Office of the Legislative Auditor - Financial Audit Division

Report Summary

Department of Finance

State Agency Spending Authority Controls

Overall Audit Conclusions

The Department of Finance has adequate controls to ensure that new appropriations recorded in the Minnesota Accounting and Procurement System (MAPS) agree with amounts authorized in law. The department also implemented computerized edits in MAPS to ensure that state agencies could not exceed the spending authority in their appropriation accounts. Furthermore, the department protected MAPS appropriation records from unauthorized changes. However, inadequate controls over appropriation transfers could provide state agencies with an avenue to circumvent spending authority limits and use funds for unauthorized purposes. Finally, we identified some appropriation accounts with large spending authority balances that were not properly secured.

Key Findings and Recommendations

• The department does not have effective controls to prevent or detect unauthorized appropriation transfers. The ability to transfer spending authority between appropriation accounts in MAPS had not been restricted to only those employees who needed such access. We also found widespread noncompliance with policies and procedures developed by the department to control appropriation transfers. Should unauthorized transfers occur, the department may not detect them because it had design flaws in its monthly reconciliation procedures.
• The department did not properly secure some appropriation accounts that were created to move cash between funds in MAPS. Though the department did not intend to give these state agencies the authority to spend the money in these accounts, we found two cases where the Department of Transportation transferred out a total of $8.8 million. The Department of Finance is now investigating the propriety of these transfers.

This information technology audit assessed the adequacy of state agency spending authority controls. The Minnesota Legislature gives state agencies the authority to spend when it passes appropriation laws. The Legislature also codifies recurring spending authority decisions in Minnesota Statutes. Agencies must use funds for their prescribed purposes and not exceed the spending authority limits imposed by lawmakers. The Department of Finance plays a pivotal role in ensuring that state agencies do not exceed their spending authority limits.