Office of the Legislative Auditor - Financial Audit Division

Report Summary
Report on Internal Control Over Statewide
Financial Reporting for Fiscal Year 2013

 

Financial Audit Division Report 14-04

Released February 14, 2014

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Conclusion

The State of Minnesota’s financial statements were fairly stated in all material respects. While the state met the statutory deadline for reporting the fiscal year 2013 financial statements, it continued to have some weaknesses in its internal controls over financial reporting.¹

Our audit report contains four findings related to internal controls over the preparation of the state’s financial statements. Three of the findings include concerns from our previous audit that had not been fully resolved.²

Findings

• The Department of Management and Budget and other state agencies did not have adequate internal controls to prevent or detect some errors in the financial information used to compile the financial statements, including footnote disclosures. This is a repeat finding.
• The Department of Management and Budget reported four prior period adjustments totaling $173.4 million to correct prior year errors, including some errors made by the Department of Transportation.
• The departments of Education and Human Services had weaknesses in their internal controls to ensure appropriate access to certain state business systems. This is a repeat finding.
• The departments of Education and Revenue each lacked a comprehensive internal control structure over financial reporting to sufficiently mitigate the risk of potential misstatements in the financial statements. This is a repeat finding.

Audit Scope

We audited the state’s financial statements for the fiscal year ended June 30, 2013. Our audit encompassed many large state agencies that had financial activities significant to the financial statements.

Background

The Department of Management and Budget is responsible for preparing the state’s annual financial statements, which are included in the State of Minnesota’s Comprehensive Annual Financial Report. To prepare the statements, the department uses information from a variety of sources, including information provided by other agencies. The issues contained in this report relate to weaknesses in internal controls in the state’s financial reporting process as a whole.

 

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¹ Minnesota Statutes 2013, 16A.50.
² Office of the Legislative Auditor’s Financial Audit Division Report 13-06, Report on Internal Control Over Statewide Financial Reporting, issued May 17, 2013.