Financial-Related Audit Report
Departments of Commerce and Public Service
July 1, 1996, through December 31, 1999
Department of Commerce
Key Findings and Recommendations:
- The department did not adequately safeguard unclaimed property. We noted several weaknesses related to the unclaimed property program, including two prior audit recommendations that had not been implemented. The department collected about $24 million in cash in fiscal year 1999, in addition to property received by the department and securities held by the trustee. We recommended that the department reconcile the unclaimed property database to the state's accounting system and bank records to ensure the accuracy of the financial information. The department also needs to inventory unclaimed property as received, improve physical security over unclaimed property, and make unclaimed property payments to other states in accordance with its agreements with those states.
- The department did not have an adequate audit trail between its receipt and licensing systems. The department collected about $14.3 million in license revenues in fiscal year 1999. We recommended that the department consider integrating the two systems to avoid duplicate data entry and establish an adequate audit trail between the two systems to enhance controls.
- We noted several findings dealing with the department's assessments and examination fees. The department did not follow state contracting procedures for special examiners and did not record all insurance field audit costs in its revolving fund.
Other Key Audit Conclusions:
- The department's accounting controls generally provided assurance that material receipts were safeguarded, accurately recorded in the accounting system, and administered in compliance with applicable legal provisions.
- Commerce had adequate controls to provide assurance that material expenditures were based on management's authorization, recorded properly in the accounting system, and made in compliance with significant legal provisions.
Effective September 15, 1999, the Governor, by executive order, merged the Department of Commerce and Public Service except its Weights and Measures Division. The combined department is responsible for regulating the financial services, energy, and telecommunications industries. In fiscal year 1999, the department collected about $88 million and expended approximately $63 million.
The Department of Commerce agreed with the audit findings and recommendations. It developed a corrective action plan to address the findings.
Department of Public Service
- The department's internal controls provided reasonable assurance that revenue collections were safeguarded, accurately reported in the accounting records, and in compliance with applicable legal provisions and management's authorization. For the items tested, the department complied with the significant finance-related legal provisions concerning inspection fees. The department recovered the costs of the Weights and Measures Division.
- The department's internal controls provided reasonable assurance that administrative expenditures were accurately reported in the accounting records and in compliance with applicable legal provisions and management's authorization. For the administrative expenditures tested, the department complied with applicable legal provisions.
Effective September 15, 1999, the Governor, by executive order, merged the Departments of Public Service and Commerce. As a result of the merger, the Weights and Measures Division is the only remaining division of the Department of Public Service.
The Weights and Measures Division is responsible for checking the accuracy of all weights, weighing devices, and measures in Minnesota. With full enforcement authority, 28 trained field staff inspect pumps and scales across the state. The division also offers precision measurement services, inspects packaged commodities, and monitors the quality and correct labeling of petroleum products.
Financial-related audit reports address internal control weaknesses and noncompliance issues found during our audits of state departments and agencies. The scope of our work at the Department of Commerce included material revenues and expenditures of the department and financial activities related to the department's unclaimed property program. At the Department of Public Service, we audited weights and measures inspection fees and administrative disbursements including payroll and travel.