HF 310

as introduced - 91st Legislature (2019 - 2020) Posted on 03/04/2019 04:26pm

A bill for an act
relating to lawful gambling; modifying requirements for annual audits and reports
for certain lawful gambling organizations; amending Minnesota Statutes 2018,
sections 297E.06, subdivision 4; 309.53, subdivision 3.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2018, section 297E.06, subdivision 4, is amended to read:

Subd. 4.

new text begin Commissioner required audits; new text end annual deleted text begin audit, deleted text end certified inventory deleted text begin , deleted text end and cash
count.

deleted text begin (a) An organization licensed under chapter 349 with gross receipts from lawful
gambling of more than $750,000 in any year must have an annual financial audit of its
lawful gambling activities and funds for that year.
deleted text end

deleted text begin (b) deleted text end new text begin (a) new text end The commissioner may require a financial audit of the lawful gambling activities
and funds of an organization licensed under chapter 349 deleted text begin , with gross receipts less than
$750,000 annually, deleted text end when an organization has:

(1) failed to timely file required gambling tax returns;

(2) failed to timely pay the gambling tax or regulatory fee;

(3) filed fraudulent gambling tax returns;

(4) failed to take corrective actions required by the commissioner; or

(5) failed to otherwise comply with this chapter.

deleted text begin (c) deleted text end new text begin (b) new text end Audits under this subdivision must be performed by an independent accountant
licensed in accordance with chapter 326A.

deleted text begin (d) deleted text end new text begin (c) new text end An organization licensed under chapter 349 must perform an annual certified
inventory and cash count at the end of its fiscal year and submit the report to the
commissioner within 30 days after the end of its fiscal year. The report shall be on a form
prescribed by the commissioner.

deleted text begin (e) deleted text end new text begin (d) new text end The commissioner of revenue shall prescribe standards for the audits, certified
inventory, and cash count reports required under this subdivision. The standards may vary
based on the gross receipts of the organization. The standards must incorporate and be
consistent with standards prescribed by the American Institute of Certified Public
Accountants. A complete, true, and correct copy of deleted text begin the audits deleted text end new text begin any required audit new text end , new text begin and the
annual new text end certified inventory deleted text begin , deleted text end and cash count report must be filed as prescribed by the
commissioner.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 2.

Minnesota Statutes 2018, section 309.53, subdivision 3, is amended to read:

Subd. 3.

Financial statement requirements new text begin ; audited financial statements;
exceptions new text end .

new text begin (a) new text end The financial statement shall include a balance sheet, statement of income
and expense, and statement of functional expenses, shall be consistent with forms furnished
by the attorney general, and shall be prepared in accordance with generally accepted
accounting principles so as to make a full disclosure of the following, including necessary
allocations between each item and the basis of such allocations:

deleted text begin (a) deleted text end new text begin (1) new text end total receipts and total income from all sources;

deleted text begin (b) deleted text end new text begin (2) new text end cost of management and general;

deleted text begin (c) deleted text end new text begin (3) new text end program services;

deleted text begin (d) deleted text end new text begin (4) new text end cost of fund-raising;

deleted text begin (e) deleted text end new text begin (5) new text end cost of public education;

deleted text begin (f) deleted text end new text begin (6) new text end funds or properties transferred out of state, with explanation as to recipient and
purpose;

deleted text begin (g) deleted text end new text begin (7) new text end total net amount disbursed or dedicated within this state, broken down into total
amounts disbursed or dedicated for each major purpose, charitable or otherwise;

deleted text begin (h) deleted text end new text begin (8) new text end names of professional fund-raisers used during the accounting year and the
financial compensation and profit resulting to each professional fund-raiser; and

deleted text begin (i) deleted text end new text begin (9) new text end a list of the five highest paid directors, officers, and employees of the organization
and its related organizations, as that term is defined by section 317A.011, subdivision 18,
that receive total compensation of more than $100,000, together with the compensation paid
to each.

new text begin (b) new text end For purposes of this subdivision, "compensation" is defined as the total amount
reported on Form W-2 (Box 5) or Form 1099-MISC (Box 7) issued by the organization and
its related organizations to the individual. The value of fringe benefits and deferred
compensation paid by the charitable organization and all related organizations as that term
is defined by section 317A.011, subdivision 18, shall also be reported as a separate item for
each person whose compensation is required to be reported pursuant to this subdivision.

new text begin (c) new text end Unless otherwise required by this subdivision, the financial statement need not be
certified.

new text begin (d) new text end A financial statement of a charitable organization which has received total revenue
in excess of $750,000 for the 12 months of operation covered by the statement shall be
accompanied by an audited financial statement prepared in accordance with generally
accepted accounting principles that has been examined by an independent certified public
accountant for the purpose of expressing an opinion. In preparing the audit the certified
public accountant shall take into consideration capital, endowment or other reserve funds,
if any, controlled by the charitable organization.

new text begin (e) new text end For purposes of calculating the $750,000 total revenue threshold provided by this
subdivision deleted text begin , deleted text end new text begin :
new text end

new text begin (1) new text end the value of donated food to a nonprofit food shelf may not be included if the food
is donated for subsequent distribution at no charge, and not for resale deleted text begin . deleted text end new text begin ; and
new text end

new text begin (2) a charitable organization licensed to conduct lawful gambling under chapter 349
shall compute revenue from lawful gambling by subtracting prizes actually paid from gross
receipts, as defined in section 349.12, subdivision 21.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end