Minnesota Office of the Legislative Auditor
Financial Audit Division

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Report Summary
Minnesota State Lottery

Selected Scope Financial Audit
For the Three Years Ended June 30, 1997

 

Public Release Date: August 14, 1998 No. 98-45

Agency Background

The Minnesota State Lottery (Lottery) provides various gaming opportunities to the public, under the authority of Minn. Stat. Section 349A. The Lottery's headquarters are located in Roseville. It also has six regional offices throughout the state. George Andersen is the director of the Lottery.

Effective July 1, 1995, statutes were amended requiring the Lottery to maintain accounts within the state treasury (except for nominal accounts for day to day operating expenses). The Lottery records financial transactions on its own accounting systems. The Lottery records payroll and employee expense reimbursements on the state's accounting system. The Lottery transferred approximately $60 million in net proceeds to the beneficiary funds each fiscal year from 1995 to 1997. Additional amounts ranging from $24 to $29 million were transferred each year for taxes in lieu of sales tax, unclaimed prizes and transfers for compulsive gambling programs.

Selected Audit Areas and Conclusions

Our audit covered the three years ended June 30, 1997. The scope included prize expenses and unclaimed prizes, operating expenses, transfers to state agencies, and employee payroll. The scope of our audit was limited, however, because the Lottery could not provide detailed electronic transactions for six months of fiscal year 1996. The loss of data was due to noncompliance with the Lottery's internal computer system change control procedures.

With respect to the remaining periods in our scope, the Lottery met minimum prize payout percentages and administered unclaimed prize dollars in accordance with state statutes. Prize expenses were appropriately classified in the accounting records. The Lottery also complied with state statutes in transferring net proceeds, payments of taxes in lieu of sales tax, and funds for compulsive gambling programs to state agencies.

The Lottery complied with statutory limits for operating and advertising expenses. These expenses were appropriately classified in the accounting records. The Lottery also administered employee payroll in compliance with bargaining unit provisions.

In its response, the Lottery agreed with the audit recommendation that it needs to ensure compliance with its system change control procedures to ensure completeness of electronic data.

 

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