Gaming

295 Pages·2014·8.061 MB·English

audit & accounting guide
Gaming
September 1, 2014
14216-359
AAG-GAM_Title.indd 1 9/22/14 11:16 AM
Copyright © 2014 by
American Institute of Certified Public Accountants, Inc.
New York, NY 10036-8775
All rights reserved. For information about the procedure for requesting permission to
make copies of any part of this work, please e-mail [email protected] with your
request. Otherwise, requests should be written and mailed to the Permissions
Department, AICPA, 220 Leigh Farm Road, Durham, NC 27707-8110.
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ISBN 978-1-94165-135-3
AAG_GAM_Copyright.indd 1 9/22/14 10:36 AM
iii
Preface
About AICPA Audit and Accounting Guides
This AICPA Audit and Accounting Guide has been developed by the AICPA
Gaming Guide Task Force to assist management in the preparation of their
financial statements in conformity with U.S. generally accepted accounting
principles(GAAP)andtoassistauditorsinperformingandreportingontheir
auditengagements.
TheFinancialReportingExecutiveCommittee(FinREC)isthedesignatedse-
niorcommitteeoftheAICPAauthorizedtospeakfortheAICPAintheareas
offinancialaccountingandreporting.Conformingchangesmadetothefinan-
cialaccountingandreportingguidancecontainedinthisguidearereviewedby
theFinRECchair(orhisorherdesignee).Anychangesmadetothefinancial
accountingandreportingguidanceinthisguideexceedingthatofconforming
changes,referredtoasenhanciveupdates,arerequiredtobeapprovedbythe
affirmativevoteofatleasttwo-thirdsofthemembersofFinREC.Noenhancive
updateshavebeenmadetothiseditionoftheguide.
Thisguidedoesthefollowing:
(cid:2)
IdentifiescertainrequirementssetforthintheFASBAccounting
(cid:2) StandardsCodification®(ASC)andbyGASB.
Describes FinREC's understanding of prevalent or sole industry
practice concerning certain issues. In addition, this guide may
indicatethatFinRECexpressesapreferencefortheprevalentor
soleindustrypractice,oritmayindicatethatFinRECexpresses
apreferenceforanotherpracticethatisnottheprevalentorsole
industrypractice;alternatively,FinRECmayexpressnoviewon
(cid:2) thematter.
Identifies certain other, but not necessarily all, industry prac-
tices concerning certain accounting issues without expressing
(cid:2) FinREC'sviewsonthem.
Provides guidance that has been supported by FinREC on the
accounting, reporting, or disclosure treatment of transactions or
eventsthatarenotsetforthinFASBASC.
AccountingguidancefornongovernmentalentitiesincludedinanAICPAAudit
andAccountingGuideisasourceofnonauthoritativeaccountingguidance.As
discussed later in this preface, FASB ASC is the authoritative source of U.S.
accountingandreportingstandardsfornongovernmentalentities,inaddition
toguidanceissuedbytheSEC.
Accounting guidance for governmental entities included in an AICPA Audit
andAccountingGuide,ifspecificallymadeapplicabletostateandlocalgovern-
mentalentitiesbytheAICPAandclearedbyGASB,isasourceofauthoritative
accountingguidancedescribedincategory(b)ofthehierarchyofGAAPforstate
andlocalgovernmentalentities.ThegovernmentalGAAP-relatedaccounting
provisions of this guide in chapters 1–3 and 12 have been cleared by GASB.
AICPAmembersshouldbepreparedtojustifydeparturesfromGAAPasdis-
cussedinRule203,AccountingPrinciples(AICPA,ProfessionalStandards,ET
sec.203par..01).
©2014, AICPA AAG-CAS
iv
AuditingguidanceincludedinanAICPAAuditandAccountingGuideisrecog-
nizedasaninterpretivepublicationasdefinedinAU-Csection200,OverallOb-
jectivesoftheIndependentAuditorandtheConductofanAuditinAccordance
WithGenerallyAcceptedAuditingStandards(AICPA,ProfessionalStandards).
Interpretivepublicationsarerecommendationsontheapplicationofgenerally
accepted auditing standards (GAAS) in specific circumstances, including en-
gagementsforentitiesinspecializedindustries.
An interpretive publication is issued under the authority of the AICPA Au-
ditingStandardsBoard(ASB)afterallASBmembershavebeenprovidedan
opportunity to consider and comment on whether the proposed interpretive
publicationisconsistentwithGAAS.ThemembersoftheASBhavefoundthe
auditingguidanceinthisguidetobeconsistentwithexistingGAAS.
Although interpretive publications are not auditing standards, AU-C section
200 requires the auditor to consider applicable interpretive publications in
planningandperformingtheauditbecauseinterpretivepublicationsarerele-
vanttotheproperapplicationofGAASinspecificcircumstances.Iftheauditor
doesnotapplytheauditingguidanceinanapplicableinterpretivepublication,
the auditor should document how the requirements of GAAS were complied
withinthecircumstancesaddressedbysuchauditingguidance.
TheASBisthedesignatedseniorcommitteeoftheAICPAauthorizedtospeak
fortheAICPAonallmattersrelatedtoauditing.Conformingchangesmadeto
theauditingguidancecontainedinthisguideareapprovedbytheASBchair(or
hisorherdesignee)andtheAICPAvicepresidentofprofessionalstandardsand
services. Any changes made to the auditing guidance in this guide exceeding
thatofconformingchanges,referredtoasenhanciveupdates,areissuedafter
allASBmembershavebeenprovidedanopportunitytoconsiderandcomment
onwhethertheguideisconsistentwiththeStatementsonAuditingStandards
(SASs).Noenhanciveupdateshavebeenmadetothiseditionoftheguide.
Recognition
2014GuideEdition
AICPASeniorCommittees
FinancialReportingExecutive
AuditingStandardsBoard Committee
DonM.Pallais MichaelTamulis
BruceP.Webb,Chair RichPaul,Chair
TheAICPAgratefullyacknowledgesthosemembersoftheGamingGuideTask
Forcewhoreviewedorotherwisecontributedtothedevelopmentofthisedition
oftheguide:FrankAlbarella,KarlBrunner,BruceBleakman,RichardLobdell,
PatrickPruitt,andMichaelWinterscheidt.
AAG-CAS ©2014, AICPA
v
TheAICPAgratefullyappreciatestheinvaluableassistanceReneeRampulla
providedinupdatingandmaintainingtheguidanceinthe2014editionofthe
guide.
AICPAStaff
SusanReed
TechnicalManager
AccountingandAuditingContentDevelopment
2011GuideEdition
GamingAuditandAccountingGuideOverhaul
TaskForce(2003–2011)
KarlM.Brunner,Chair AnthonyD.McDuffie
RickArpin AndrewM.Mintzer
BruceBleakman JohnB.Page
BrianR.Ford PatrickT.Pruitt
GregoryJ.Gale SandraK.Schulze
RichardLobdell
AICPASeniorCommittees
AuditingStandardsBoard
DarrellR.Schubert,Chair DonM.Pallais
ErnestF.Baugh ThomasA.Ratcliffe
BrianBluhm BrianR.Richson
RobertE.Chevalier ThomasM.Stemlar
SamK.Cotterell MarkH.Taylor
JamesR.Dalkin KimL.Tredinnick
DavidDuree H.StevenVogel
EdG.Jolicoeur PhilD.Wedemeyer
DavidMorris KurtisA.Wolff
KennethR.Odom MeganZietsman
FinancialReportingExecutiveCommittee
(memberswhenthiseditionwas (pastmemberswho
completed) contributedtothisedition)
JayHanson,FormerChair JohnAlthoff
DavidAlexander MarkM.Bielstein
RickArpin ValBitton
RobertAxel NeriBukspan
KimberBascom BrettE.Cohen
GlennBradley PascalDesroches
JimDolinar FayeE.Feger
ChuckEvans KarenFrench
BruceJohnson RichardR.Jones
JosephD.McGrath CarlKampel
AngelaNewell LisaKelly
JonathonNus PeterKnutson
(continued)
©2014, AICPA AAG-CAS
vi
(memberswhenthiseditionwas (pastmemberswho
completed) contributedtothisedition)
RichPaul JamesKroeker
TerrySpidell StevenLilien
DanZwarn BobLaux
AndrewMintzer
DavidM.Morris
HollyNelson
RichardR.Petersen
RoyP.Rendino
ColemanRoss
RandallSogoloff
EnriqueTejerina
RobertUhl
DanielWeaver
BrentWoodford
TheGamingGuideTaskForceandtheAICPAgratefullyappreciatetheinvalu-
ableassistanceReneeRampullaprovidedinthedevelopmentofthisguide.
The Gaming Guide Task Force and the AICPA gratefully acknowledge Joel
Tanenbaum,whoreviewed,andotherwisecontributed,tothedevelopmentof
thisguide.
Guidance Considered in This Edition
ThiseditionoftheguidehasbeenmodifiedbytheAICPAstafftoincludecer-
tainchangesnecessaryduetotheissuanceofauthoritativeguidancesincethe
guidewasoriginallyissued(September1,2011,edition),andotherrevisionsas
deemedappropriate.However,thisguidedoesnotincludeallaudit,accounting,
reporting, and other requirements applicable to an entity or a particular en-
gagement.Thisguideisintendedtobeusedinconjunctionwithallapplicable
sourcesofauthoritativeguidance.
AuthoritativeguidanceissuedthroughSeptember1,2014,hasbeenconsidered
inthedevelopmentofthiseditionoftheguide.Authoritativeguidancethatis
issuedandeffectiveforentitieswithfiscalyearsendingonorbeforeSeptember
1,2014,isincorporateddirectlyinthetextofthisguide.Authoritativeguidance
issued but not yet effective for fiscal years ending on or before September 1,
2014,isbeingpresentedasaguidanceupdate.Aguidanceupdateisashaded
areathatcontainsinformationontheguidanceissuedbutnotyeteffectiveand
a reference to appendix A, "The New Revenue Recognition Standard: FASB
ASUNo.2014-09,"whereappropriate.
Thisincludesrelevantguidanceissueduptoandincludingthefollowing:
(cid:2)
FASBAccountingStandardsUpdate(ASU)No.2014-15,Presen-
tationofFinancialStatements—GoingConcern(Subtopic205-40):
DisclosureofUncertaintiesaboutanEntity'sAbilitytoContinue
(cid:2) asaGoingConcern
GASBstatements,interpretations,andtechnicalbulletinsissued
throughSeptember1,2014
AAG-CAS ©2014, AICPA
vii
(cid:2)
GASB Comprehensive Implementation Guide 2013-14 issued in
September2013
(cid:2)
SAS No. 129, Amendment to Statement on Auditing Standards
No.122Section920,LettersforUnderwritersandCertainOther
RequestingParties,asAmended(AICPA,ProfessionalStandards,
AU-Csec.920)
(cid:2)
StatementofPosition13-2,PerformingAgreed-UponProcedures
Engagements That Address the Completeness, Mapping, Consis-
tency,orStructureofXBRL-FormattedInformation(AICPA,Tech-
nicalPracticeAids,AUDsec.14,470)
(cid:2)
InterpretationNo.3,"AuditorofParticipatingEmployerinaGov-
ernmentalAgentMultiple-EmployerPensionPlan,"ofAU-Csec-
tion500,AuditEvidence(AICPA,ProfessionalStandards,AU-C
sec.9500par..30–.36)
(cid:2)
PCAOB Auditing Standard No. 17, Auditing Supplemental In-
formationAccompanyingAuditedFinancialStatements(AICPA,
PCAOBStandardsandRelatedRules,AuditingStandards)
Usersofthisguideshouldconsiderguidanceissuedsubsequenttothoseitems
listed previously to determine their effect on entities covered by this guide.
Indeterminingtheapplicabilityofrecentlyissuedguidance,itseffectivedate
shouldalsobeconsidered.
The changes made to this edition of the guide are identified in appendix H,
"Schedule of Changes Made to the Text From the Previous Edition." The
changes do not include all those that might be considered necessary if the
guideweresubjectedtoacomprehensivereviewandrevision.
FASB ASC Pending Content
PresentationofPendingContentinFASBASC
AmendmentstoFASBASC(issuedintheformofASUs)areinitiallyincorpo-
ratedintoFASBASCin"pendingcontent"boxesbelowtheparagraphsbeing
amendedwithlinkstothetransitioninformation.Thependingcontentboxes
are meant to provide users with information about how the guidance in a
paragraphwillchangeasaresultofthenewguidance.
Pendingcontentappliestodifferententitiesatdifferenttimesduetovarying
fiscal year-ends, and because certain guidance may be effective on different
dates for public and nonpublic entities. As such, FASB maintains amended
guidance in pending content boxes within FASB ASC until the roll-off date.
Generally,theroll-offdateissixmonthsfollowingthelatestfiscalyearendfor
whichtheoriginalguidancebeingamendedcouldstillbeapplied.
PresentationofFASBASCPendingContentinAICPAAuditand
AccountingGuides
Amended FASB ASC guidance that is included in pending content boxes in
FASB ASC on September 1, 2014, is referenced as "Pending Content" in this
guide.Readersshouldbeawarethat"PendingContent"referencedinthisguide
willeventuallybesubjectedtoFASB'sroll-offprocessandnolongerbelabeled
as"PendingContent"inFASBASC(asdiscussedinthepreviousparagraph).
©2014, AICPA AAG-CAS
viii
Terms Used to Define Professional Requirements in This
AICPA Audit and Accounting Guide
Any requirements described in this guide are normally referenced to the ap-
plicable standards or regulations from which they are derived. Generally the
termsusedinthisguidedescribingtheprofessionalrequirementsoftherefer-
encedstandardsetter(forexample,theASB)arethesameasthoseusedinthe
applicable standards or regulations (for example, must or should). However,
where the accounting requirements are derived from FASB ASC, this guide
uses should, whereas FASB uses shall. The Notice to Constituents in FASB
ASCstatesthatFASBconsidersthetermsshouldandshalltobecomparable
terms.
Readersshouldrefertotheapplicablestandardsandregulationsformorein-
formation on the requirements imposed by the use of the various terms used
todefineprofessionalrequirementsinthecontextofthestandardsandregu-
lationsinwhichtheyappear.
Certainexceptionsapplytothesegeneralrules,particularlyinthosecircum-
stances where the guide describes prevailing and/or preferred industry prac-
tices for the application of a standard or regulation. In these circumstances,
theapplicableseniorcommitteeresponsibleforreviewingtheguide'scontent
believestheguidancecontainedhereinisappropriateforthecircumstances.
Applicability of GAAS and PCAOB Standards
AppendixA,"CouncilResolutionDesignatingBodiestoPromulgateTechnical
Standards," to Rule 202, Compliance with Standards (AICPA, Professional
Standards), of the AICPA Code of Professional Conduct recognizes both the
ASB and the PCAOB as standard setting bodies designated to promulgate
auditing,attestation,andqualitycontrolstandards.Paragraph.01ofRule202
requires an AICPA member who performs an audit to comply with the app-
licablestandards.
Auditsofthefinancialstatementsofthoseentitiesnotsubjecttotheoversight
authorityofthePCAOB(thatis,thoseentitiesnotwithinitsjurisdiction,here-
inafterreferredtoasnonissuers)aretobeconductedinaccordancewithGAAS
as issued by the ASB, a senior committee of the AICPA. The ASB develops
andissuesstandardsintheformofSASsthroughadueprocessthatincludes
deliberationinmeetingsopentothepublic,publicexposureofproposedSASs,
anda formalvote.TheSASsandtheirrelatedinterpretationsare codifiedin
theAICPA'sProfessionalStandards.
Auditsofthefinancialstatementsofthoseentitiessubjecttotheoversightau-
thorityofthePCAOB(thatis,thoseentitieswithinitsjurisdiction,hereinafter
referred to as issuers) are to be conducted in accordance with standards es-
tablishedbythePCAOB,aprivatesector,nonprofitcorporationcreatedbythe
Sarbanes-OxleyActof2002.TheSEChasoversightauthorityoverthePCAOB,
includingtheapprovalofitsrules,standards,andbudget.
The auditing content in this guide primarily discusses GAAS issued by the
ASBandisapplicabletoauditsofnonissuers.AppendixB,"ClarifiedAuditing
StandardsandPCAOBStandards,"ofthisguideisincludedtoassistauditors
incomparingtheclarifiedstandards,manyofwhicharereferencedthroughout
thisguide,tothePCAOBstandards.AppendixBofthisguideispreparedfor
AAG-CAS ©2014, AICPA
ix
informationalandreferencepurposesonly.Ithasnotbeenreviewed,approved,
disapproved,orotherwiseactedonbythePCAOBoranyseniorcommitteeof
theAICPAanddoesnotrepresentofficialpositionsorpronouncementsofthe
PCAOBortheAICPA.
ConsiderationsforauditsofissuersinaccordancewithPCAOBstandardsmay
also be discussed within this guide's chapter text. When such discussion is
provided,therelatedparagraphsaredesignatedwiththefollowingtitle:Con-
siderationsforAuditsPerformedinAccordanceWithPCAOBStandards.
Applicability of GovernmentAuditingStandards
In addition to GAAS, governmental gaming entities may also be required, or
voluntarily elect, to have their audits performed in accordance with Govern-
mentAuditingStandards(alsoreferredtoastheYellowBook),issuedbythe
Comptroller General of the United States. Auditors who perform audits un-
derGovernmentAuditingStandardsshouldrefertotheAICPA'sAuditGuide
GovernmentAuditingStandardsandCircularA-133Audits.
AICPA.org Website
The AICPA encourages you to visit the website at www.aicpa.org, and the
Financial Reporting Center at www.aicpa.org/FRC. The Financial Reporting
Center supports members in the execution of high-quality financial report-
ing. Whether you are a financial statement preparer or a member in public
practice, this center provides exclusive member-only resources for the entire
financial reporting process, and provides timely and relevant news, guidance
andexamplessupportingthefinancialreportingprocess,includingaccounting,
preparingfinancialstatementsandperformingcompilation,review,audit,at-
testorassuranceandadvisoryengagements.CertaincontentontheAICPA's
websitesreferencedinthisguidemayberestrictedtoAICPAmembersonly.
Alternatives Within U.S. GAAP for Private Companies
ThePrivateCompanyCouncil(PCC),establishedbytheFinancialAccounting
Foundation'sBoardofTrusteesin2012,andFASB,workingjointly,willmutu-
allyagreeonasetofcriteriatodecidewhetherandwhenalternativeswithin
U.S.GAAParewarrantedforprivatecompanies.Basedonthosecriteria,the
PCC will review and propose alternatives within U.S. GAAP to address the
needsofusersofprivatecompanyfinancialstatements.TheseU.S.GAAPal-
ternativesmaybeappliedtothoseentitiesthatarenotpublicbusinessentities,
not-for-profits,oremployeebenefitplans.
TheFASBASCmasterglossarydefinesapublicbusinessentityas
A public business entity is a business entity meeting any one of the
criteriabelow.Neitheranot-for-profitentitynoranemployeebenefit
planisabusinessentity.
a) It is required by the U.S. Securities and Exchange Com-
mission (SEC) to file or furnish financial statements, or
doesfileorfurnishfinancialstatements(includingvolun-
taryfilers),withtheSEC(includingotherentitieswhose
financialstatementsorfinancialinformationarerequired
tobeorareincludedinafiling).
©2014, AICPA AAG-CAS
x
b) ItisrequiredbytheSecuritiesExchangeActof1934(the
Act),asamended,orrulesorregulationspromulgatedun-
dertheAct,tofileorfurnishfinancialstatementswitha
regulatoryagencyotherthantheSEC.
c) It is required to file or furnish financial statements with
aforeignordomesticregulatoryagencyinpreparationfor
thesaleoforforpurposesofissuingsecuritiesthatarenot
subjecttocontractualrestrictionsontransfer.
d) It has issued, or is a conduit bond obligor for, securities
that are traded, listed, or quoted on an exchange or an
over-the-countermarket.
e) It has one or more securities that are not subject to con-
tractualrestrictionsontransfer,anditisrequiredbylaw,
contract, or regulation to prepare U.S. GAAP financial
statements(includingfootnotes)andmakethempublicly
availableonaperiodicbasis(forexample,interimoran-
nualperiods).Anentitymustmeetbothoftheseconditions
tomeetthiscriterion.
An entity may meet the definition of a public business entity solely because
itsfinancialstatementsorfinancialinformationisincludedinanotherentity's
filingwiththeSEC.Inthatcase,theentityisonlyapublicbusinessentityfor
purposesoffinancialstatementsthatarefiledorfurnishedwiththeSEC.
Anydiscussionofalternativesforprivatecompanieswithinthisguideisclearly
identified.
Select Recent Developments Significant to This Guide
ASB’s Clarity Project
Toaddressconcernsovertheclarity,length,andcomplexityofitsstandards,
theASBredraftedstandardsforclarityandalsoconvergedthestandardswith
theInternationalStandardsonAuditing,issuedbytheInternationalAuditing
andAssuranceStandardsBoard.Aspartofredraftingthestandards,theynow
specify more clearly the objectives of the auditor and the requirements with
whichtheauditorhastocomplywhenconductinganauditinaccordancewith
GAAS.Theclarifiedauditingstandardsarenowfullyeffective.
Aspartoftheclarityprojectthe"AU-C"identifierwasestablishedtoavoidcon-
fusionwithreferencestoexisting"AU"sections.TheAU-Cidentifierhadbeen
scheduledtorevertbacktotheAUidentifierattheendof2013,bywhichtime
thepreviousAUsectionswouldbesupersededforallengagements.However,
inresponsetouserrequests,theAU-Cidentifierwillberetainedindefinitely.
ThesupersededAUsectionswereremovedfromProfessionalStandardsatthe
endof2013,asscheduled.
TheASBhascompletedtheClarityProjectwiththeissuanceofSASNo.128,
Using the Work of Internal Auditors (AICPA, Professional Standards, AU-C
sec. 610) in February 2014. This guidance is effective for audits of financial
statementsforperiodsendingonorafterDecember15,2014.
AAG-CAS ©2014, AICPA