[Federal Register Volume 87, Number 105 (Wednesday, June 1, 2022)]
[Proposed Rules]
[Pages 33091-33093]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-11482]


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DEPARTMENT OF THE INTERIOR

National Indian Gaming Commission

25 CFR Part 571

RIN 3141-AA72


Audit Standards

AGENCY: National Indian Gaming Commission, Department of the Interior.

ACTION: Proposed rule.

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SUMMARY: The National Indian Gaming Commission (NIGC) proposes to amend 
our Audit Standards regulations. The proposed rule will amend the 
regulations to 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 proposed amendment to the rule will 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 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 
charitable gaming operation's compliance with the financial reporting. 
The proposed amendment also adds a provision clarifying that the 
submission of an adverse opinion does not satisfy the regulation's 
reporting requirements.

DATES: The agency must receive comments on or before July 1, 2022.

ADDRESSES: You may send comments by any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.
     Email: [email protected].
     Fax: (202) 632-7066.
     Mail: National Indian Gaming Commission, 1849 C Street NW, 
MS 1621, Washington, DC 20240.
     Hand Delivery: National Indian Gaming Commission, 90 K 
Street NE, Suite 200, Washington, DC 20002, between 9 a.m. and 5 p.m., 
Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Jennifer Lawson, National Indian 
Gaming Commission; Telephone: (202) 632-7003.

SUPPLEMENTARY INFORMATION: 

I. Comments Invited

    Interested parties are invited to participate in this proposed 
rulemaking by submitting such written data, views, or arguments as they 
may desire. Comments providing the factual basis behind supporting the 
views and suggestions presented are particularly helpful in developing 
reasoned regulatory decisions on the proposal.

II. 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 Part 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.

III. Development of the Proposed 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 proposed amendments to the 
Audit standards are designed to reduce the financial hurdles that small 
and charitable gaming operations face regarding the audit requirement. 
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 reviewed all comments received through consultation 
and now proposes these changes.

IV. Regulatory Matters

Regulatory Flexibility Act

    The proposed 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.

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 proposed 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 proposed 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 proposed 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 proposed 
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- 0003.

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

[[Page 33092]]

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 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 
proposed to be amended as follows:

PART 571--MONITORING AND INVESTIGATIONS

0
1. The authority citation 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 prepared by the certified public 
accountant 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. An adverse opinion 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 and the tribe or TGRA informs the NIGC of 
such permission; 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 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 gaming operation has multiple gaming places, facilities or 
locations on the tribe's Indian lands, 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 places, facilities or locations;
    (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;
    (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

[[Page 33093]]

the charitable gaming operation's financial information, and after such 
review, the tribe or TGRA concludes that the charitable gaming 
operation conducted the gaming in a manner that protected the integrity 
of the games offered and safeguarded the assets used in connection with 
the gaming operation, and the charitable 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 charitable 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: May 18, 2022.
E. Sequoyah Simermeyer,
Chairman.
Jeannie Hovland,
Vice Chair.
[FR Doc. 2022-11482 Filed 5-31-22; 8:45 am]
BILLING CODE 7565-01-P