Minnesota Office of the Legislative Auditor
Financial Audit Division

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Report Summary
Department of Management and Budget
Federal Compliance Audit

 

Financial Audit Division Report 17-08 Released March 24, 2017

We audited the Department of Management and Budget’s oversight and administration of the state’s federal programs. The department’s oversight and administration includes cash management, allocation of statewide indirect costs, oversight of internal service fund rates, and the preparation of the state’s Schedule of Expenditures of Federal Awards for fiscal year 2016.1 This audit is part of our broader federal single audit objective to obtain reasonable assurance about whether the State of Minnesota complied with the types of compliance requirements that are applicable to each of its federal programs.

Our first objective was to determine whether the Department of Management and Budget complied, and had adequate controls to ensure compliance, with federal program requirements in its oversight and administration of the state’s federal programs. We interviewed staff at the Department of Management and Budget to understand how the department ensured compliance with federal requirements. We tested the department’s internal controls and transactions to ensure compliance with federal requirements.

Our second objective was to determine whether the Department of Management and Budget had resolved one issue from our previous audit.

Conclusion

Except as explained in the audit finding in this report, we concluded that the Department of Management and Budget complied with federal requirements over cash management, allocation of statewide indirect costs, oversight of internal service fund rates, and the preparation of the state’s Schedule of Expenditures of Federal Awards for fiscal year 2016. We also concluded that the department had controls to ensure compliance.

Audit Finding

  • For fiscal year 2016, the Department of Management and Budget approved rates for centralized information technology services that exceeded the cost of those services and overcharged federal programs. This is a repeat finding from our previous audit.2

1 Governmental Accounting Standards Board, Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments states that, “Internal service funds may be used to report any activity that provides goods or services to other funds, departments, or agencies [of the state] . . . on a cost-reimbursement basis.”

2 Office of the Legislative Auditor, Financial Audit Division Report 16-09, Department of Management and Budget (Finding 1), issued March 24, 2016.

More Information

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