Office of the Legislative Auditor - Financial Audit Division

Report Summary

Minnesota Men of Color

We have conducted a special review of the Minnesota Men of Color's financial management of state grants received from the Department of Health for the period from 1999 to 2003. We also reviewed the Department of Health's administration of these grant contracts. The Minnesota Men of Color is a nonprofit organization, established in December 1998. It offers HIV/STD (Human Immunodeficiency Virus and Sexually Transmitted Disease) prevention, testing, intervention, and outreach services to Minnesota's African American, Arab/Middle Eastern, Asian Pacific Islander, Chicano/Latino, and North American gay, bisexual, and transgender populations. For fiscal years 1999 through 2003, the Department of Health's HIV/STD Prevention Services Section awarded the Minnesota Men of Color grants totaling $698,565, although actual payments to the organization totaled $337,349.

Our objective in conducting this special review was to answer the following questions:

• Did the Minnesota Men of Color expend grant funds in accordance with legal requirements and grant contract provisions?
• Did the Department of Health adequately monitor the Minnesota Men of Color's compliance with its grant agreements?

Key Conclusions

• The Minnesota Men of Color did not have the administrative capability to properly account for the use of grant funds received from the Department of Health. The organization had a very small staff and did not adequately maintain its critical financial systems. Of the $337,349 the Department of Health disbursed to the Minnesota Men of Color, we identified a total of $27,227 in undocumented and other questioned costs.
• The Minnesota Men of Color did not comply with several financial-related and programmatic requirements of the grant contracts relating to staffing, training, program materials, and service levels. It also did not file the required forms to maintain its status as a not-for-profit corporation and did not carry the required workers' compensation insurance.
• The Department of Health did not adequately monitor its grant contracts with the Minnesota Men of Color. The department did not take sufficient action when it became clear that the Minnesota Men of Color was not complying with grant provisions. Despite noncompliance with grant contract requirements and deliverables, the department continued to fund the grantee organization, including an increased award for the 2003-2005 grant period.

• The Department of Health did not structure certain aspects of its grant contracts with the Minnesota Men of Color to provide for adequate oversight.