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3 golden objects Minnesota Legislature

Office of the Legislative Auditor - Financial Audit Division

Report Summary

Management Letter

Department of Finance

Fiscal Year Ended June 30, 2002

Key Audit Conclusions:

  • We issued an unqualified audit opinion, dated December 6, 2002, on the State of Minnesota's basic financial statements for the year ended June 30, 2002. In accordance with Government Auditing Standards, we also issued our report, dated December 6, 2002, on our consideration of the State of Minnesota's internal control over financial reporting and our tests of compliance with certain provisions of laws, regulations, contracts, and grants. In March 2003, we will issue our report on compliance with requirements applicable to each major federal program and internal control over compliance in accordance with the U.S. Office of Management and Budget's Circular A-133.

Key Findings:

  • The Department of Finance did not properly secure access to the databases and queries used to prepare the state's financial statements. Limiting security clearances is an important control to prevent unauthorized changes to the data that underlies the state's financial statements. Without appropriate security controls, unauthorized data changes could lead to costly delays in the financial statement preparation process. Unauthorized data changes could also diminish the integrity of information that the department uses to make important financial reporting decisions.
  • The Budget Division and Accounting Services Division published different budget reports that require reconciliation. The department's preliminary budgetary financial statements also contained errors and omissions that resulted in audit adjustments. We recommended that the department search for ways to modify its budgetary financial reporting practices to reduce the differences and minimize confusion and perform analytical reviews to identify errors and omissions in preliminary budgetary financial statements.
  • The department did not ensure the accuracy and completeness of financial information received from other state agencies for inclusion in the state's financial statements. We made several audit adjustments related to this financial activity. Left uncorrected, these types of transactions have the potential to negatively impact the accuracy of the state's financial reporting process.

Management letters address internal control weaknesses and noncompliance issues we identified during our audit of the state's financial statements and federally funded programs. The scope of our work in the Department of Finance was limited to those activities administered by the department that were material to the State of Minnesota's basic financial statements and administration of federal financial assistance programs for the fiscal year ended June 30, 2002. The audit focused primarily on preparation of the state's basic financial statements as well as certain of the department's statewide financial management responsibilities relating to cash and debt management and the state's accounting system.

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