|Public Release Date: September 30, 1999
The Minnesota Legislature established the Agricultural Utilization Research Institute as a nonprofit corporation in 1989. The institute promotes the establishment of new products and product uses and the expansion of existing markets for the state's agricultural commodities and products. The institute is governed by an 11-member board of directors. The board appoints an executive director to administer the institute. Edgar Olson has served as executive director since July 1997.
We focused our audit on three specific areas: the overall financial management of the institute, project funding, and payroll. Generally, the institute designed and implemented internal controls to provide reasonable assurance that it safeguarded assets. However, the institute did not take a periodic inventory of its fixed assets. In addition, the institute did not deposit cash receipts timely and did not properly secure the balance in one bank account.
Except as noted below, for the items tested, the institute complied with applicable finance related legal provisions and policies established by its governing board. We noted two discrepancies between the institute's bylaws and Minn. Stat. Section 116O.09 and one discrepancy within the bylaws themselves. In addition, the institute disbursed project funds to clients before ensuring the appropriate project reports had been filed and did not comply with the loan collection provisions of its accounts receivable policy.
The institute properly compensated its employees in accordance with board policy. In addition, the institute appropriately withheld and contributed the proper amounts for its employee retirement and deferred compensation plans, other employee benefit plans, and taxes withheld. However, the institute did not adequately separate the personnel, payroll, and bank reconciliation processes.
In its audit response, the institute indicated it is taking corrective action to resolve the audit issues raised. However, the institute believed its bylaws were in compliance with Minnesota Statute.