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Legislative Audit Commission Meeting

Minutes

December 18, 2008

Members Present:

Representative Michael Beard Senator Don Betzold
Representative Sondra Erickson    Senator Joe Gimse
Representative Rick Hansen Senator David Hann
Representative Steve Simon Senator James Metzen
  Senator Ann H. Rest
  Senator Claire Robling

Members Absent:

Representative Aaron Peterson
Representative Connie Ruth

 

Representative Rick Hansen, Chair, called the Legislative Audit Commission (LAC) meeting to order at 2:02 p.m.  The main purpose of the meeting was to review the financial management problems revealed in recent OLA audit reports. 

Representative Hansen introduced Legislative Auditor Jim Nobles.  Mr. Nobles said they were going to be talking about the pattern of emerging problems among state agencies and the solution to those problems.  Mr. Nobles introduced Deputy Legislative Auditor Cecile Ferkul to give more details on the recurring internal control and compliance weaknesses the Financial Audit Division had been finding in their audit reports.  Ms. Ferkul said the common areas of weakness are incompatible duties, safeguarding of receipts, payroll, employee use of state-issued cell phones, and travel related expenses and benefits.  She said the solution to these problems would come from the Department of Finance playing a larger role in the financial management of all state agencies.  She noted that with the OLA having responsibility for about 160 different entities but only being able to get to a handful of them each year, having one central office—such as Finance—taking more of an active role, some of these problems could be avoided.  She also said that the Chief Financial Officers within the agencies would be a good place to start for internal financial controls. 

Senator Hann wondered if it would be helpful to abolish some of the smaller boards or commissions.  Mr. Nobles responded that the Combative Sports Commission used to be the Boxing Board, but was abolished by the Legislature.  Then it came back as Combative Sports Commission and was expanded to include other areas.  He told the commission members that it’s up to the Legislature to decide what is best.  He said we cannot just cut all programs because they do serve a purpose and the citizens.  However, he added that we have to find a way to ensure good business practices and financial management.

Senator Rest agreed that the Department of Finance seemed like a logical place to do the orientation or training when a new board or commission gets established.  She also wondered about the Legislative Coordinating Commission as an option for this.  She said it should be formalized so that they can be held accountable.  Mr. Nobles said he would welcome the opportunity to work on the language for this if needed.

Mr. Nobles pointed out that the OLA does not consider these current reports a success.  He said the office has fewer auditors, but are finding more problems.  He added that the office used to have approximately 80 employees and is now down to approximately 60; financial auditors went from 60 down to 40.  When asked by Senator Hann who he considers “a good role model in state government,” Mr. Nobles responded by saying “MnSCU,” because their Chief Financial Officer is always involved, even with the campus financial audits.  He added that MnSCU is not perfect because they still have findings, but that their centralized method of management would make a good model for the state to move towards.

Ms. Ferkul added that not all of the financial audits done by the OLA come back negative.  She said that Fergus Falls Veterans Home had a great audit, but that Minneapolis Veterans Home was on the way other end of the spectrum. 

Representative Hansen asked Mr. Nobles to give a brief update on the status of the program evaluations for the 2009 Legislative session.  Mr. Nobles said that through the topic selection process last year, eight topics had been chosen and that six of those were in progress.  He said that a very important one would be coming out first around mid-January called Personal Care Assistance, with Q-Comp following in late January.  Next would be MINNCOR Industries in early February, Oversight of Workers’ Compensation in mid-February, and Biofuel Policies and Programs and MnSCU Occupational Programs in late February.  He also said that there were two other evaluations that would begin once staff were freed up from the current projects:  Capitol Complex Security and E-Verify.  Mr. Nobles told the commission members that the office is definitely behind where they had planned to be by this time, but they had lost several staff members and had not hired anyone to fill those positions. 

Representative Hansen inquired if the OLA had the capacity to fill the vacant positions.  Mr. Nobles said that at this point he did not know because he had not heard from Legislative leadership whether there would be a hiring freeze.  So, the OLA was moving forward by filling positions on a temporary basis rather than full time. 

Representative Hansen thanked Mr. Nobles and the staff of OLA for all their work done over the past year.  With no further comments, the meeting was adjourned at 3:44 p.m.

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Representative Rick Hansen, Chair

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Shelly Watterud, Recording Secretary

 

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