HF 143

as introduced - 92nd Legislature (2021 - 2022) Posted on 02/15/2021 04:25pm

A bill for an act
relating to lawful gambling; modifying requirements for annual audits and reports
for certain lawful gambling organizations; amending Minnesota Statutes 2020,
sections 297E.06, subdivision 4; 309.53, subdivision 3.

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

Section 1.

Minnesota Statutes 2020, section 297E.06, subdivision 4, is amended to read:

Subd. 4.

Commissioner required audits; annual audit, certified inventory, and cash
count.

(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.

(b) (a) The commissioner may require a financial audit of the lawful gambling activities
and funds of an organization licensed under chapter 349, with gross receipts less than
$750,000 annually, 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.

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

(d) (c) 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.

(e) (d) 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 the audits any required audit, and the
annual certified inventory, and cash count report must be filed as prescribed by the
commissioner.

EFFECTIVE DATE.

This section is effective July 1, 2021.

Sec. 2.

Minnesota Statutes 2020, section 309.53, subdivision 3, is amended to read:

Subd. 3.

Financial statement requirements; audited financial statements;
exceptions.

(a) 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:

(a) (1) total receipts and total income from all sources;

(b) (2) cost of management and general;

(c) (3) program services;

(d) (4) cost of fund-raising;

(e) (5) cost of public education;

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

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

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

(i) (9) 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.

(b) 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.

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

(d) 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.

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

(1) 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.; and

(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.

EFFECTIVE DATE.

This section is effective July 1, 2021.