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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 Fiscal Year Ended June 30, 1997


Public Release Date: March 20, 1998 No. 98-19

Agency Background

The mission of the Department of Economic Security is to help Minnesotans help themselves achieve economic security. The department accomplishes this mission by providing an accessible, integrated employment and training system for all Minnesotans. Some of the major programs administered by the department include: Reemployment Insurance, Low Income Energy Assistance, Rehabilitation Services, and Job Training Partnership Act. Ms. R. Jane Brown serves as 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, 1997, and to the requirements of the Single Audit Act, relating to federal financial assistance.

We reviewed reemployment insurance revenues and benefit payments. The Department of Economic Security fairly presented the financial activity for the Reemployment Insurance Program in the state of Minnesota's financial statements for fiscal year 1997 in accordance with generally accepted accounting principles. The department complied, in all material respects, with the federal requirements for disbursing reemployment insurance benefits. In addition, our testing showed that the department properly accounted for and deposited reemployment insurance revenues.

We reviewed compliance requirements related to federal programs under the Single Audit Act. We found that the department complied, in all material respects, with the federal laws and regulations governing the federal programs included in the audit scope. The department designed internal controls to provide reasonable assurance that financial activities were properly recorded in the accounting system and programs were managed in compliance with federal rules and regulations. However, we found that certain Workforce Preparation Branch employees did not record actual hours worked on specific programs. Rather, these employees used an allocation method to charge time to some programs. We cannot determine if this method resulted in the proper allocation of payroll hours to programs. This allocation method may adversely impact the distribution of pooled administrative costs to department programs.

Finally, we reviewed the department's computing environment. We found that the department's critical data is vulnerable to unauthorized access. Security administration procedures are ineffective, security rules are not documented and understood, and the department has not yet finalized its comprehensive disaster recovery plan.

The department agreed with the audit report's findings and recommendations. They plan to take the necessary measures to resolve the issues raised.


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