Casino Accounting and Financial Management: Second Edition

Chapter 4: Casino Revenue Flows

This chapter discusses the basic concepts of casino revenue accounting, which represents the truly unique aspects of casino counting control, systems, and procedures. The importance of understanding these casino revenue flows cannot be overemphasized. The diversity, the complexity, and the commingling or mixture of revenue transactions with exchange or cashiering transactions creates an atmosphere where even sophisticated laypersons may have difficulty understanding how casino revenues really flow. A second important need is to recognize that once casino revenue flows can be understood, they can indeed be controlled, the controls can be tested, and eventually the entire casino operation can be subjected to appropriate auditing scrutiny and review. c asino accounting organization The first step in understanding the casino revenue flows is to understand the accounting personnel, their working relationships, the overall accounting organization, and the role of casino revenue accounting operations in this structure. The casino accounting organization could be characterized as having been set up in five distinct categories. The first consists of the operating personnel who are present in the public casino areas. These include pit clerks, change booth personnel, and to some degree even the dealers on individual games. These operating personnel have primary responsibility in the revenue reporting process. In the case of dealers, they also have some limited revenue reporting duties in addition to their regular responsibilities for the conduct and security of the games. c h a p t e r 4 Casino Revenue Flows 98 Accounting The second group consists of accounting personnel who occupy semipublic positions and who conduct intermediate-level revenue collection activity. Examples at this level are cashiers within cages, personnel such as runners and supervisors connected with the fill and credit procedures, and those persons connected with the issuance of casino credit or markers, including credit approval and record keeping. The third group of accounting personnel consists of those who have relatively little public exposure. These persons have the highest degree of responsibility for the revenue collection procedures. The people in this area include count room personnel, vault or main bank personnel, and cashiers involved in the maintenance of marker and check cashing activity. Many supervisors (such as cashier supervisors) are in this category. The fourth group consists of those persons who have top revenue reporting responsibility, including overall income statement reporting. This group includes the senior financial management, internal auditors, controllers, and financial vice presidents and CFOs. Finally, in addition to these revenue personnel, the casino has other traditional accounting personnel dedicated to functions such as food and beverage accounting, hotel room revenue accounting, accounts payable, and payroll and general ledger accounting. Fig. 4-1. Casino Financial Organization Structure Revenue Flows 99 c asino organization and control objectives It should be stressed that since the fundamental product of a casino is service to the customer and the principal inventory item is money, the accounting controls exercised by the accounting department alone cannot and should not be overly centralized. There must be many clerks and controllers and many control points. In this way, each and every operating department can assure the proper recording of transactions and the proper conduct of the appropriate controls in each area. Figure 4-1 indicates the financial operating structure of a typical hotelcasino . The main principle of organization is to achieve maximum control, principally through separation of duties of various individuals. This principle is based on the belief that if many persons are involved in processing and reporting a transaction, then theft can only occur through collusive fraud. The risks of this occurring are lessened by a substantial division of duties in the accounting and record-keeping area. The separation of the responsibilities for various revenue reporting activities among several departments may even result in financial reporting personnel having several different supervisors. This maximum separation of duties helps to maintain a program of effective internal control.1 There may be as many as three distinct groups of accounting and financial reporting personnel involved in the casino revenue flows and the casino operations: 1. Casino operations a. Dealers b. Pit clerks to record game transactions c. Drop teams 2. Cage operations a. Cage cashiers b. Credit cashiers 3. Count rooms a. Hard coin and soft currency count personnel (Note: Slot count now includes both coin and currency counts. The traditional hard count now includes certain “soft count” items.) All of these personnel are involved in various degrees with the revenue reporting process...