WHY we should demand OPEN audits of Indian Gaming in California

One of our contributors, who is known as Atilla the CPA explains why we need to have more light shining of Indian Gaming in California.

The Casino tribes promised they would take care of our budget issues if we gave them more machines. How's that working out for us?
They said that non gaming tribes would benefit. How's that working out for them?
They said they would take care of their tribal members. How's that working out for over 3,000 tribesman who have been terminated from tribes like Pechanga, Enterprise, Redding, San Pascual, Picayune?

Here's Attila the CPA's post:

The courts offer a forum for resolving many disputes but there are many matters that can’t be effectively resolved by judges and juries, and are effectively resolved in other ways. The courts are reluctant to interfere in who may be a shareholder in a business, or a member of an Indian tribe. Courts cannot second-guess the kind of expenditures that enterprises can make in the furtherance of legitimate purposes except in limited circumstances.


In most enterprises there is a need for professional managers to represent the interests of the owners. This separation of “ownership” and “management” gives rise to needed mechanisms to assure management serves the needs of the owners, and does not confuse management’s interest with the interests of the owners. These “Internal Controls” assure the free flow of reliable information from business and governmental managers to the owners. This information flow assures that shareholders are treated fairly, and that business or government entities expenditures legitimately further the interest of the business or governmental enterprise. It is through fair and complete reporting from managers, that the owners protect their interest.

There are bad guys out there!

In order to prevent Organized Crime from taking over Indian Gaming, The National Indian Gaming Commission and others have developed Minimum Internal Control Standards for Indian Gaming (MICS). There has been considerable resistance from the tribes over the implementation, and content of the MICS, and who should enforce these rules. Some of the tribes want another bite at the apple in drafting the rules.

Who can we trust?

The Tribes say that they can do it themselves; the NIGC says that it is their job, and Jerry Brown; the California Attorney General says that it is his job. While they squabble over who has oversight over enforcement, Tribal Members and the Public pay the price for inaction.

Where the #$%@ are the Auditors?

CPA’s routinely examine payments to shareholders to verify that all shareholders are treated fairly and paid according to terms of the entities entity’s enabling documents, For Indian Tribal Governments, This audit step confirms adherence to policies as outlined in the tribal bylaws and compliance with documentation standards applicable to governmental entities. Tribal compliance with the policies is not exempt from verification under auditing rules. Other audit procedures confirm that regulatory requirements and tax rules are followed, and that Officers and Employees don’t divert organizational resources to themselves.

The Indian Gaming Regulatory Act requires that a CPA firm audit Tribal gaming activities. Additionally The White House Office of Management and Budget requires that a CPA audited Annual Report, along with a report of Internal Control deficiencies be submitted as a condition for receiving Public Funds. The tribal annual reports must follow Governmental Accounting Standards Board accounting rules and disclosure rules and be available to the Public. While the tribes have often placed restrictions on the availability of these reports, they are available, as evidenced by the Torres Martinez Audit Reports published recently by the Palm Springs Desert Sun in conjunction with yet another Indian Country scandal.

There are significant resources fighting against effective oversight of tribal leaders. Tribal leaders fear disclosure. Politicians like Jerry Brown drag their feet to slow the implementation of needed oversight in order to increase their share of tribal campaign financing kitty. Additionally, tribal members have been reluctant to insist on accountability from their leaders out of fear of disenrollment and other forms of retaliation.

Let’s put it in the newspaper!

Now is the time to hold the tribal leaders feet to the fire, and demand full disclosure of internal control deficiencies, and their stewardship of tribal resources. The Palm Springs Desert Sun, to their credit, has shown us how to do it. We must insist that the Pechanga Audit reports be made public, and that Internal control deficiencies be corrected, and that the BIA and other Federal and State agencies be required to explain any failures to exercise their oversight responsibilities.