Financial reporting

# (a)

Division consultation. Prior to any audit of the CLC that shall be performed by a certified public accountant, the CLC shall provide to the division 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 division 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 division on an annual basis:

# (1)

Disclosure of all related-party transactions

# (2)

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

(E) Professional fees, including legal, accounting and consulting fees Information which is submitted to the division on a more frequent basis in connection with other sections of these regulations need not be reduplicated in the annual report.

# (4)

A report as to whether any material deficiencies in internal control were noted by the independent auditor during the course of the annual audit of CLC's financial statements. In addition, the CLC shall submit to the division a copy of any report 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 control.

# (6)

Access to articles of organization and any changes thereto, resolution, amendments to by-laws, minutes of CLC meetings, and schedules of percentage distribution of income.

# (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 division as to why said recommendations will not be implemented.

# (e)

Additional audits.

# (1)

The division may require, in its sole discretion, the CLC or any vendor to submit to an audit of its internal control systems. The division or its duly authorized representative(s), 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 division.
If the CLC disagrees with the recommendations, it shall provide a written explanation to the division as to why said recommendations should not be implemented. Thereafter, a final determination shall be made by the division as to whether said recommendations shall be required.