FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
REQUIRED AUDITS OF AGENTS NOT CONDUCTED
The Lottery did not always follow its established procedures when conducting audits
of new agents. Department procedures require all new agents to be audited for the first
four weeks they are on-line. New agents with errors in any two of the first four weeks are
to be audited for an additional four weeks. Audits consist of Department personnel
reviewing the agents’ settlement envelopes upon receipt at the Central Office. Three
of 10 new agents tested had errors and should have been audited for another four weeks but
were not. Further, there were eight occurrences where the agent’s settlement package
contained an error but the package was filed without further examination. (Finding No. 2,
page 14)
We recommended that additional audits be performed as required and that errors be
resolved before the settlement package is placed in storage.
Lottery officials concurred with our recommendation, stating they would review
procedures. However, they stated that as computer technology has increased in recent
years, the impact of errors found in agent settlement packages has significantly
decreased, and they will determine whether to revise or discontinue the settlement process
altogether.
CONTROL WEAKNESS IN THE SUBSCRIPTION UNIT
The Subscription Unit was not adequately controlling and documenting subscriptions
received. The Lottery subscription sales plan provides for advance sale of subscriptions
for Lotto and Little Lotto games. Discounts are awarded to participants who renew within
the required timeframe. About 100 subscription checks are received a day and subscription
sales for fiscal year 1999 amounted to over $3.4 million.
We found that subscription renewal forms were not properly completed in that several
lacked the amount of the subscription or the wrong amount had been entered on the renewal
form. Payments for multiple subscriptions or payments made with multiple checks were not
adequately documented. Batch control procedures were not being properly completed, and
data entered into the computer system was not being checked for accuracy. We noted one
sale which resulted in a subscriber receiving 52 drawings for the price of 26 drawings.
(Finding No. 3, pages 15-16)
We recommended the Subscription Unit maintain adequate documentation and adhere to
established control procedures.
Lottery officials concurred with this recommendation and agreed to make the necessary
adjustments.
OTHER FINDINGS
The remaining finding dealt with lack of segregation of duties within the
Department’s property and equipment area. We will review progress toward
implementation of all recommendations in our next compliance audit.
AUDITORS’ OPINION
Our auditors stated the Department of Lottery’s financial statements as of
June 30, 1999 were fairly presented in all material respects.
____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:KMC:pp
SPECIAL ASSISTANT ADUITORS
Our special assistant auditors for this audit were Martin & Shadid, CPAs.
