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PDFWAC 230-07-065

Group III, IV, and V management control system.

Charitable or nonprofit licensees assigned to Groups III, IV, and V must develop and implement a management control system that:
(1) Is overseen by an independent group of officers or board of directors who have been elected by a process in which all full and regular members have a single vote; and
(2) Includes written policies which set the responsibilities of and establish the scope of authority delegated to officers, board of directors, and employees; and
(3) Includes affirmative management and accounting controls to ensure that all funds and other assets directly or indirectly obtained with gambling proceeds are protected from misuse, are dedicated solely to the purposes of the organization, and do not inure to the private use of any person. For purposes of this section, we do not consider the following uses of gambling proceeds inurement:
(a) Providing program services to members or the public; or
(b) Costs for necessary expenses, including salaries or wages for services to perform the purposes of the organization. Salaries or wages paid to members, officers, board of directors, or their direct relatives, are not inurement if they are necessary, reasonable, and an independent management system makes the decision to pay them; and
(4) Includes a planning process to set goals for uses of gambling proceeds and allows the officers or board of directors to monitor progress toward those goals. Organizations reserving funds in endowments or trust funds must have a formal business plan or budget outlining uses of those funds; and
(5) Includes a system of internal accounting controls designed to reduce errors, minimize the risk of embezzlement, and safeguard assets. The licensee's officers or board of directors must implement procedures to monitor established controls for compliance. The internal accounting control system must include at least:
(a) Management approval for expenditures; and
(b) Access to assets is restricted to those individuals management authorizes; and
(c) Recording procedures for all transactions in accordance with generally accepted accounting principles (GAAP). Licensees must record transactions with enough detail to maintain accountability for assets; and
(d) Periodic comparison of recorded assets to physical assets and reconciliation of all differences. "Reconcile" means the licensee must compare the two balances, resolve any differences, and document the comparison and the differences in writing. Licensees must keep the reconciliation as part of their records.
(6) Is documented and available for our review.
[Statutory Authority: RCW 9.46.070. WSR 07-10-032 (Order 609), ยง 230-07-065, filed 4/24/07, effective 1/1/08.]
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