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3 golden objects Minnesota Legislature

Office of the Legislative Auditor - Financial Audit Division

Report Summary
Department of Economic Security

Financial Audit For the
Fiscal Year Ended June 30, 1996


Public Release Date: April 11, 1997 No. 97-17

Agency Background

The Department of Economic Security is responsible for providing an employment, rehabilitation, and income support system to increase the economic independence of Minnesotans. A few of the major programs administered by the department include: Reemployment Insurance, Rehabilitation Services, Job Service, Low Income Energy Assistance, and Job Training Partnership Act. Ms. R. Jane Brown serves as the commissioner of the department.

Audit Areas and Conclusions

Our audit scope was limited to those activities material to the state of Minnesota's Comprehensive Annual Financial Report for the year ended June 30, 1996, and to the requirements of the Single Audit Act of 1984, relating to federal financial assistance.

We reviewed reemployment insurance revenues and benefit payments. The Department of Economic Security materially complied with statutory requirements for disbursing reemployment insurance benefits. In addition, our testing showed that the department appropriately accounted for and deposited reemployment insurance revenues. However, we found that the department needs to improve computer access controls over employer tax rates.

We reviewed specific compliance requirements related to federal programs under the Single Audit Act. We found that the department materially complied with most of these requirements. However, we found that the department inappropriately based a portion of the state match it reported to the federal government for federal fiscal years 1993, 1994, 1995, and 1996 on estimates for the Rehabilitation Services Basic Support Program (CFDA 84.126).

We also reviewed administrative expenditures. The department used a cost accounting system to allocate costs. Our testing showed that the department properly classified costs. In addition, the system accurately allocated costs based on time distribution. However, we believe the Workforce Preparation Branch used an unacceptable method to determine employee hours worked.

Finally, we reviewed the department's computing environment. Our review noted the department's critical data is vulnerable to unauthorized access. Also, the department does not have a comprehensive disaster recovery plan.


Office of the Legislative Auditor, Room 140, 658 Cedar St., St. Paul, MN 55155 : or 651‑296‑4708