Report Summary
Financial-Related Audit
Higher Education Services Office
July 1, 1997, through June 30, 2000
Key Findings and Recommendations:
- The Higher Education Services Office (HESO) did not limit state grant advances to post-secondary institutions to immediate cash needs. Most colleges had large cash balances on hand for extended periods of time. In addition, many schools had to return a significant portion of their advances not needed for grants to students. As a result of the outstanding advances, and difficulty predicting institution summer school needs near fiscal year-end, HESO had a hard time accurately estimating unused state grant funds available for cancellation at the end of fiscal year 2001.
- The office lacked an effective separation of duties in the handling of deposits and recording of receipts. We recommended that the office restrict an employee's access to the receipts log.
- The office did not adequately monitor Learning Network of Minnesota grantees by requiring that they file financial status reports detailing expenditures and funding match. We also found that six grantee contracts did not contain the required provisions for audit access, contract cancellation, and ownership of materials.
- Improved internal controls were needed to verify the accuracy of amounts billed for vendor loan collection services provided to the office. We recommended that management review and authorize the invoices for payment.
- Finally, procedural improvements were recommended for separation of duties over payroll and employee travel reimbursement processing.
Background:
The Higher Education Services Office is a component unit of the State of Minnesota primarily responsible for state financial aid grants and loans, and other educational resource-sharing programs. The office's general purpose financial statements are audited annually by a CPA firm. The office is under the leadership of Dr. Robert Poch, Director.
Financial-Related Audit Reports address internal control weaknesses and noncompliance issues during our audits of state departments and agencies. The scope of our work at the Higher Education Services Office included administrative expenditures, state grants, interstate tuition reciprocity, and education resource-sharing programs. This has not been a comprehensive audit of all of HESO's financial activities.
