Minnesota Office of the Legislative Auditor
Financial Audit Division

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Report Summary
Department of Revenue

Programs Selected for
Fiscal Year 1997 Statewide Audit

 

Public Release Date: February 20, 1998 No. 98-08

Background Information

The Department of Revenue is responsible for managing the state's tax systems. Minnesota relies on the voluntary compliance of its citizens with those tax laws. The department works to win compliance through a balanced interaction of efforts that focuses on developing sound tax policies, educating citizens, providing expedient customer service, and providing administrative and enforcement services in the areas of tax collection and assessment. The department collected more than $10.5 billion in tax dollars during fiscal year 1997. Mr. James Girard, the current commissioner of the department, was appointed by the Governor on July 1, 1996.

Selected Audit Areas and Conclusions

Our audit scope was limited to those areas material to the state of Minnesota's Comprehensive Annual Financial Report for the year ended June 30, 1997. Our primary objective was to render an opinion on the state of Minnesota's financial statements. As part of our work, we were required to gain an understanding of the internal control structure and ascertain whether the Department of Revenue complied with laws and regulations that may have a material effect on its financial statements.

The Department of Revenue's financial activity for fiscal year 1997 was fairly presented in the state of Minnesota's Comprehensive Annual Financial Report for the year ended June 30, 1997. In addition, the department had properly recorded its tax revenues, refunds, and local government aids on the Minnesota Accounting and Procurement System (MAPS). We are concerned that the department has not taken a more aggressive role in verifying the integrity of withholding tax information obtained from employers to the wage detail information on file with the department. In addition, the department did not perform a critical withholding tax reconciliation for part of the year. The department did not adequately safeguard its cash receipts. We also found that, in certain circumstances, the department made duplicate refund payments.

We found that for the items we tested, the department had complied, in all material respects, with finance related legal provisions addressed in the scope of our audit. However, we found that the department did not deposit its cash receipts timely in accordance with Minn. Stat. Section 16A.275.

The department agreed with the audit report findings and recommendations and is taking actions to resolve the issues.

 

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