Seneca Gaming Corporation Consulting

Seneca Gaming Corporation traditionally had a small Internal Audit Department that spent its time performing gaming compliance audits. It owns three casinos: Niagara Falls, Allegany, and Buffalo Creek. About a year ago, senior management hired a new Director of Internal Audit and increased the department budget so the new Director could hire additional staff to expand from compliance audits to operational audits.

The Director of Internal Audit wanted to perform an operational audit of the Food and Beverage operation, but had no one on his staff who had Food and Beverage experience. I was hired as a consultant to provide that experience and train his staff in Food and Beverage auditing techniques.

The plan was that the Allegany Audit Manager would manage the Allegany audit, and I would manage the Niagara Falls and Buffalo Creek audits. I worked with the Allegany Audit Manager to develop the audit programs and explained to him what he and his assistant needed to do to conduct the audit successfully.

During our planning process, the Allegany Audit Manager came to Niagara Falls and we worked on the audit program. We divided the audit programs into six areas: Purchasing/Accounts Payable, Food Warehouse, Kitchen Operations, Bars, Sales, Menu Costing. I set up an Internal Control Questionnaire for each area where the questions were designed to determine what internal controls were in place and which ones might be missing.

I secret shopped the Niagara Falls and Allegany casinos on consecutive weekends by eating in the dining rooms and observing the bartenders at the bars. I secret shopped the Buffalo Creek casino on a week night. I noted potential issues for follow up with management. I also traced the transactions to Income Audit to ensure they were recorded correctly.

In Niagara Falls, I had two auditors reporting to me. We did walkthrough tours of the facilities with management to acquaint ourselves with the various venues and kept our eyes open for internal control lapses. As my staff started a section, I would meet with the auditor and explained what audit tests they should perform, what issues to look for, and how those issues should be resolved.

As audit issues were noted during our work, we documented them in the audit report format. We held periodic meetings with management to apprise them of our progress and to discuss issues we had uncovered.

By the day of the Exit Conference, we had a draft of the audit report ready to discuss with senior management. The audit findings were classified by High Risk, Medium Risk, and Low Risk. Each finding had a Discussion section, Observations/Comments section, Recommendation, and Management’s Comments. The audit staff had been fully trained and would be able to conduct the next Food and Beverage audit without outside assistance.

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