Sec.12-568a-18. Financial reporting

(a) Department consultation. Prior to any audit of the CLC to be performed by a certified public accountant, the CLC shall provide to the department the opportunity to meet with the CLC to identify areas of audit to be conducted by the certified public accountant.

(b) Annual report. The CLC shall require that the independent certified public accountant engaged to conduct the audit required under section 12-802(d) of the Connecticut General Statutes submits to the department within one-hundred-fifty (150) days after the close of its fiscal year, a complete set of audited financial statements that present the CLC’s financial position and the results of its operations and its cash flows in conformity with generally accepted accounting principles.

(c) Disclosure. In addition, the CLC shall disclose the following to the department on an annual basis:

(1) All related-party transactions;

(2) An organizational chart;

(3) Schedules of:

(A) Annuities purchased to fund lottery prizes;

(B) Miscellaneous revenue in detail by source;

(C) Promotions and advertising expenses;

(D) Payments of major contractual services; and

(E) Professional fees, including legal, accounting and consulting fees;

(4) A report as to whether any material deficiencies in internal controls were noted by the independent auditor during the course of the annual audit of the CLC’s financial statements. In addition, the CLC shall submit to the department a copy of any report and associated auditor’s letters issued by the independent auditor in connection with the annual audit;

(5) The CLC’s representation letter to the auditor for accounting information material to the financial statements and for matters relating to audit disclosure requirements. Any reports resulting from an examination or the performance of mutually agreed upon procedures relating to the design and/or operating effectiveness of the CLC’s internal controls; and

(6) Articles of organization and any changes thereto, resolution, amendments to by-laws, and minutes of meetings of the CLC.

(d) Recommendations. Recommendations made as a result of an audit shall be implemented within a reasonable time frame as established by the CLC. If the CLC disagrees with the recommendations, it shall provide a written explanation to the department as to why such recommendations will not be implemented.

(e) Additional audits.

(1) The department may require, in its sole discretion, the CLC or any vendor to submit to an audit, by the department or a third party, of its internal controls. The department, or its duly authorized representatives, shall be provided with total cooperation and such written information in a timely manner as may be requested.

(2) Recommendations made as a result of the audit shall be implemented within a reasonable time frame as established by the CLC and approved by the department. If the CLC disagrees with the recommendations, it shall provide a written explanation to the department as to why said recommendations should not be implemented. Thereafter, a final determination shall be made by the department as to whether implementation of such recommendations shall be required.

(f) Access to other audits. The CLC shall provide to the department any audit report on the CLC completed by any governmental body, independent certified public accountant, independent service auditor, or other consultant, including any audit report performed on its lottery gaming system.

(Adopted effective October 6, 1999; Amended April 13, 2021)