(a)

1. (1) Each licensee shall submit to the Arkansas Racing Commission and to the CGS a narrative description of its system of internal procedures and administrative and accounting controls (internal controls), or modifications to previously approved internal controls, at least thirty (30) days before the licensee’s casino gaming operations are to commence, unless otherwise directed by the commission.
2. (2) Each submission shall be accompanied by a certification by the licensee’s chief financial officer or equivalent that the submitted internal controls are adequate, effective, and establish a consistent overall system of internal controls and conform to generally accepted accounting principles.
3. (3) The initial submission shall be accompanied by a report of an independent certified public accountant licensed to practice in Arkansas or other state acceptable by the commission, stating that the submitted system conforms in all respects to the standards of internal control set forth in the commission’s rules or in what respects the system does not conform.
4. (4) Except as otherwise provided in this section, a licensee may, upon submission to the commission of a narrative description of a change in its system of internal controls and the two (2) original signed certifications described above, implement the change on the sixteenth calendar day following the completed submission.
5. (5) Any submission received by the commission after 3:00 p.m. shall be considered to have been submitted on the next business day.

6. (6) Each submission by a licensee or applicant shall include, as applicable and without limitation, the following:

   1. (A) Administrative controls which include, without limitation, the procedures and records that are concerned with the decision-making processes leading to management’s authorization of transactions;
   2. (B) Accounting controls which have as their primary objectives the safeguarding of assets and the reliability of financial records and are consequently designed to provide reasonable assurance that:

(i) Transactions are executed in accordance with management’s general and specific authorization;

1. (ii) Transactions are recorded to permit preparation of financial statements in conformity with generally accepted accounting principles and 23 CAR § 358-604, and to maintain accountability for assets; and

   1. (iii) Access to assets is permitted only in accordance with management authorization;
   2. (C) The recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences;

   3. (D)

      1. (i) A list of persons assigned to the repairing and maintenance of gaming machines and bill acceptors, participating in the filling of payout reserve containers and payment of jackpots or any other job duty involving the operation of the casino gaming.
      2. (ii) This information does not have to be submitted to the commission, however, must be available for auditing by the CGS.
      3. (iii) Nothing in this section shall be construed to limit a licensee from utilizing personnel in addition to those described herein nor shall anything in this section be construed to limit the discretion of the commission to order the utilization of additional personnel by the licensee necessary for the proper conduct and effective supervision of gaming in an establishment;
   4. (E) Records regarding licensee ownership;
   5. (F) Procedures for patron signature files used for identifying a person or validity of a signature, if applicable;

   6. (G)

      1. (i) Maintain internal controls for the authorization and issuance of complimentary services and items, including cash and noncash gifts.
      2. (ii) Such internal controls shall include, without limitation, the procedures by which the licensee delegates to its employees the authority to approve the issuance of complimentary services and items for casino gaming patrons and the procedures by which conditions or limits, if any, which may apply to such authority are established and modified, including limits based on relationships between the authorizer and recipient, and shall further include effective provisions for audit purposes;
   7. (H) Procedures on overall reconciliation of all documents including jackpot payout slips, ticket redemption terminal fills, receipts generated by cashiers, change persons, and attendants, along with the conforming soft count room receipt;
   8. (I) Develop a plan that defines handling of the receipt of chips from the manufacturer, inventory of chips at the licensee, and the destruction of the chips by the licensee, where applicable; and
   9. (J) Develop a written procedure for determining the gross receipts from casino gaming and gross wagering revenue for each type of casino gaming offered.

(b)

1. (1) The commission shall review a submission made pursuant to subsection (a) of this section and information made available to the commission pursuant to subsection (a) of this section and determine whether the internal controls conform to the requirements of the commission and provides adequate and effective controls for the operations of the licensee.

2. (2) No applicant for a license shall commence wagering on casino gaming until the licensee’s system of internal controls is approved by the commission.

   1. (c) If, during its review of a licensee’s internal controls the commission determines that a procedure in the internal controls contains a substantial and material insufficiency likely to have a direct and materially adverse impact on the integrity of gaming or the control of gross revenue, the commission, by written notice to the licensee, shall:
3. (1) Specify the precise nature of the insufficiency and when possible, an acceptable alternative procedure;
4. (2) Schedule a hearing before the commission no later than fifteen (15) calendar days after the date of such written notice to determine whether the internal controls are insufficient; and

5. (3) Direct that any internal controls in issue not be implemented until approved by the commission.

   1. (d) Examples of procedures that the commission may, under appropriate circumstances, determine to contain a substantial and material insufficiency likely to have a direct and materially adverse impact on the integrity of gaming or the control of gross revenue shall include, without limitation, the following:
6. (1) Procedures that fail to provide an adequate audit trail that would permit the review of the licensee’s casino gaming operations or the reconstruction of gross revenue of transactions;
7. (2) Procedures that fail to provide for the segregation of incompatible functions so that no employee is in a position both to commit an error or to perpetrate a fraud and to conceal the error or fraud in the normal course of his or her duties;
8. (3) Procedures that do not include forms or other materials referenced in the submission or required by the rules that are essential elements of the internal controls and prevent a meaningful review of the submission;
9. (4) Procedures that would implement accounting procedures not yet authorized by the rules of the commission; and
10. (5) Procedures that are dependent upon the use of equipment or related devices or software not yet approved by the commission, unless such procedures are required as part of an authorized test of the equipment or related device or software.

(f)

1. (1)

   1. (A) A current version of the internal controls of a licensee shall be maintained in, or made available through secure computer access to, the accounting department and surveillance department of the licensee.
   2. (B) The licensee shall also maintain a copy of any superseded changes to its internal control procedures and the two (2) certifications required for each change for a minimum of five (5) years in a location approved by the commission.
   3. (C) Each page of the internal controls shall indicate, as applicable, the date on which it was submitted to the commission and the date on which it was either approved by the commission or implemented pursuant to subsection (a) of this section or immediate changes to internal controls which shall include the date on which it was filed internally and implemented by the licensee.
2. (2) Notwithstanding any other provision of this section to the contrary, the two (2) certifications otherwise required by subsection (a) of this section shall not be required for changes to the jobs compendium of a licensee other than the licensed categories, job codes, job functions, reporting lines (including but not limited to new positions and deleted positions) or job titles as provided within the organizational structure.

(g)

1. (1) Nothing contained herein would preclude any licensee from implementing procedures which constitute an acceptable alternative to the specific standards set forth herein.
2. (2) Any such alternative procedure would have to be submitted to the commission in accordance with the procedures set forth in this section and would have to be reviewed and approved by the commission.

(h) Licensee’s system of internal controls not required to be submitted to the commission.

1. (1) Each licensee offering gaming operations shall make available to the commission and to the CGS for inspection and approval, which are not required to be submitted to the commission, as applicable and without limitation, the following:

   1. (A)

      1. (i) An organizational structure which is designed to preserve the integrity of the licensee.
      2. (ii) This information does not have to be submitted to the commission, however, must be available for auditing by the CGS;

   2. (B)

      1. (i) The design, construction, location, and security of the count room, currency vault, cashier booths, and cashier cages.
      2. (ii) This information does not have to be submitted to the commission, however, must be available for auditing by the CGS;

   3. (C)

      1. (i) The names of persons possessing access to the currency bank, security keys, and those that are authorized to access the alarm system.
      2. (ii) This information does not have to be submitted to the commission, however, must be available for auditing by the CGS;

   4. (D)

      1. (i) Removal, transportation, and count of cash storage boxes including the signature procedures.
      2. (ii) This information does not have to be submitted to the commission, however, must be available for auditing by the CGS;

   5. (E)

      1. (i) The licensee’s surveillance system plan, including the surveillance system location or locations.
      2. (ii) This information does not have to be submitted to the commission, however, must be available for auditing by the CGS; and

   6. (F)

      1. (i) Policies and procedures that allow and track those individuals who request to be excluded from the facility that are voluntarily agreeing to be excluded from all casino gaming activities and to be prohibited from collecting any winnings or recovering any losses at all eligible facilities.
      2. (ii) This information does not have to be submitted to the commission, however, must be available for auditing by the CGS.
2. (2) This information will be assessed by the commission in conjunction with the submitted system of internal controls, as outlined in this part to ensure the licensee is operating with adequate and effective controls.