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 |
Background
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.
