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3 golden objects Minnesota Legislature

Office of the Legislative Auditor - Financial Audit Division

Report Summary
Department of Labor and Industry

Financial Audit
For the Fiscal Year Ended June 30, 1997


Public Release Date: February 12, 1998 No. 98-05


The Department of Labor and Industry is responsible for processing and paying over $100 million of workers' compensation claims each year. The department's liability for these claims results from supplemental benefits, second injury responsibilities, and uninsured employers. The claims are paid from the Special Compensation Fund that is financed by assessments made on employers. The department also collected receipts for various purposes and activities, such as issuing licenses. Ms. Gretchen Maglich was appointed Commissioner of Labor and Industry in December 1997. Mr. Gary Bastian served as the commissioner from April 12, 1995, until November 21, 1997.

Selected Audit Areas and Conclusions

Our audit scope focused on workers' compensation claims paid and assessments collected by the Special Compensation Fund for fiscal year 1997. The fund's financial activities were material to the state's financial statements and examined as part of our annual Statewide Audit. We also examined the department's information system security access controls during fiscal year 1997.

We concluded that Special Compensation Fund claims and assessments were fairly presented on the state's fiscal year 1997 financial statements in compliance with generally accepted accounting principles. However, we found that department staff need to improve consistency in their calculations of the reserve for general long-term obligation.

Also, we concluded that the department adequately limited access to sensitive computer resources and data. Restricted access to the department's computerized systems effectively separated staff capabilities. Special Compensation Fund security clearances appear reasonable based on job responsibilities.

The department agreed with the audit report finding and recommendation. They are currently implementing a new claims management system, which should consistently calculate the estimated future liability for claims.


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