Minnesota Office of the Legislative Auditor
Financial Audit Division

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Report Summary
Department of Employment and Economic Development
Internal Controls and Compliance Audit

 

Financial Audit Division Report 15-17 Released December 18, 2015

Background

The Office of the Legislative Auditor conducted this audit to determine whether the Department of Employment and Economic Development had adequate internal controls over selected economic development programs and complied with applicable legal requirements. We audited selected programs for the period July 1, 2011, through May 31, 2015.

The department administers several types of programs whose main goals are to assist companies to retain existing jobs, create new high-quality jobs, and encourage private investment in small companies within Minnesota. These programs involve the use of grants, loans, and tax incentives.

Conclusion

The Department of Employment and Economic Development’s internal controls over economic development programs and funds were generally adequate to ensure that it accurately reimbursed recipients for allowable grant expenditures, processed loan payments and recoveries, issued tax credits to eligible investors and businesses in accordance with management’s authorizations and finance-related legal provisions, and recorded these transactions in the state’s accounting system and the department’s financial records. For items tested, the department generally complied with finance-related legal provisions.

However, the department had some internal control weaknesses and noncompliance concerns related to loan administration, grant monitoring, and tax credit processing.

Findings

  • For small business investment tax credits, the Department of Employment and Economic Development did not always ensure businesses continued to meet statutory qualifications after making an initial certification. In addition, the department did not always accurately calculate and document the tax credit amounts.
  • The Department of Employment and Economic Development did not always comply with state grant policies and grant agreements in administering and monitoring grants from the Minnesota Investment Fund.
  • The Department of Employment and Economic Development did not pay a tribal government for the cost to administer Indian business loans.
More Information

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