[Federal Register Volume 77, Number 106 (Friday, June 1, 2012)]
[Proposed Rules]
[Pages 32444-32465]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12991]


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DEPARTMENT OF THE INTERIOR

National Indian Gaming Commission

25 CFR Part 543

RIN 3141-AA27


Minimum Internal Control Standards

AGENCY: National Indian Gaming Commission.

ACTION: Proposed rule.

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SUMMARY: The National Indian Gaming Commission (NIGC) proposes to amend 
its minimum internal control standards for Class II gaming under the 
Indian Gaming Regulatory Act to reorder the sections, delete commonly 
understood definitions, add and amend existing definitions; amend the 
term ``variance'' as it applies to establishing an alternate minimum 
standard; amend the bingo, pull-tab, information and technology 
sections to reflect technological advances; delete references to 
``unrestricted player accounts''; and consolidate the revenue audit and 
audit and accounting procedures into their respective sections.

DATES: Submit comments on or before July 31, 2012.

ADDRESSES: You may submit comments by any one of the following methods, 
however, please note that comments sent by electronic mail are strongly 
encouraged.
    [ssquf] Email comments to: reg.review@nigc.gov.
    [ssquf] Mail comments to: National Indian Gaming Commission, 1441 L 
Street NW., Suite 9100, Washington, DC 20005.
    [ssquf] Hand deliver comments to: 1441 L Street NW., Suite 9100, 
Washington, DC 20005.
    [ssquf] Fax comments to: National Indian Gaming Commission at 202-
632-0045.

FOR FURTHER INFORMATION CONTACT: National Indian Gaming Commission, 
1441 L Street NW., Suite 9100, Washington, DC 20005. Telephone: 202-
632-7009; email: reg.review@nigc.gov.

SUPPLEMENTARY INFORMATION:

I. Comments Invited

    Interested parties are invited to participate in this proposed 
rulemaking by submitting such written data, views, or arguments as they 
may desire. Comments that provide the factual basis supporting the 
views and suggestions presented are particularly helpful in developing 
reasoned regulatory decisions on the proposal.

II. Background

    The Indian Gaming Regulatory Act (IGRA or Act), Public Law 100-497, 
25 U.S.C. 2701 et seq., was signed into law on October 17, 1988. The 
Act establishes the NIGC and sets out a comprehensive framework for the 
regulation of gaming on Indian lands. On January 5, 1999, the NIGC 
published a final rule in the Federal Register called Minimum Internal 
Control Standards. 64 FR 590. The rule added a new part to the 
Commission's regulations establishing Minimum Internal Control 
Standards (MICS) to reduce the risk of loss because of customer or 
employee access to cash and cash equivalents within a casino. The rule 
contains standards and procedures that govern cash handling, 
documentation, game integrity, auditing, surveillance, and variances, 
as well as other areas.
    The Commission recognized from their inception that the MICS would 
require periodic review and updates to keep pace with technology, and 
has amended them three times since: June 27, 2002 (67 FR 43390), August 
12, 2005 (70 FR 47108), and October 10, 2008 (73 FR 60498). In addition 
to making updates to account for advances in technology, the 2008 MICS 
also included part 543 and began the process of relocating all Class II 
controls into that part. These MICS do not classify games as Class II 
or Class III; rather, they provide minimum controls for gaming that is 
assumed to be Class II.
    On November 18, 2010, the NIGC issued a Notice of Inquiry and 
Notice of Consultation (NOI) advising the public that the NIGC was 
conducting a comprehensive review of its regulations and requesting 
public comment on which of its regulations were most in need of 
revision, in what order the Commission should review its regulations, 
and the process NIGC should utilize to make revisions. 75 FR 70680 
(Nov. 18, 2010). On April 4, 2011, after consulting with tribes and 
reviewing all comments, NIGC published a Notice of Regulatory Review 
Schedule (NRR) setting out a consultation schedule and process for 
review. 76 FR 18457. The Commission's

[[Page 32445]]

regulatory review process established a tribal consultation schedule 
with a description of the regulation groups to be covered at each 
consultation. This part 543 was included in this regulatory review.

III. Development of the Proposed Rule

    The Commission consulted with tribes as part of its review of part 
543. In response to comments received, the Commission appointed a 
Tribal Advisory Committee (TAC) to review and recommend changes to part 
543. The TAC submitted its recommendations for part 543 on February 14, 
2012.
    The Commission developed a preliminary discussion draft based upon 
recommendations from current and previous TACs, NIGC staff and subject 
matter experts. The Commission published the preliminary draft on its 
Web site on March 16, 2012, and requested that all comments from the 
public be provided to the Agency by April, 27, 2012. The Commission 
consulted with tribes on the discussion draft in Mayetta, Kansas, on 
March 22, 2012, and San Diego, California, on April 5, 2012.
    Part 543 addresses minimum internal control standards (MICS) for 
Class II gaming operations. The regulations require tribes to establish 
controls and implement procedures at least as stringent as those 
described in this part to maintain the integrity of the gaming 
operation and minimize the risk of theft.
    The MICS were last amended in 2009, in the first phase of a multi-
phase process of revising the MICS and separating Class II and III 
controls. This proposed rule furthers that multi-phase process and 
includes amendments to update the MICS to reflect widespread 
technological advances in the industry.

A. General Comments

    Commenters generally stated that the discussion draft is an 
improvement over the current MICS. Some commenters noted that these 
regulations provide tribes with more flexibility than the existing MICS 
or the 2010 proposal, but many stated that part 543 should be drafted 
to provide even more flexibility to tribal regulators and gaming 
operations. Commenters suggested removing the procedural requirements 
and measuring compliance by the extent to which tribes have 
successfully achieved a regulatory standard, rather than the extent to 
which tribes have followed step-by-step procedures in the MICS. The 
Commission declines to take this approach, and believes that the 
standards set forth in this part are both appropriate and sufficiently 
detailed to be implemented by tribes.
    Additionally, some commenters requested that NIGC reference IRS 
regulations when establishing validation and verification thresholds 
throughout this part. Although the thresholds are the same in both the 
MICS and in IRS reporting requirements, the relationship is merely one 
of convenience for the operations. The intent of the thresholds in the 
MICS would be unaffected by any prospective change in IRS regulations. 
Moreover, referencing another agency's regulations could create 
unnecessary jurisdictional confusion. For these reasons, the Commission 
declines to reference IRS regulations in the proposed rule.
    Finally, some commenters noted inconsistent language and use of the 
supervision provisions throughout the proposed rule. The Commission has 
revised each section accordingly, with the exception of the information 
and technology section, which requires additional detailed controls and 
segregation of duties because information and technology flows across 
all departments.

B. Interpretive Provisions

    Commenters suggested adding three interpretive provisions to Sec.  
543.3. First, commenters requested that the Commission include a 
provision stating that nothing in this part is intended to limit 
technology. The Commission agrees that nothing in this part is intended 
to limit technology, but believes that such a provision is properly 
located in the technical standards rather than control standards. The 
Commission invites further comment on specific ways in which the MICS 
may inadvertently limit technology.
    Next, commenters recommended that the Commission include a section 
specifying that only applicable control standards apply. The Commission 
agrees and has changed Sec.  543.3(b) of this proposed rule to require 
TGRAs to ensure that ``TICS are established and implemented that 
provide a level of control that equals or exceeds the applicable 
standards set forth in this part.'' (emphasis added). If a standard is 
not applicable, a TGRA need not establish or implement TICS for it and 
there will be no standard to apply.
    Finally, some commenters advocated for the inclusion of a 
severability clause to ensure that, should a court conclude that any 
part of this regulation is invalid, such invalidity will not affect the 
rest of the part. Although a severability clause appears in the current 
technical standards, the Commission declines to incorporate a 
severability clause in the proposed rule. Though the presence of 
severability clause may give some indication of an agency's intent 
regarding the severability of its regulations, ``severability clauses * 
* * are not conclusive.'' Canterbury Liquors v. Sullivan, 999 F. Supp. 
144 (D.MA. 1994). When interpreting a regulation, ``the ultimate 
determination of severability will rarely turn on the presence or 
absence of such a clause.'' Community for Creative Non-violence v. 
Turner, 893 F. 2d 1387 (D.C. Cir. 1990), citing United States v. 
Jackson, 390 U.S. 570, 585 n. 27 (1968).
    The Commission declines to include a severability clause in this 
regulation because it believes that the regulations are not so 
intertwined that striking one provision would necessarily always 
require invalidation of the entire part, and the lack of a severability 
clause will not compel a court's finding on the issue.

C. Small Operations

    Commenters requested clarification that the charitable gaming 
operations described in 543.4 are not limited to those with a 501(c)(3) 
designation. The Commission agrees that it does not intend to limit the 
definition of charitable organizations to those with a 501(c)(3) 
designation. For purposes of the MICS, an organization is charitable if 
the regulating tribe recognizes it as such.
    Nevertheless, the comment prompted close review of the charitable 
organization exception. The Commission invites comment on whether there 
is a practical difference or benefit for distinguishing charitable 
operations from other small operations, or whether the small operation 
provision sufficiently covers all operations, charitable or not, with 
less than $3 million in gross gaming revenue.

D. Alternate Minimum Standard

    Except when a TGRA institutes a stricter standard than those 
contained in this part, if a TGRA wishes to use a different standard, 
it may submit a request to the Chair for approval of an alternate 
minimum standard. The discussion draft differed in terminology, 
referring to an ``alternate control standard.'' Several commenters 
expressed confusion over what is meant by an alternate control 
standard. In response, the Commission revised the terminology to 
clarify that there is no need to seek approval from the Chair where a 
TGRA desires to implement

[[Page 32446]]

standards that exceed the level of control described in these MICS.

E. Bingo

    Many comments expressed concern that the discussion draft separated 
Class II gaming systems from manual bingo. The Commission agrees with 
these commenters that ``bingo is bingo'' and there is no need to 
separate them. For these reasons, the controls for bingo appear as a 
consolidated section (Sec.  543.8) in the proposed rule.
    Additionally, commenters suggested that the definition of ``agent'' 
should be expanded to allow computer applications to perform the 
functions of an agent. The only provision cited in support of this 
suggestion was Sec.  543.7(d)(3-4), which inadvertently required two 
agents to verify and validate every gaming system payout. The proposed 
rule corrects the language in Sec.  543.7(d) to provide that the system 
may serve as one validator and verifier for manual payouts and the sole 
verifier and validator for automatic payouts. Further, Sec.  543.3(e) 
states that ``for any computer applications utilized, alternate 
documentation or procedures that provide at least the level of control 
established by the standards of this part, as approved by the TGRA, 
will be acceptable.'' Therefore, the Commission declines to revise the 
definition of agent at this time, but invites comment on whether 
additional uses of the term agent may warrant amendment of the 
definition.

F. Pull Tabs

    The Commission received very few comments on the pull tabs section, 
but one commenter expressed concern that the defacing requirement and 
kiosk definition would prevent barcoded pull tabs from being redeemed 
at kiosks. The Commission revised the definition of kiosk in the 
proposed rule to specifically include machines with the capability to 
redeem and reconcile pull tabs, if those machines also perform the 
routine functions of a kiosk, such as accepting and generating cash-out 
tickets and gaming credits. Further, the Commission is not limiting 
technology to the barcode-reading machines referenced in the comment, 
but has included a provision that allows for kiosks to redeem and 
reconcile uniquely identified pull tabs (up to $600) without the need 
for defacing, so long as the tabs are secured and destroyed after 
removal from the kiosk in accordance with procedures approved by the 
TGRA.

G. Card Games

    The card games section contains standards for both promotional 
tournament play and regular card room operations. One commenter 
suggested that promotional and non-promotional funds should be treated 
in the same way. The Commission disagrees. In promotional play, the 
operation becomes the custodian of the entry fees; in regular play, the 
players maintain control of their chips, which they may exchange for 
value at any point. The custodial relationship is not present in 
regular card play and, therefore, the controls need not be as 
stringent. The need for stricter standards in promotional play is also 
the reason for the difference in rule posting requirements (Sec. Sec.  
543.10(f) and 543.10(g)(5)) cited by one commenter.
    Another commenter expressed concern that the standards may allow 
the card room to be unsupervised. At this time, the Commission has 
chosen not to revise the standard because it is intended to be a 
minimum. Nevertheless, the Commission acknowledges the concern and 
requests further comment on whether further amendments to this section 
are necessary.

H. Player Tracking, Gaming Promotions, and Complimentary Items

    Commenters inquired why player tracking and gaming promotions were 
combined into one section. The discussion draft and this proposed rule 
combined the sections because player tracking and gaming promotions are 
both high risk areas in the gaming industry that offer players awards 
based upon gaming activity and a predetermined rule structure. The 
Commission also notes that the two activities are often interrelated, 
particularly when a player's game play tracking information is used to 
determine eligibility for gaming promotions.
    Many commenters recommended deleting the standards for player 
tracking and gaming promotions, stating that they are non-gaming 
activities. The Commission disagrees. Gaming promotions, as defined in 
the proposed rule, require game play as a condition of eligibility. For 
example, the promotions standards are not applicable to the type of 
promotion in which a patron drops a free card into a tumbler drawing. 
The promotions at issue are directly related to gaming activity and 
are, therefore, within the scope of the Commission's authority to 
establish Class II MICS.
    Further, although player tracking systems may be useful for 
gathering other customer data, their primary purpose is to track game 
play and issue rewards based upon that play.
    Because the player tracking and gaming promotions standards found 
in this proposed rule require game play to become eligible for the 
rewards, the Commission has concluded that they relate to gaming 
activities and are within the scope of its authority.

I. Complimentary Items

    Commenters have also recommended deletion of the complimentary 
service or items (comps) section because they believe that it is not 
directly related to gaming and therefore outside of the Commission's 
authority. However, like player tracking rewards, comps are awarded to 
induce gaming at the operation and are awarded based upon gaming 
activity. Comps are also a high risk area for gaming operations if not 
adequately controlled, but, unlike player tracking rewards, comps are 
often granted based on agent discretion. Accordingly, the Commission 
declines to delete the comps section from the proposed rule.

J. Patron Deposit Accounts

    The proposed rule makes two corrections as a result of comments 
received. First, it resolves a discrepancy between the smart card 
definition and the patron deposit account standards by eliminating the 
definitional requirement that smart cards be the only source of account 
data. Second, it no longer lists ``adjustments'' as an example of a 
change that patrons may make to their account. Additionally, to clarify 
one commenter's concerns, personal identification numbers continue to 
be acceptable forms of identification under Sec.  543.14(b)(1), despite 
the deletion of the specific reference to them.
    Some commenters suggested adding standards for unrestricted player 
deposit accounts, but the Bank Secrecy Act prohibits access to accounts 
without some form of identification. Therefore, the proposed rule does 
not reference unrestricted accounts.

K. Lines of Credit

    The Commission received few comments relating to lines of credit. 
One commenter noted that the TAC recommended deleting this section. 
Some operations issue lines of credit for gaming, and others, during 
consultation, have mentioned that they have plans to issue lines of 
credit in the future. The Commission invites additional comments on why 
this section is unnecessary.

L. Drop and Count

    Many commented generally that the section is too procedural and it 
should be one, streamlined standard instead of

[[Page 32447]]

separated by game. The Commission agrees that this section is more 
procedural than others. Drop and count is, however, a process, which 
differs by game.
    In response to comments received, the proposed rule contains 
several edits from the preliminary draft. First, all references to 
``soft count'' have been stricken and the section references only a 
generic ``count.'' Next, physical access to the count room in Sec.  
543.17(b) has been expanded to ``count team agents, designated staff, 
and other authorized persons.'' This change is intended to allow access 
for regulators, independent auditors, and emergency staff that are not 
``agents'' of the operation. Similarly, emergency access to stored full 
financial instrument storage components was expanded to authorized 
``persons'' for addressing an emergency situation because fire 
department or other emergency responders may not necessarily be 
personnel of the gaming operation.
    Some comments suggested using one term for both financial 
instrument storage components and drop boxes. Although they serve the 
same purpose, financial instrument storage components are an industry 
term specific to player interfaces, while drop boxes are specific to 
card tables. Applying either of the terms universally could create 
confusion. Additionally, one commenter was concerned that the terms 
``financial instrument storage component'' and ``bill-in meter'' may 
limit the use of particular technologies. The Commission is interested 
in hearing what specific technologies this may limit and potential 
alternative terms.
    Finally, one comment suggested that, for operations that do not 
designate a supervisory count team member, a supervisor from the 
department receiving the drop proceeds should be able to verify them. 
The Commission disagrees, and notes that doing so would contravene the 
intent of Sec.  543.17(f)(14), which requires that the receiving agents 
have no knowledge of the drop proceeds total before it is verified, and 
that the drop proceeds are not transferred with their documentation.

M. Cage, Vault, Kiosk, Cash and Cash Equivalents

    This section describes the standards and documentation requirements 
for securing and issuing money from the cage. Some comments advised 
that the provisions addressing patron deposit accounts and gaming 
promotions should be moved to their respective sections. The proposed 
rule does not incorporate this suggested change because the patron 
deposit and gaming promotion sections address the controls for those 
programs generally, but the provisions in the cage section are specific 
to the handling of those types of transactions by the cage. One 
commenter suggested that the kiosk section is unnecessary. The 
Commission disagrees. Kiosks function as automated cashiers. Therefore, 
controls are necessary to ensure kiosks' integrity.

N. Information and Technology

    In response to comments, the Commission reviewed the use of the 
terms ``personnel'' and ``agents'' in this section, and extended the 
independence provision to all agents, rather than the personnel of the 
gaming operation. Commenters also requested clarification on the 
reference to ``systems'' in the physical and logical security 
provisions. The Commission agrees that ``systems'' might be confused 
with Class II gaming systems, and has clarified the provisions by 
adding the following definition of systems to the information 
technology section: ``As used in this section only, a system is any 
computerized system that is essential to the gaming environment. This 
includes, but is not limited to, the server and peripherals for Class 
II gaming systems, accounting, surveillance, essential phone systems, 
and door access and warning systems.''
    A commenter also suggested deleting the annual requirement for 
testing recovery procedures. The Commission disagrees, and notes that 
removing the phrase would not change the standard, because an 
independent auditor conducts yearly reviews to determine whether each 
requirement has been met.

O. Surveillance

    Several commenters questioned the need for surveillance of a bingo 
server, particularly where the server is located in a secure physical 
location with controlled access. The Commission agrees that requiring 
surveillance of a bingo server may be impractical, and that the 
controls in the information and technology section are adequate 
minimums to protect against tampering with a device and its software. 
Specifically, the Commission points to the physical security standards 
in Sec.  543.20(e), the logical security standards in Sec.  543.20(f), 
the user controls in Sec.  543.20(g), and the remote access controls in 
Sec.  543.20(i). Therefore, the Commission has deleted the bingo server 
surveillance requirement from the proposed rule.
    One commenter expressed concern that the one-year retention period 
for surveillance footage of suspected crimes, suspicious activity, and 
security detentions is arbitrary. The Commission notes that this 
timeframe was adopted from Tribal Gaming Working Group guidance and 
invites further comment on why the Commission should adopt a different 
retention period.
    One commenter also objected to the definition of sufficient 
clarity, noting that it may unintentionally prohibit the use of 
technology that does not use frames. The Commission appreciates this 
comment and is interested in learning more about the specific types of 
surveillance technology that may be excluded by requiring 20 frames per 
second, and whether inclusion of the phrase ``or equivalent recording 
speed'' would sufficiently address any potential limitations on 
technology.
    Finally, a commenter suggested that the MICS should specifically 
require documentation of training and surveillance coverage of the 
bingo board. The Commission appreciates these concerns. TGRAs may 
include such standards as appropriate. With regard to surveillance of 
bingo boards, the Commission believes that risks are adequately reduced 
by the information technology section and part 547 technical standards 
(for gaming system bingo and electronic card minders) and the presence 
of a physical card (for manual bingo).

P. Audit and Accounting and Revenue Audit

    Several commenters requested that the rule replace ``Commission'' 
with ``TGRA'' as the entity responsible for citing instances of 
noncompliance in Sec.  543.23(c)(8). The Commission declines to make 
this change, but agrees that it is entirely appropriate to add the 
TGRA, and has done so in the proposed rule.
    Some commenters requested that we clarify the requirement to record 
journal entries by independent accountants, stating that independent 
accountants do not keep journal entries. The Commission disagrees. 
Independent CPAs regularly prepare what are referred to as ``audit 
entries.'' They also sometimes prepare ``closing entries.'' Audit 
entries and closing entries are specific types of journal entries that 
are encompassed by the requirement of Sec.  543.23(b)(2)(iii). Further, 
when ``independent accountant'' refers to an outsourced accountant or 
accounting firm, the person or firm will prepare journal entries for 
posting to the records in the same manner as accountants employed by 
the operation.
    Finally, one commenter requested clarification about whether a call 
to the TGRA to schedule a test of the currency counter would constitute 
an improper ``announcement'' of the test. A scheduling call to a 
regulatory body,

[[Page 32448]]

particularly in cases where the test may be performed by that same 
regulatory body, does not constitute an improper announcement under the 
currency counter testing provision.

Regulatory Matters

Regulatory Flexibility Act

    The proposed rule will not have a significant impact on a 
substantial number of small entities as defined under the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq. Moreover, Indian Tribes are not 
considered to be small entities for the purposes of the Regulatory 
Flexibility Act.

Small Business Regulatory Enforcement Fairness Act

    The proposed rule is not a major rule under 5 U.S.C. 804(2), the 
Small Business Regulatory Enforcement Fairness Act. The rule does not 
have an effect on the economy of $100 million or more. The rule will 
not cause a major increase in costs or prices for consumers, individual 
industries, Federal, State, local government agencies or geographic 
regions, nor will the proposed rule have a significant adverse effect 
on competition, employment, investment, productivity, innovation, or 
the ability of the enterprises, to compete with foreign based 
enterprises.

Unfunded Mandate Reform Act

    The Commission, as an independent regulatory agency, is exempt from 
compliance with the Unfunded Mandates Reform Act, 2 U.S.C. 1502(1); 2 
U.S.C. 658(1).

Takings

    In accordance with Executive Order 12630, the Commission has 
determined that the proposed rule does not have significant takings 
implications. A takings implication assessment is not required.

Civil Justice Reform

    In accordance with Executive Order 12988, the Commission has 
determined that the proposed rule does not unduly burden the judicial 
system and meets the requirements of sections 3(a) and 3(b)(2) of the 
Order.

National Environmental Policy Act

    The Commission has determined that the proposed rule does not 
constitute a major federal action significantly affecting the quality 
of the human environment and that no detailed statement is required 
pursuant to the National Environmental Policy Act of 1969, 42 U.S.C. 
4321, et seq.

Paperwork Reduction Act

    The information collection requirements contained in this proposed 
rule were previously approved by the Office of Management and Budget 
(OMB) as required by 44 U.S.C. 3501 et seq. and assigned OMB Control 
Number 3141- 0012, which expired in August of 2011. The NIGC published 
a notice to reinstate that control number on April 25, 2012. 77 FR 
24731. There is no change to the paperwork created by this amendment.

Text of the Proposed Rules

    For the reasons discussed in the Preamble, the Commission proposes 
to amend the text of its regulations at 25 CFR Part 543 to read as 
follows:

PART 543--MINIMUM INTERNAL CONTROL STANDARDS FOR CLASS II GAMING

Sec.
543.1 What does this part cover?
543.2 What are the definitions of this part?
543.3 How do tribal governments comply with this part?
543.4 Does this part apply to small and charitable gaming 
operations?
543.5 How does a gaming operation apply to use an alternate control 
standard from those set forth in this part?
543.6 [Reserved]
543.7 [Reserved]
543.8 What are the minimum internal control standards for bingo?
543.9 What are the minimum internal control standards for pull tabs?
543.10 What are the minimum internal control standards for card 
games?
543.11 [Reserved]
543.12 What are the minimum internal control standards for gaming 
promotions and player tracking systems?
543.13 What are the minimum internal control standards for 
complimentary services or items?
543.14 What are the minimum internal control standards for patron 
deposit accounts and cashless systems?
543.15 What are the minimum internal control standards for lines of 
credit?
543.16 [Reserved]
543.17 What are the minimum internal control standards for drop and 
count?
543.18 What are the minimum internal control standards for the cage, 
vault, kiosk, cash and cash equivalents?
543.19 [Reserved]
543.20 What are the minimum internal control standards for 
information technology and information technology data?
543.21 What are the minimum internal control standards for 
surveillance?
543.22 [Reserved]
543.23 What are the minimum internal control standards for audit and 
accounting?
543.24 What are the minimum internal control standards for revenue 
audit?
543.25--543.49 [Reserved]

    Authority:  25 U.S.C. 2702(2), 2706(b)(1-4), 2706(b)(10).


Sec.  543.1  What does this part cover?

    This part establishes the minimum internal control standards for 
the conduct of Class II games on Indian lands as defined in 25 U.S.C. 
2701 et seq.


Sec.  543.2  What are the definitions for this part?

    The definitions in this section apply to all sections of this part 
unless otherwise noted.
    Accountability. All financial instruments, receivables, and patron 
deposits constituting the total amount for which the bankroll custodian 
is responsible at a given time.
    Agent. A person authorized by the gaming operation, as approved by 
the TGRA, to make decisions or perform assigned tasks or actions on 
behalf of the gaming operation.
    Automatic payout. Payment issued by a machine.
    Cage. A secure work area within the gaming operation for cashiers, 
which may include a storage area for the gaming operation bankroll.
    Chair. The Chair of the National Indian Gaming Commission.
    Cash equivalents. Documents, financial instruments other than cash, 
or anything else of representative value to which the gaming operation 
has assigned a monetary value. A cash equivalent includes, but is not 
limited to, tokens, chips, coupons, vouchers, payout slips and tickets, 
and other items to which a gaming operation has assigned an exchange 
value.
    Cashless system. A system that performs cashless transactions and 
maintains records of those cashless transactions.
    Chips. Cash substitutes, in various denominations, issued by a 
gaming operation.
    Class II game. Class II gaming has the same meaning as defined in 
25 U.S.C. 2703(7)(A).
    Class II gaming system. All components, whether or not technologic 
aids in electronic, computer, mechanical, or other technologic form, 
that function together to aid the play of one or more Class II games, 
including accounting functions mandated by these regulations or part 
547 of this chapter.
    Commission. The National Indian Gaming Commission, established by 
the Indian Gaming Regulatory Act, 25 U.S.C. 2701 et seq.
    Count. The act of counting and recording the drop and/or other 
funds. Also, the total funds counted for a particular game, player 
interface, shift, or other period.

[[Page 32449]]

    Count room. A secured room location where the count is performed in 
which the cash and cash equivalents are counted.
    Dedicated camera. A video camera that continuously records a 
specific activity.
    Drop proceeds. The total amount of financial instruments removed 
from drop boxes and financial instrument storage components.
    Drop box. A locked container in which cash or cash equivalents are 
placed at the time of a transaction.
    Exception report. A listing of occurrences, transactions or items 
that fall outside a predetermined range of acceptability.
    Financial instrument. Any tangible item of value tendered in Class 
II game play, including, but not limited to bills, coins, vouchers, and 
coupons.
    Gaming promotion. Any promotional activity or award that requires 
game play as a condition of eligibility.
    Generally Accepted Accounting Principles (GAAP). A widely accepted 
set of rules, conventions, standards, and procedures for reporting 
financial information, as established by the Financial Accounting 
Standards Board (FASB), including, but not limited to, the standards 
for casino accounting published by the American Institute of Certified 
Public Accountants (AICPA).
    Generally Accepted Auditing Standards (GAAS). A widely accepted set 
of standards that provide a measure of audit quality and the objectives 
to be achieved in an audit, as established by the Auditing Standards 
Board of the American Institute of Certified Public Accountants 
(AICPA).
    Governmental Accounting Standards Board (GASB). Generally accepted 
accounting principles used by state and local governments.
    Independent. The separation of functions to ensure that the agent 
or process monitoring, reviewing, or authorizing the controlled 
activity, function, transaction is separate from the agents or process 
performing the controlled activity, function, transaction.
    Kiosk. A device capable of accepting or generating wagering or 
cash-out tickets and/or wagering credits, and may be capable of 
initiating electronic transfers of money to or from a customer account. 
Kiosks may also be capable of redeeming and reconciling pull tabs.
    Lines of credit. The privilege granted by a gaming operation to a 
patron to (1) defer payment of debt or (2) to incur debt and defer its 
payment under specific terms and conditions.
    Manual payout. Hand payment to a player.
    Marker. A document, signed by the patron, promising to repay credit 
issued by the gaming operation.
    MICS. Minimum internal control standards in this part.
    Network communication equipment. A device or collection of devices 
that controls data communication in a system including, but not limited 
to, cables, switches, hubs, routers, wireless access points, landline 
telephones and cellular telephones.
    Patron. A person who is a customer or guest of the gaming operation 
and may interact with a Class II game. Also may be referred to as a 
``player.''
    Patron deposit account. An account maintained on behalf of a 
patron, for the deposit and withdrawal of funds for the primary purpose 
of interacting with a gaming activity.
    Player interface. Any component(s) of a Class II gaming system, 
including an electronic or technological aid (not limited to terminals, 
player stations, handhelds, fixed units, etc.), that directly enables 
player interaction in a Class II game.
    Prize payout. Payment to a player associated with a winning or 
qualifying event.
    Promotional progressive pots and/or pools. Funds contributed to a 
game by and for the benefit of players that are distributed to players 
based on a predetermined event.
    Shift. A time period, unless otherwise approved by the tribal 
gaming regulatory authority, not to exceed 24 hours.
    Shill. An agent financed by the gaming operation and acting as a 
player.
    Smart card. A card with embedded integrated circuits that possesses 
the means to electronically store or retrieve account data.
    Sufficient clarity. The capacity of a surveillance system to record 
images at a minimum of 20 frames per second and at a resolution 
sufficient to clearly identify the intended activity, person, object, 
or location.
    Surveillance operation room(s). The secured area(s) where 
surveillance takes place and/or where active surveillance equipment is 
located.
    Surveillance system. A system of video cameras, monitors, 
recorders, video printers, switches, selectors, and other ancillary 
equipment used for surveillance.
    System of Internal Controls (SICS). An overall operational 
framework for a gaming operation that incorporates principles of 
independence and segregation of function, and is comprised of written 
policies, procedures, and standard practices based on overarching 
regulatory standards specifically designed to create a system of checks 
and balances to safeguard the integrity of a gaming operation and 
protect its assets.
    Tier A. Gaming operations with annual gross gaming revenues of more 
than $3 million but not more than $8 million.
    Tier B. Gaming operations with annual gross gaming revenues of more 
than $8 million but not more than $15 million.
    Tier C. Gaming operations with annual gross gaming revenues of more 
than $15 million.
    TGRA. Tribal gaming regulatory authority which is the entity 
authorized by tribal law to regulate gaming conducted pursuant to the 
Indian Gaming Regulatory Act.
    TICS. Tribal Internal Control Standards.
    Vault. A secure area where cash and cash equivalents are stored.


Sec.  543.3  How do tribal governments comply with this part?

    (a) Minimum standards. These are minimum standards and a TGRA may 
establish and implement additional controls that do not conflict with 
those set out in this part.
    (b) TICS. TGRAs must ensure that TICS are established and 
implemented that provide a level of control that equals or exceeds the 
applicable standards set forth in this part.
    (1) Evaluation of Existing TICS. Each TGRA must, in accordance with 
the tribal gaming ordinance, determine whether and to what extent their 
TICS require revision to ensure compliance with this part.
    (2) Compliance Date. All changes necessary to ensure compliance 
with this part must be promulgated within twelve months of the 
effective date of this part and implemented at the commencement of the 
next fiscal year. At the discretion of the TGRA, gaming operations may 
have an additional six months to come into compliance with the TICS.
    (c) SICS. Each gaming operation must develop and implement a SICS 
that, at a minimum, comply with the TICS.
    (1) Existing gaming operations. All gaming operations that are 
operating on or before the effective date of this part, must comply 
with this part within the time requirements established in paragraph 
(b) of this section. In the interim, such operations must continue to 
comply with existing TICS.
    (2) New gaming operations. All gaming operations that commence 
operations after the effective date of this part must comply with this 
part before commencement of operations.

[[Page 32450]]

    (d) Variances. Where referenced throughout this part, the TGRA must 
set a reasonable threshold for when a variance must be reviewed to 
determine the cause, and the results of the review must be documented 
and maintained.
    (e) Computer applications. For any computer applications utilized, 
alternate documentation and/or procedures that provide at least the 
level of control established by the standards of this part, as approved 
in writing by the TGRA, will be acceptable.
    (f) Determination of tier. (1) The determination of tier level will 
be made based upon the annual gross gaming revenues indicated within 
the gaming operation's audited financial statements.
    (2) Gaming operations moving from one tier to another will have 
nine months from the date of the independent certified public 
accountant's audit report to achieve compliance with the requirements 
of the new tier. The TGRA may extend the deadline by an additional six 
months if written notice is provided to the Commission no later than 
two weeks before the expiration of the nine month period.
    (g) Submission to Commission. Tribal regulations promulgated 
pursuant to this part are not required to be submitted to the 
Commission pursuant to Sec.  522.3(b) of this chapter.
    (h) Enforcement of Commission MICS. (1) Each TGRA is required to 
establish and implement TICS pursuant to paragraph (b) of this section. 
Each gaming operation is then required, pursuant to paragraph (c) of 
this section, to develop and implement a SICS that complies with the 
TICS. Failure to do so may subject the tribal operator of the gaming 
operation, or the management contractor, to penalties under 25 U.S.C. 
Sec.  2713.
    (2) Enforcement action by the Commission will not be initiated 
under this part without first informing the tribe and TGRA of 
deficiencies in the SICS of its gaming operation and allowing a 
reasonable period of time to address such deficiencies. Such prior 
notice and opportunity for corrective action are not required where the 
threat to the integrity of the gaming operation is immediate and 
severe.


Sec.  543.4  Does this part apply to small and charitable gaming 
operations?

    (a) Small gaming operations. This part does not apply to small 
gaming operations provided that:
    (1) The TGRA permits the operation to be exempt from this part;
    (2) The annual gross gaming revenue of the operation does not 
exceed $3 million; and
    (3) The TGRA develops, and the operation complies with, alternate 
procedures that:
    (i) Protect the integrity of games offered;
    (ii) Safeguard the assets used in connection with the operation; 
and
    (iii) Create, prepare and maintain records in accordance with 
Generally Accepted Accounting Principles.
    (b) Charitable gaming operations. This part does not apply to 
charitable gaming operations provided that:
    (1) All proceeds are for the benefit of a charitable organization;
    (2) The TGRA permits the charitable organization to be exempt from 
this part;
    (3) The charitable gaming operation is operated wholly by the 
charitable organization's agents;
    (4) The annual gross gaming revenue of the charitable operation 
does not exceed $3 million; and
    (5) The TGRA develops, and the charitable gaming operation complies 
with, alternate procedures that:
    (i) Protect the integrity of the games offered;
    (ii) Safeguard the assets used in connection with the gaming 
operation; and
    (iii) Create, prepare and maintain records in accordance with 
Generally Accepted Accounting Principles.
    (c) Independent operators. Nothing in this section exempts gaming 
operations conducted by independent operators for the benefit of a 
charitable organization.


Sec.  543.5  How does a gaming operation apply to use an alternate 
minimum standard from those set forth in this part?

    (a) TGRA approval. (1) A TGRA may approve an alternate standard 
from those required by this part if it has determined that the 
alternate standard will achieve a level of security and integrity 
sufficient to accomplish the purpose of the standard it is to replace.
    (2) For each enumerated standard for which the tribal gaming 
regulatory authority approves an alternate standard, it must submit to 
the Chair within 30 days a detailed report, which must include the 
following:
    (i) An explanation of how the alternate standard achieves a level 
of security and integrity sufficient to accomplish the purpose of the 
standard it is to replace; and
    (ii) The alternate standard as granted and the record on which it 
is based.
    (3) In the event that the TGRA or the tribal government chooses to 
submit an alternate standard request directly to the Chair for joint 
government to government review, the TGRA or tribal government may do 
so without the approval requirement set forth in paragraph (a)(1) of 
this section.
    (b) Chair review. (1) The Chair may approve or object to an 
alternate standard granted by a TGRA.
    (2) Any objection by the Chair must be in writing and provide 
reasons that the alternate standard, as approved by the TGRA, does not 
provide a level of security or integrity sufficient to accomplish the 
purpose of the standard it is to replace.
    (3) If the Chair fails to approve or object in writing within 60 
days after the date of receipt of a complete submission, the alternate 
standard is considered approved by the Chair. The Chair may, upon 
notification to the TGRA, extend this deadline an additional 60 days.
    (4) No alternate standard may be implemented until it has been 
approved by the TGRA pursuant to paragraph (a)(1) of this section or 
the Chair has approved it pursuant to paragraph (b)(1) of this section.
    (c) Appeal of Chair decision. A Chair's decision may be appealed 
pursuant to 25 CFR Subchapter H.


Sec.  543.6  [Reserved]


Sec.  543.7  [Reserved]


Sec.  543.8  What are the minimum internal control standards for bingo?

    (a) Supervision. Supervision must be provided as needed for bingo 
operations by an agent(s) with authority equal to or greater than those 
being supervised.
    (b) Bingo Cards. (1) Physical bingo card inventory controls must 
address the placement of orders, receipt, storage, issuance, removal, 
and cancellation of bingo card inventory to ensure that:
    (i) The bingo card inventory can be accounted for at all times; and
    (ii) Bingo cards have not been marked, altered, or otherwise 
manipulated.
    (2) Receipt from supplier. (i) When bingo card inventory is 
initially received from the supplier, it must be inspected (without 
breaking the factory seals, if any), counted, inventoried, and secured 
by an authorized agent.
    (ii) Bingo card inventory records must include the date received, 
quantities received, and the name of the individual conducting the 
inspection.
    (3) Storage. (i) Bingo cards must be maintained in a secure 
location, accessible only to authorized agents, and with surveillance 
coverage adequate to identify persons accessing the storage area,
    (ii) For Tier A operations, bingo card inventory may be stored in a 
cabinet, closet, or other similar area; however, such area must be 
secured and separate from the working inventory.

[[Page 32451]]

    (4) Issuance and Returns of Inventory. (i) Controls must be 
established for the issuance and return of bingo card inventory. 
Records signed by the issuer and recipient must be created under the 
following events:
    (A) Issuance of inventory from storage to a staging area;
    (B) Issuance of inventory from a staging area to the cage or 
sellers;
    (C) Return of inventory from a staging area to storage; and
    (D) Return of inventory from cage or seller to staging area or 
storage.
    (ii) [Reserved]
    (5) Cancellation and removal. (i) Bingo cards removed from 
inventory that are deemed out of sequence, flawed, or misprinted and 
not returned to the supplier must be cancelled to ensure that they are 
not utilized in the play of a bingo game. Bingo cards that are removed 
from inventory and returned to the supplier or cancelled must be logged 
as removed from inventory.
    (ii) Bingo cards associated with an investigation must be retained 
intact outside of the established removal and cancellation policy.
    (6) Logs. (i) The inventory of bingo cards must be tracked and 
logged from receipt until use or permanent removal from inventory.
    (ii) The bingo card inventory record(s) must include:
    (A) Date;
    (B) Shift;
    (C) Time;
    (D) Location;
    (E) Inventory received, issued, removed, and returned;
    (F) Signature of agent performing transaction;
    (G) Signature of agent performing the reconciliation;
    (H) Any variance;
    (I) Beginning and ending inventory; and
    (J) Description of inventory transaction being performed.
    (c) Bingo card sales. (1) Agents who sell bingo cards must not be 
the sole verifier of bingo cards for prize payouts.
    (2) Manual bingo card sales: In order to adequately record, track, 
and reconcile sales of bingo cards, the following information must be 
documented:
    (i) Date;
    (ii) Shift or session;
    (iii) Number of bingo cards issued, sold, and returned;
    (iv) Dollar amount of bingo card sales;
    (v) Signature, initials, or identification number of the agent 
preparing the record;
    (vi) Signature, initials, or identification number of an 
independent agent who verified the bingo cards returned to inventory 
and dollar amount of bingo card sales.
    (3) Bingo card sale voids must be processed in accordance with the 
rules of the game and established controls that must include the 
following:
    (i) Patron refunds;
    (ii) Adjustments to bingo card sales to reflect voids;
    (iii) Adjustment to bingo card inventory;
    (iv) Documentation of the reason for the void; and
    (v) Authorization for all voids.
    (4) Server Based Bingo card sales. In order to adequately record, 
track and reconcile sales of bingo cards, the following information 
must be documented from the server:
    (i) Date;
    (ii) Shift or session;
    (iii) Number of bingo cards sold (this is not required if the 
system does not track cards sold, but system limitation must be noted);
    (iv) Dollar amount of bingo card sales; and
    (v) Amount in, amount out and other associated meter information;
    (d) Draw. (1) Controls must be established and procedures 
implemented to ensure that all eligible objects used in the conduct of 
the bingo game are available to be drawn and have not been damaged or 
altered.
    (i) Verification of physical objects must be performed by two 
agents before the start of the first bingo game/session. At least one 
of the verifying agents must be a supervisory agent or independent of 
the bingo games department.
    (ii) Where the selection is made through an electronic aid, 
certification in accordance with 25 CFR part 547 is acceptable for 
verifying the randomness of the draw.
    (2) Controls must be established and procedures implemented to:
    (i) Verify the identity of the objects as they are drawn;
    (ii) Accurately record the drawn objects; and
    (iii) Transmit the identity of the drawn objects to the 
participants.
    (3) Controls must be established and procedures implemented to 
provide a method of recall of the draw, which includes the order and 
identity of the objects drawn, for dispute resolution purposes.
    (4) Verification and display of server based draw. Controls must be 
established and procedures implemented to ensure that:
    (i) The identity of each object drawn is accurately recorded and 
transmitted to the participants. The procedures must identify the 
method used to ensure the identity of each object drawn.
    (ii) For all games offering a prize payout of $1,200 or more, as 
the objects are drawn, the identity of the objects are immediately 
recorded and maintained for a minimum of 24 hours.
    (iii) Certification in accordance with 25 CFR part 547 is 
acceptable for verifying the randomness of the draw.
    (e) Prize payout. (1) Authorization or signatures.
    (i) Controls must be established and procedures implemented to 
prevent unauthorized access or misappropriation of cash or cash 
equivalents by identifying the agent authorized (by position) to make a 
payout and at the predetermined payouts levels for that position; and
    (ii) Payout controls must ensure separate control of the cash 
accountability functions;
    (2) Verification of validity. Controls must be established and 
procedures implemented to verify that the following is valid for the 
game in play prior to payment of a winning prize:
    (i) Winning card(s);
    (ii) Objects drawn; and
    (iii) The previously designated arrangement of numbers or 
designations on such cards, as described in 25 U.S.C. 2703(7)(A).
    (iv) At least two agents must verify that the card, objects drawn, 
and previously designated arrangement were valid for the game in play.
    (v) Where an automated verification method is available, 
verification by such method is acceptable.
    (3) Validation. (A) For manual payouts, at least two agents must 
determine the validity of the claim prior to the payment of a prize. 
The system may serve as one of the validators.
    (B) For automatic payout, the system may serve as the sole 
validator of the claim.
    (4) Verification. (A) For manual payouts, at least two agents must 
verify that the winning pattern has been achieved on the winning card 
prior to the payment of a prize. The system may serve as one of the 
verifiers.
    (B) For automatic payouts, the system may serve as the sole 
verifier that the pattern has been achieved on the winning card.
    (5) Authorization and signatures. (i) At least two agents must 
authorize, sign, and witness all manual prize payouts.
    (ii) Manual prize payouts over a predetermined amount (not to 
exceed $5,000 for a Tier A facility, $10,000 at a Tier B facility and 
$20,000 for a Tier C facility, except for $50,000 for a Tier C facility 
with over $100,000,000 in gross gaming revenues) must require one of 
the two signatures and verifications to be a supervisory or

[[Page 32452]]

management employee independent of the operation of Class II Gaming 
System Bingo.
    (iii) This predetermined amount must be authorized by management, 
approved by the tribal gaming regulatory authority, documented, and 
maintained.
    (iv) A Class II gaming system may substitute for one authorization/
signature verifying, validating or authorizing a winning card, but may 
not substitute for a supervisory or management employee signature.
    (6) Payout records, including manual payout records, must be 
controlled to prevent unauthorized access, misappropriation, fraud or 
forgery. Payout records must include the following information:
    (i) Date and time;
    (ii) Amount of the payout (alpha & numeric for player interface 
payouts); and
    (iii) Bingo card identifier or player interface identifier.
    (iv) Manual payouts must also include the following:
    (A) Game name or number;
    (B) Description of pattern covered, such as cover-all or four 
corners;
    (C) Signature of all, but not less than two, agents involved in the 
transaction;
    (D) Overrides; (1) An authorized agent must compare the amount of 
the prize at the player interface to the accounting system amount. If 
the player interface amount is different than the accounting system 
amount, an override may be necessary and, if so, must be properly 
documented.
    (2) Override transactions must be verified by a supervisory or 
management agent independent of the transaction.
    (E) Any other information necessary to substantiate the payout.
    (7) Payouts must be witnessed and verified against the payout 
record by an agent other than the agent issuing the payout.
    (f) Cash and cash equivalent controls. (1) Procedures must be 
implemented to prevent unauthorized access to, or fraudulent 
transactions involving, cash or cash equivalents.
    (2) Cash or cash equivalents exchanged between two persons must be 
counted independently by at least two agents and reconciled to the 
recorded amounts at the end of each shift or session. Unexplained 
variances must be documented and maintained. Unverified transfers of 
cash or cash equivalents are prohibited.
    (3) Procedures must be implemented to control cash or cash 
equivalents based on the amount of the transaction. These procedures 
must include documentation by shift, session, or other relevant time 
period of the following:
    (i) Inventory, including any increases or decreases;
    (ii) Transfers;
    (iii) Exchanges, including acknowledging signatures or initials; 
and
    (iv) Resulting variances.
    (4) Any change to control of accountability, exchange, or transfer 
must require that the cash or cash equivalents be counted and recorded 
independently by at least two agents and reconciled to the recorded 
amount.
    (g) Technologic aids to the play of bingo. Controls must be 
established and procedures implemented to safeguard the integrity of 
technologic aids to the play of bingo during installations, operations, 
modifications, removal and retirements. Such procedures must include 
the following:
    (1) Shipping and receiving. (i) A communication procedure must be 
established between the supplier, the gaming operation, and the TGRA to 
properly control the shipping and receiving of all software and 
hardware components. Such procedures must include:
    (A) Notification of pending shipments must be provided to the TGRA 
by the gaming operation;
    (B) Certification in accordance with 25 CFR part 547 and approval 
by TGRA prior to shipment;
    (C) Notification from the supplier to the TGRA, or the gaming 
operation as approved by the TGRA, of the shipping date and expected 
date of delivery. The shipping notification must include:
    (1) Name and address of the supplier;
    (2) Description of shipment;
    (3) For player interfaces: a serial number;
    (4) For software: software version and description of software;
    (5) Method of shipment; and
    (6) Expected date of delivery.
    (ii) Procedures must be implemented for the exchange of Class II 
gaming system components for maintenance and replacement.
    (iii) Class II gaming system components must be shipped in a secure 
manner to deter unauthorized access.
    (iv) The TGRA, or its designee, must receive all Class II gaming 
system components and game play software packages, and verify the 
contents against the shipping notification.
    (2) Access credential control methods. (i) Controls must be 
established to restrict access to the Class II gaming system 
components, as set forth in Sec.  543.20, Information and Technology.
    (ii) [Reserved]
    (3) Recordkeeping and audit processes. (i) The gaming operation 
must maintain the following records, as applicable, related to 
installed game servers and player interfaces:
    (A) Date placed into service;
    (B) Date made available for play;
    (C) Supplier;
    (D) Software version;
    (E) Serial number;
    (F) Game title;
    (G) Asset and/or location number;
    (H) Seal number; and
    (I) Initial meter reading.
    (ii) Procedures must be implemented for auditing such records in 
accordance with Sec.  543.23, Audit and Accounting.
    (4) System software signature verification. (i) Procedures must be 
implemented for system software verifications. These procedures must 
include comparing signatures generated by the verification programs 
required by 25 CFR 547.8, to the signatures provided in the independent 
test laboratory letter for that software version.
    (ii) An agent independent of the bingo operation must perform 
system software signature verification(s) to verify that only approved 
software is installed.
    (iii) Procedures must be implemented for investigating and 
resolving any software verification variances.
    (iv) Internal audits must be conducted as set forth in Sec.  
543.23, Audit and Accounting. Such audits must be documented.
    (5) Testing. (i) Testing must be completed during the installation 
process to verify that the player interface has been properly 
installed. This must include testing of the following, as applicable:
    (A) Communication with the Class II gaming system;
    (B) Communication with the accounting system;
    (C) Communication with the player tracking system;
    (D) Currency and vouchers to bill acceptor;
    (E) Voucher printing;
    (F) Meter incrementation;
    (G) Pay table, for verification;
    (H) Player interface denomination, for verification;
    (I) All buttons, to ensure that all are operational and programmed 
appropriately;
    (J) System components, to ensure that they are safely installed at 
location; and
    (K) Locks, to ensure that they are secure and functioning.
    (6) Display of Rules and Necessary Disclaimers. The TGRA or the 
operation must verify that all game rules and disclaimers are displayed 
at all times or made readily available to the player upon request, as 
required by 25 CFR part 547.

[[Page 32453]]

    (7) All Class II gaming equipment must comply with 25 CFR part 547, 
Minimum Technical Standards for Gaming Equipment Used With the Play of 
Class II Games.
    (8) Dispute resolution (h) Operations.
    (1) Malfunctions. Procedures must be implemented to investigate, 
document and resolve malfunctions. Such procedures must address the 
following:
    (i) Determination of the event causing the malfunction;
    (ii) Review of relevant records, game recall, reports, logs, 
surveillance records;
    (iii) Repair or replacement of the Class II gaming component;
    (iv) Verification of the integrity of the Class II gaming component 
before restoring it to operation; and
    (2) Removal, Retirement and/or Destruction. Procedures must be 
implemented to retire or remove any or all associated components of a 
Class II gaming system from operation. Procedures must include the 
following:
    (i) For player interfaces and components that accept cash or cash 
equivalents:
    (A) Coordinate with the drop team to perform a final drop;
    (B) Collect final accounting information such as meter readings, 
drop, payouts, etc.;
    (C) Remove and/or secure any or all associated equipment such as 
locks, card reader, or ticket printer from the retired or removed 
component; and
    (D) Document removal, retirement, and/or destruction.
    (ii) For removal of software components:
    (A) Purge and/or return the software to the license holder; and
    (B) Document the removal.
    (iii) For other related equipment such as blowers, cards, interface 
cards:
    (A) Remove and/or secure equipment; and
    (B) Document the removal or securing of equipment.
    (iv) For all components: (A) Verify that unique identifiers, and 
descriptions of removed/retired components are recorded as part of the 
retirement documentation; and
    (B) Coordinate with the accounting department to properly retire 
the component in the system records.
    (v) Where the TGRA authorizes destruction of any Class II gaming 
system components, procedures must be developed to destroy such 
components. Such procedures must include the following:
    (A) Methods of destruction
    (B) Witness or surveillance of destruction
    (C) Documentation of all components destroyed; and
    (D) Signatures of agent(s) destroying components attesting to 
destruction.
    (i) Vouchers. (1) Controls must be established and procedures 
implemented to:
    (i) Verify the authenticity of each voucher or coupon redeemed.
    (ii) If the voucher is valid, verify that the patron is paid the 
appropriate amount.
    (iii) Document the payment of a claim on a voucher that is not 
physically available or a voucher that cannot be validated such as a 
mutilated, expired, lost, or stolen voucher.
    (iv) Retain payment documentation for reconciliation purposes.
    (v) For manual payment of a voucher of $500 or more, require a 
supervisory employee to verify the validity of the voucher prior to 
payment.
    (2) Vouchers paid during a period while the voucher system is 
temporarily out of operation must be marked ``paid'' by the cashier.
    (3) Vouchers redeemed while the voucher system was temporarily out 
of operation must be validated as expeditiously as possible upon 
restored operation of the voucher system.
    (4) Paid vouchers must be maintained in the cashier's 
accountability for reconciliation purposes.
    (5) Unredeemed vouchers can only be voided in the voucher system by 
supervisory employees. The accounting department will maintain the 
voided voucher, if available.
    (j) All relevant controls from Sec.  543.20, Information and 
Technology will apply.
    (k) Revenue Audit. Standards for revenue audit of bingo are 
contained in Sec.  543.24, Revenue Audit.
    (l) Variance. The TGRA must establish the threshold level at which 
a variance, including deviations from the mathematical expectations 
required by 25 CFR 547.4, will be reviewed to determine the cause. Any 
such review must be documented.


Sec.  543.9  What are the minimum internal control standards for pull 
tabs?

    (a) Supervision. Supervision must be provided as needed for pull 
tab operations and over pull tab storage areas by an agent(s) with 
authority equal to or greater than those being supervised.
    (b) Pull tab inventory. Controls must be established and procedures 
implemented to prevent unauthorized access, misappropriation, forgery, 
theft, or fraud to pull tab inventory. Such controls must provide that:
    (1) Access to pull tabs is restricted to authorized agents;
    (2) The pull tab inventory is controlled by agents independent of 
pull tab sales;
    (3) Pull tabs exchanged between agents are secured and 
independently controlled;
    (4) Increases or decreases to pull tab inventory are recorded, 
tracked, and reconciled; and
    (5) Pull tabs must be maintained in a secure location, accessible 
only to authorized agents, and with surveillance coverage adequate to 
identify persons accessing the area.
    (c) Pull tab sales. (1) Controls must be established and procedures 
implemented to record, track, and reconcile all pull tab sales and 
voids.
    (2) When pull tab sales are recorded manually, total sales must be 
verified by an agent independent of the pull tab sales being verified.
    (3) No person may have unrestricted access to pull tab sales 
records.
    (d) Winning pull tabs. (1) Controls must be established and 
procedures implemented to record, track, and reconcile all redeemed 
pull tabs and pull tab payouts.
    (2) The redeemed pull tabs must be defaced so that they cannot be 
redeemed for payment again.
    (3) Pull tabs that are uniquely identifiable with a machine 
readable code (including, but not limited to a barcode) may be 
redeemed, reconciled, and stored by kiosks without the need for 
defacing, so long as the redeemed pull tabs are secured and destroyed 
after removal from the kiosk in accordance with the procedures approved 
by the TGRA.
    (4) Winning pull tabs must be verified and paid as follows:
    (i) Prize payouts of $600 or more, or a lesser amount established 
by the gaming operation, must be documented and verified by at least 
two agents. If an automated method of verification is available, it is 
acceptable for the automated method to serve as one of the verifiers.
    (ii) Prize payouts over a predetermined amount require the 
signature and verification of two agents, one of whom must be a member 
of supervisory or management staff independent of the pull tab 
department. This predetermined amount must be authorized by management, 
documented, and maintained.
    (5) Total payout must be calculated and recorded by shift.
    (e) Pull tab operating funds.
    (1) All funds used to operate the pull tab game must be accounted 
for and recorded and all transfers of cash and/or cash equivalents must 
be verified.
    (2) All funds used to operate the pull tab game must be 
independently counted and verified by at least two agents and 
reconciled to the recorded

[[Page 32454]]

amounts at the end of each shift or session.
    (f) Statistical records. (1) Statistical records must be 
maintained, including (for games sold in their entirety) a win-to-write 
hold percentage as compared to the expected hold percentage derived 
from the flare. Records must also include win and write (sales) for 
each deal or type of game, for:
    (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 must review 
statistical information at least on a monthly basis and must 
investigate any unusual statistical fluctuations. These investigations 
must be documented, maintained for inspection, and provided to the TGRA 
upon request.
    (g) Revenue audit. Standards for revenue audit of pull tabs are 
contained in Sec.  543.24, Revenue Audit.
    (h) Variances. The TGRA must establish the threshold level at which 
a variance must be reviewed to determine the cause. Any such review 
must be documented.


Sec.  543.10  What are the minimum internal control standards for card 
games?

    (a) Supervision. Supervision must be provided as needed during the 
card room operations by an agent(s) with authority equal to or greater 
than those being supervised.
    (1) A supervisor may function as a dealer without any other 
supervision if disputes are resolved by supervisory personnel 
independent of the transaction or independent of the card games 
department; or
    (2) A dealer may function as a supervisor if not dealing the game.
    (b) Exchanges or transfers. (1) Exchanges between table banks and 
the main card room bank (or cage, if a main card room bank is not used) 
must be authorized by a supervisor. All exchanges must be evidenced by 
the use of a lammer unless the exchange of chips, tokens, and/or cash 
takes place at the table. If table banks are maintained at an imprest 
level and runners are used for the exchanges at the table, no 
supervisory authorization is required.
    (2) Exchanges from the main card room bank (or cage, if a main card 
room bank is not used) to the table banks must be verified by the card 
room dealer and the runner.
    (3) Transfers between the main card room bank and the cage must be 
properly authorized and documented. Documentation must be retained for 
at least 24 hours.
    (c) Playing cards. (1) New and used playing cards must be 
maintained in a secure location, with appropriate surveillance 
coverage, and accessible only to authorized agents.
    (2) Used playing cards that are not to be re-used must be properly 
cancelled and removed from service to prevent re-use. The removal and 
cancellation procedure requires TGRA review and approval.
    (3) Playing cards associated with an investigation must be retained 
intact and outside of the established removal and cancellation 
procedure.
    (d) Shill funds. (1) Issuance of shill funds must be recorded and 
have the written approval of the supervisor.
    (2) Returned shill funds must be recorded and verified by a 
supervisor.
    (3) The replenishment of shill funds must be documented.
    (e) Standards for reconciliation of card room bank. Two agents--one 
of whom must be a supervisory agent--must independently count the table 
inventory at the opening and closing of the table and record the 
following information:
    (1) Date;
    (2) Shift;
    (3) Table number;
    (4) Amount by denomination;
    (5) Amount in total; and
    (6) Signatures of both agents.
    (f) Posted rules. The rules must be displayed or available for 
patron review at the gaming operation, including rules governing 
contests, prize payouts, fees, the rake collected, and the placing of 
antes.
    (g) Promotional Progressive Pots and Pools. (1) All funds 
contributed by players into the pools must be returned when won in 
accordance with the posted rules with no commission or administrative 
fee withheld.
    (i) The payout may be in the form of personal property, such as a 
car.
    (ii) A combination of a promotion and progressive pool may be 
offered.
    (2) The conditions for participating in current card game 
promotional progressive pots, pools, and any related promotions, 
including drawings and giveaway programs, must be prominently displayed 
or available for customer review at the gaming operation.
    (3) Individual payouts for card game promotional progressive pots, 
pools and any other promotion, including related drawings and giveaway 
programs, that are $600 or more must be documented at the time of the 
payout to include the following:
    (i) Customer's name;
    (ii) Date of payout;
    (iii) Dollar amount of entry payout and/or nature and dollar value 
of any non-cash payout;
    (iv) The signature of the agent completing the transaction 
attesting to the disbursement of the payout; and
    (v) Name of contest/tournament.
    (4) If the cash (or cash equivalent) payout for the card game 
promotional progressive pot, pool, or related promotion, including a 
payout resulting from a drawing or giveaway program, is less than $600, 
documentation must be created to support accountability of the bank 
from which the payout was made.
    (5) Rules governing current promotional pools must be conspicuously 
posted in the card room and/or available in writing for customer 
review. The rules must designate:
    (i) The amount of funds to be contributed from each pot;
    (ii) What type of hand it takes to win the pool;
    (iii) How the promotional funds will be paid out;
    (iv) How/when the contributed funds are added to the pools; and
    (v) Amount/percentage of funds allocated to primary and secondary 
pools, if applicable.
    (6) Promotional pool contributions must 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.
    (7) The amount of the pools must be conspicuously displayed in the 
card room.
    (8) At least once each day that the game is offered, the posted 
pool amount must be updated to reflect the current pool amount.
    (9) At least once each day that the game is offered, agents 
independent of the card room must reconcile the increases to the posted 
pool amount to the cash previously counted or received by the cage.
    (10) All decreases to the pool must be properly documented, 
including a reason for the decrease.
    (11) Promotional funds removed from the card game must be placed in 
a locked container.
    (i) Agents authorized to transport the locked container are 
precluded from having access to the contents keys.
    (ii) The contents key must be maintained by a department 
independent of the card room.
    (iii) At least once a day, the locked container must be removed by 
two agents, 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.

[[Page 32455]]

    (h) Variances. The TGRA must establish the threshold level at which 
a variance must be reviewed to determine the cause. Any such review 
must be documented.


Sec.  543.11  [Reserved]


Sec.  543.12  What are the minimum internal control standards for 
gaming promotions and player tracking systems?

    (a) Supervision. Supervision must be provided as needed for gaming 
promotions and player tracking by an agent(s) with authority equal to 
or greater than those being supervised.
    (b) Gaming promotions. The rules of the gaming promotion must be 
displayed or made readily available to participants upon request. 
Gaming promotions rules require TGRA approval and must include the 
following:
    (1) The rules of play;
    (2) The nature and value of the associated prize(s) or cash 
award(s);
    (3) Any restrictions or limitations on participant eligibility;
    (4) The date(s), time(s), and location(s) for the associated 
promotional activity or activities;
    (5) Any other restrictions or limitations, including any related to 
the claim of prizes or cash awards;
    (6) The announcement date(s), time(s), and location(s) for the 
winning entry or entries; and
    (7) Rules governing promotions offered across multiple gaming 
operations, third party sponsored promotions, and joint promotions 
involving third parties.
    (c) Player tracking systems. (1) Changes to the player tracking 
systems, promotional accounts, promotion and external bonusing system 
parameters which control features such as the awarding of bonuses, the 
issuance of cashable credits, non-cashable credits, coupons and 
vouchers, must be performed under the authority of supervisory 
employees, independent of the department initiating the change. 
Alternatively, the changes may be performed by supervisory employees of 
the department initiating the change if sufficient documentation is 
generated and the propriety of the changes are randomly verified by 
supervisory employees independent of the department initiating the 
change on a monthly basis.
    (2) All other changes to the player tracking system must be 
appropriately documented.
    (d) Variances. The TGRA must establish the threshold level at which 
a variance must be reviewed to determine the cause. Any such review 
must be documented.


Sec.  543.13  What are the minimum internal control standards for 
complimentary services or items?

    (a) Supervision. Supervision must be provided as needed for 
approval of complimentary services by an agent(s) with authority equal 
to or greater than those being supervised.
    (b) Complimentary services and items include, but are not limited 
to, travel, lodging, food, beverages, or entertainment expenses 
provided, at the agent's discretion, directly to the patron by the 
gaming operation or indirectly to patrons on behalf of the gaming 
operation by a third party.
    (c) Complimentary services or items. Controls must be established 
and procedures implemented to prevent unauthorized access, 
misappropriation, forgery, theft, or fraud. Such controls must include 
procedures for the following:
    (1) Authorizing agents to approve the issuance of complimentary 
services or items, including levels of authorization;
    (2) Limits and conditions on the approval and issuance of 
complimentary services or items;
    (3) Modifying conditions or limits on the approval and issuance of 
complimentary services or items;
    (4) Documenting and recording the authorization, issuance, and 
tracking of complimentary services or items, including cash and non-
cash gifts;
    (i) Complimentary issuance records must include the following for 
all complimentary items and services equal to or exceeding an amount 
established by the TGRA.
    (A) Name of patron who received the complimentary service or item;
    (B) Name(s) of issuer of the complimentary service or item;
    (C) The actual cash value of the complimentary service or item;
    (D) The type of complimentary service or item (food, beverage, 
etc.); and
    (E) Date the complimentary service or item was issued.
    (ii) [Reserved].
    (d) Complimentary services and items records must be summarized and 
reviewed for proper authorization and compliance with established 
authorization thresholds.
    (1) A detailed reporting of comp transactions that meet an 
established threshold approved by the TGRA must be prepared at least 
monthly.
    (2) The detailed report must be forwarded to management for review.
    (e) Variances. The TGRA must establish the threshold level at which 
a variance must be reviewed to determine the cause. Any such review 
must be documented.


Sec.  543.14  What are the minimum internal control standards for 
patron deposit accounts and cashless systems?

    (a) Supervision. Supervision must be provided as needed for patron 
deposit accounts and cashless systems by an agent(s) with authority 
equal to or greater than those being supervised.
    (b) Patron deposit accounts and cashless systems. (1) Controls must 
be established and procedures implemented for patron deposit accounts 
and cashless systems to prevent unauthorized access, misappropriation, 
forgery, theft, or fraud.
    (2) Smart cards cannot maintain the only source of account data.
    (3) Establishment of patron deposit accounts. The following 
standards apply when the patron establishes an account.
    (i) The patron must appear at the gaming operation in person, at a 
designated area of accountability, and present valid government issued 
picture identification; and
    (ii) An agent must examine the patron's identification and record 
the following information:
    (A) Type, number, and expiration date of the identification;
    (B) Patron's name;
    (C) A unique account identifier;
    (D) Date the account was opened; and
    (E) The agent's name.
    (4) The patron must sign the account documentation before the agent 
may activate the account.
    (5) The agent or cashless system must provide the patron deposit 
account holder with a secure method of access.
    (c) Patron deposits, withdrawals and adjustments. (1) Prior to the 
patron making a deposit or a withdrawal from a patron deposit account, 
the agent or cashless system must verify the patron deposit account, 
the patron identity, and availability of funds.
    (2) Adjustments made to the patron deposit accounts must be 
performed by an agent.
    (3) When a deposit, withdrawal, or adjustment is processed by an 
agent, a transaction record must be created containing the following 
information:
    (i) Same document number on all copies;
    (ii) Type of transaction, (deposit, withdrawal, or adjustment);
    (iii) Name or other identifier of the patron;
    (iv) The unique account identifier;
    (v) Patron signature for withdrawals, unless a secured method of 
access is utilized;
    (vi) For adjustments to the account, the reason for the adjustment;
    (vii) Date and time of transaction;
    (viii) Amount of transaction;

[[Page 32456]]

    (ix) Nature of deposit, withdrawal, or adjustment (cash, check, 
chips); and
    (x) Signature of the agent processing the transaction.
    (4) When a patron deposits or withdraws funds from a patron deposit 
account electronically, the following must be recorded:
    (i) Date and time of transaction;
    (ii) Location (player interface, kiosk);
    (iii) Type of transaction (deposit, withdrawal);
    (iv) Amount of transaction; and
    (v) The unique account identifier.
    (5) Patron deposit account transaction records must be available to 
the patron upon reasonable request.
    (6) If electronic funds transfers are made to or from a gaming 
operation bank account for patron deposit account funds, the bank 
account must be dedicated and may not be used for any other types of 
transactions.
    (d) Variances. The TGRA must establish the threshold level at which 
a variance must be reviewed to determine the cause. Any such review 
must be documented.


Sec.  543.15  What are the minimum internal control standards for lines 
of credit?

    (a) Supervision. Supervision must be provided as needed for lines 
of credit by an agent(s) with authority equal to or greater than those 
being supervised.
    (b) Establishment of Lines of Credit Policy. (1) If a gaming 
operation extends lines of credit, controls must be established and 
procedures implemented to safeguard the assets of the gaming operation. 
Such controls must include a lines of credit policy including the 
following:
    (i) A process for the patron to apply for, modify, and/or re-
establish lines of credit, to include required documentation and credit 
line limit;
    (ii) Authorization levels of credit issuer(s);
    (iii) Identification of agents authorized to issue lines of credit;
    (iv) A process for verifying an applicant's credit worthiness;
    (v) A system for recording patron information; to include:
    (A) Name, current address, and signature;
    (B) Identification credential;
    (C) Authorized credit line limit;
    (D) Documented approval by an agent authorized to approve credit 
line limits;
    (E) Date, time and amount of credit issuances and payments; and
    (F) Amount of available credit.
    (vi) A process for issuing lines of credit to include the 
following:
    (A) Verifying the patron's identity;
    (B) Notifying the patron of the lines of credit terms, including 
obtaining patron's written acknowledgment of the terms by signature;
    (C) Completing a uniquely identified, multi-part, lines of credit 
issuance form, such as a marker or counter check, which includes the 
terms of the lines of credit transaction;
    (D) Obtaining required signatures;
    (E) Determining the amount of the patron's available lines of 
credit;
    (F) Updating the credit balance record at the time of each 
transaction to assure that lines of credit issued are within the 
established limit and balance for that patron; and
    (G) Requiring the agent issuing the lines of credit to be 
independent of the agent who authorized the lines of credit.
    (vii) A policy establishing credit line limit exceptions to include 
the following:
    (A) Identification of the agent(s) authorized to permit a credit 
line limit to be exceeded;
    (B) Authorization thresholds; and
    (C) Required documentation.
    (viii) A policy governing increases and decreases to a patron's 
lines of credit account balances to include the following:
    (A) Documentation and record keeping requirements;
    (B) Independence between the department that receives the payment 
and the department that maintains custody of the credit balance for 
payments made by mail;
    (C) Collections;
    (D) Periodic audits and confirmation of balances; and
    (E) If a collection agency is used, a process to ensure 
documentation of increases and decreases to the lines of credit account 
balances.
    (ix) A policy governing write-offs and settlements to include:
    (A) Identification of agent(s) authorized to approve write-offs and 
settlements;
    (B) Authorization levels for write-offs and settlements of lines of 
credit instruments;
    (C) Required documentation for write-offs and settlements;
    (D) Independence between the agent who established the lines of 
credit and the agent writing off or settling the lines of credit 
instrument.
    (E) Necessary documentation for the approval of write-offs and 
settlements and transmittal to the appropriate department for recording 
and deductibility.
    (c) Variances. The TGRA must establish the threshold level at which 
a variance must be reviewed to determine the cause. Any such review 
must be documented.


Sec.  543.16  [Reserved]


Sec.  543.17  What are the minimum internal control standards for drop 
and count?

    (a) Supervision. Supervision must be provided for drop and count as 
needed by an agent(s) with authority equal to or greater than those 
being supervised.
    (b) Count Room Access. Controls must be established and procedures 
implemented to limit physical access to the count room to count team 
agents, designated staff, and other authorized persons. Such controls 
must include the following:
    (1) Count team agents may not exit or enter the count room during 
the count except for emergencies or scheduled breaks.
    (2) Surveillance must be notified whenever count room agents exit 
or enter the count room during the count.
    (3) The count team policy, at a minimum, must address the 
transportation of extraneous items such as personal belongings, tool 
boxes, beverage containers, etc., into or out of the count room.
    (c) Count team. Controls must be established and procedures 
implemented to ensure security of the count and the count room to 
prevent unauthorized access, misappropriation of funds, forgery, theft, 
or fraud. Such controls must include the following:
    (1) For Tier A and B operations, all counts must be performed by at 
least two agents. For Tier C operations, all counts must be performed 
by at least three agents.
    (2) For Tier A and B operations, at no time during the count can 
there be fewer than two count team agents in the count room until the 
drop proceeds have been accepted into cage/vault accountability. For 
Tier C operations, at no time during the count can there be fewer than 
three count team agents in the count room until the drop proceeds have 
been accepted into cage/vault accountability.
    (3) For Tier A and B operations, count team agents must be rotated 
on a routine basis such that the count team is not consistently the 
same two agents more than four days per week. This standard does not 
apply to gaming operations that utilize a count team of more than two 
agents. For Tier C operations, count team agents must be rotated on a 
routine basis such that the count team is not consistently the same 
three agents more than four days per week. This standard does not apply 
to gaming operations that utilize a count team of more than three 
agents.
    (4) Functions performed by count team agents must be rotated on a 
routine basis.
    (5) Count team agents must be independent of the department being

[[Page 32457]]

counted and the cage/vault departments. An accounting agent may be used 
if there is an independent audit of all count documentation.
    (d) Card game drop standards. Controls must be established and 
procedures implemented to ensure security of the drop process to 
prevent unauthorized access to gaming equipment and the drop, 
misappropriation of funds, forgery, theft, or fraud. Such controls must 
include the following:
    (1) Surveillance must be notified when the drop is to begin so that 
surveillance may monitor the activities.
    (2) Once the drop is started, it must continue until finished.
    (3) At the end of each shift:
    (i) All locked card game drop boxes must be removed from the tables 
by an agent independent of the card game shift being dropped;
    (ii) For any tables opened during the shift, a separate drop box 
must be placed on each table, or a gaming operation may utilize a 
single drop box with separate openings and compartments for each shift; 
and
    (iii) Card game drop boxes must be transported directly to the 
count room or other equivalently secure area by a minimum of two 
agents, at least one of whom is independent of the card game shift 
being dropped, until the count takes place.
    (4) Document which tables were not open during a shift and 
therefore not part of the drop.
    (5) All card game drop boxes must be posted with a number 
corresponding to a permanent number on the gaming table and marked to 
indicate game, table number, and shift, if applicable.
    (e) Player interface and financial instrument drop standards.
    (1) Surveillance must be notified when the drop is to begin so that 
surveillance may monitor the activities. The player interface financial 
instrument storage component drop begins when the first financial 
instrument storage component is removed.
    (2) A minimum of two individuals must be involved in the removal of 
the player interface storage component drop, at least one of whom is 
independent of the player interface department.
    (3) All financial instrument storage components may be removed only 
at the time previously designated by the gaming operation and reported 
to the TGRA. If an emergency drop is required, surveillance must be 
notified before the drop is conducted and the TGRA must be informed 
within a timeframe approved by the TGRA.
    (4) The financial instrument storage components must be removed by 
an agent independent of the player interface 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 must be provided for the financial instrument storage 
components removed from the player interfaces and awaiting transport to 
the count room.
    (ii) Transportation of financial instrument storage components must 
be performed by a minimum of two agents, at least one of whom is 
independent of the player interface department.
    (5) All financial instrument storage components must be posted with 
a number corresponding to a permanent number on the player interface.
    (f) Card game count standards. (1) Access to stored, full card game 
drop boxes must be restricted to authorized members of the drop and 
count teams.
    (2) The card game count must be performed in a soft count room or 
other equivalently secure area with comparable controls.
    (3) Access to the count room during the count must 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 must be in effect to prevent the commingling 
of funds from different revenue centers.
    (5) Count equipment and systems must be tested, with the results 
documented, at minimum before the first count begins to ensure the 
accuracy of the equipment.
    (6) The card game drop boxes must be individually emptied and 
counted so as to prevent the commingling of funds between boxes until 
the count of the box has been recorded.
    (i) The count of each box must be recorded in ink or other 
permanent form of recordation.
    (ii) For counts that do not utilize a currency counter, a second 
count must be performed by a member of the count team who did not 
perform the initial count. Separate counts of chips and tokens must 
always be performed by members of the count team.
    (iii) Coupons or other promotional items not included in gross 
revenue must be recorded on a supplemental document by either the count 
team members or accounting personnel. All single-use coupons must be 
cancelled daily by an authorized agent to prevent improper 
recirculation.
    (iv) If a currency counter interface is used:
    (A) It must be adequately restricted to prevent unauthorized 
access; and
    (B) The currency drop figures must be transferred via direct 
communications line or computer storage media to the accounting 
department.
    (7) If currency counters are utilized, a count team member must 
observe the loading and unloading of all currency at the currency 
counter, including rejected currency.
    (8) Two counts of the currency rejected by the currency counter 
must be recorded per table, as well as in total. Posting rejected 
currency to a nonexistent table is prohibited.
    (9) Card game drop boxes, when empty, must be shown to another 
member of the count team, to another agent observing the count, or to 
surveillance, provided that the count is monitored in its entirety by 
an agent independent of the count.
    (10) Procedures must be implemented to ensure that any corrections 
to the count documentation are permanent, identifiable and that the 
original, corrected information remains legible. Corrections must be 
verified by two count team agents.
    (11) The count sheet must be reconciled to the total drop by a 
count team member who may not function as the sole recorder, and 
variances must be reconciled and documented.
    (12) All count team agents must sign the report attesting to their 
participation in the count.
    (13) A final verification of the total drop proceeds, before 
transfer to cage/vault, must be performed by at least two agents, one 
of whom is a supervisory count team member, and one a count team agent.
    (i) Final verification must include a comparison of currency 
counted totals against the currency counter/system report, if any 
counter/system is used.
    (ii) Any unresolved variances must be documented, and the 
documentation must remain part of the final count record forwarded to 
accounting.
    (iii) This verification does not require a complete recount of the 
drop proceeds, but does require a review sufficient to verify the total 
drop proceeds being transferred.
    (iv) The two agents must sign the report attesting to the accuracy 
of the total drop proceeds verified.
    (v) All drop proceeds and cash equivalents that were counted must 
be submitted to the cage or vault cashier (who must be independent of 
the count team) or to an agent independent of the

[[Page 32458]]

revenue generation source and the count process for verification. The 
cashier or agent must certify, by signature, the amount of the drop 
proceeds delivered and received. Any unresolved variances must be 
reconciled, documented, and/or investigated by accounting/revenue 
audit.
    (14) After certification by the receiver of the funds, the drop 
proceeds must be transferred to the cage/vault.
    (i) The count documentation and records must not be transferred to 
the cage/vault with the drop proceeds.
    (ii) The cage/vault agent must have no knowledge or record of the 
drop proceeds total before it is verified.
    (iii) All count records must be forwarded to accounting or 
adequately secured and accessible only by accounting agents.
    (iv) The cage/vault agent receiving the transferred drop proceeds 
must sign the report attesting to the verification of the total 
received.
    (v) Any unresolved variances between total drop proceeds recorded 
on the count room report and the cage/vault final verification during 
transfer must be documented and investigated.
    (15) The count sheet, with all supporting documents, must be 
delivered to the accounting department by a count team member or an 
agent independent of the cashiers department. Alternatively, it may be 
adequately secured so that it is only accessible to accounting agents.
    (16) The cage/vault agent must sign the count sheet, or other 
reconciling document, and thereby assume accountability of the currency 
drop proceeds, ending the count.
    (g) Player interface financial instrument count standards.
    (1) Access to stored full financial instrument storage components 
must be restricted to:
    (i) Authorized members of the drop and count teams; and
    (ii) In an emergency, authorized persons for the resolution of a 
problem.
    (2) The player interface financial instrument count must be 
performed in a count room or other equivalently secure area with 
comparable controls.
    (3) Access to the count room during the count must 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 must be in effect that prevent the 
commingling of funds from different revenue centers.
    (5) The count team must not have access to bill-in meter amounts 
until after the count is completed and the drop proceeds are accepted 
into the cage/vault accountability.
    (6) Count equipment and systems must be tested, with the results 
documented, at minimum before the first count begins, to ensure the 
accuracy of the equipment.
    (7) If a currency counter interface is used:
    (i) It must be adequately restricted to prevent unauthorized 
access; and
    (ii) The currency drop figures must be transferred via direct 
communications line or computer storage media to the accounting 
department.
    (8) The financial instrument storage components must be 
individually emptied and counted so as to prevent the commingling of 
funds between storage components until the count of the storage 
component has been recorded.
    (i) The count of each storage component must be recorded in ink or 
other permanent form of recordation.
    (ii) Coupons or other promotional items not included in gross 
revenue may be recorded on a supplemental document by the count team 
members or accounting personnel. All single-use coupons must be 
cancelled daily by an authorized agent to prevent improper 
recirculation.
    (9) If currency counters are utilized, a count team member must 
observe the loading and unloading of all currency at the currency 
counter, including rejected currency.
    (10) Two counts of the currency rejected by the currency counter 
must be recorded per interface terminal as well as in total. Rejected 
currency must be posted to the interface terminal from which it was 
collected.
    (11) Storage components, when empty, must be shown to another 
member of the count team, to another agent who is observing the count, 
or to surveillance, provided that the count is monitored in its 
entirety by an agent independent of the count.
    (12) Procedures must be implemented to ensure that any corrections 
to the count documentation are permanent, identifiable and the 
original, corrected information remains legible. Corrections must be 
verified by two count team agents.
    (13) The count sheet must be reconciled to the total drop by a 
count team member who may not function as the sole recorder, and 
variances must be reconciled and documented. This standard does not 
apply to vouchers removed from the financial instrument storage 
components.
    (14) All count team agents must sign the report attesting to their 
participation in the count.
    (15) A final verification of the total drop proceeds, before 
transfer to cage/vault, must be performed by at least two agents, one 
of whom is a supervisory count team member and the other a count team 
agent.
    (i) Final verification must include a comparison of currency 
counted totals against the currency counter/system report, if a 
counter/system is used.
    (ii) Any unresolved variances must be documented and the 
documentation must remain a part of the final count record forwarded to 
accounting.
    (iii) This verification does not require a complete recount of the 
drop proceeds but does require a review sufficient to verify the total 
drop proceeds being transferred.
    (iv) The two agents must sign the report attesting to the accuracy 
of the total drop proceeds verified.
    (v) All drop proceeds and cash equivalents that were counted must 
be turned over to the cage or vault cashier (who must be independent of 
the count team) or to an agent independent of the revenue generation 
and the count process for verification. Such cashier or agent must 
certify, by signature, the amount of the drop proceeds delivered and 
received. Any unresolved variances must be reconciled, documented, and/
or investigated by accounting/revenue audit.
    (16) After certification by the recipient of the funds, the drop 
proceeds must be transferred to the cage/vault.
    (i) The count documentation and records must not be transferred to 
the cage/vault with the drop proceeds.
    (ii) The cage/vault agent may have no knowledge or record of the 
drop proceeds total before it is verified.
    (iii) All count records must be forwarded to accounting adequately 
secured and accessible only by accounting agents.
    (iv) The cage/vault agent receiving the transferred drop proceeds 
must sign the report attesting to the verification of the total 
received.
    (v) Any unresolved variances between total drop proceeds recorded 
on the count room report and the cage/vault final verification during 
transfer must be documented and investigated.
    (17) The cage/vault agent must sign the count sheet, or other 
reconciling document, thereby assuming accountability of the currency 
drop proceeds, and ending the count.
    (18) The count sheet, with all supporting documents, must be 
delivered to the accounting department

[[Page 32459]]

by a count team member or agent independent of the cashiers department. 
Alternatively, it may be adequately secured and accessible only by 
accounting department.
    (h) Controlled keys. Controls must be established and procedures 
implemented to safeguard the use, access, and security of keys in 
accordance with the following:
    (1) Each of the following requires a separate and unique key lock 
or alternative secure access method:
    (i) Drop cabinet;
    (ii) Drop box release;
    (iii) Drop box content; and
    (iv) Storage racks and carts used for the drop.
    (2) Access to and return of keys or equivalents must be documented 
with the date, time, and signature or other unique identifier of the 
agent accessing or returning the key(s).
    (i) For Tier A and B operations, at least two (2) drop team agents 
are required to be present to access and return keys. For Tier C 
operations, at least three (3) drop team agents are required to be 
present to access and return keys.
    (ii) For Tier A and B operations, at least two (2) count team 
agents are required to be present at the time count room and other 
count keys are issued for the count. For Tier C operations, at least 
three (two for card game drop box keys in operations with three tables 
or fewer) count team agents are required to be present at the time 
count room and other count keys are issued for the count.
    (3) Documentation of all keys, including duplicates, must be 
maintained, including:
    (i) Unique identifier for each individual key;
    (ii) Key storage location;
    (iii) Number of keys made, duplicated, and destroyed; and
    (iv) Authorization and access.
    (4) Custody of all keys involved in the drop and count must be 
maintained by a department independent of the count and the drop agents 
as well as those departments being dropped and counted.
    (5) Other than the count team, no agent may have access to the drop 
box content keys while in possession of storage rack keys and/or 
release keys.
    (6) Other than the count team, only agents authorized to remove 
drop boxes are allowed access to drop box release keys.
    (7) Any use of keys at times other than the scheduled drop and 
count must be properly authorized and documented.
    (8) Emergency manual keys, such as an override key, for 
computerized, electronic, and alternative key systems must be 
maintained in accordance with the following:
    (i) Access to the emergency manual key(s) used to access the box 
containing the player interface drop and count keys requires the 
physical involvement of at least three agents from separate 
departments, including management. The date, time, and reason for 
access, must be documented with the signatures of all participating 
persons signing out/in the emergency manual key(s);
    (ii) The custody of the emergency manual keys requires the presence 
of two agents from separate departments from the time of their issuance 
until the time of their return; and
    (iii) Routine physical maintenance that requires access to the 
emergency manual key(s), and does not involve accessing the player 
interface drop and count keys, only requires the presence of two agents 
from separate departments. The date, time, and reason for access must 
be documented with the signatures of all participating agents signing 
out/in the emergency manual key(s).
    (i) Variances. The TGRA must establish the threshold level at which 
a variance must be reviewed to determine the cause. Any such review 
must be documented.


Sec.  543.18  What are the minimum internal control standards for the 
cage, vault, kiosk, cash and cash equivalents?

    (a) Supervision. Supervision must be provided as needed for cage, 
vault, kiosk, and other operations using cash or cash equivalents by an 
agent(s) with authority equal to or greater than those being 
supervised.
    (b) Cash and cash equivalents. Controls must be established and 
procedures implemented to prevent unauthorized access, 
misappropriation, forgery, theft, or fraud.
    (c) Personal checks, cashier's checks, traveler's checks, payroll 
checks, and counter checks.
    (1) If personal checks, cashier's checks, traveler's checks, 
payroll checks or counter checks are cashed at the cage, the controls 
must provide for security and integrity. For each check cashing 
transaction, the agent(s) conducting the transaction must:
    (i) Verify the patron's identity;
    (ii) Examine the check to ensure it includes the patron's name, 
current address, and signature;
    (iii) For personal checks, verify the patron's check cashing 
authority and record the source and results in accordance with 
management policy;
    (iv) If a check guarantee service is used to guarantee the 
transaction and the procedures required by the check guarantee service 
are followed, then the above requirements do not apply.
    (2) When counter checks are issued, the following must be included 
on the check:
    (i) The patron's name and signature;
    (ii) The dollar amount of the counter check;
    (iii) Patron's bank name, bank routing, and account numbers;
    (iv) Date of issuance; and
    (v) Signature of the agent approving the counter check transaction.
    (3) Personal checks, payroll checks, and counter checks that are 
not deposited in the normal course of business, as established by 
management, (held checks) are subject to Sec.  543.15 credit standards.
    (4) When traveler's checks or other guaranteed drafts, such as 
cashier's checks, are presented, the cashier must comply with the 
examination and documentation procedures as required by the issuer.
    (5) If a third party check cashing or guarantee service is used, 
the examination and documentation procedures required by the service 
provider apply, unless otherwise provided by tribal law or regulation.
    (d) Cage and vault accountability. (1) All transactions that flow 
through the cage must be summarized for each work shift of the cage and 
must be supported by documentation.
    (2) Increases and decreases to the total cage inventory must be 
verified, supported by documentation, and recorded. For any individual 
increase/decrease that exceeds $100, documentation must include the 
date and shift, the purpose of the increase/decrease, the agent(s) 
completing the transaction, and the person or department receiving the 
cage funds (for decreases only).
    (3) The cage and vault inventories (including coin rooms/vaults) 
must be counted independently by at least two agents, attested to by 
signature, and recorded in ink or other permanent form at the end of 
each shift during which the activity took place. These agents must make 
individual counts to compare for accuracy and maintain individual 
accountability. All discrepancies must be noted and investigated.
    (4) The gaming operation must establish and 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 
patrons as they are incurred.

[[Page 32460]]

    (e) Kiosks. (1) Kiosks shall be maintained on an imprest basis on 
the cage accountability and shall be counted independently by at least 
two agents and reconciled each time the kiosk is reimpressed.
    (2) Currency cassettes shall be imprest by an agent and verified 
independently by at least one agent, both of whom shall sign each 
cassette.
    (3) Imprest cassettes shall be secured with a lock or tamper 
resistant seal and, if not placed inside a kiosk, shall be stored in a 
secured area of the cage/vault.
    (4) The TGRA or the gaming operation, subject to the approval of 
the TGRA, shall develop and implement security controls over the 
kiosks, i.e. forced entry, evidence of any entry, and protection of 
circuit boards containing programs.
    (5) With regard to cashless systems, the TGRA or the gaming 
operation, subject to the approval of the TGRA, shall develop and 
implement procedures to ensure that communications between the kiosk 
and system are secure and functioning.
    (6) Kiosks or equipment associated therewith must be capable of 
producing the following reports upon demand:
    (i) Recap of the disposition of wagering instruments accepted, 
which must be available by reconciliation period (day, shift or drop 
cycle); and
    (ii) Reconciliation report that includes the current cash balance, 
current balance of the wagering instruments by dollar amount and by 
number of items and the reconciliation period date and time.
    (f) Patron deposited funds. If a gaming operation permits a patron 
to deposit funds for safekeeping and/or front money purposes with the 
gaming operation at the cage, and when transfers of patron deposited 
funds are transferred to a gaming area for wagering purposes, the 
following standards apply:
    (1) The receipt or withdrawal of a patron deposit must be 
documented, with a copy given to the patron and a copy remaining in the 
cage.
    (2) Both copies of the document of receipt or withdrawal must 
contain the following information:
    (i) Same receipt number on each copy;
    (ii) Patron's name and signature;
    (iii) Date of receipt and withdrawal;
    (iv) Dollar amount of deposit/withdrawal (for foreign currency 
transactions include the US dollar equivalent, the name of the foreign 
country, and the amount of the foreign currency by denomination);
    (v) Nature of deposit/withdrawal; and
    (vi) Name and signature of the agent who conducted the transaction.
    (3) The following procedures must be established and complied with 
for front money deposits:
    (i) Maintaining a detailed record by patron name and date of all 
funds on deposit;
    (ii) Maintaining a current balance of all patron deposits that are 
in the cage/vault inventory or accountability; and
    (iii) Reconciling this current balance with the deposits and 
withdrawals at least daily.
    (g) Promotional payments, drawings, and giveaway programs. The 
following procedures must apply to any payment resulting from a 
promotional payment, drawing, or giveaway program disbursed by the cage 
department or any other department. This section does not apply to 
programs that are addressed elsewhere in this part.
    (1) Payments that are less than $100 must be documented to support 
the cage accountability.
    (2) Payments of $100 or more must be documented at the time of the 
payment, and documentation must include the following:
    (i) Date and time;
    (ii) Dollar amount of payment or description of personal property;
    (iii) Reason for payment; and
    (iv) Patron's name (drawings only).
    (v) Signature(s) of at least two agents verifying, authorizing, and 
completing the promotional payment with the patron, except for 
computerized systems that validate and print the dollar amount of the 
payment on a computer generated form, only one signature is required.
    (h) Chip(s) and token(s). Controls must be established and 
procedures implemented to ensure accountability of chip and token 
inventory. Such controls must include, but are not limited to, the 
following:
    (1) Purchase;
    (2) Receipt;
    (3) Inventory;
    (4) Storage; and
    (5) Destruction.
    (i) Cage and vault access. Controls must be established and 
procedures implemented to prevent unauthorized access, 
misappropriation, forgery, or fraud. Such controls must include the 
following:
    (1) Restricting physical access to the cage to cage department 
agents, designated staff, and other authorized persons; and
    (2) Limiting transportation of extraneous items such as personal 
belongings, tool boxes, beverage containers, etc., into and out of the 
cage.
    (j) Variances. The TGRA must establish the threshold level at which 
a variance must be reviewed to determine the cause. Any such review 
must be documented.


Sec.  543.19  [Reserved]


Sec.  543.20  What are the minimum internal control standards for 
information technology and information technology data?

    (a) Supervision.
    (1) Controls must identify the supervisory agent in the department 
or area responsible for ensuring that the department or area is 
operating in accordance with established policies and procedures.
    (2) The supervisory agent must be independent of the operation of 
Class II games.
    (3) Controls must ensure that duties are adequately segregated and 
monitored to detect procedural errors and to prevent the concealment of 
fraud.
    (4) Internal controls must require that all personnel having access 
to Class II gaming systems have no signatory authority over financial 
instruments and payout forms, and are independent of and restricted 
from access to:
    (i) Financial instruments; and
    (ii) Accounting, audit, and ledger entries.
    (b) As used in this section only, a system is any computerized 
system that is essential to the gaming environment. This includes, but 
is not limited to, the server and peripherals for Class II gaming 
system, accounting, surveillance, essential phone system, and door 
access and warning systems.
    (c) Class II gaming systems' logical and physical controls. 
Controls must be established and procedures implemented to ensure 
adequate:
    (1) Control of physical and logical access to the information 
technology environment, including accounting, voucher, cashless and 
player tracking, among others used in conjunction with Class II gaming;
    (2) Physical and logical protection of storage media and its 
contents, including recovery procedures;
    (3) Access credential control methods;
    (4) Record keeping and audit processes; and
    (5) Departmental independence, including, but not limited to, means 
to restrict agents that have access to information technology from 
having access to financial instruments.
    (d) Independence. All agents having access to the Class II 
information technology environment and/or data are independent of and 
restricted from access to:
    (1) Financial instruments;
    (2) Signatory authority over financial instruments and payouts 
forms; and
    (3) Accounting, audit, and ledger entries.

[[Page 32461]]

    (e) Physical security. (1) Internal controls must require that the 
information technology environment and infrastructure be maintained in 
a secured physical location such that access is restricted to 
authorized agents only.
    (2) Access devices to the systems' secured physical location, such 
as keys, cards, or fobs, must be controlled by an independent agent.
    (3) Access to the systems' secured physical location must be 
restricted to agents in accordance with established policies and 
procedures, which must include maintaining and updating a record of 
agents granted access privileges.
    (4) Communications to and from Network Communication Equipment must 
be physically secured from unauthorized access.
    (f) Logical security. (1) Security standards and procedures must be 
designed and implemented to protect all systems and to ensure that 
access to the following is restricted and secured:
    (i) Systems' software and application programs;
    (ii) Data associated with Class II gaming; and
    (iii) Communications facilities, systems, and information 
transmissions associated with Class II gaming systems.
    (2) Unused services and non-essential ports must be disabled 
whenever possible.
    (3) Procedures must be implemented to ensure that all activity 
performed on systems is restricted and secured from unauthorized 
access, and logged.
    (4) Communications to and from systems via Network Communication 
Equipment must be logically secured from unauthorized access.
    (g) User controls.(1) Systems, including application software, must 
be secured with passwords or other means for authorizing access.
    (2) Management personnel or agents independent of the department 
being controlled must assign and control access to system functions.
    (3) Access credentials such as passwords, PINs, or cards must be 
controlled as follows:
    (i) Each user must have his or her own individual access 
credential;
    (ii) Access credentials must be changed at an established interval 
approved by the TGRA; and
    (iii) Access credential records must be maintained either manually 
or by systems that automatically record access changes and force access 
credential changes, including the following information for each user:
    (A) User's name;
    (B) Date the user was given access and/or password change; and
    (C) Description of the access rights assigned to user.
    (4) Lost or compromised access credentials must be deactivated, 
secured or destroyed within an established time period approved by the 
TGRA.
    (5) Access credentials of terminated users must be deactivated 
within an established time period approved by the TGRA.
    (6) Only authorized agents may have access to inactive or closed 
accounts of other users, such as player tracking accounts and 
terminated user accounts.
    (h) Installations and/or modifications. (1) Only TGRA authorized or 
approved systems and modifications may be installed.
    (2) Records must be kept of all new installations and/or 
modifications to Class II gaming systems. These records must include, 
at a minimum:
    (i) The date of the installation or change;
    (ii) The nature of the installation or change such as new software, 
server repair, significant configuration changes;
    (iii) Evidence of verification that the installation or the changes 
are approved; and
    (iv) The identity of the agent(s) performing the installation/
modification.
    (3) Documentation must be maintained, such as manuals, user guides, 
describing the systems in use and the operation, including hardware.
    (i) Remote access. (1) Agents may be granted remote access for 
system support, provided that each access session is documented and 
maintained at the place of authorization. The documentation must 
include:
    (i) Name of agent authorizing the access;
    (ii) Name of agent accessing the system;
    (iii) Verification of the agent's authorization;
    (iv) Reason for remote access;
    (v) Description of work to be performed;
    (vi) Date and time of start of end-user remote access session; and
    (vii) Date and time of conclusion of end-user remote access 
session.
    (2) All remote access must be performed via a secured method.
    (j) Incident monitoring and reporting. (1) Documented procedures 
must be implemented for responding to, monitoring, investigating, 
resolving, documenting, and reporting security incidents associated 
with information technology systems.
    (2) All security incidents must be responded to within an 
established time period approved by the TGRA and formally documented.
    (k) Data backups. (1) Controls must include adequate backup, 
including, but not limited to, the following:
    (i) Daily data backup of critical information technology systems;
    (ii) Data backup of critical programs or the ability to reinstall 
the exact programs as needed;
    (iii) Secured storage of all backup data files and programs, or 
other adequate protection;
    (iv) Mirrored or redundant data source; and
    (v) Redundant and/or backup hardware.
    (2) Controls must include recovery procedures, including, but not 
limited to, the following:
    (i) Data backup restoration;
    (ii) Program restoration; and
    (iii) Redundant or backup hardware restoration.
    (3) Recovery procedures must be tested on a sample basis at 
specified intervals at least annually. Results must be documented.
    (4) Backup data files and recovery components must be managed with 
at least the same level of security and access controls as the system 
for which they are designed to support.
    (l) Software downloads. Downloads, either automatic or manual, must 
be performed in accordance with 25 CFR 547.12.
    (m) Verifying downloads. Following download of any game software, 
the Class II gaming system must verify the downloaded software using a 
software signature verification method. Using any method it deems 
appropriate, the TGRA must confirm the verification.


Sec.  543.21  What are the minimum internal control standards for 
surveillance?

    (a) Supervision. Supervision must be provided as needed for 
surveillance by an agent(s) with authority equal to or greater than 
those being supervised.
    (b) Surveillance equipment and control room(s). Controls must be 
established and procedures implemented to prevent unauthorized access 
and/or activities, misappropriation, forgery, theft, or fraud. Such 
controls must include the following:
    (1) For Tier A, the surveillance system must be maintained and 
operated from a secured location, such as a locked cabinet. For Tier B 
and C, the surveillance system must be maintained and operated from a 
staffed surveillance operation room(s).
    (2) The surveillance operation room(s) must be secured to prevent 
unauthorized entry.
    (3) Access to the surveillance operation room(s) must be limited to

[[Page 32462]]

surveillance agents and other authorized persons.
    (4) Surveillance operation room(s) access logs must be maintained.
    (5) Surveillance operation room equipment must have total override 
capability over all other satellite surveillance equipment located 
outside the surveillance operation room.
    (6) Power loss to the surveillance system.
    (i) For Tier A, in the event of power loss to the surveillance 
system, alternative security procedures, such as additional supervisory 
or security agents, must be implemented immediately.
    (ii) For Tier B and C, in the event of power loss to the 
surveillance system, an auxiliary or backup power source must be 
available and capable of providing immediate restoration of power to 
the surveillance system to ensure that surveillance agents can observe 
all areas covered by dedicated cameras.
    (7) The surveillance system must record an accurate date and time 
stamp on recorded events. The displayed date and time must not 
significantly obstruct the recorded view.
    (8) All surveillance agents must be trained in the use of the 
equipment, games, and house rules.
    (9) Each camera required by the standards in this section must be 
installed in a manner that will prevent it from being readily 
obstructed, tampered with, or disabled.
    (10) The surveillance system must:
    (i) Have the capability to display all camera views on a monitor;
    (ii) Include sufficient numbers of recording devices to record the 
views of all cameras required by this section;
    (iii) Record all camera views; and
    (iv) For Tier B and C only, include sufficient numbers of monitors 
to simultaneously display gaming and count room activities.
    (11) A periodic inspection of the surveillance systems must be 
conducted. When a malfunction of the surveillance system is discovered, 
the malfunction and necessary repairs must be documented and repairs 
initiated within seventy-two (72) hours.
    (i) If a dedicated camera malfunctions, alternative security 
procedures, such as additional supervisory or security agents, must be 
implemented immediately.
    (ii) The TGRA must be notified of any surveillance system and/or 
camera(s) that have malfunctioned for more than twenty-four (24) hours 
and the alternative security measures being implemented.
    (c) Additional surveillance requirements. With regard to the 
following functions, controls must also include:
    (1) Surveillance of the jackpot meter for Class II gaming systems:
    (2) Manual bingo: (i) For manual draws, the surveillance system 
must monitor the bingo ball drawing device or mechanical random number 
generator, which must be recorded during the course of the draw by a 
dedicated camera to identify the numbers or other designations drawn; 
and
    (ii) The surveillance system must monitor and record the activities 
of the bingo game, including drawing, calling, and entering the balls, 
numbers or other designations drawn.
    (3) Card games: (i) Except for card game tournaments, a dedicated 
camera(s) with sufficient clarity must be used to provide:
    (A) An overview of the activities on each card table surface, 
including card faces and cash and/or cash equivalents;
    (B) An overview of card game activities, including patrons and 
dealers; and
    (C) An unobstructed view of all posted progressive pool amounts.
    (ii) For card game tournaments, a dedicated camera(s) must be used 
to provide an overview of tournament activities, including entrances/
exits and any area where cash or cash equivalents are exchanged.
    (4) Cage and vault: (i) The surveillance system must monitor and 
record a general overview of activities occurring in each cage and 
vault area with sufficient clarity to identify individuals within the 
cage and patrons and staff members at the counter areas and to confirm 
the amount of each cash transaction;
    (ii) Each cashier station must be equipped with one (1) dedicated 
overhead camera covering the transaction area; and
    (iii) The cage or vault area in which fill and credit transactions 
occur must be monitored and recorded by a dedicated camera or motion 
activated dedicated camera that provides coverage with sufficient 
clarity to identify the chip values and the amounts on the fill and 
credit slips. Controls provided by a computerized fill and credit 
system constitute an adequate alternative to viewing the amounts on the 
fill and credit slips.
    (5) Count rooms: (i) The surveillance system must monitor and 
record with sufficient clarity a general overview of all areas where 
currency or coin may be stored or counted; and
    (ii) The surveillance system must provide coverage of scales of 
sufficient clarity to view any attempted manipulation of the recorded 
data.
    (d) Reporting Requirements. TGRA-approved procedures must be 
implemented for reporting suspected crimes and suspicious activity.
    (e) Recording Retention. Controls must be established and 
procedures implemented that include the following:
    (1) All recordings required by this section must be retained for a 
minimum of seven days; and
    (2) Suspected crimes, suspicious activity, or detentions by 
security personnel discovered within the initial retention period must 
be copied and retained for a time period, not less than one year.
    (f) Logs. Logs must be maintained and demonstrate the following:
    (1) Compliance with the storage, identification, and retention 
standards required in this section;
    (2) Each malfunction and repair of the surveillance system as 
defined in this section; and
    (3) Activities performed by surveillance agents.


Sec.  543.22  [Reserved]


Sec.  543.23  What are the minimum internal control standards for audit 
and accounting?

    (a) Conflicts of standards. When establishing SICS, the gaming 
operation should review, and consider incorporating, other external 
standards such as GAAP, GAAS, and standards promulgated by GASB and 
FASB. In the event of a conflict between the MICS and the incorporated 
external standards, the external standards prevail.
    (b) Accounting. Controls must be established and procedures 
implemented to safeguard assets and ensure each gaming operation:
    (1) Prepares accurate, complete, legible, and permanent records of 
all transactions pertaining to gaming revenue and activities for 
operational accountability.
    (2) Prepares general accounting records on a double-entry system of 
accounting, maintaining detailed, supporting, subsidiary records, and 
ensures the following activities are performed:
    (i) Record gaming activity transactions in an accounting system to 
identify and track all revenues, expenses, assets, liabilities, and 
equity;
    (ii) Record all markers, IOU's, returned checks, held checks, or 
other similar credit instruments;
    (iii) Record journal entries prepared by the gaming operation and 
by its independent accountants;
    (iv) Prepare income statements and balance sheets;

[[Page 32463]]

    (v) Prepare appropriate subsidiary ledgers to support the balance 
sheet;
    (vi) Prepare, review, and maintain accurate financial statements;
    (viii) Prepare transactions in accordance with management's general 
and specific authorization only;
    (ix) Record transactions to facilitate proper recording of gaming 
revenue and fees, and to maintain accountability of assets;
    (x) Compare recorded accountability for assets to actual assets at 
periodic intervals, and take appropriate action with respect to any 
discrepancies;
    (xi) Segregate functions, duties, and responsibilities in 
accordance with sound business practices;
    (xii) Prepare minimum bankroll calculations; and
    (xiii) Maintain and preserve all financial records and relevant 
supporting documentation.
    (c) Internal audit. Controls must be established and procedures 
implemented to ensure that:
    (1) Internal auditor(s) perform audits of each department of a 
gaming operation, at least annually, to review compliance with TICS, 
SICS, and these MICS, which include at least the following areas:
    (i) Bingo, including supervision, bingo cards, bingo card sales, 
draw, prize payout; cash and equivalent controls, technological aids to 
the play of bingo, operations, vouchers, and revenue audit procedures;
    (ii) Pull tabs, including, supervision, pull tab inventory, pull 
tab sales, winning pull tabs, pull tab operating funds, statistical 
records, and revenue audit procedures;
    (iii) Card games, including supervision, exchange or transfers, 
playing cards, shill funds, reconciliation of card room bank, posted 
rules, and promotional progressive pots and pools;
    (iv) Gaming promotions and player tracking procedures, including 
supervision, gaming promotion rules and player tracking systems;
    (v) Complimentary services or items, including procedures for 
issuing, authorizing, redeeming, and reporting complimentary service 
items;
    (vi) Patron deposit accounts and cashless systems procedures, 
including supervision, patron deposit accounts and cashless systems, as 
well as patron deposits, withdrawals and adjustments;
    (vii) Lines of credit procedures, including establishment of lines 
of credit policy;
    (viii) Drop and count standards, including supervision, count room 
access, count team, card game drop standards, player interface and 
financial instrument drop standards, card game count standards, player 
interface financial instrument count standards, and controlled keys;
    (ix) Cage, vault, cash and cash equivalent procedures, including 
supervision, cash and cash equivalents, personal checks, cashier's 
checks, traveler's checks, payroll checks, and counter checks, cage and 
vault accountability, kiosks, patron deposited funds, promotional 
payouts, drawings, and giveaway programs, chip and token standards, and 
cage and vault access;
    (x) Information technology, including supervision, class II gaming 
systems' logical and physical controls, independence, physical 
security, logical security, user controls, installations and/or 
modifications, remote access, incident monitoring and reporting, data 
back-ups, software downloads, and verifying downloads;
    (xi) Accounting standards, including accounting records, 
maintenance and preservation of financial records and relevant 
supporting documentation.
    (2) Internal auditor(s) are independent of gaming operations with 
respect to the departments subject to audit (auditors internal to the 
operation, officers of the TGRA, or outside CPA firm may perform this 
function).
    (3) Internal auditor(s) report directly to the Tribe, TGRA, audit 
committee, or other entity designated by the Tribe.
    (4) Documentation such as checklists, programs, reports, etc. is 
prepared to evidence all internal audit work and follow-up performed as 
it relates to compliance with TICS, SICS, and these MICS, including all 
instances of noncompliance.
    (5) Audit reports are maintained and made available to the 
Commission upon request and must 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.
    (6) All material exceptions resulting from internal audit work are 
investigated and resolved and the results are documented.
    (7) Internal audit findings are reported to management, responded 
to by management stating corrective measures to be taken, and included 
in the report delivered to management, the Tribe, TGRA, audit 
committee, or other entity designated by the Tribe for corrective 
action.
    (8) Follow-up observations and examinations must be performed to 
verify that corrective action has been taken regarding all instances of 
non-compliance cited by internal audit, the independent accountant, the 
Commission, and/or the TGRA. The verification must be performed within 
six (6) months following the date of notification.
    (d) Annual requirements. (1) Agreed upon procedures. A CPA must be 
engaged to perform an assessment to verify whether the gaming operation 
is in compliance with these MICS, and/or the TICS or SICS if they 
provide at least the same level of controls as the MICS. The assessment 
must be performed in accordance with agreed upon procedures and the 
most recent versions of the Statements on Standards for Attestation 
Engagements and Agreed-Upon Procedures Engagements (collectively 
``SSAEs''), issued by the American Institute of Certified Public 
Accountants.
    (2) The tribe must submit two copies of the agreed-upon procedures 
report to the Commission within 120 days of the gaming operation's 
fiscal year end in conjunction with the submission of the annual 
financial audit report required pursuant to 25 CFR part 571.
    (3) Review of internal audit.(i) The CPA must determine compliance 
by the gaming operation with the internal audit requirements in 
paragraph (d) above by:
    (A) Completing the internal audit checklist;
    (B) Ensuring that the internal auditor completed checklists for 
each gaming department of the operation;
    (C) Verifying that any areas of non-compliance have been 
identified;
    (D) Ensuring that audit reports are completed and include responses 
from management; and
    (E) Verifying that appropriate follow-up on audit findings has been 
conducted and necessary corrective measures have been taken to 
effectively mitigate the noted risks.
    (ii) If the CPA determines that the internal audit procedures 
performed during the fiscal year have been properly completed, the CPA 
may rely on the work of the internal audit for the completion of the 
MICS checklists as they relate to the standards covered by this part.
    (4) Report format. The SSAEs are applicable to agreed-upon 
procedures engagements required in this part. All noted instances of 
noncompliance with the MICS and/or the TICS or SICS, if they provide 
the same level of controls as the MICS, must be documented in the 
report with a narrative description, the number of exceptions and 
sample size tested.

[[Page 32464]]

Sec.  543.24  What are the minimum internal control standards for 
revenue audit?

    (a) Independence. Audits must be performed by agent(s) independent 
of the transactions being audited.
    (b) Documentation. The performance of revenue audit procedures, the 
exceptions noted, and the follow-up of all revenue audit exceptions 
must be documented and maintained.
    (c) Controls must be established and procedures implemented to 
audit of each of the following operational areas:
    (1) Bingo. (i) At the end of each month, verify the accuracy of the 
ending balance in the bingo control log by reconciling it with the 
bingo paper inventory. Investigate and document any variance noted.
    (ii) Daily, recalculate supporting records and documents to 
reconcile to summarized paperwork (e.g. total sales and payouts per 
shift and/or day).
    (iii) At least monthly, review variances related to bingo 
accounting data, which must include, at a minimum, any variance noted 
by the Class II gaming system for cashless transactions in and out, 
electronic funds transfer in and out, external bonus payouts, vouchers 
out and coupon promotion out. Investigate and document any variance 
noted.
    (iv) At least monthly, review statistical reports for any 
deviations from the mathematical expectations exceeding a threshold 
established by the TGRA. Investigate and document any deviations 
compared to the mathematical expectations required to be submitted per 
Sec.  547.4.
    (v) At least monthly, take a random sample, foot the vouchers 
redeemed and trace the totals to the totals recorded in the voucher 
system and to the amount recorded in the applicable cashier's 
accountability document.
    (2) Pull tabs. (i) Daily, verify the amount of winning pull tabs 
redeemed each day.
    (ii) At the end of each month, verify the accuracy of the ending 
balance in the pull tab control by reconciling the pull tabs on hand. 
Investigate and document any variance noted.
    (iii) At least monthly, compare for reasonableness the amount of 
pull tabs sold from the pull tab control log to the amount of revenue 
recognized.
    (iv) At least monthly, review statistical reports for any 
deviations exceeding a specified threshold, as defined by the TGRA. 
Investigate and document any large and unusual fluctuations noted.
    (3) Card games. (i) Daily, reconcile the amount indicated on the 
progressive sign/meter to the cash counted or received by the cage and 
the payouts made for each promotional progressive pot and pool. This 
reconciliation must be sufficiently documented, including 
substantiation of differences, adjustments, etc.
    (ii) At least monthly, review all payouts for the promotional 
progressive pots, pools, or other promotions to determine proper 
accounting treatment and that they are conducted in accordance with 
conditions provided to the customers.
    (iii) At least weekly, reconcile all contest/tournament entry and 
payout forms to the dollar amounts recorded in the appropriate 
accountability document.
    (4) Gaming promotions and player tracking. (i) At least monthly, 
perform procedures to ensure that promotional payments, drawings, and 
giveaway programs are conducted in accordance with information provided 
to the customers.
    (ii) At least one day per quarter, for computerized player tracking 
systems, perform the following procedures:
    (A) Review all point addition/deletion authorization documentation, 
other than for point additions/deletions made through an automated 
process, for propriety;
    (B) Review exception reports, including transfers between accounts; 
and
    (C) Review documentation related to access to inactive and closed 
accounts.
    (iii) At least annually, all computerized player tracking systems 
(in-house developed and purchased systems) must be reviewed by 
personnel independent of the individuals that set up or make changes to 
the system parameters. The review must be performed to determine that 
the configuration parameters are accurate and have not been altered 
without appropriate management authorization (e.g., player tracking 
system--verify the accuracy of the awarding of points based on the 
dollar amount wagered). Document and maintain the test results.
    (5) Complimentary services or items. At least monthly, review the 
reports required in Sec.  543.13(d). These reports must be made 
available to the Tribe, TGRA, audit committee, other entity designated 
by the Tribe, and the Commission, upon request.
    (6) Patron deposit accounts. (i) At least weekly, reconcile patron 
deposit account liability (deposits  adjustments-
withdrawals = total account balance) to the system record.
    (ii) At least weekly, review manual increases and decreases to/from 
player deposit accounts to ensure proper adjustments were authorized.
    (7) Lines of credit. (i) At least three (3) times per year, an 
agent independent of the cage, credit, and collection functions must 
perform all of the following:
    (A) Select a sample of line of credit accounts;
    (B) Ascertain compliance with credit limits and other established 
credit issuance procedures;
    (C) Reconcile outstanding balances of both active and inactive 
(includes write-offs and settlements) accounts on the accounts 
receivable listing to individual credit records and physical 
instruments. This procedure need only be performed once per year for 
inactive accounts; and
    (D) Examine line of credit records to determine that appropriate 
collection efforts are being made and payments are being properly 
recorded.
    (ii) On at least five (5) days per month, subsequently reconcile 
partial payment receipts to the total payments recorded by the cage for 
the day and account for the receipts sequentially.
    (iii) At least monthly, perform an evaluation of the collection 
percentage of credit issued to identify unusual trends.
    (8) Drop and count. (i) At least quarterly, unannounced currency 
counter and currency counter interface (if applicable) tests must be 
performed, and the test results documented and maintained. All 
denominations of currency and all types of cash out tickets counted by 
the currency counter must be tested. This test may be performed by 
internal audit or the TGRA. The result of these tests must be 
documented and signed by the agent or agents performing the test.
    (ii) At least quarterly, unannounced weigh scale and weigh scale 
interface (if applicable) tests must be performed, and the test results 
documented and maintained. This test may be performed by internal audit 
or the TGRA. The result of these tests must be documented and signed by 
the agent or agents performing the test.
    (iii) For computerized key security systems controlling access to 
drop and count keys, perform the following procedures:
    (A) At least quarterly, review the report generated by the 
computerized key security system indicating the transactions performed 
by the individual(s) that adds, deletes, and changes users' access 
within the system (i.e., system administrator). Determine whether the 
transactions completed by the system administrator provide adequate 
control over the access to the drop and count keys. Also, determine 
whether any drop and count key(s) removed or returned to the key 
cabinet

[[Page 32465]]

by the system administrator was properly authorized;
    (B) At least quarterly, review the report generated by the 
computerized key security system indicating all transactions performed 
to determine whether any unusual drop and count key removals or key 
returns occurred; and
    (C) At least quarterly, review a sample of users that are assigned 
access to the drop and count keys to determine that their access to the 
assigned keys is adequate relative to their job position.
    (iv) At least quarterly, an inventory of all controlled keys must 
be performed and reconciled to records of keys made, issued, and 
destroyed. Investigations must be performed for all keys unaccounted 
for, and the investigation documented.
    (9) Cage, vault, cash, and cash equivalents. (i) At least monthly, 
the cage accountability must be reconciled to the general ledger.
    (ii) On at least one day each month, trace the amount of cage 
deposits to the amounts indicated in the bank statements.
    (iii) On at least two days each year, a count must be performed of 
all funds in all gaming areas (i.e. cages, vaults, and booths 
(including reserve areas), kiosks, cash-out ticket redemption machines, 
and change machines. Count all chips and tokens by denomination and 
type. Count individual straps, bags, and imprest banks on a sample 
basis. Trace all amounts counted to the amounts recorded on the 
corresponding accountability forms to ensure that the proper amounts 
are recorded. Maintain documentation evidencing the amount counted for 
each area and the subsequent comparison to the corresponding 
accountability form. The count must be completed within the same gaming 
day for all areas.
    (A) Counts must be observed by an individual independent of the 
department being counted. It is permissible for the individual 
responsible for the funds to perform the actual count while being 
observed.
    (B) Internal audit may perform and/or observe the two counts.
    (iv) At least annually, select a sample of invoices for chips and 
tokens purchased, and trace the dollar amount from the purchase invoice 
to the accountability document that indicates the increase to the chip 
or token inventory to ensure that the proper dollar amount has been 
recorded.
    (v) At each business year end, create and maintain documentation 
evidencing the amount of the chip/token liability, the change in the 
liability from the previous year, and explanations for adjustments to 
the liability account including any adjustments for chip/token float.
    (vi) At least monthly, review a sample of returned checks to 
determine that the required information was recorded by cage personnel 
when the check was cashed.
    (vii) At least monthly, review exception reports for all 
computerized cage systems for propriety of transactions and unusual 
occurrences. The review must include, but is not limited to, voided 
authorizations. All noted improper transactions or unusual occurrences 
identified must be investigated and the results documented.
    (viii) Daily, reconcile all parts of forms used to document 
increases/decreases to the total cage inventory, investigate any 
variances noted, and document the results of such investigations.
    (10) Accounting. (i) At least monthly, verify receipt, issuance, 
and use of controlled inventory, including, but not limited to, bingo 
cards, pull tabs, playing cards, keys, pre-numbered and/or multi-part 
forms, etc.
    (ii) Periodically perform minimum bankroll calculations to ensure 
that the gaming operation maintains cash in an amount sufficient to 
satisfy the gaming operation's obligations.


Sec.  543.25-543.49  [Reserved]

    Dated this 22nd of May, 2012.
Tracie L. Stevens,
Chairwoman.

Steffani A. Cochran,
Vice-Chairwoman.

Daniel J. Little,
Commissioner.
[FR Doc. 2012-12991 Filed 5-31-12; 8:45 am]
BILLING CODE 7565-01-P