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3 golden objects Minnesota Legislature

Office of the Legislative Auditor - Financial Audit Division

Report Summary

Financial-Related Audit

Iron Range Resources and Rehabilitation Agency

July 1, 1998, through June 30, 2001

Key Findings and Recommendations

Statutory provisions do not clearly define the respective authorities of the board and the agency. We recommended that the board and the agency seek legislative clarification to define those actions that the agency can initiate without specific board approval.

The agency does not have a conflict of interest policy that addresses the unique conflicts that its employees and board may face. The sensitive nature of the agency's operations warrants a conflict of interest policy tailored to its environment. We recommended that the agency and the board design conflict of interest policies that recognize their unique roles in the community and the impact that actual or suspected preferential treatment may have to its reputation and integrity.

The agency's transactions with a venture capital fund may not have been an authorized use of the Northeast Minnesota Economic Protection Trust Fund. Since 1996, the agency gave the venture capital fund $2.25 million. The agency also did not adequately monitor the venture capital fund's use of the funds nor curtail certain financial activity that did not comply with the financing agreement or statutes. We recommended that the agency only use Northeast Minnesota Economic Protection Trust Funds as allowed by statutory authority. We also recommended that the agency monitor and review the financial activity of the venture capital fund to ensure that it complies with the terms of the financing agreements.

The agency incurred questionable or excessive costs when it sponsored a suite at the Excel Energy Center. The agency held seven events at the suite during Minnesota Wild hockey games in fiscal years 2001 and 2002. The agency held the first four events before it fully executed the sponsorship agreement. The agency needs to document how the costs incurred and the inclusion of spouses and some staff served a public purpose. In addition, when the agency provided lodging to various staff and some attendees for some of the events, it needed to document these related costs on the special expense form. The agency also bartered the use of a suite level boardroom and a $1,500 per year ticket credit to a private company in exchange for the company providing beverages, including alcoholic beverages, for suite events. We recommended that the agency ensure that any disbursement it makes serves a public purpose and provides its primary benefit to the taconite tax relief area.

Agency Background

The Iron Range Resources and Rehabilitation Agency's mission is to coordinate the development of the remaining resources of the taconite tax relief area and contribute toward the vocational training and rehabilitation of the residents in the taconite tax relief area. The taconite tax relief area is an area that encompasses Minnesota's three iron ranges.

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