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Terminated Lottery Sales Agents’ Reconciliation Reports Were Missing.

Of the terminated lottery sales agents reviewed during the audit, 24 percent had information missing from their final settlement reconciliations.
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Overview

From our sample of 50 terminated lottery sales agents, 12 (24%) had reports missing from their final settlement reconciliations:

  • five missing Inventory Movement Reports
  • nine missing Instant Ticket Game Book Settlement Reports
  • ten missing Final Settlement Reports, which contain the final count of partial and full ticket books at a terminated lottery sales agent’s location.

As a result, there is no assurance that all instant ticket game books and funds have been returned by lottery sales representatives (LSRs).

Authoritative Guidance

The MSLC’s “Asset Control and Ticket Return Policies and Procedures” had last been updated in 2005 and were being updated again during our audit in 2020, which we documented in an interview with MSLC personnel. In that interview, MSLC personnel explained the reconciliation process for terminated lottery sales agents at agent locations. To document that they have accounted for and secured all instant ticket game books and funds on site, LSRs generate the following ES system reports:

  1. The Instant Ticket Game Partial Book Return Report is signed by the terminated lottery sales agent and the LSR. The LSR generates it by scanning partial ticket books at the terminated agent’s location.
  2. The Instant Ticket Game Full Book Return Report is signed by the terminated lottery sales agent and the LSR. The LSR generates it by scanning full ticket books at the terminated agent’s location.
  3. The Instant Ticket Game Book Settlement Report is signed by the terminated lottery sales agent and the LSR. It represents the total of all instant ticket game books inventoried.
  4. The Final Settlement Report is signed by the terminated lottery sales agent and the LSR. It represents the final total value of all instant ticket game books in the inventory at the agent’s location.
  5. The Inventory Movement Report indicates that all ticket books scanned by the LSR at the terminated lottery sales agent’s location have been deactivated in the ES system.

Reasons for Issue

MSLC did not provide a reason these reports were not available. They may have been lost, misfiled, or not generated during the reconciliation process.

Recommendation

MSLC should establish policies and procedures to ensure that all required reports for reconciling instant ticket game books and funds are generated.

Auditee’s Response

The MSLC has revised and documented policies and procedures to address terminated lottery sales agent reports. These policies and procedures are designed to achieve several goals including:

  1. Reduce the instant ticket game inventory on hand when an agent is terminating.
  2. Provide specific steps and requirements for processing instant ticket returns and collecting appropriate documentation.
  3. Provide specific steps and requirements for processing instant tickets returned from a terminated agent to the MSLC.

In addition to immediately implementing these revised policies and procedures, the MSLC will implement software changes to significantly increase the automation of the process during the next twelve months.

Auditor’s Reply

Based on its response, MSLC is taking measures to address our concerns on this matter.

Date published: June 9, 2021

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