Minnesota Office of the Legislative Auditor
Financial Audit Division

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Report Summary
Department of Corrections

Selected Scope Financial Audit

For the Year Ended June 30, 1994;

 

Public Release Date: October 6, 1995 No. 95-41

Agency Background

The Department of Corrections is a service and regulatory agency which provides correctional facilities and community programs for adjudicated delinquent and adult felons. Commissioner Frank Wood provided the general management of the department since his appointment, effective September 9, 1993.

During fiscal year 1994, the department initiated a restructuring of the industries program at the correctional facilities. The department created a unit called MINNCOR to centralize control over management, production coordination sales, marketing, designing, purchasing, and accounting operations of the industries program. One objective of MINNCOR is to establish a uniform accounting system. MINNCOR intends to use a wide area network system to send and receive information through an accounting software package to and from production facilities.

Selected Audit Areas and Conclusions

Inmate Work Programs: Private Employers

Our review documented controls over inmate earnings at the ten correctional facilities during fiscal year 1994. We also reviewed controls through February 1995 to include the reorganization within the department that created the MINNCOR unit. We limited testing to the activities at MCF-Shakopee and MCF-Lino Lakes.

Our review concentrated on the financial controls over inmate earnings from private employers at the facilities, but also addressed two private business contracts controlled by MINNCOR. We found inmate wages earned from private employers are not properly controlled. We also found that the department has not executed written contracts to limit the department's financial risks with these private businesses.

The Department of Corrections Central Office and facilities together are responsible for maintaining control over inmate accounts, both individual and group. Dual supervision exists for the finance directors who supervise accounting staff in this area at each facility. The finance directors report typically to the associate warden of administration at each facility as well as the financial services director in the central office. This dual reporting responsibility complicates oversight of the accounting function. As a result, correctional facilities and the Central Office have not established proper control over inmate financial activities to ensure that: (1) financial duties are properly separated, (2) reconciliations are completed for financial activity, and (3) account balances and authorized cash levels are accurate.

 

Office of the Legislative Auditor ♦ Room 140, 658 Cedar St., St. Paul, MN 55155