Audit Standards, 57595-57598 [2022-20230]
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Federal Register / Vol. 87, No. 182 / Wednesday, September 21, 2022 / Rules and Regulations
§ 522.12 Individually owned class II
gaming operations operating on September
1, 1986.
For licensing of individually owned
gaming operations operating on
September 1, 1986, under § 502.3(e) of
this chapter, a tribal ordinance shall
contain the same requirements as those
in § 522.11(a) through (d).
§ 522.13
Revocation of class III gaming.
A governing body of a tribe, in its sole
discretion and without the approval of
the Chair, may adopt an ordinance or
resolution revoking any prior ordinance
or resolution that authorizes class III
gaming.
(a) A tribe shall submit to the Chair
one copy of any revocation ordinance or
resolution certified as authentic by an
authorized tribal official.
(b) The Chairman shall publish such
ordinance or resolution in the Federal
Register and the revocation provided by
such ordinance or resolution shall take
effect on the date of such publication.
(c) Notwithstanding any other
provision of this section, any person or
entity operating a class III gaming
operation on the date of publication in
the Federal Register under paragraph
(b) of this section may, during a oneyear period beginning on the date of
publication, continue to operate such
operation in conformance with a tribalstate compact.
(d) A revocation shall not affect:
(1) Any civil action that arises during
the one-year period following
publication of the revocation; or
(2) Any crime that is committed
during the one-year period following
publication of the revocation.
Dated: September 14, 2022.
E. Sequoyah Simermeyer,
Chairman.
Jeannie Hovland
Vice Chair.
[FR Doc. 2022–20235 Filed 9–20–22; 8:45 am]
BILLING CODE 7565–01–P
DEPARTMENT OF THE INTERIOR
National Indian Gaming Commission
25 CFR Part 571
RIN 3141–AA72
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Audit Standards
National Indian Gaming
Commission.
ACTION: Final rule.
AGENCY:
The National Indian Gaming
Commission (NIGC) is amending its
Audit standards regulations. The
amendments eliminate the Commission
SUMMARY:
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waiver requirement for reviewed
financial statements and allow all
operations grossing less than $2 million
in the previous fiscal year to submit
reviewed financial statements provided
that the tribe or tribal gaming regulatory
authority (TGRA) permits the gaming
operation to submit reviewed financials.
The amendments also create a third tier
of financial reporting for charitable
gaming operations with annual gross
revenues of $50,000 or less where, if
permitted by the tribe, a tribal or
charitable gaming operation may submit
financial information on a monthly
basis to the tribe or the TGRA and in
turn, the tribe or TGRA provides an
annual certification to the NIGC
regarding the gaming operation’s
compliance with the financial reporting
requirements. The amendments also add
a provision clarifying that the
submission of an adverse opinion does
not satisfy the regulation’s reporting
requirements.
DATES: This rule is effective October 21,
2022.
FOR FURTHER INFORMATION CONTACT:
Michael Hoenig, National Indian
Gaming Commission; Telephone: (202)
632–7003.
SUPPLEMENTARY INFORMATION:
I. 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 National Indian Gaming
Commission (NIGC or Commission) and
sets out a comprehensive framework for
the regulation of gaming on Indian
lands. On January 22, 1993, the
Commission promulgated § 571.12
establishing audit standards for tribal
gaming facilities. On July 27, 2009, the
Commission amended the regulation to
allow tribes with multiple facilities to
consolidate their audit statements into
one and to allow operations earning less
than $2 million in gross gaming revenue
to file an abbreviated statement.
II. Development of the Rule
On June 9, 2021, the National Indian
Gaming Commission sent a Notice of
Consultation announcing that the
Agency intended to consult on several
topics, including proposed changes to
the Audit standards. Prior to
consultation, the Commission released
proposed discussion drafts of the
regulations for review. The amendments
to the Audit standards are designed to
reduce the financial hurdles that small
and charitable gaming operations face
regarding the audit requirement. They
also clarify which types of audit
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opinions satisfy the audit submission
requirements. The Commission held
two virtual consultation sessions in
September and one virtual consultation
in October of 2021 to receive tribal
input on any proposed changes.
The Commission then published a
proposed rule for notice and comments
on June 1, 2022 at 87 FR 33091 and
extended the comment period to August
1, 2022 on July 13, 2022 at 87 FR 41637.
III. Review of Public Comments
The Commission received several
general and specific comments on the
proposed amendments.
Comment: One commenter proposed
changes to eliminate the ‘‘prepared by a
certified public accountant’’ language
from the financial statements element of
audit submissions.
Response: Commission agrees and has
revised the rule accordingly.
Comment: One commenter proposed
changes to clarify that the independent
certified public accountant is the entity
that may issue an adverse opinion and
that any adverse opinions must still be
submitted to the Commission.
Response: Commission agrees and has
revised the rule accordingly.
Comment: One commenter expressed
appreciation for the Commission’s
proposal to continue accepting adverse
opinions that result from financial
statements prepared in accordance with
generally accepted accounting
principles as promulgated by the
Financial Accounting Standards Board
rather than the Governmental
Accounting Standards Board.
Response: Commission appreciates
the comment and has maintained the
exception in this rule.
Comment: Two commenters noted
that the discussion draft circulated
during the consultation rounds
addressed disclaimed audits, but the
proposed rule did not. They asked what
the Commission’s position is on
disclaimed audits.
Response: At this time, the
Commission has chosen to continue to
accept disclaimed audit opinions, but
may revisit the issue in the future. The
Compliance Division will continue to
carefully review each disclaimed
opinion and the circumstances behind
them.
Comment: One commenter expressed
concern that tribes who go to the effort
and expense of conducting an audit
only to receive an adverse opinion are
now subject to the same violation as a
tribe that failed to submit anything at
all.
Response: The reasons for receiving
an adverse opinion and the difference in
circumstances is more appropriately
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Federal Register / Vol. 87, No. 182 / Wednesday, September 21, 2022 / Rules and Regulations
considered in the Civil Fine Assessment
process, which requires the Chairman to
weigh the unique facts and
circumstances—including good faith
efforts toward compliance—for each
violation.
Comment: Two commenters are
concerned that this creates a new basis
for a violation without requiring an
intermediate investigative or technical
assistance step.
Response: Under the amended rule, if
a tribe submits an adverse opinion, the
Chair must still follow the procedures
set forth in IGRA and NIGC regulations
before taking any enforcement action.
The Commission has determined that
this amendment is necessary for the
Chairman to protect the tribal gaming
industry and its assets.
Comment: One commenter has
requested more detail on how a tribe or
TGRA must notify NIGC that it has
given permission for a gaming operation
to submit reviewed financial statements.
Response: Upon reviewing this
section of the regulation, the
Commission determined that notice is
not necessary and has revised the rule
accordingly. The Commission presumes
by submission of the reviewed financial
statements that the tribe or TGRA has
given permission for the review process.
If any questions arise about a gaming
operation’s authority to file reviewed
statements, the Compliance Division
will contact the tribe or TGRA for
confirmation.
Comment: Several commenters asked
what constitutes a ‘‘reason to believe’’
that a gaming operation’s assets are at
risk or are being misused under IGRA,
and suggest that it should be more
clearly defined.
Response: The Commission disagrees.
Nothing in IGRA or NIGC regulations
requires the Commission to reduce the
audit requirements to a review of
financial statements or submission of
financial records to the TGRA. The
Commission is taking this step to relieve
the burden on certain small and
charitable gaming operations. That
being said, the Commission and the
Chairman still have the regulatory
responsibility placed on it under IGRA
to ensure that the Tribe is the primary
beneficiary of its gaming operations and
that gaming revenues are used for the
purposes set forth in IGRA. The
Commission believes the standard set
forth in this rule allows the NIGC to
achieve both of those goals and
adequately limits the Chairman’s
discretion to a good faith belief in a
threat to gaming assets.
Comment: Several commenters noted
that draft circulated during
consultations included changes to the
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language regarding gaming operations
consolidating audits for multiple places,
facilities, or locations, but the proposed
rule did not contain these changes.
Response: In the draft submitted for
consultation, the language in § 571.12(d)
stated: ‘‘If a tribe has multiple gaming
facilities or operations on the tribe’s
Indian lands, the tribe may choose to
satisfy the annual audit requirement of
paragraph (b) with a consolidated audit
if the following requirements are
satisfied. . . .’’ This change was
inadvertently left out of the NPRM, and
the language reverted back to that in the
existing regulation, ‘‘If a gaming
operation has multiple gaming
places. . . .’’ The Commission is
reinstating the language proposed in the
consultation draft, as it is more accurate.
Comment: One commenter expressed
appreciation for the third tier of
financial reporting established for
operations with gross gaming revenue
under $50,000.
Response: Commission appreciates
this comment.
Comment: Several commenters
requested that the Commission increase
the $50,000 threshold for reviewed
financial statements to $100,000 or
higher.
Response: Commission disagrees. The
reviewed financial statements submitted
to date do not indicate any benefit to
raising the threshold at this time. The
Commission may revisit this in the
future if circumstances change.
IV. Regulatory Matters
Regulatory Flexibility Act
The 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 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 rule have a
significant adverse effect on
competition, employment, investment,
productivity, innovation, or the ability
of the enterprises, to compete with
foreign based enterprises.
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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 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 rule does not unduly burden the
judicial system and meets the
requirements of section 3(a) and 3(b)(2)
of the Order.
National Environmental Policy Act
The Commission has determined that
the 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 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–
0001.
Tribal Consultation
The National Indian Gaming
Commission is committed to fulfilling
its tribal consultation obligations—
whether directed by statute or
administrative action such as Executive
Order (E.O.) 13175 (Consultation and
Coordination with Indian Tribal
Governments)—by adhering to the
consultation framework described in its
Consultation Policy published July 15,
2013. The NIGC’s consultation policy
specifies that it will consult with tribes
on Commission Action with Tribal
Implications, which is defined as: Any
Commission regulation, rulemaking,
policy, guidance, legislative proposal, or
operational activity that may have a
substantial direct effect on an Indian
tribe on matters including, but not
limited to the ability of an Indian tribe
to regulate its Indian gaming; an Indian
tribe’s formal relationship with the
Commission; or the consideration of the
Commission’s trust responsibilities to
Indian tribes.
Pursuant to this policy, on June 9,
2021, the National Indian Gaming
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Federal Register / Vol. 87, No. 182 / Wednesday, September 21, 2022 / Rules and Regulations
Commission sent a Notice of
Consultation to the public, announcing
the Agency intended to consult on
several topics, including proposed
amendments to NIGC audit standards.
The Commission held two virtual
consultation sessions in September and
one virtual consultation session in
October of 2021 to receive tribal input
on proposed changes.
List of Subjects in 25 CFR Part 571
Gambling, Indian—lands, Indian—
tribal government, Reporting and
recordkeeping requirements.
Therefore, for reasons stated in the
preamble, 25 CFR part 571 is amended
as follows:
PART 571—MONITORING AND
INVESTIGATIONS
1. The authority citation for part 571
continues to read as follows:
■
Authority: 25 U.S.C. 2706(b),
2710(b)(2)(C), 2715, 2716.
■
2. Revise § 571.12 to read as follows:
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§ 571.12
Audit standards.
(a) Each tribe shall prepare
comparative financial statements
covering all financial activities of each
class II and class III gaming operation on
the tribe’s Indian lands for each fiscal
year.
(b) A tribe shall engage an
independent certified public accountant
to conduct an annual audit of the
financial statements of each class II and
class III gaming operation on the tribe’s
Indian lands for each fiscal year. The
audit and auditor must meet the
following standards:
(1) The independent certified public
accountant must be licensed by a state
board of accountancy.
(2) Financial statements shall conform
to generally accepted accounting
principles and the annual audit shall
conform to generally accepted auditing
standards.
(3) The independent certified public
accountant expresses an opinion on the
financial statements. If the independent
certified public accountant issues an
adverse opinion, it still must be
submitted, but does not satisfy this
requirement unless:
(i) It is the result of the gaming
operation meeting the definition of a
state or local government and the
gaming operation prepared its financial
statements in accordance with generally
accepted accounting principles (GAAP)
as promulgated by Financial Accounting
Standards Board (FASB); or
(ii) The adverse opinion pertains to a
consolidated audit pursuant to
paragraph (d) of this section and the
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operations not attributable to the
adverse opinion are clearly identified.
(c) If a gaming operation has gross
gaming revenues of less than $2,000,000
during the prior fiscal year, the annual
audit requirement of paragraph (b) of
this section is satisfied if:
(1) The independent certified public
accountant completes a review of the
financial statements conforming to the
statements on standards for accounting
and review services of the gaming
operation; and
(2) The tribe or tribal gaming
regulatory authority (TGRA) permits the
gaming operation to submit a review of
the financial statements according to
this paragraph (c); provided that
(3) If the Chair of the NIGC has reason
to believe that the assets of a gaming
operation are not being appropriately
safeguarded or the revenues are being
misused under the Indian Gaming
Regulatory Act (IGRA), the Chair may, at
his or her discretion, require any gaming
operation subject to this paragraph (c) to
submit additional information or
comply with the annual audit
requirement of paragraph (b) of this
section.
(d) If a tribe has multiple gaming
facilities or operations on the tribe’s
Indian lands, the tribe may choose to
satisfy the annual audit requirement of
paragraph (b) of this section with a
consolidated audit if the following
requirements are satisfied:
(1) The tribe is the owner of all the
facilities;
(2) The independent certified public
accountant completes an audit
conforming to generally accepted
auditing standards of the consolidated
financial statements;
(3) The consolidated financial
statements include consolidating
schedules for each gaming place,
facility, or location; and
(4) The independent certified public
accountant expresses an opinion on the
consolidated financial statement as a
whole and subjects the accompanying
financial information to the auditing
procedures applicable to the audit of
consolidated financial statements.
(e) If there are multiple gaming
operations on a tribe’s Indian lands and
each operation has gross gaming
revenues of less than $2,000,000 during
the prior fiscal year, the annual audit
requirement of paragraph (b) of this
section is satisfied if:
(1) The tribe chooses to consolidate
the financial statements of the gaming
operations;
(2) The consolidated financial
statements include consolidating
schedules for each operation;
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57597
(3) The independent certified public
accountant completes a review of the
consolidated schedules conforming to
the statements on standards for
accounting and review services for each
gaming facility or location; and
(4) The independent certified public
accountant expresses an opinion on the
consolidated financial statements as a
whole and subjects the accompanying
financial information to the auditing
procedures applicable to the audit of
consolidated financial statements.
(f)(1) If a tribal or charitable gaming
operation has gross gaming revenues of
less than $50,000 during the prior fiscal
year, the annual audit requirement of
paragraph (b) of this section is satisfied
if:
(i) The gaming operation creates,
prepares, and maintains records in
accordance with Generally Accepted
Accounting Principles;
(ii) At a minimum, the gaming
operation provides the tribe or tribal
gaming regulatory authority (TGRA)
with the following financial information
on a monthly basis:
(A) Each occasion when gaming was
offered in a month;
(B) Gross gaming revenue for each
month;
(C) Amounts paid out as, or paid for,
prizes for each month;
(D) Amounts paid as operating
expenses, providing each recipient’s
name; the date, amount, and check
number or electronic transfer
confirmation number of the payment;
and a brief description of the purpose of
the operating expense;
(E) All deposits of gaming revenue;
(F) All withdrawals of gaming
revenue;
(G) All expenditures of net gaming
revenues, including the recipient’s
name, the date, amount, and check
number or electronic transfer
confirmation number of the payment;
and a brief description of the purpose of
the expenditure; and
(H) The names of each employee and
volunteer, and the salary or other
compensation paid to each person;
(iii) The tribe or TGRA permits the
gaming operation to be subject to this
paragraph (f), and the tribe or TGRA
informs the NIGC in writing of such
permission; and
(iv) Within 30 days of the gaming
operation’s fiscal year end, the tribe or
the TGRA provides a certification to the
NIGC that the tribe or TGRA reviewed
the gaming operation’s financial
information, and after such review, the
tribe or TGRA concludes that the
gaming operation conducted the gaming
in a manner that protected the integrity
of the games offered and safeguarded
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Federal Register / Vol. 87, No. 182 / Wednesday, September 21, 2022 / Rules and Regulations
the assets used in connection with the
gaming operation, and the gaming
operation expended net gaming
revenues in a manner consistent with
IGRA, NIGC regulations, the tribe’s
gaming ordinance or resolution, and the
tribe’s gaming regulations.
(2) If the tribe or TGRA does not or
cannot provide the NIGC with the
certification required by paragraph
(f)(1)(v) of this section within 30 days of
the gaming operation’s fiscal year end,
the gaming operation must otherwise
comply with the annual audit
requirement of paragraph (b) of this
section.
(3) The tribe or TGRA may impose
additional financial reporting
requirements on gaming operations that
otherwise qualify under this paragraph
(f).
(4) If the Chair of the NIGC has reason
to believe that the assets of a gaming
operation are not being appropriately
safeguarded or the revenues are being
misused under IGRA, the Chair may, at
his or her discretion, require any gaming
operation subject to this paragraph (f) to
submit additional information or
comply with the annual audit
requirement of paragraph (b) of this
section.
(5) This paragraph (f) does not affect
other requirements of IGRA and NIGC
regulations, including, but not limited
to, fees and quarterly fee statements (25
U.S.C. 2717; 25 CFR part 514);
requirements for revenue allocation
plans (25 U.S.C. 2710(b)(3));
requirements for individually-owned
gaming (25 U.S.C. 2710(b)(4), (d); 25
CFR 522.10); minimum internal control
standards for Class II gaming and
agreed-upon procedures reports (25 CFR
part 543); background and licensing for
primary management officials and key
employees of a gaming operation (25
U.S.C. 2710(b)(2)(F); 25 CFR parts 556,
558); and facility licenses (25 CFR part
559).
Dated: September 14, 2022.
E. Sequoyah Simermeyer,
Chairman.
Jeannie Hovland,
Vice Chair.
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BILLING CODE 7565–01–P
16:33 Sep 20, 2022
Coast Guard
33 CFR Part 165
[Docket Number USCG–2022–0674]
RIN 1625–AA00
Safety Zone; KE Electric Party
Firework Show; Detroit River; Detroit,
MI
Coast Guard, DHS.
Temporary final rule.
AGENCY:
ACTION:
The Coast Guard is
establishing a temporary safety zone for
navigable waters near the Downtown
Detroit, Detroit, MI. The safety zone is
needed to protect personnel, vessels,
and the marine environment from
potential hazards associated with
fireworks displays created by the K/E
Electric Party Firework Show display.
Entry of vessels or persons into this
zone is prohibited unless specifically
authorized by the Captain of the Port
Detroit or his designated representative.
DATES: This rule is effective from 9:30
p.m. through 10:00 p.m. on September
24, 2022.
ADDRESSES: To view documents
mentioned in this preamble as being
available in the docket, go to https://
www.regulations.gov, type USCG–2022–
0674 in the ‘‘SEARCH’’ box and click
‘‘SEARCH.’’ Click on Open Docket
Folder on the line associated with this
rule.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this rule, call or
email Ms. Tracy Girard, Waterways
Department, Coast Guard Sector Detroit,
telephone (313) 568–9564, email
Tracy.M.Girard@uscg.mil.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Table of Abbreviations
CFR Code of Federal Regulations
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of proposed rulemaking
§ Section
U.S.C. United States Code
II. Background Information and
Regulatory History
[FR Doc. 2022–20230 Filed 9–20–22; 8:45 am]
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DEPARTMENT OF HOMELAND
SECURITY
Jkt 256001
The Coast Guard is issuing this
temporary rule without prior notice and
opportunity to comment pursuant to
authority under section 4(a) of the
Administrative Procedure Act (APA) (5
U.S.C. 553(b)). This provision
authorizes an agency to issue a rule
without prior notice and opportunity to
comment when the agency for good
cause finds that those procedures are
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‘‘impracticable, unnecessary, or contrary
to the public interest.’’ Under 5 U.S.C.
553(b)(B), the Coast Guard finds that
good cause exists for not publishing a
notice of proposed rulemaking (NPRM)
with respect to this rule because doing
so would be impracticable. The event
sponsor notified the Coast Guard with
insufficient time to accommodate the
comment period. This safety zone must
be established by September 24, 2022 in
order to protect the public and vessels
from the hazards associated with a
maritime fireworks display.
Under 5 U.S.C. 553(d)(3), the Coast
Guard finds that good cause exists for
making this rule effective less than 30
days after publication in the Federal
Register. Delaying the effective date of
this rule would be contrary to the rule’s
objectives of protecting the public and
vessels on the navigable waters in the
vicinity of the fireworks display.
III. Legal Authority and Need for Rule
The Coast Guard is issuing this rule
under authority in 46 U.S.C. 70034
(previously 33 U.S.C. 1231). The
Captain of the Port Detroit (COTP) has
determined that potential hazards
associated with fireworks displays will
be a safety concern for anyone within a
420-foot radius of the launch site. The
likely combination of recreational
vessels, darkness punctuated by bright
flashes of light, and fireworks debris
falling into the water presents risks of
collisions which could result in serious
injuries or fatalities. This rule is needed
to protect personnel, vessels, and the
marine environment in the navigable
waters within the safety zone during the
fireworks display.
IV. Discussion of the Rule
This rule establishes a safety zone that
will be enforced from 9:30 p.m. through
10:30 p.m. on September 24, 2022. The
safety zone will encompass all U.S.
navigable waters of the Detroit River
within a 420-foot radius of the fireworks
launch site located at the The ICON
Center in downtown Detroit, MI. The
duration of the safety zone is intended
to protect personnel, vessels, and the
marine environment in these navigable
waters during the fireworks display.
Entry into, transiting, or anchoring
within the safety zone is prohibited
unless authorized by the COTP Detroit
or his designated representative. The
COTP Detroit or his designated
representative may be contacted via
VHF Channel 16.
V. Regulatory Analyses
We developed this rule after
considering numerous statutes and
Executive orders related to rulemaking.
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]]>Agencies
[Federal Register Volume 87, Number 182 (Wednesday, September 21, 2022)]
[Rules and Regulations]
[Pages 57595-57598]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20230]
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
National Indian Gaming Commission
25 CFR Part 571
RIN 3141-AA72
Audit Standards
AGENCY: National Indian Gaming Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The National Indian Gaming Commission (NIGC) is amending its
Audit standards regulations. The amendments eliminate the Commission
waiver requirement for reviewed financial statements and allow all
operations grossing less than $2 million in the previous fiscal year to
submit reviewed financial statements provided that the tribe or tribal
gaming regulatory authority (TGRA) permits the gaming operation to
submit reviewed financials. The amendments also create a third tier of
financial reporting for charitable gaming operations with annual gross
revenues of $50,000 or less where, if permitted by the tribe, a tribal
or charitable gaming operation may submit financial information on a
monthly basis to the tribe or the TGRA and in turn, the tribe or TGRA
provides an annual certification to the NIGC regarding the gaming
operation's compliance with the financial reporting requirements. The
amendments also add a provision clarifying that the submission of an
adverse opinion does not satisfy the regulation's reporting
requirements.
DATES: This rule is effective October 21, 2022.
FOR FURTHER INFORMATION CONTACT: Michael Hoenig, National Indian Gaming
Commission; Telephone: (202) 632-7003.
SUPPLEMENTARY INFORMATION:
I. 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 National Indian Gaming Commission (NIGC or
Commission) and sets out a comprehensive framework for the regulation
of gaming on Indian lands. On January 22, 1993, the Commission
promulgated Sec. 571.12 establishing audit standards for tribal gaming
facilities. On July 27, 2009, the Commission amended the regulation to
allow tribes with multiple facilities to consolidate their audit
statements into one and to allow operations earning less than $2
million in gross gaming revenue to file an abbreviated statement.
II. Development of the Rule
On June 9, 2021, the National Indian Gaming Commission sent a
Notice of Consultation announcing that the Agency intended to consult
on several topics, including proposed changes to the Audit standards.
Prior to consultation, the Commission released proposed discussion
drafts of the regulations for review. The amendments to the Audit
standards are designed to reduce the financial hurdles that small and
charitable gaming operations face regarding the audit requirement. They
also clarify which types of audit opinions satisfy the audit submission
requirements. The Commission held two virtual consultation sessions in
September and one virtual consultation in October of 2021 to receive
tribal input on any proposed changes.
The Commission then published a proposed rule for notice and
comments on June 1, 2022 at 87 FR 33091 and extended the comment period
to August 1, 2022 on July 13, 2022 at 87 FR 41637.
III. Review of Public Comments
The Commission received several general and specific comments on
the proposed amendments.
Comment: One commenter proposed changes to eliminate the ``prepared
by a certified public accountant'' language from the financial
statements element of audit submissions.
Response: Commission agrees and has revised the rule accordingly.
Comment: One commenter proposed changes to clarify that the
independent certified public accountant is the entity that may issue an
adverse opinion and that any adverse opinions must still be submitted
to the Commission.
Response: Commission agrees and has revised the rule accordingly.
Comment: One commenter expressed appreciation for the Commission's
proposal to continue accepting adverse opinions that result from
financial statements prepared in accordance with generally accepted
accounting principles as promulgated by the Financial Accounting
Standards Board rather than the Governmental Accounting Standards
Board.
Response: Commission appreciates the comment and has maintained the
exception in this rule.
Comment: Two commenters noted that the discussion draft circulated
during the consultation rounds addressed disclaimed audits, but the
proposed rule did not. They asked what the Commission's position is on
disclaimed audits.
Response: At this time, the Commission has chosen to continue to
accept disclaimed audit opinions, but may revisit the issue in the
future. The Compliance Division will continue to carefully review each
disclaimed opinion and the circumstances behind them.
Comment: One commenter expressed concern that tribes who go to the
effort and expense of conducting an audit only to receive an adverse
opinion are now subject to the same violation as a tribe that failed to
submit anything at all.
Response: The reasons for receiving an adverse opinion and the
difference in circumstances is more appropriately
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considered in the Civil Fine Assessment process, which requires the
Chairman to weigh the unique facts and circumstances--including good
faith efforts toward compliance--for each violation.
Comment: Two commenters are concerned that this creates a new basis
for a violation without requiring an intermediate investigative or
technical assistance step.
Response: Under the amended rule, if a tribe submits an adverse
opinion, the Chair must still follow the procedures set forth in IGRA
and NIGC regulations before taking any enforcement action. The
Commission has determined that this amendment is necessary for the
Chairman to protect the tribal gaming industry and its assets.
Comment: One commenter has requested more detail on how a tribe or
TGRA must notify NIGC that it has given permission for a gaming
operation to submit reviewed financial statements.
Response: Upon reviewing this section of the regulation, the
Commission determined that notice is not necessary and has revised the
rule accordingly. The Commission presumes by submission of the reviewed
financial statements that the tribe or TGRA has given permission for
the review process. If any questions arise about a gaming operation's
authority to file reviewed statements, the Compliance Division will
contact the tribe or TGRA for confirmation.
Comment: Several commenters asked what constitutes a ``reason to
believe'' that a gaming operation's assets are at risk or are being
misused under IGRA, and suggest that it should be more clearly defined.
Response: The Commission disagrees. Nothing in IGRA or NIGC
regulations requires the Commission to reduce the audit requirements to
a review of financial statements or submission of financial records to
the TGRA. The Commission is taking this step to relieve the burden on
certain small and charitable gaming operations. That being said, the
Commission and the Chairman still have the regulatory responsibility
placed on it under IGRA to ensure that the Tribe is the primary
beneficiary of its gaming operations and that gaming revenues are used
for the purposes set forth in IGRA. The Commission believes the
standard set forth in this rule allows the NIGC to achieve both of
those goals and adequately limits the Chairman's discretion to a good
faith belief in a threat to gaming assets.
Comment: Several commenters noted that draft circulated during
consultations included changes to the language regarding gaming
operations consolidating audits for multiple places, facilities, or
locations, but the proposed rule did not contain these changes.
Response: In the draft submitted for consultation, the language in
Sec. 571.12(d) stated: ``If a tribe has multiple gaming facilities or
operations on the tribe's Indian lands, the tribe may choose to satisfy
the annual audit requirement of paragraph (b) with a consolidated audit
if the following requirements are satisfied. . . .'' This change was
inadvertently left out of the NPRM, and the language reverted back to
that in the existing regulation, ``If a gaming operation has multiple
gaming places. . . .'' The Commission is reinstating the language
proposed in the consultation draft, as it is more accurate.
Comment: One commenter expressed appreciation for the third tier of
financial reporting established for operations with gross gaming
revenue under $50,000.
Response: Commission appreciates this comment.
Comment: Several commenters requested that the Commission increase
the $50,000 threshold for reviewed financial statements to $100,000 or
higher.
Response: Commission disagrees. The reviewed financial statements
submitted to date do not indicate any benefit to raising the threshold
at this time. The Commission may revisit this in the future if
circumstances change.
IV. Regulatory Matters
Regulatory Flexibility Act
The 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 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 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 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 rule does not unduly burden the judicial system and
meets the requirements of section 3(a) and 3(b)(2) of the Order.
National Environmental Policy Act
The Commission has determined that the 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 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- 0001.
Tribal Consultation
The National Indian Gaming Commission is committed to fulfilling
its tribal consultation obligations--whether directed by statute or
administrative action such as Executive Order (E.O.) 13175
(Consultation and Coordination with Indian Tribal Governments)--by
adhering to the consultation framework described in its Consultation
Policy published July 15, 2013. The NIGC's consultation policy
specifies that it will consult with tribes on Commission Action with
Tribal Implications, which is defined as: Any Commission regulation,
rulemaking, policy, guidance, legislative proposal, or operational
activity that may have a substantial direct effect on an Indian tribe
on matters including, but not limited to the ability of an Indian tribe
to regulate its Indian gaming; an Indian tribe's formal relationship
with the Commission; or the consideration of the Commission's trust
responsibilities to Indian tribes.
Pursuant to this policy, on June 9, 2021, the National Indian
Gaming
[[Page 57597]]
Commission sent a Notice of Consultation to the public, announcing the
Agency intended to consult on several topics, including proposed
amendments to NIGC audit standards. The Commission held two virtual
consultation sessions in September and one virtual consultation session
in October of 2021 to receive tribal input on proposed changes.
List of Subjects in 25 CFR Part 571
Gambling, Indian--lands, Indian--tribal government, Reporting and
recordkeeping requirements.
Therefore, for reasons stated in the preamble, 25 CFR part 571 is
amended as follows:
PART 571--MONITORING AND INVESTIGATIONS
0
1. The authority citation for part 571 continues to read as follows:
Authority: 25 U.S.C. 2706(b), 2710(b)(2)(C), 2715, 2716.
0
2. Revise Sec. 571.12 to read as follows:
Sec. 571.12 Audit standards.
(a) Each tribe shall prepare comparative financial statements
covering all financial activities of each class II and class III gaming
operation on the tribe's Indian lands for each fiscal year.
(b) A tribe shall engage an independent certified public accountant
to conduct an annual audit of the financial statements of each class II
and class III gaming operation on the tribe's Indian lands for each
fiscal year. The audit and auditor must meet the following standards:
(1) The independent certified public accountant must be licensed by
a state board of accountancy.
(2) Financial statements shall conform to generally accepted
accounting principles and the annual audit shall conform to generally
accepted auditing standards.
(3) The independent certified public accountant expresses an
opinion on the financial statements. If the independent certified
public accountant issues an adverse opinion, it still must be
submitted, but does not satisfy this requirement unless:
(i) It is the result of the gaming operation meeting the definition
of a state or local government and the gaming operation prepared its
financial statements in accordance with generally accepted accounting
principles (GAAP) as promulgated by Financial Accounting Standards
Board (FASB); or
(ii) The adverse opinion pertains to a consolidated audit pursuant
to paragraph (d) of this section and the operations not attributable to
the adverse opinion are clearly identified.
(c) If a gaming operation has gross gaming revenues of less than
$2,000,000 during the prior fiscal year, the annual audit requirement
of paragraph (b) of this section is satisfied if:
(1) The independent certified public accountant completes a review
of the financial statements conforming to the statements on standards
for accounting and review services of the gaming operation; and
(2) The tribe or tribal gaming regulatory authority (TGRA) permits
the gaming operation to submit a review of the financial statements
according to this paragraph (c); provided that
(3) If the Chair of the NIGC has reason to believe that the assets
of a gaming operation are not being appropriately safeguarded or the
revenues are being misused under the Indian Gaming Regulatory Act
(IGRA), the Chair may, at his or her discretion, require any gaming
operation subject to this paragraph (c) to submit additional
information or comply with the annual audit requirement of paragraph
(b) of this section.
(d) If a tribe has multiple gaming facilities or operations on the
tribe's Indian lands, the tribe may choose to satisfy the annual audit
requirement of paragraph (b) of this section with a consolidated audit
if the following requirements are satisfied:
(1) The tribe is the owner of all the facilities;
(2) The independent certified public accountant completes an audit
conforming to generally accepted auditing standards of the consolidated
financial statements;
(3) The consolidated financial statements include consolidating
schedules for each gaming place, facility, or location; and
(4) The independent certified public accountant expresses an
opinion on the consolidated financial statement as a whole and subjects
the accompanying financial information to the auditing procedures
applicable to the audit of consolidated financial statements.
(e) If there are multiple gaming operations on a tribe's Indian
lands and each operation has gross gaming revenues of less than
$2,000,000 during the prior fiscal year, the annual audit requirement
of paragraph (b) of this section is satisfied if:
(1) The tribe chooses to consolidate the financial statements of
the gaming operations;
(2) The consolidated financial statements include consolidating
schedules for each operation;
(3) The independent certified public accountant completes a review
of the consolidated schedules conforming to the statements on standards
for accounting and review services for each gaming facility or
location; and
(4) The independent certified public accountant expresses an
opinion on the consolidated financial statements as a whole and
subjects the accompanying financial information to the auditing
procedures applicable to the audit of consolidated financial
statements.
(f)(1) If a tribal or charitable gaming operation has gross gaming
revenues of less than $50,000 during the prior fiscal year, the annual
audit requirement of paragraph (b) of this section is satisfied if:
(i) The gaming operation creates, prepares, and maintains records
in accordance with Generally Accepted Accounting Principles;
(ii) At a minimum, the gaming operation provides the tribe or
tribal gaming regulatory authority (TGRA) with the following financial
information on a monthly basis:
(A) Each occasion when gaming was offered in a month;
(B) Gross gaming revenue for each month;
(C) Amounts paid out as, or paid for, prizes for each month;
(D) Amounts paid as operating expenses, providing each recipient's
name; the date, amount, and check number or electronic transfer
confirmation number of the payment; and a brief description of the
purpose of the operating expense;
(E) All deposits of gaming revenue;
(F) All withdrawals of gaming revenue;
(G) All expenditures of net gaming revenues, including the
recipient's name, the date, amount, and check number or electronic
transfer confirmation number of the payment; and a brief description of
the purpose of the expenditure; and
(H) The names of each employee and volunteer, and the salary or
other compensation paid to each person;
(iii) The tribe or TGRA permits the gaming operation to be subject
to this paragraph (f), and the tribe or TGRA informs the NIGC in
writing of such permission; and
(iv) Within 30 days of the gaming operation's fiscal year end, the
tribe or the TGRA provides a certification to the NIGC that the tribe
or TGRA reviewed the gaming operation's financial information, and
after such review, the tribe or TGRA concludes that the gaming
operation conducted the gaming in a manner that protected the integrity
of the games offered and safeguarded
[[Page 57598]]
the assets used in connection with the gaming operation, and the gaming
operation expended net gaming revenues in a manner consistent with
IGRA, NIGC regulations, the tribe's gaming ordinance or resolution, and
the tribe's gaming regulations.
(2) If the tribe or TGRA does not or cannot provide the NIGC with
the certification required by paragraph (f)(1)(v) of this section
within 30 days of the gaming operation's fiscal year end, the gaming
operation must otherwise comply with the annual audit requirement of
paragraph (b) of this section.
(3) The tribe or TGRA may impose additional financial reporting
requirements on gaming operations that otherwise qualify under this
paragraph (f).
(4) If the Chair of the NIGC has reason to believe that the assets
of a gaming operation are not being appropriately safeguarded or the
revenues are being misused under IGRA, the Chair may, at his or her
discretion, require any gaming operation subject to this paragraph (f)
to submit additional information or comply with the annual audit
requirement of paragraph (b) of this section.
(5) This paragraph (f) does not affect other requirements of IGRA
and NIGC regulations, including, but not limited to, fees and quarterly
fee statements (25 U.S.C. 2717; 25 CFR part 514); requirements for
revenue allocation plans (25 U.S.C. 2710(b)(3)); requirements for
individually-owned gaming (25 U.S.C. 2710(b)(4), (d); 25 CFR 522.10);
minimum internal control standards for Class II gaming and agreed-upon
procedures reports (25 CFR part 543); background and licensing for
primary management officials and key employees of a gaming operation
(25 U.S.C. 2710(b)(2)(F); 25 CFR parts 556, 558); and facility licenses
(25 CFR part 559).
Dated: September 14, 2022.
E. Sequoyah Simermeyer,
Chairman.
Jeannie Hovland,
Vice Chair.
[FR Doc. 2022-20230 Filed 9-20-22; 8:45 am]
BILLING CODE 7565-01-P
