Minnesota Office of the Legislative Auditor
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Report Summary
State Board of Investment

Statewide Financial Audit

For the Fiscal Year Ended June 30, 1996

 

Public Release Date: January 24, 1997 No. 97-05

Background Information

The Minnesota State Board of Investment (SBI) administers and directs the investment of state funds, primarily retirement funds. Minn. Stat. Chapter 11A governs the investment activities of the board. Howard J. Bicker is the executive director of the board.

The board uses both internal staff and external investment managers to fulfill its responsibilities. The external firms invest and manage the assets of the Post Retirement Fund and Supplemental Investment Fund, as well as the assets of the basic retirement funds and the assigned risk plan. The basic retirement funds contain the pension assets of the active participants in the following eight statewide retirement plans: Teachers Retirement Fund, Public Employees Retirement Fund, State Employees Retirement Fund, Public Employees Police and Fire Fund, Police and Fire Consolidation Fund, Highway Patrol Retirement Fund, Correctional Employees Fund, and Judges Retirement Fund. SBI staff manage the other investments.

Audit Objectives

The primary objective of our audit was to render an opinion on the Investment Trust Fund financial statements. These financial statements are included both in SBI's Annual Report and in the state of Minnesota's Comprehensive Annual Financial Report for fiscal year 1996. Our objective included determining whether SBI's financial statements presented fairly the financial position, results of operations, and changes in net assets in conformity with generally accepted accounting principles.

As part of our work, we gained an understanding of the internal control structure over investment purchases and sales, investment custody and valuation, investment income collection and allocation, and management fee payments and reimbursement cycles. We also ascertained whether SBI complied with laws and regulations that may have had a material effect on its financial statements.

Conclusions

SBI's Annual Report for the year ended June 30, 1996, includes our unqualified audit opinion, dated December 2, 1996, on the Investment Trust Fund's financial statements. The SBI financial statements are also included in the state of Minnesota's Comprehensive Annual Financial Report for the year ended June 30, 1996, which includes our audit opinion dated December 2, 1996. We found that SBI designed and implemented a system of management controls to provide reasonable assurance that investments were adequately safeguarded, authorized, and properly recorded in accounting records and financial statements. For the items tested, SBI complied with material financial legal provisions.

 

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