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CA State Lottery Risk Assessment Survey of Operations and Activities -
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CALIFORNIA STATE LOTTERY
Survey Report
Risk Assessment
July 1, 2016, through October 31, 2019
BETTY T. YEE
California State Controller
September 2020
BETTY T. YEE
California State Controller
September 30, 2020
Alva Vernon Johnson, Director
California State Lottery
700 North Tenth Street
Sacramento, CA 95811
Dear Mr. Johnson:
The State Controller’s Office conducted a risk assessment survey of the California State
Lottery’s (Lottery) operations and activities for the period of July 1, 2016, through October 31,
2019. The survey was performed to evaluate the risks for which Lottery operations, activities,
and certain contracts are exposed. This survey will be used to assist us in developing future
Lottery audit plans.
We identified 123 operations, activities, and major contracts. As a result of our survey, the
operations, activities, and major contracts have been categorized as follows:
Eight as high risk;
Thirty as medium-high risk;
Twenty-one as medium risk;
Twenty-six as medium-low risk; and
Thirty-eight as low risk.
If you have any questions, please contact Andrew Finlayson, Chief, State Agency Audits Bureau,
by telephone at (916) 324-6310, or by email at afinlayson@sco.ca.gov.
Sincerely,
Original signed by
JIM L. SPANO, CPA
Chief, Division of Audits
JLS/as
Alva Vernon Johnson, Director -2- September 30, 2020
cc: Gregory Ahern, Chair
California State Lottery Commission
Keetha Mills, Commissioner
California State Lottery Commission
Peter Stern, Commissioner
California State Lottery Commission
Nathaniel Kirtman III, Commissioner
California State Lottery Commission
Fernando Aceves, Chief Counsel, Executive Division
California State Lottery
Sharon Allen, Deputy Director, Sales and Marketing Division
California State Lottery
Nicholas Buchen, Deputy Director, Finance Division
California State Lottery
Tiffany Donohue, Deputy Director, Operations Division
California State Lottery
Vincent Espinosa, Chief Enterprise Risk Officer, Executive Division
California State Lottery
Christopher Fernandez, Deputy Director, Human Resources Division
California State Lottery
Jim Hasegawa, Deputy Director, Business Planning, Executive Division
California State Lottery
Jeremy Linson, Deputy Director, Security and Law Enforcement Division
California State Lottery
Paula Negrete, Deputy Director, External Affairs, Executive Division
California State Lottery
Jon Schlussler, Deputy Director, Information and Technology Services Division
California State Lottery
Roberto Zavala, Deputy Director, Internal Audits, Executive Division
California State Lottery
James Shannon, Audit Manager, Internal Audits, Executive Division
California State Lottery
California State Lottery Risk Assessment Survey
Contents
Survey Report
Summary ............................................................................................................................. 1
Background ......................................................................................................................... 1
Objectives, Scope, and Methodology ................................................................................ 2
Conclusion ........................................................................................................................... 4
Restricted Use ..................................................................................................................... 5
Schedule 1—High Risk Operations and Activities ............................................................... 6
Schedule 2—Medium-High Risk Operations and Activities ................................................ 8
Schedule 3—Medium Risk Operations and Activities .......................................................... 12
Schedule 4—Medium-Low Risk Operations and Activities ................................................. 15
Schedule 5—Low Risk Operations and Activities ................................................................ 18
California State Lottery Risk Assessment Survey
Survey Report
Summary The State Controller’s Office (SCO) conducted a risk assessment survey
of the California State Lottery’s (Lottery) operations and activities for the
period of July 1, 2016, through October 31, 2019. The survey was
performed to evaluate the risks for which Lottery operations, activities,
and certain contracts are exposed. This survey will be used to assist us in
developing future Lottery audit plans.
We identified 123 operations, activities, and major contracts. As a result
of our survey, the operations, activities, and major contracts have been
categorized as follows:
Eight as high risk;
Thirty as medium-high risk;
Twenty-one as medium risk;
Twenty-six as medium-low risk; and
Thirty-eight as low risk.
See Schedules 1 through 5 for operation and activity descriptions and
survey results.
Background On November 6, 1984, California voters passed Proposition 37, the
California State Lottery Act of 1984 (Lottery Act), which authorized the
creation of a state-operated lottery. The Lottery Act is found in
Chapter 12.5, section 8880 et seq., of the Government Code. The Lottery
Act created the California State Lottery Commission (Commission) and
gave it broad powers to oversee the operations of a statewide lottery. The
purpose of the Lottery Act was to provide supplemental monies to benefit
public education without the imposition of additional or increased taxes.
The Lottery has eight divisions: Executive, Finance, Human Resources,
Operations, Corporate Communications, Security and Law Enforcement,
Information Technology Services, and Sales and Marketing. As of June 1,
2020, the Lottery has 883 budgeted positions, which include positions at
Lottery Headquarters in Sacramento, two distribution centers, and nine
district offices.
The SCO performs a risk assessment on the Lottery’s operations and
activities approximately every five years; the survey is used to assist us in
developing future Lottery audit plans. The risk assessment is a systematic
process of evaluating the exposure to risk of operations and activities that
impact the Lottery’s mission to provide supplemental funding to
California’s public schools. An assessment involves gathering entity-wide
information, developing assessment criteria, identifying and assessing
risks, and categorizing activities and operations from low to high risk.
-1-
California State Lottery Risk Assessment Survey
Pursuant to Government Code (GC) section 8880.46.6, the SCO may
conduct special post-audits of the Lottery, as the Controller deems
necessary. The Controller or his/her agents conducting an audit under this
chapter shall have access and authority to examine any and all records of
the Commission.
GC section 12410 states, “The Controller shall superintend the fiscal
concerns of the state. The Controller shall audit all claims against the state,
and may audit the disbursement of any state money, for correctness,
legality, and for sufficient provision of law for payment.” In addition, GC
section 12411 stipulates that “ . . . the Controller shall suggest plans for
the improvement and management of revenues.”
Objectives, Scope, The objectives of our survey were to:
and Methodology
Identify and gain an understanding of all Lottery operations and
activities;
Evaluate each of the Lottery’s operations and activities and assess its
exposure to risks of fraud, waste, misuse, abuse, and noncompliance
with laws, rules, and regulations; and
Classify operations and activities into risk categories to assist us in
developing future audit plans.
The survey period was July 1, 2016, through October 31, 2019.
To achieve our objectives, we:
Developed and distributed questionnaires and performed interviews
with Lottery management, supervisory personnel, and other staff
members to gain an understanding of the operations, activities, and
major contracts of each division;
Developed a list of Lottery operations, activities, and major contracts
to be evaluated;
Established risk factors, a rating scale, and scoring criteria for
evaluating the operations, activities, and major contracts identified;
Reviewed the results of previous engagements by the SCO, the
Lottery’s Internal Audits Unit, and external audit agencies;
Obtained and analyzed limited aspects of internal control, as well as
financial and other data;
Assigned a score for each of the risk factors and computed a composite
risk score for every identified operation, activity, and major contract;
and
Categorized each of the operations, activities, and major contracts into
one of the five levels of risk based on its composite score: high,
medium-high, medium, medium-low, or low.
-2-
California State Lottery Risk Assessment Survey
We identified 123 Lottery operations, activities, and major contracts. We
compiled the list using the following sources:
Risk assessment ranking schedules from the previous SCO risk
assessment survey, dated April 2016;
The Lottery’s organizational charts for fiscal year (FY) 2016-17
through FY 2019-20;
Input from the Lottery’s executive management team; and
The Lottery’s contract listing.
We used the following risk factors to evaluate the identified operations,
activities, and major contracts and their respective weights:
Operational Risk – 30%
This factor focuses on the five interrelated components of internal
control: control environment, risk assessment, information and
communication, control activities, and monitoring. To evaluate this
factor, we used information from questionnaires and interviews with
Lottery management and staff.
Financial Risk – 30%
This factor focuses on reviewing budgeted and actual expenditures of
the division/unit. The dollar amount, type, complexity, and frequency
of the transactions made by the division/unit were also considerations
for this factor.
Compliance Risk – 20%
This factor focuses on the Lottery’s mandatory compliance with state
laws and regulations, contractual obligations, and reporting
requirements. To evaluate this factor, we gained an understanding of
the laws, rules, and regulations of each operation and activity and
reviewed current and prior audit findings by the SCO, the Lottery’s
Internal Audits Unit, and external agencies.
Strategic Risk – 20%
This factor focuses on the business development of the division/unit.
The recent restructuring, expansion of operations, and changes in
processes were components of this risk factor.
This engagement is a survey and not an audit; therefore, we did not
perform this engagement under generally accepted government auditing
standards.
-3-
California State Lottery Risk Assessment Survey
Conclusion Based on the work performed, the risk factors of each operation, activity,
and major contract received a score between one and five, with one
indicating minimal risk and five indicating maximum risk. We then
determined the composite score of each operation, activity, and major
contract and categorized it into one of five levels of risk: high, medium-
high, medium, medium-low, or low. The following table summarizes the
results:
Number of
Operations,
Level of Activities, and
Risk Explanation of Risk Contracts Schedule
Operations, activities, and contracts assessed at
High high risk for susceptibility of potential waste,
8 1
(4.01-5.00) fraud, and/or misuse of resources. These areas
should be audited on a routine basis.
Medium- Operations, activities, and contracts assessed
High with elevated risk. These areas should be 30 2
(3.51-4.00) audited periodically.
Operations, activities, and contracts assessed
Medium with moderate risk. Given time constraints and
21 3
(3.01-3.50) resources, these areas should be audited
occasionally.
Medium- Operations, activities, and contracts assessed
Low with limited risk. As such, an audit may be 26 4
(2.01-3.00) conducted.
Operations, activities, and contracts assessed
Low with minimal risk. New information or
38 5
(1.00-2.00) extraordinary circumstances would need to
arise to warrant an audit.
For operations, activities, and contracts categorized as medium-high and
high-risk, future audits will include an economy and efficiency objective
focusing on identifying potential waste and ensuring that contributions to
education are maximized.
We will periodically assess the effects of any future changes to the
Lottery’s operations and activities, or related risk factors that may occur.
We will consider these adjustments for audit priorities and future audit
plans.
See Schedules 1 through 5 for operation and activity descriptions and
survey results.
Views of We discussed our survey results with Lottery representatives at the exit
conference held on August 25, 2020. Due to the nature of this engagement,
Responsible
a draft report was not issued.
Officials
-4-
California State Lottery Risk Assessment Survey
Restricted Use This report is intended for the information and use of the Lottery, the
Commission, and the SCO; it is not intended to be and should not be used
by anyone other than these specified parties. This restriction is not
intended to limit distribution of this report, which is a matter of public
record, and will be available on the SCO website at www.sco.ca.gov.
Original signed by
JIM L. SPANO, CPA
Chief, Division of Audits
September 30, 2020
-5-
California State Lottery Risk Assessment Survey
Schedule 1—
High Risk Operations and Activities
Composite
Operation/Activity/Contract Division Description
Score
Procurement services Operations Acquires goods, services, or works 4.15
from an external source through
purchase orders, service agreements,
and/or contracts.
Prize Payments Unit Finance Validates and processes all prize claims 4.08
received from players and the Lottery’s
district offices; processes certain
retailer account adjustments; responds
to prize related inquiries received by the
Lottery's customer service center.
International Game Information Provides gaming and 4.08
Technology PLC (IGT) Technology telecommunication services.
Global Solutions Corporation Services
contract
(expires October 13, 2026)
Revenue Collections Unit Finance Collects revenues from over 4.08
23,000 retailers that sell Lottery
products; handles retailer inquiries,
resolves non-sufficient funds issues,
and administers retailer sanctions and
terminations; performs financial
reviews of prospective retailers
intending to sell Lottery products.
Scientific Games, Inc. Sales and Provides Scratchers printing and related 4.05
contract Marketing services.
(expires November 30, 2022)
Scratchers Unit Sales and Manages the entire lifecycle of 4.05
Marketing Scratchers games; develops the
Scratchers Product Plan in order to
achieve sales goals; determines launch
dates, price points, themes, prize
structures, and graphic design; oversees
inventory management, sales
monitoring, planogram placement, and
ending games.
District Sales Representative Sales and Provides sales support, retailer 4.05
activities Marketing consultation, and promotional services
for games to maximize Lottery product
visibility and profitability.
California State Lottery Risk Assessment Survey
Schedule 1 (continued)
High Risk Operations and Activities
Composite
Operation/Activity/Contract Division Description
Score
District offices Sales and Supports personnel in nine district 4.05
Marketing offices. Processes winner claims in the
district offices and provides field sales
support efforts.
California State Lottery Risk Assessment Survey
Schedule 2—
Medium-High Risk Operations and Activities
Composite
Operation/Activity/Contract Division Description
Score
Distribution centers Sales and Northern and Southern Distribution 3.98
Marketing Centers serve as the two central points
for distribution of Lottery supplies,
point-of-sale materials, Scratchers
tickets, and equipment.
DPR Construction, A General Operations Provides statewide construction 3.93
Partnership contract services for Lottery facilities.
(expires December 18,2020)
Personnel Transactions Unit Human Processes personnel transactions, leave 3.90
Resources balances, payroll, and benefits.
IGT Global Solutions Sales and Provides Scratchers printing and related 3.90
Corporation contract Marketing services.
(expires November 30, 2022)
David and Goliath, LLC Sales and Provides general market advertising 3.85
contract Marketing services.
(expires August 18, 2023)
Alcone Marketing Group Sales and Provides marketing promotion and 3.83
contract Marketing point-of-sale services.
(expired August 31, 2020)
Fleet Management Program Operations Monitors the use and maintenance of 3.80
Lottery vehicles.
3.80
Facilities Administration Unit Operations Manages maintenance and repairs
contracts for all Lottery facilities
statewide to ensure the health and
safety of staff and public, continuity of
operations, and site security; tracks,
maintains, and schedules all
preventative maintenance work orders
for heating, ventilation, and air
conditioning systems; performs
backflow testing and fire system
checks; tracks energy and water usage;
maintains Leadership in Energy and
Environmental Design certifications.;
provides tri-annual site inspections to
proactively address facilities issues;
ensures buildings comply with safety
standards, Occupational Safety and
Health Administration, State Fire
Marshal, and local requirements for
facility systems.
California State Lottery Risk Assessment Survey
Schedule 2 (continued)
Composite
Operation/Activity/Contract Division Description
Score
United Parcel Service, Inc. Sales and Provides Scratchers ticket delivery 3.80
contract Marketing services.
(expires November 27, 2021)
Promotions and Events Unit Sales and Develops and executes promotional 3.78
Marketing events, fairs, and festivals for
consumers and retailers.
Casanova Pendrill Sales and Provides Hispanic market advertising 3.78
Publicidad, Inc. contract Marketing services.
(expired October 31, 2019)
Contract Administration Operations Provides contract administration 3.75
Services Unit guidance and assistance to all Lottery
contract managers during the contract
development and post award-phases.
Route Sales Representative Sales and Services all active Smart and Final, 3.68
activities Marketing Rite Aid, and CVS stores.
Responsibilities include ordering,
delivering, and loading Scratchers
tickets, providing merchandising,
collecting money from vending
machines from the sale of both
Scratchers tickets and draw games, and
working with store management to
verify money collected.
Accounts Payable Unit Finance Processes accounts payable transactions 3.68
for Lottery vendors and retailers.
Circus LAX LLC contract Sales and Provides Hispanic market advertising 3.68
(expires October 17, 2024) Marketing services.
Field Investigations Section Security and Conducts investigations of Lottery- 3.68
Law related criminal and administrative
Enforcement violations; conducts claim
investigations and in-person interviews
on high-value prize claims; ensures that
the compliance enforcement program is
effective in preventing sales of Lottery
products to minors; ensures that Lottery
retailers comply with Lottery
Regulations; conducts complaint
investigations and background checks
of Lottery employees and contractors.
California State Lottery Risk Assessment Survey
Schedule 2 (continued)
Composite
Operation/Activity/Contract Division Description
Score
Consumer Marketing and Sales and Assists in the development of positive 3.65
Advertising Unit Marketing player and public attitudes toward the
Lottery and its games; oversees the
development of advertising and
marketing campaigns that promote the
sale of Lottery products and support
corporate goals; coordinates marketing-
related projects and programs.
Key Accounts Unit Sales and Develops and manages relationships 3.63
Marketing with major retail chains, franchise
organizations, and ownership groups
with multiple locations.
LPA Sacramento, Inc. Operations Provides architectural and engineering 3.63
contract services for Lottery facilities.
(expires March 20, 2021)
Stanley Convergent Security Security and Provides security system services, 3.63
Solutions contract Law preventative maintenance, new
(expires August 31, 2019) Enforcement installations, emergency services, and
equipment repairs at Lottery facilities.
Pollard Banknote Limited Sales and Provides Scratchers printing and related 3.60
contract Marketing services.
(expires November 30, 2022)
Sales Incentive Bonus Sales and Coordinates quarterly bonuses for 3.60
Program Marketing eligible Sales employees that meet sales
goals.
Cash Receipts and Finance Records cash receipts and deposits. 3.60
Disbursements Unit
Office Revolving Fund and Finance Maintains and monitors disbursement 3.60
Travel Disbursements records, revolving fund transactions,
and travel reimbursements and
advances.
Property and Asset Operations Tags, maintains, tracks and disposes of 3.58
Management Lottery assets.
MUSE Communications, Inc. Sales and Provides African-American market 3.58
contract Marketing advertising services.
(expires October 31, 2020)
California State Lottery Risk Assessment Survey
Schedule 2 (continued)
Composite
Operation/Activity/Contract Division Description
Score
Special Investigations and Security and Performs ticket printing security tests 3.58
Gaming Security Unit Law on Scratchers tickets; investigates
Enforcement questionable and fraudulent tickets;
conducts criminal background and
disclosure investigations on all Lottery
employees and contractors.
Scratchers Inventory Sales and Maximizes sales and ensures that 3.55
Management Center Unit Marketing retailers have a sufficient amount of
inventory until the next cycle; keeps
retailers informed of pertinent
information such as new games, game
features, sales promotional events, and
sales campaigns.
Draw Management Unit Security and Ensures that all draws are conducted 3.55
Law fairly and securely; monitors online
Enforcement and second-chance draws; monitors
online systems, and maintains draw
files.
Emergency Management and Security and Provides security for all Lottery 3.55
Physical Security Unit Law products, facilities, employees,
(formerly Physical Security Enforcement vendors, and visitors through the
Unit) management of a 24-hour,7-day-a-
week, statewide comprehensive
physical security system.
California State Lottery Risk Assessment Survey
Schedule 3—
Medium Risk Operations and Activities
Composite
Operation/Activity/Contract Division Description
Score
Mail and Reprographic Operations Receives mail; distributes intra-office 3.50
Services Unit mail; logs and tracks certified and
registered claims mail; provides
copying services for the Lottery.
Investigative Services Unit Security and Addresses Security and Law 3.50
Law Enforcement Division (SLED)-related
Enforcement calls from the Lottery’s 1-800-
LOTTERY telephone line; reviews
and authenticates questionable claims
and high-value prize claims.
Retailer Marketing and Point- Sales and Develops, produces, and distributes all 3.48
of-Sale Materials Unit Marketing point-of-sale materials; develops
general marketing advertising for all
Lottery retailers.
Financial Statements and Finance Prepares financial reporting required 3.45
Game Accounting Unit of the Lottery by statute and
Commission directives including, but
not limited to, quarterly and annual
financial statements; performs game
accounting and fixed assets
accounting; researches and analyzes
complex game account and fiscal
issues to formulate appropriate
accounting methods to meet
accounting standards and Generally
Accepted Accounting Principles
requirements.
Engagement and Retention Sales and Communicates to players and 3.38
Marketing Unit Marketing consumers through digital channels
such as web, mobile, email, and short
message service; manages the
Lottery’s Player Loyalty Program.
Non Retailer Accounts Finance Maintains and monitors accounts 3.35
Receivables Unit receivable records for vendors and
employees.
Financial Oversight and Finance Manages the Lottery’s investment 3.33
Investments Unit portfolio, currently valued at
approximately $850 million; performs
alternative collections methods in an
effort to collect outstanding debts
owed from Lottery retailers.
California State Lottery Risk Assessment Survey
Schedule 3 (continued)
Composite
Operation/Activity/Contract Division Description
Score
Securitas Security Services, Security and Provides security-guard services at 3.33
USA, Inc. contract Law Lottery headquarters and at special
(expires December 27, 2021) Enforcement events throughout the state.
Retailer Services Unit Security and Evaluates the background of retailers 3.28
Law seeking to sell Lottery products to
Enforcement determine their suitability pursuant to
Lottery Regulations; works with
Lottery investigators to ensure that
retailers comply with operating
procedures, contractual requirements,
Lottery regulations, and policies;
oversees appeal pleadings, probation
monitoring, and inspections of retailers
who are subjects of complaints.
District Offices Prize Finance Processes immediate prize payments 3.28
Payments Unit for error-free claims of prizes up to
$1,000.
Time Advertising contract Sales and Provides Asian-market advertising 3.28
(expires November 7, 2020) Marketing services.
Capital Program Operations Provides program management 3.25
Management, Inc. contract services for statewide construction
(expired August 7, 2020) projects at Lottery facilities.
Taxes Unit Finance Compiles tax requirements of the 3.25
Lottery and ensures compliance with
all state and federal tax-reporting
requirements.
Epicor Software Corporation Information Provides services for upgrading the 3.18
contract Technology financial system to Epicor 10.
(expires December 23, 2023) Services
Draw Games Unit Sales and Develops gaming options for 3.15
Marketing consumers and retailers; assesses
potential gaming opportunities through
the Lottery draw games portfolio.
Facilities Development Operations Coordinates the development of 3.08
Program Lottery-owned facilities.
Retailer Recruitment Unit Sales and Recruits new retailers to the Lottery. 3.08
Marketing
California State Lottery Risk Assessment Survey
Schedule 3 (continued)
Composite
Operation/Activity/Contract Division Description
Score
Information Technology (IT) Information Provides human-resources-related 3.08
Procurement and Technology activities in Information Technology
Administrative Services Unit Services Services Division (ITSD); develops
and monitors the ITSD budget and all
ITSD procurements; responsible for
tracking overall IT maturity and
progress against change initiatives
within ITSD.
ICF Next, Inc. contract Information Provides website development, design, 3.08
(expires September 30, 2020) Technology implementation, and web-hosting
Services services.
Visa Cal-Card Program Operations Manages the purchase card program to 3.05
Lottery staff for the acquisition of
allowable goods and services with
spending limits.
Western Contract Furnishers Operations Provides modular furniture 3.03
contract components and related
(expires June 14, 2022) reconfiguration and installment
services for all Lottery locations.
California State Lottery Risk Assessment Survey
Schedule 4—
Medium-Low Risk Operations and Activities
Composite
Operation/Activity/Contract Division Description
Score
Office supplies Operations Reviews, approves, and submits office 2.78
supply orders for Lottery staff.
Security and Law Security and Provides general administration 2.73
Enforcement Administration Law functions, including processes over
Enforcement SLED’s asset management, inventory,
and equipment.
Website and social media Sales and Creates, maintains, and updates the 2.70
Marketing Lottery’s public website and social
media sites.
Budgets Unit Finance Administers budgetary operations of 2.68
the Lottery, including development,
implementation, evaluation, and
control of the Lottery’s budget and
fiscal planning activities.
Classification and Pay Unit Human Ensures that appointments to civil 2.68
Resources service classifications are made in
accordance with applicable laws,
regulations, and control agency
guidelines; initiates personnel action
requests.
Consolidated Information Provides telecommunication and 2.60
Communications contract Technology disaster recovery services.
(expired July 31, 2020) Services
Fiscal Systems Unit Finance Conducts studies of the Division’s 2.60
fiscal systems and related policies,
procedures and practices, facilitates
system changes and resolutions, and
provides consultative services to users
and stakeholders; administers
Epicor/eBackoffice security access;
manages changes to eBackoffice
modules and reports; and reviews IGT
system access for the Finance
Division.
Engineering and Maintenance Operations Provides engineering and maintenance 2.55
Unit services for Lottery facilities.
California State Lottery Risk Assessment Survey
Schedule 4 (continued)
Composite
Operation/Activity/Contract Division Description
Score
Training, Recruitment and Security and Manages SLED’s training program, 2.55
Fleet Services (formerly Law plans, and fleet of vehicles; provides
Standards and Training) Unit Enforcement oversight of the gaming database
project.
Elsym Consulting, Inc. Information Provides internal control services and 2.53
contract Technology related services, including tax system
(expires October 13, 2021) Services services.
Retailer Network Sales and Manages Retailer Management System 2.48
Management Unit Marketing lifecycles of retailer accounts,
including application and equipment
installation processing, ownership
changes, tax changes, moves,
terminations, and any other record
updates or changes; processes retailer
incentives; assists retailers in signing
on to the retailer website.
Digital and Interactive Information Performs custom design and the 2.43
Services Unit Technology development of websites, mobile
Services applications, and web-based
applications.
Forecasting Unit Finance Forecasts sales for the Super Lotto 2.38
Plus and Mega Millions jackpot
games; establishes the advertised
jackpot levels for each drawing for
these games.
Gaming Vendor Management Information Manages the day-to-day monitoring 2.38
Unit Technology and operations for the gaming system;
Services enforces specific contract language
and ensures that all contract
deliverables are completed; acts as the
liaison between contractors and
Lottery staff, monitoring the service
level agreements, and imposing
financial assessments when agreed
upon service levels are not met.
Customer Contact Center Sales and Receives and provides correspondence 2.38
Unit Marketing services to retailers and members of
the public who call the 1-800
information line or send email to the
Lottery.
California State Lottery Risk Assessment Survey
Schedule 4 (continued)
Composite
Operation/Activity/Contract Division Description
Score
Productions Unit Sales and Produces corporate audio, video, and 2.33
Marketing other production activities designed to
meet communication needs.
Department of Rehabilitation Executive Provides accessibility consulting 2.30
contract services.
(expires June 30, 2022)
Retailer Access Program Executive Ensures that people with disabilities 2.30
have access to Lottery products at
Lottery retailers.
e-procurement system Operations Contract/procurement management 2.28
system for the initiation, review, and
approval of purchases.
Leasing activities Operations Monitors the Lottery’s leases. 2.28
Small Business and Disabled Operations Small Business: Ensures that a fair 2.25
Veteran Business Enterprise share of the Lottery’s purchases and
Program contracts for goods, information
technology, services, and construction
be placed with small businesses or
microbusiness.
Disabled Veteran Business Enterprise:
Ensures veteran participation in the
Lottery’s procurement of contracts.
Information Security and Executive Safeguards information assets from 2.23
Privacy Office various threats to information security
and privacy; establishes protocols for
identifying and neutralizing threats,
and administers information security
training programs; ensures that any
findings and observations from
compliance assessments are addressed.
Payroll distribution processes Finance Posts adjusting and correcting payroll 2.15
entries; receives and distributes
warrants to the Lottery’s divisions.
Financial Analysis and Risk Finance Performs analysis and research to 2.10
Management Unit control risks, identify profit
opportunities, and improve the
Lottery’s effectiveness.
Training Human Oversees supervisors and staff 2.05
Resources development and training.
Custodial Support Unit Operations Provides janitorial services. 2.05
California State Lottery Risk Assessment Survey
Schedule 5—
Low Risk Operations and Activities
Composite
Operation/Activity/Contract Division Description
Score
Alter Agents Inc. contract E x e c u tive Provides Communication 1.88
(expires February 22, 2021) Effectiveness Tracking Study
services.
Legal Services Unit Executive Provides legal services to the 1.85
Lottery; advises staff and
commissioners of risks; oversees
ethics and Public Records Act
compliance.
Health and Safety Unit Human Develops and maintains health and 1.85
Resources safety and wellness programs;
maintains Division of Occupational
Safety and Health (Cal/OSHA)
injury reporting requirements.
Records Retention Operations Management of all of the Lottery's 1.85
Management physical records.
KPMG LLP - Draw Audit Executive Provides draw auditing and review 1.80
contract services.
(expires July 21, 2020)
IT Service Desk Unit Information Receives and records all Service 1.80
Technology Desk interactions with IT
Services customers while assessing,
resolving, and reporting service
incidents; provides technical
support for all technology devices
used by Lottery employees,
including software installations and
upgrades.
IT Security and Enterprise Information Ensures alignment of IT strategies 1.80
Architecture Unit Technology with business strategies; provides
Services architecture-development services
to identify solutions for enterprise
business needs and develops
migration and sequencing plans for
their implementation; manages
cyber security; monitors and
mitigates cyber-risk.
California State Lottery Risk Assessment Survey
Schedule 5 (continued)
Composite
Operation/Activity/Contract Division Description
Score
Quality Review Unit Finance Provides oversight of Finance 1.78
Division’s core functions and
ensures that the internal
management team’s existing
practices conform to policies,
procedures, and quality standards.
Performs post-reviews of financial
transactions and reviews of policies
and procedures; assesses the quality
of financial data and work
documents, and reduces the number
of preventable audit findings;
compiles the Quarterly Finance
Division Performance Report;
maintains Finance Division’s audit
tracking database and action
calendar in addressing audit
recommendations and corrections.
Monitor and implement audit Executive Internal Audits Unit monitors the 1.75
recommendations status and implementation of all
internal and external audit
recommendations.
Injured Workers Program Human Oversees workers’ compensation 1.68
Resources and the Return to Work program.
Network Engineering and Information Oversees the Lottery’s networking 1.60
Administration Unit Technology infrastructure which includes
Services switches, routers, firewalls,
wireless and Voice over Internet
Protocol connectivity and
performance.
Infrastructure Administration Information Provides monitoring, support, and 1.60
and Support Unit Technology maintenance of the Lottery’s IT
Services infrastructure.
Data, Information and Information Maintains the enterprise-wide 1.60
Analytics Services Unit Technology Business Intelligence and Business
Services Analytics system.
Forms management Operations Maintains all of the Lottery’s form 1.58
documents.
California State Lottery Risk Assessment Survey
Schedule 5 (continued)
Composite
Operation/Activity/Contract Division Description
Score
Enterprise Portfolio Information Provides portfolio-level oversight 1.55
Management Office Technology of projects throughout the Lottery;
Services provides direct project management
of high criticality projects; provides
guidance and support for managers
of lower criticality projects.
Gaming Application Support Information Gathers and writes business 1.50
and Quality Management Technology requirements; creates test plans and
Unit Services tests cases; produces problem
reports; reviews system
requirement specifications and
facilitates customer acceptance
testing of gaming-system changes.
Labor Relations and Human Develops and maintains manager- 1.50
Performance Management Resources labor relationships; handles labor
Unit grievances; meets with unions;
investigates allegations and adverse
actions.
KPMG LLP - Financial Audit Executive Provides financial auditing and 1.48
contract related services.
(expires March 29, 2021)
Enterprise Risk and Executive Monitors and strengthens internal 1.48
Optimization Section controls at the enterprise level;
performs risk assessments and
process evaluations to create a desk
manual for the Lottery; reports
biannually on the adequacy of
Lottery’s control systems (State
Leadership Accountability Act).
Legislative portfolio Executive External Affairs Unit proposes, 1.48
drafts, tracks, and testifies all
legislative bills involving or
sponsored by the Lottery.
Application Development and Information Provides support for software 1.48
Support Unit Technology applications used by internal
Services Lottery users.
California State Lottery Risk Assessment Survey
Schedule 5 (continued)
Composite
Operation/Activity/Contract Division Description
Score
Business research and Executive Business Planning and Research 1.43
analytics Unit provides research services to
divisions to aid in the development
of their tactical programs; creates
predictive data models to help solve
business problems; conducts
independent assessments of the
effectiveness of implemented
tactics.
Audits, internal reviews and Executive Internal Audits Unit examines and 1.40
consulting services evaluates financial, administrative,
and operational activities of the
Lottery; provides guidance to
executive management on internal
controls and strategic planning.
Equal Employment Executive Administers the Lottery’s Equal 1.35
Opportunity Unit Employment Opportunity program,
bilingual services, Limited
Examination Appointment Process,
Upward Mobility program, and
Bullying and Abusive Conduct
Policy.
Business and strategic Executive Business Planning and Research 1.33
planning Unit develops the annual and three-
year strategic plans; assists
divisions in developing their
tactical proposals to address the
goals for the upcoming fiscal year;
develops each product’s annual
sales goal, which becomes part of
the Lottery’s proposed budget;
conducts an independent
assessment of the effectiveness of
implemented tactics.
Independent verification and Executive Internal Audits Unit conducts 1.23
validation services independent verification and
validation services for special
promotions.
Oversight of Internal Control Executive Internal Audits Unit approves 1.23
System Internal Control System changes
and enhancements.
Selection services Human Reviews applications to ensure that 1.23
Resources minimum qualifications are met
and recruits for vacancies.
California State Lottery Risk Assessment Survey
Schedule 5 (continued)
Composite
Operation/Activity/Contract Division Description
Score
Public Affairs and Public Affairs Develops and disseminates press 1.18
Communication and releases, and media advisories;
Communication organizes media events and mission
campaigns.
Patents and trademarks Executive Legal Services Unit administers 1.18
preserving trademarks; submits
applications for patents and
services.
Draw Management services Executive Internal Audits Unit assists the 1.15
Draw Management Unit with
activities related to draws; reviews
draw procedures; monitors
equipment.
Monitoring audit contracts Executive Internal Audits Unit manages and 1.15
oversees annual financial audit
contracts, other audit-related
contracts, and agreed-upon
procedures contracts.
World Lottery Association Executive Internal Audits Unit ensures that 1.15
Security Standards the Lottery meets the criteria to
certification maintain the World Lottery
Association Security Control
Standards certification.
Corporate social Executive External Affairs Unit develops 1.15
responsibility programs, community relations and supports
community sponsorship outreach programs; publicizes
program, and stakeholder information about responsible
relations gaming; partners with California
Department of Education to support
its annual Teacher of the Year
Awards and Distinguished School
Awards.
Employee recognition Human Oversees the development and 1.15
Resources implementation of employee
recognition programs for the
Lottery.
California State Lottery Risk Assessment Survey
Schedule 5 (continued)
Composite
Operation/Activity/Contract Division Description
Score
Statement on Standards for Executive Governs the way organizations 1.08
Attestation Engagements 18 report on various compliance
controls. Lottery ensures IGT has
proper controls in place; IGT
completes Service Organization
Control I and Service Organization
Control II reports.
Workforce and succession Human Updates and maintains work force 1.08
planning Resources succession plans through staff
evaluation, career development,
training needs, and mentoring
programs.
Reasonable accommodation Human Implements and monitors 1.08
Resources compliance with the Americans
with Disabilities Act and the Health
Insurance Portability and
Accountability Act; staff medical-
related issues, and provides
accident training for Lottery staff.
State Controller’s Office
Division of Audits
Post Office Box 942850
Sacramento, CA 94250
http://www.sco.ca.gov
S19-LOT-4002