. (f) Role of management. (2) Management shall be required to respond to internal audit findings stating corrective measures to be taken to avoid recurrence of the audit exception. (3) Such management responses shall be included in the internal audit report that will be delivered to management, the Tribe, Tribal gaming regulatory authority, audit committee, or other entity designated by the Tribe. (g) Internal Audit Guidelines. [67 FR 43400, June 27, 2002, as amended at 70 FR 47107, Aug. 12, 2005] § 542.43 What are the minimum internal control standards for surveillance for a Tier C gaming operation? (a) The surveillance system shall be maintained and operated from a staffed surveillance room and shall provide surveillance over gaming areas. (b) The entrance to the surveillance room shall be located so that it is not readily accessible by either gaming operation employees who work primarily on the casino floor, or the general public. (c) Access to the surveillance room shall be limited to surveillance personnel, designated employees, and other persons authorized in accordance with the surveillance department policy. Such policy shall be approved by the Tribal gaming regulatory authority. The surveillance department shall maintain a sign-in log of other authorized persons entering the surveillance room. (d) Surveillance room equipment shall have total override capability over all other satellite surveillance equipment located outside the surveillance room. (e) In the event of power loss to the surveillance system, an auxiliary or backup power source shall be available and capable of providing immediate restoration of power to all elements of the surveillance system that enable surveillance personnel to observe the table games remaining open for play and all areas covered by dedicated cameras. Auxiliary or backup power sources such as a UPS System, backup generator, or an alternate utility supplier, satisfy this requirement. (f) The surveillance system shall include date and time generators that possess the capability to display the date and time of recorded events on video and/or digital recordings. The displayed date and time shall not significantly obstruct the recorded view. (g) The surveillance department shall strive to ensure staff is trained in the use of the equipment, knowledge of the games, and house rules. (h) Each camera required by the standards in this section shall be installed in a manner that will prevent it from being readily obstructed, tampered with, or disabled by customers or employees. (i) Each camera required by the standards in this section shall possess the capability of having its picture displayed on a monitor and recorded. The surveillance system shall include sufficient numbers of monitors and recorders to simultaneously display and record multiple gaming and count room activities, and record the views of all dedicated cameras and motion activated dedicated cameras. (j) Reasonable effort shall be made to repair each malfunction of surveillance system equipment required by the standards in this section within seventy-two (72) hours after the malfunction is discovered. The Tribal gaming regulatory authority shall be notified of any camera(s) that has malfunctioned for more than twenty-four (24) hours. (1) In the event of a dedicated camera malfunction, the gaming operation and/or the surveillance department shall immediately provide alternative camera coverage or other security measures, such as additional supervisory or security personnel, to protect the subject activity. (2) [Reserved] (k) Bingo. (2) The surveillance system shall monitor and record the game board and the activities of the employees responsible for drawing, calling, and entering the balls drawn or numbers selected. (l) Card games. (m) Progressive card games. (i) The table surface, sufficient that the card values and card suits can be clearly identified; (ii) An overall view of the entire table with sufficient clarity to identify customers and dealer; and (iii) A view of the posted jackpot amount. (2) [Reserved] (n) Keno. (2) The surveillance system shall monitor and record general activities in each keno game area with sufficient clarity to identify the employees performing the different functions. (o) Pari-mutuel. (p) Table games Operations with four (4) or more table games. (i) With sufficient clarity to identify customers and dealers; and (ii) With sufficient coverage and clarity to simultaneously view the table bank and determine the configuration of wagers, card values, and game outcome. (iii) One (1) dedicated camera per table and one (1) pan-tilt-zoom camera per four (4) tables may be an acceptable alternative procedure to satisfy the requirements of this paragraph. (2) Operations with three (3) or fewer table games. (i) Comply with the requirements of paragraph (p)(1) of this section; or (ii) Have one (1) overhead camera at each table. (3) Craps. (4) Roulette. (5) Big wheel. (q) Progressive table games. (i) The table surface, sufficient that the card values and card suits can be clearly identified; (ii) An overall view of the entire table with sufficient clarity to identify customers and dealer; and (iii) A view of the progressive meter jackpot amount. If several tables are linked to the same progressive jackpot meter, only one meter need be recorded. (2) [Reserved] (r) Gaming machines. (i) All customers and employees at the gaming machine, and (ii) The face of the gaming machine, with sufficient clarity to identify the payout line(s) of the gaming machine. (2) In-house progressive machine. (i) All customers and employees at the gaming machine; and (ii) The face of the gaming machine, with sufficient clarity to identify the payout line(s) of the gaming machine. (3) Wide-area progressive machine. (i) All customers and employees at the gaming machine; and (ii) The face of the gaming machine, with sufficient clarity to identify the payout line(s) of the gaming machine. (4) Notwithstanding paragraph (r)(1) of this section, if the gaming machine is a multi-game machine, the Tribal gaming regulatory authority, or the gaming operation subject to the approval of the Tribal gaming regulatory authority, may develop and implement alternative procedures to verify payouts. (s) Cage and vault. (2) Each cashier station shall be equipped with one (1) dedicated overhead camera covering the transaction area. (3) The surveillance system shall provide an overview of cash transactions. This overview should include the customer, the employee, and the surrounding area. (t) Fills and credits. (2) Controls provided by a computerized fill and credit system maybe deemed an adequate alternative to viewing the fill and credit slips. (u) Currency and coin. (2) Audio capability of the soft count room shall also be maintained. (3) The surveillance system shall provide for: (i) Coverage of scales shall be sufficiently clear to view any attempted manipulation of the recorded data. (ii) Monitoring and recording of the table game drop box storage rack or area by either a dedicated camera or a motion-detector activated camera. (iii) Monitoring and recording of all areas where coin may be stored or counted, including the hard count room, all doors to the hard count room, all scales and wrapping machines, and all areas where uncounted coin may be stored during the drop and count process. (iv) Monitoring and recording of soft count room, including all doors to the room, all table game drop boxes, safes, and counting surfaces, and all count team personnel. The counting surface area must be continuously monitored and recorded by a dedicated camera during the soft count. (v) Monitoring and recording of all areas where currency is sorted, stacked, counted, verified, or stored during the soft count process. (v) Change booths. (w) Video recording and/or digital record retention. (2) Recordings involving suspected or confirmed gaming crimes, unlawful activity, or detentions by security personnel, must be retained for a minimum of thirty (30) days. (3) Duly authenticated copies of video recordings and/or digital records shall be provided to the Commission upon request. (x) Video library log. (y) Malfunction and repair log. (2) The log shall state the time, date, and nature of each malfunction, the efforts expended to repair the malfunction, and the date of each effort, the reasons for any delays in repairing the malfunction, the date the malfunction is repaired, and where applicable, any alternative security measures that were taken. (z) Surveillance log. (2) Such log shall be maintained by surveillance room personnel and shall be stored securely within the surveillance department. (3) At a minimum, the following information shall be recorded in a surveillance log: (i) Date; (ii) Time commenced and terminated; (iii) Activity observed or performed; and (iv) The name or license credential number of each person who initiates, performs, or supervises the surveillance. (4) Surveillance personnel shall also record a summary of the results of the surveillance of any suspicious activity. This summary may be maintained in a separate log. [67 FR 43400, June 27, 2002, as amended at 70 FR 47108, Aug. 12, 2005]

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