A Performance Audit
An Audit Report on The Texas Lottery Commission’s Administration of Selected Instant Ticket Contracts
The Texas Lottery Commission (Commission) generally planned, procured, and formed the two instant ticket contracts audited in accordance with applicable statutes, rules, Office of the Comptroller of Public Accounts requirements, and Commission policies and procedures to help ensure that the State’s interests were protected. The two contracts audited were the Commission’s contract with Pollard Banknote Limited (Pollard) for instant ticket printing and the Commission’s contract with IGT Solutions Corporation (IGT) for operations related to instant tickets.
While the Commission generally monitored those contracts to ensure compliance with contract terms, it should improve its monitoring of the Pollard contract to ensure that it records correct delivery truck seal numbers, consistently performs required background checks on key contractor personnel, and verifies that Pollard provides all required reports.
The Commission Generally Planned, Procured, and Formed the Pollard and IGT Contracts According to Applicable Statutes, Rules, Office of the Comptroller of Public Accounts Requirements, and Commission Policies and Procedures
While Texas Government Code, Section 466.105, exempts the Texas Lottery Commission (Commission) from many statutory contracting requirements, the Commission has voluntarily adopted rules and policies to follow certain statewide requirements for contract planning and procurement.
For the Pollard Banknote Limited (Pollard) contract audited and IGT Solutions Corporation (IGT) contract audited, the Commission generally complied with applicable statutes, rules, Office of the Comptroller of Public Accounts requirements, State of Texas Contract Management Guide requirements, and Commission policies and procedures to ensure that it performed the activities discussed below. However, the Commission (1) did not require contracting personnel and evaluation team members to sign conflict of interest forms and (2) did not require contracting personnel to sign non-disclosure forms for the contracts audited, as required by Texas Government Code, Sections 2261.252 and 2262.004 (the Commission is not exempt from those requirements). The Commission has developed procedures that require contracting personnel to complete those forms for future contracts.
The Commission Generally Monitored the Pollard Contract; However, It Should Improve Certain Aspects of Its Monitoring
The Commission performed monitoring activities to ensure that Pollard complied with the contract requirements. For each individual instant ticket game that auditors tested, the Commission’s monitoring activities ensured that (1) the Commission received the correct quantities and quality of instant tickets and (2) the instant tickets were tamper-resistant and compatible with the Commission’s instant ticket information systems.
However, the Commission should improve certain aspects of its monitoring to ensure that Pollard meets other contract requirements. Specifically, the Commission should improve its monitoring to ensure that it records correct delivery truck seal numbers, consistently performs required background checks on key contractor personnel, verifies that Pollard provides all required reports, and verifies that Pollard complies with test game submission requirements.
The Commission adequately monitored the IGT contract through monitoring activities it contracted to Grant Thornton LLP (Grant Thornton) and direct monitoring activities.
For both contracts audited, the Commission complied with requirements in the State of Texas Contract Management Guide, its policies and procedures, and specific terms in the contracts to verify that contractor invoices were valid, properly supported, and approved.
Additionally, the Commission appropriately supported, authorized, and reduced payments to the contractors based on sanctions that the contracts allowed.
Although invoices were valid, properly supported, and approved, one Commission employee had access rights to the Uniform Statewide Accounting System (USAS) that would allow the employee to both enter and release USAS transactions. That represented a weakness in segregation of duties.
Graphics, Media, Supporting documents