23-115-206. Internal controls — Annual audit.

23-115-206. Internal controls — Annual audit. (a) To ensure the financial integrity of lotteries, the Office of the Arkansas Lottery shall: (1) Establish and maintain effective internal controls over financial reporting, including the monitoring of ongoing activities, and comply with the Arkansas Constitution and applicable laws, rules, contracts, agreements, and grants; (2)(A) Establish and maintain effective internal controls to prevent and detect fraud, including without limitation a system of internal audits. (B) The Director of the Office of the Arkansas Lottery shall: (i) By July 1, 2015, approve a formal, written three-year audit plan; and (ii) Annually review the audit plan. (C) The director shall review and take action to approve or reject a recommendation from the internal auditor to amend the audit plan; (3) Include in any contract or license with a vendor or retailer for data processing services or other computer services a provision permitting Arkansas Legislative Audit to have access and authority to audit the computer systems of the vendor or retailer; (4) Notify Arkansas Legislative Audit of all known fraud or suspected fraud or all known or suspected illegal acts involving management or other employees of the office or others with whom the office contracts; (5) Inform Arkansas Legislative Audit and the Chief Fiscal Officer of the State of any known material violations of the Arkansas Constitution, applicable statutes, rules, contracts, agreements, or grants; (6) Prepare the financial statements, including the related notes to the financial statements, of the office in accordance with generally accepted accounting principles and in accordance with guidelines and timelines established by the Chief Fiscal Officer of the State to permit incorporation into the state's financial statements and to permit the audit of the state's financial statements and the office's financial statements in a timely manner; (7) Make all financial records and related information available to Arkansas Legislative Audit, including the identification of significant vendor relationships in which the vendor has the responsibility for program compliance, in accordance with §§ 10-4-416 and 10-4-424; (8)(A) Submit monthly reports to the Governor and the Legislative Council disclosing the following budgeted and actual information for the reporting period and cumulatively for the fiscal year: (i) Total lottery revenues; (ii) Prize disbursements; (iii) Operating expenses; (iv) Net assets; and (v) Administrative expenses. (B) The director shall submit a comprehensive annual financial report to the Governor and to the Legislative Council by placing the report on the office's website and providing notice of its availability to the Governor and to the Legislative Council. (C)(i) The comprehensive annual financial report shall comply with Governmental Accounting Standards Board Statement 34 and follow the guidelines of the Certificate of Achievement for Excellence in Financial Reporting Program of the Government Finance Officers Association. (ii) The Legislative Council shall identify the statistical data required for compliance with this subdivision (a)(8)(C). (D) The comprehensive annual financial report shall include without limitation: (i) Information concerning the director; (ii) A current organizational chart; (iii) Information on each type of lottery game offered by the Arkansas Scholarship Lottery, game promotions, or other activities related to games during the fiscal year; (iv) The annual financial audit report made to the Legislative Joint Auditing Committee; (v) A statement of revenue, expenses, and changes in net assets for each fiscal year since inception of the Arkansas Scholarship Lottery; (vi) Separate reports from each component or department of the office or the Arkansas Scholarship Lottery, including without limitation sales, marketing, retailers, gaming operations, players, and security; (vii) A fiscal year-end report on any information required to be reported by the office on a monthly basis, including without limitation: (a) Unclaimed lottery prize money under § 23-115-403; (b) The Scholarship Shortfall Reserve Trust Account under § 23-115-802; and (c) Minority-owned business and female-owned business participation under § 23-115-401; (viii) Information concerning the Arkansas Scholarship Lottery's industry standings or rankings; (ix) Information concerning the scholarships awarded from net lottery proceeds, including without limitation: (a) Demographic reports from the Division of Higher Education for each full semester during the fiscal year on accessibility to scholarships, award amounts for each approved institution of higher education; and (b) The division's report to the Legislative Council required by § 6-85-219; (x) A report from the Lottery Retailer Advisory Board, if a report was received during the fiscal year; (xi) Where to find information on gambling disorder treatment and education programs; (xii) Where to find website information on rules, gaming, and frequently asked questions; and (xiii) Contact information for the Arkansas Scholarship Lottery and key employees of the office; (9) Maintain weekly or more frequent records of lottery transactions, including without limitation: (A) The distribution of tickets or shares to retailers; (B) Revenues received; (C) Claims for lottery prizes; (D) Lottery prizes paid; (E) Lottery prizes forfeited; and (F) Other financial transactions of the office; (10)(A) Submit to the cochairs of the Legislative Council by April 30 of each year the estimated annual operating budget for the office for the next fiscal year. (B) At a minimum, the estimated annual operating budget submitted for the Legislative Council's review shall: (i) Contain an estimate of the net proceeds to be available for scholarships and grants during the succeeding fiscal year; (ii) Compare the: (a) Actual revenues and expenditures for the last completed fiscal year; (b) Budgeted revenues and expenditures for the current fiscal year; and (c) Estimated revenues and expenditures for the next fiscal year; (iii) Contain an explanation of increases or decreases in revenues and expenditures shown in the estimated annual operating budget for the next fiscal year compared to the budgeted revenues and expenditures for the current fiscal year; (iv) Classify all revenues and expenditures by specific purpose instead of “miscellaneous” or “other”; (v) Contain a schedule of the total amounts of regular salaries, extra help compensation, overtime compensation, and personal services matching as defined in § 19-4-521; and (vi) For each position title authorized under §§ 23-115-305 — 23-115-307, contain a schedule of the annual salary, special allowance, or grade and include: (a) The total number of persons currently employed; (b) The number of Caucasian male employees; (c) The number of Caucasian female employees; (d) The total number of Caucasian employees; (e) The number of African-American male employees; (f) The number of African-American female employees; (g) The number of other employees who are members of racial minorities; and (h) The total number of minorities currently employed; and (11) Adopt the same fiscal year as that used by state government. (b)(1)(A) Arkansas Legislative Audit shall annually audit the office. (B) Arkansas Legislative Audit may conduct an investigation or audit or prepare special reports regarding the office or related entities, scholarships, grants, vendors, retailers, or any other transactions or relationships connected or associated with the office or its operations, duties, or functions upon the approval of the Legislative Joint Auditing Committee. (2) The office shall reimburse Arkansas Legislative Audit at an hourly rate set by the Legislative Joint Auditing Committee for work performed by Arkansas Legislative Audit relating to any audit, investigation, or special report regarding the office and related entities, scholarships, grants, vendors, retailers, or other related matters. (3)(A) If the office, the General Assembly, the Legislative Council, or the Legislative Joint Auditing Committee requests additional audits or performance reviews of the fiscal affairs or operations of the office to be conducted by a private certified public accountant or other consultant, the Secretary of the Department of Finance and Administration shall select and contract with appropriate certified public accountants or consultants to provide the services. (B) The secretary shall contract for the services which shall be paid directly to the contractor by the office. (C) A copy of any report or management correspondence prepared by the certified public accountants or consultants shall be forwarded to Arkansas Legislative Audit, the secretary, and the Legislative Council. (4) This chapter does not limit the statutory authority of Arkansas Legislative Audit or the responsibilities of the office or related entities, members of the Lottery Retailer Advisory Board, employees, vendors, retailers, or any other individuals or entities to cooperate with Arkansas Legislative Audit or provide information or records requested by Arkansas Legislative Audit.