Minnesota Office of the Legislative Auditor
Financial Audit Division

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Report Summary
Department of Labor & Industry

Programs Selected for

Fiscal Year 1995 Statewide Audit;

 

Public Release Date: February 16, 1996 No. 96-08

Background

The Department of Labor and Industry was responsible for processing and paying about $100 million of workers' compensation claims in fiscal year 1995. The claims are paid from the Special Compensation Fund that is financed by assessments made on certain insurance companies and employers. Mr. Gary Bastian has served as the Commissioner of Labor and Industry since April 12, 1995.

Selected Audit Areas and Conclusions

Our audit scope focused on department financial activities that were material to the state's fiscal year 1995 financial statements. As a result, we examined Special Compensation Fund assessments collected and workers' compensation claims paid. In addition, we reviewed access controls for the department's computer system.

We concluded that Special Compensation Fund assessments and claims were fairly presented on the state's fiscal year 1995 financial statements in compliance with generally accepted accounting principles.

The internal controls over assessment revenues were generally adequate; however we found some areas where the department could strengthen controls. The department needs to improve the timeliness of certain deposits; must ensure that newly licensed insurance companies are required to file assessment reports; and must maintain adequate supporting documentation for certain accounts receivable.

Our fiscal year 1994 audit cited several findings with the department's processing of workers' compensation claims. In fiscal year 1995, we found that the department was making progress with resolving these problems; however, continued efforts were needed.

Our review of access controls for the department's computer system revealed that, in general, the department is limiting access to sensitive data on its mainframe computer. We found, however, that computer programmers have unfettered and continuous access to all data. We concluded that such extensive access was unnecessary and inappropriate for the programmers and recommended that the department reevaluate its policy of giving unrestricted access to the programmers.

 

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