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3 golden objects Minnesota Legislature

Office of the Legislative Auditor - Financial Audit Division

Report Summary

Management Letter

Department of Revenue

Fiscal Year Ended June 30, 2002

Key Finding and Recommendations

The Department of Revenue incorrectly calculated the uniform tax rate for the 2002 state property tax because of erroneous information submitted by two counties. The abstracts of assessment values submitted by Hennepin and Ramsey counties erroneously included airport land. As a result, the statewide tax rate was understated, and the 87 counties, in total, assessed approximately $3,000,000 less than the law required. The department did not detect the error in time to adjust the tax rate or the amounts to be assessed by the counties for 2002. We recommended that the department seek legislative authority to adjust future assessments when calculation errors are discovered. We also recommended that the department expand its review of county assessment abstracts to verify compliance with applicable statutes.

Management letters address internal control weaknesses and noncompliance issues found during our annual audit of the state's financial statements and federally funded programs. The scope of work in individual agencies is limited. During the fiscal year 2002 audit, our work at the Department of Revenue focused on the material tax revenues, such as individual income, corporate income, sales, fuel, state property, mortgage and deed, health care, gross earnings, tobacco, and gift and estate. Our work also focused on the material expenditure programs such as local government aids, homestead and agricultural credit aid, and police and fire state aid.

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