Department of Internal Affairs: Effectiveness of controls on non-casino gaming machines

Performance audits from 2007: Follow-up report.

The Department of Internal Affairs (the Department) administers the Gambling Act 2003, which sets out the framework for controls on non-casino gaming (or “pokie”) machines.

The scope of our audit

Our performance audit assessed the effectiveness of the Department’s policies, procedures, and practices for ensuring that:

  • non-casino gaming machine operators and venues are licensed – allowing only those persons and organisations who meet the Act’s requirements to enter and remain in the non-casino gaming machine industry;
  • non-casino gaming machine operator and venue costs are appropriate – otherwise, funds available to the community are reduced; and
  • funds are distributed or applied to authorised purposes, including through grants – otherwise, the community does not benefit in the manner intended by the Act.

We did not examine how funds flowed to the community, how the funds were used in the community, how effectively the funds were used in the community, or the Department’s oversight of harm minimisation activities.

Our findings

Licensing non-casino gaming machine operators and venues

Although the Department had extensive policies and procedures covering its licensing and auditing of operators and venues, those policies, procedures, and practices did not always meet the requirements of the Gambling Act.

Licensing staff were issuing and renewing licences without the necessary delegated authority. The Department treated this seriously, sought appropriate legal advice, and had largely rectified the issue by the time our report was finalised.

Our audit also identified significant delays in finalising annual licences for some societies and clubs.

Monitoring and enforcing compliance

Although the Department’s strategic approach to compliance was still emerging, the fundamental elements we expected the Department to have were in place.

However, the Department was unable to systematically and comprehensively monitor compliance levels within the industry, limiting its ability to demonstrate the results of its work and further refine how it works.

Compliance of grant processes and payments

Gambling inspectors lacked clear guidance for auditing and investigating how gaming machine operators were making grants to community groups and for other authorised purposes. Policies and procedures for this work needed finalising.

The response to our findings and recommendations

All 17 of our recommendations for the Department were accepted, and the Department agreed to carry them all out. Widespread media coverage followed the release of our report.

The Department employed a staff member to oversee that our recommendations were carried out. In August 2007 and November 2008, the Department provided us with an update on its progress. The Department has now specifically addressed all the recommendations from our report.

The Department considered that our audit complemented other business improvement initiatives that were under way within the organisation at the time. Our audit findings supported wider changes within the Department’s Gambling Compliance Group, including:

  • better links between licensing and compliance processes;
  • improved decision-making around licensing;
  • clearer alignment with the Department’s gambling outcome framework; and
  • better reporting and quality assurance through a new performance assurance team.

This alignment of our audit findings with the Department’s own initiatives has also meant that it could respond to 11 ancillary findings raised in our report. A new project called the Integrated Gambling Platform is considering addressing a number of our recommendations, including the need for improved grants monitoring.

We commend the Department for its response to our report.

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