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3 golden objects Minnesota Legislature

Office of the Legislative Auditor - Financial Audit Division

Report Summary
Minnesota State Board of Investment

Financial Audit
Fiscal Year Ended June 30, 1997


Public Release Date: January 22, 1998 No. 98-03

Background Information

The Minnesota State Board of Investment (SBI) administers the investment of state funds, primarily retirement funds. Minn. Stat. Chapter 11A governs the investment activities of the board. Howard J. Bicker is the executive director of the board.

The board uses both internal staff and external investment managers to fulfill its responsibilities. The external firms invest and manage the assets of the Post Retirement Fund and Supplemental Investment Fund, as well as the assets of the basic retirement funds and the assigned risk plan. SBI staff manage the other investments.

The basic retirement funds contain the pension assets of the active participants in the following eight statewide retirement plans, Teachers Retirement Fund, Public Employees Retirement Fund, State Employees Retirement Fund, Public Employees Police and Fire Fund, Police and Fire Consolidation Fund, Highway Patrol Retirement Fund, Correctional Employees Fund, and Judges Retirement Fund.

Audit Objectives and Scope

The primary objective of our audit was to render an opinion on the Investment Trust Fund financial statements. These financial statements are included both in SBI's Annual Report and in the State of Minnesota's Comprehensive Annual Financial Report for fiscal year 1997. Our objective included determining whether SBI's financial statements presented fairly the financial position, results of operations, and changes in net assets in conformity with generally accepted accounting principles.

As part of our work we gained an understanding of the internal control structure over investment purchases and sales, investment custody and valuation, investment income and allocation, security lending income and management fee payments, and reimbursement cycles. We also ascertained whether SBI complied with laws and regulations that may have had a material effect on its financial statements. In addition, we audited administrative expenditures.


SBI's Annual Report and the state of Minnesota's Comprehensive Annual Financial Report for the year ended June 30, 1997, include our unqualified audit opinions on the Investment Trust Fund's financial statements dated December 8, 1997. We found that SBI designed internal controls to provide reasonable assurance that investments were adequately safeguarded, authorized, and properly recorded in accounting records and financial statements. SBI designed controls to provide reasonable assurance that administrative expenditures were authorized for a proper purpose and accurately recorded in the accounting records and financial statements. For items tested, we also found SBI to be in compliance with material financial legal provisions.


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