Office of the Legislative Auditor

Legislative Audit Commission

Minutes

Members Present:

Members Absent:

Other Non-LAC Members Present:

Representative Rick Hansen, Chair, called the Legislative Audit Commission (LAC) meeting to order at 10:04 a.m. Representative Hansen noted that several legislators from other legislative committees were present at the meeting, and he welcomed their participation. The purpose of the meeting was to release three reports by the Office of the Legislative Auditor: 1) the special review, Minnesota Department of Natural Resources and the 2007 North American Wildlife Enforcement Officers Association Conference, 2) Department of Health Internal Control and Compliance Audit, and 3) Department of Labor and Industry Internal Control and Compliance Audit.

Representative Hansen introduced Legislative Auditor Jim Nobles. Mr. Nobles indicated that a newspaper article on May 5, 2008, prompted the Office of the Legislative Auditor to investigate the involvement of Minnesota Department of Natural Resources (DNR) in the 2007 conference of the North American Wildlife Enforcement Officers Association (NAWEOA) held in St. Paul. Mr. Nobles pointed out that DNR spent over $400,000 planning and hosting the conference but never established a formal document that defined its role in the conference. The only formal agreement that defined roles and responsibilities was between NAWEOA and the Minnesota Conservation Officers Association (MCOA), a private organization and the union that represents DNR’s conservation officers. Mr. Nobles said top DNR officials, including in the commissioner’s office, were aware that DNR money and staff resources were being used for the conference, and they reviewed and approved various documents related to the conference. They at times indicated the department’s role should be limited, but they failed to develop a document that clearly defined those limits and expectations. This informal, ad hoc approach led to miscommunication and conflicts, with DNR’s involvement in the conference being largely controlled by the department’s Enforcement Division and MCOA. Mr. Nobles said it also resulted in DNR inappropriately spending almost $300,000 on social and personal aspects of the conference that had no public purpose. In addition, he said it resulted in Enforcement Division staff and officials using their state positions and public resources to raise money from private sources for the benefit of MCOA and NAWEOA, which violated Minnesota’s statutory code of conduct for state employees because both MCOA and NAWEOA are private organizations with which DNR’s conservation officers are affiliated.

After many questions and comments from both LAC members and other legislators, Representative Hansen invited Mark Holsten, Commissioner of the Minnesota Department of Natural Resources, to respond to the OLA findings and recommendations. Mr. Holsten said that the OLA report provided a “systems look” at what occurred around the planning and execution of the conference. He said the department does not disagree with the Legislative Auditor’s report and will use its recommendations to improve controls and clarify the department’s policies and procedures. He also indicated the department is using an outside investigator to conduct a more detailed examination of what actions were taken by specific DNR officials and employees. After making his statement, Commissioner Holsten responded to questions and comments from commission members and other legislators.

The meeting turned to the next item on the agenda regarding the financial audit, Department of Health Internal Control and Compliance Audit. Cecile Ferkul, Deputy Legislative Auditor for the Financial Audit Division, gave a brief overview of the audit and introduced Mike Hassing, the manager of the audit. Mr. Hassing explained that the department collects approximately $35 million of receipts from regulatory and occupational licensure each year. The department also provided grants and aid of approximately $274 million each year to individuals, local governments, and nonprofit organizations. The department had 19 findings in the report related to internal control and legal compliance deficiencies.

Representative Hansen invited Craig Acomb, Chief Financial Officer from the Minnesota Department of Health, to respond to the OLA findings and recommendations. Mr. Acomb said that, in general, the department agrees with the findings and intends to work toward reconciling the issues. He said that the department does already have internal controls in place; however, he acknowledged the fact that they can still do better.

Representative Hansen directed the meeting to the next report, Department of Labor and Industry Internal Control and Compliance Audit. Cecile Ferkul introduced Brad White, the manager of the audit. Mr. White said there were 17 findings in the report, including travel overpayments exceeding $10,000; a $55,572 overpayment to a claimant; undocumented authorizations for some high-risk transactions; and missing records for purchasing cards.

Representative Hansen welcomed Michael Houliston, Deputy Commissioner, and Cecelia Jackson, Chief Financial Officer from the Minnesota Department of Labor and Industry. Mr. Houliston said that he appreciates the assistance of the OLA auditors whenever they come into the department. He said the department is in agreement with the findings and they are in different stages in dealing with them. Ms. Jackson said that she is currently taking an in-depth look at the travel reimbursements for the employee who was overpaid in excess of $10,000. She also looked at all past travel reimbursements to make sure there were not others that had been overlooked.

With no further discussion or comments, the meeting was adjourned at 1:00 p.m.

Representative Rick Hansen, Chair

Shelly Watterud, Recording Secretary