491—5.2(99D,99F) Annual reports. Licensees shall submit audits to the commission as required by Iowa Code sections 99D.20 and 99F.13.
	5.2(1) The audit of financial transactions and condition of licensee’s operation shall include:
	a. 	An internal control letter;
	b. 	Documentation that the county board of supervisors selected the auditing firm;
	c. 	A balance sheet; and
	d. 	A profit-and-loss statement pertaining to the licensee’s activities in the state, including a breakdown of expenditures and subsidies.
	5.2(2) If the licensee’s fiscal year does not correspond to the calendar year, a supplemental schedule indicating financial activities on a calendar-year basis shall be included in the report.
	5.2(3) In the event of a license termination, change in business entity, or material change in ownership, the administrator may require the filing of an interim report, as of the date of occurrence of the event. The filing due date shall be the later of 30 calendar days after notification to the licensee or 30 calendar days after the date of the occurrence of the event, unless an extension is granted.
	5.2(4) An engagement letter for the audit between the licensee and auditing firm shall be available upon request. The engagement letter requirement does not apply to the licensed qualified sponsoring organization. Conditions of engagement for the audit shall include, at a minimum, the following requirements:
	a. 	The auditing firm shall report any material errors, irregularities or illegal acts that come to the firm’s attention during the course of an audit to the licensee’s audit committee or senior management as required by the rules of professional conduct that apply to the auditing firm. The licensee shall report such material errors, irregularities or illegal acts to the commission in a timely manner following reporting to the licensee’s audit committee or senior management.
	b. 	The auditing firm shall inform the commission in writing of matters that come to the firm’s attention that represent significant deficiencies in the design or operation of the internal control structure.
	c. 	The audit supervisor or an audit staff member conducting the audit must have experience or training in the gaming industry.
	d. 	The auditing firm agrees to respond timely to all reasonable requests of successor auditors.
	e. 	The auditing firm agrees, if requested by the commission, to provide licensee management and the commission with recommendations designed to help the licensee make improvements in its internal control structure and operation, and other matters that are discovered during the audit.
	5.2(5) Consolidated financial statements may be filed by commonly owned or operated establishments with the following conditions:
	a. 	The consolidated financial statements shall include in the supplemental schedule, or elsewhere as determined by the licensee and auditing firm, for each licensee: balance sheets, statements of operations, statements of cash flows, schedules of operating expenses and schedules of adjusted gross revenue and taxes and fees paid to governmental agencies.
	b. 	The auditing firm must audit and issue a report on the separate financial statements that expresses an opinion for each individual entity licensed in Iowa.
	c. 	Any internal audit staff assisting with the audit shall report any material errors, irregularities or illegal acts that come to the staff’s attention during the course of an audit to the licensee’s audit committee or senior management as required by the rules of professional conduct. The licensee shall report such material errors, irregularities or illegal acts to the commission in a timely manner following reporting to the licensee’s audit committee or senior management.
	d. 	All other requirements in this rule are met and included for each entity licensed in Iowa unless an exception is granted in writing by the commission (or administrator).
	5.2(6) The annual audit report required by Iowa Code section 99D.20 shall include a schedule detailing the following information: number of performances; attendance; regulatory fee; total mutuel handle and taxes paid to the state, city, and county; unclaimed winnings; purses paid indicating sources; total breakage and disbursements; and the disbursements of 1 percent of exotic wagers on three or more racing animals.
	5.2(7) The annual audit report required by Iowa Code section 99F.13 shall include:
	a. 	A schedule detailing a weekly breakdown of adjusted gross revenue; taxes paid to the state, city, county, and county endowment fund; and regulatory fees.
	b. 	A report on whether material weaknesses in internal accounting control exist. A report shall be filed for each individual entity licensed in Iowa if a consolidated audit is provided.
	5.2(8) Internal control records, compliance records, marketing expenses, and supplemental schedules included in the annual reports shall be kept confidential, as outlined in Iowa Code section 99F.12(4).
[ARC 1876C, IAB 2/18/15, effective 3/25/15; ARC 4378C, IAB 3/27/19, effective 5/1/19]