Auditing Promotions Presented by: Gena Davis Senior Auditor, Cherokee Nation Gaming Commission

1. Auditing Promotions Presented by: Gena Davis Senior Auditor, Cherokee Nation Gaming Commission gena-davis@cherokee.org Christopher Barnhart Gaming Auditor, Cherokee Nation Gaming Commission christopher-barnhart@cherokee.org

2. Enough about us, now what about you? • How many of you work in audit now? • How many of you work for operations? • How many of you work for the regulatory side (i.e. gaming commission)? • *Now get up and find someone you don’t know and introduce yourself. • We’re all here for the same reason!

3. Our Topics • Why auditing promotions is important • Who should be auditing • Risk in Promotions • Techniques on writing an audit program that best fits your casino • Different systems for tracking promotional drawings/giveaways • Issues identified with promotions and ways to remedy those issues

4. Why Casinos Conduct Promotions • Strategic Level • Increase trip frequency • Increase average spending • Draw in new customers • Financial Level • Increase revenue • Customer Loyalty

5. Significance to Auditing Promotions • Since promotional allowances are some of the biggest expenses that casinos have, then they need to be tracked and audited sufficiently. • Q. Why do we audit promotions? Two main reasons: • 1. To ensure the casino is making the appropriate business decisions and that all financials have been accounted for. • 2. Requirement by the tribe, commission, or audit committee.

6. Responsible Parties • Who is ultimately responsible for conducting the audit of promotions? • Managers/employees – self audit • Revenue Audit – first initial independent audit • Internal Audit – second independent audit • Gaming Commission – second or third independent audit • External Auditors – third or fourth independent audit

7. Key Risk • High Expense • Concerns with Impropriety • Weak Controls • Database Reporting • Direct Mail = Stop sign for self-excluded persons (SEP’s) • Coupons/Prizes • Are there any key risk that I may have not listed that need to be included?

8. Overview of General Auditing Standards • Planning Phase (first steps) • Recognize what regulations and policies and procedures will be involved in the audit. • Review prior audits. • Ensure the audit program fits the needs of tribal regulations and ensures any areas of concern are covered throughout the program. • Complete standard planning steps. (We follow the International Professional Practices Framework (IPPF).

9. Overview of General Auditing Standards Continued • Fieldwork (dirty work) • Conduct fieldwork based on audit program and risk. Ensure any areas of concern are being followed up. • Ensure that areas of concern during the audit are being communicated to the auditee. • Closing (breathe and smile) • Finalize audit report. • Issue report to casino management. • Follow standard closing procedures.

10. Building a Promotions Audit Program • Review regulations, policies and procedures, state compacts, and any other relative information to ensure you conduct a thorough compliance audit/review. • Review prior audits. • Start with an outline that best fits your audit system. (TeamMate – Audit Management System)

11. Building a Promotions Audit Program continued • Brain storm ideas – This helps to identify areas with like or similar laws and regulations. Therefore, those areas can be grouped together in the audit program. • Think about the processes conducted at your facility for promotions. (Even though the processes may not be accurate or in compliance, it helps determine the actions needed to complete testing for that particular audit step.) • Send the audit program through a series of reviews to ensure the best result. (We utilize two reviewers)

12. Sample Outline - Audit Program

13. Manual - Audit Program

14. System View – Audit Program

15. System View – Audit Program

16. Promotional Tracking Systems • IGT – IGT Advantage • MGT – MGT Promotional Intelligence Suite

17. Examining Reports • First step to consider before reviewing reports is to ensure that the reports are accurate and utilized by the casino (revenue audit, marketing team, etc.). • When conducting a promotions audit, you should always have the gaming commission report (GCR) available so that you can compare the reports back to the approved promotions. • Be prepared by understanding the reports and the information provided on the reports. This can be done by researching the system that produces the reports or by simply questioning the employees who utilize the reports. • Be sure to test all aspects of the GCRs, post forma information or promotions results, and reports to ensure that the promotion was conducted as approved.

18. Sample Report from IGT Advantage

19. Sample Report from IGT Advantage

20. Example of Issues with Promotions • Issue: Accounting and Revenue Audit procedures do not address all policies and/or regulations. • Remedy: When creating audit procedures, ensure that all areas of the MICS, TICS, and any applicable regulations are covered. This can be done by performing a thorough cross reference of each applicable regulation to the policy and procedure.

21. Example Issues with Promotions • Issue: Post Formas are not being created and submitted to the appropriate management. • Remedy: Ensure that marketing management follow policy and procedure at the end of a promotion. Post Formas are utilized to verify promotion outcomes and to ensure that the promotion was conducted as approved by the gaming commission.

22. Questions?

23. Thank you!