(a) The licensed authorized organization or unit shall maintain records to substantiate bingo expenses. Bank statements, cancelled checks and cancelled check images may not be adequate to substantiate bingo expenses.     
      (b) Examples of records that are acceptable to substantiate bingo expenses for each type of expense are:      
        (1) Invoices, itemized billing statements, sales receipts, or similar documents that have information about the items purchased or services provided and contain the following details:                  (A) the name and contact information of the person or entity selling the goods or providing the service;                   (B) an adequate description of goods or services purchased;                   (C) the quantity of each product purchased or service received;                   (D) the price of each product purchased or service received which may include the pricing information for services provided pursuant to a service agreement;                   (E) the total dollar amount billed; and                   (F) the date of the transaction.         
        (2) Written lease agreement between the commercial lessor and the licensed authorized organization or unit stating the amount of rent charged for the use of bingo premises. If there is no written agreement, the organization must support the rental payments with an invoice from the lessor stating location, rental dates, and rental amounts by occasion.       
        (3) Rent forgiveness letter or lease amendment signed by the commercial lessor stating the amount of any rent forgiven or permanently or temporarily reduced.       
        (4) Payroll records that include a listing for each employee showing:                  (A) primary position worked;                   (B) date and occasion number worked (if more than one occasion held on a single day);                   (C) total number of hours worked per occasion (if paid hourly);                   (D) rate and criteria (hourly, per occasion, etc.);                   (E) gross wages;                   (F) all taxes and payroll deduction amounts; and                   (G) net payroll amount.         
        (5) Federal and state payroll tax returns, including related deposit slips and receipts or other documentation that the deposits were accepted.       
        (6) Documentation of the payment of other federal, state, and local taxes, which may include tax returns, 1099's and property tax paid.       
        (7) Actual or imaged bank statements, deposit slips and cancelled checks or cancelled check images, to the extent available from the financial institution.       
        (8) Debit card transactions reports.       
        (9) The purpose, amount and payee for each electronic transfer from the organization's bingo checking account.       
        (10) A licensed authorized organization or unit shall maintain records to document any expenses, including incidental expenses, for promotions or door prizes, including any advertisements, flyers, game schedules, or documents reflecting any special pricing structures.       
      (c) The licensed authorized organization or unit shall maintain records to document the allocation method for bingo expenses which are shared by organizations in a hall.     
      (d) The licensed authorized organization or unit shall maintain records to document the allocation method for expenses that are divided between bingo and non-bingo operations of the organization and the allocation of the expenditure between bingo expense and charitable distribution.     
      (e) All expenses from the bingo checking account must be listed on a Cash Disbursements Journal on forms provided by the Commission or in another format that shows the information for each check written, electronic fund transfers, bank fees, and cash shortages or overages. If any licensed authorized organized organization maintains its records on a commercially available accounting software package (e.g. Quicken), use of the standard accounting features of the package shall meet the requirements of this section.      
        (1) A Cash Disbursements Journal shall be maintained on a cash basis and include information for checks written, electronic fund transfers, bank fees and cash shortages or overages that are dated during the calendar quarter.       
        (2) Cash Disbursement Journal Required Information:                  (A) date of check, withdrawal or electronic funds transfer transaction;                   (B) check number, transaction number or confirmation number;                   (C) name of payee;                   (D) amount of expense;                   (E) expense category--each expense item shall correspond to the category on the Texas Bingo Quarterly Report; and                   (F) totals--Each expense category shall be totaled quarterly and match the information reported to the Commission on the Texas Bingo Quarterly Report. Any changes made on the Texas Bingo Quarterly Report shall be documented on the Cash Disbursements Journal.         
      (f) A licensed authorized organization or unit shall maintain sufficient funds in the bingo checking account to cover all checks written and electronic fund transfers. Bank fees incurred because the organization fails to maintain sufficient funds in its account to cover expenditures from the bingo account may not be considered a reasonable or necessary expense.     
      (g) All disbursement records must be complete, accurate, legible, and maintained for four (4) years by the licensed authorized organization.     
     Source Note:        The provisions of this §402.506 adopted to be effective April 15, 2008, 33 TexReg 2953; amended to be effective July 5, 2010, 35 TexReg 5823; amended to be effective August 1, 2016, 41 TexReg 5505