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3 golden objects Minnesota Legislature

Office of the Legislative Auditor - Financial Audit Division

Report Summary

Financial-Related Audit

State Board of Electricity

July 1, 1999, through June 30, 2003

Audit Conclusions

The board’s internal controls provided reasonable assurance that it accurately recorded payments to electrical inspectors in compliance with contract provisions. Although segments of the inspectors’ work are reviewed by a number of different board staff, due to the nature of the inspection process and the volume of inspections performed, the board has limited ability to verify the performance of inspections submitted for payment by the inspectors. It sporadically conducted field audits of inspections performed by inspectors, but the audits were not consistent and not always formally documented. The board could enhance its field audit of the inspections process by having them performed on a more regular schedule and by providing a more detailed report to the board office.

Generally, the State Board of Electricity promptly deposited inspection fees. However, as explained in Chapter 3, Finding 1, some weaknesses noted in the board’s licensing receipt process also applied to inspection receipts. The board complied with legal provisions over inspection fees.

The State Board of Electricity did not have adequate internal controls over its receipt process. The board did not adequately safeguard receipts, including inspection and licensing fees, before deposit. It also did not always timely deposit licensing receipts as required by statute. The board did not segregate incompatible receipt processing duties. Finally, it did not reconcile the total number of licenses issued to the license fees deposited. The board has not resolved prior audit recommendations to improve controls over receipts. These internal control weaknesses create an environment that may not prevent or detect errors, and may provide an opportunity for theft or fraud. We recommended that the board keep all receipts physically secure until deposit, deposit receipts daily as required by statute, appropriately segregate incompatible receipt processing duties, and reconcile the licenses issued to the receipts deposited.

The State Board of Electricity had adequate internal controls to provide reasonable assurance that it properly authorized and accurately reported payroll and other administrative expenditures in the accounting records and complied with applicable legal provisions

Agency Background

The State Board of Electricity is a service and regulatory agency. It inspects electrical installations in all areas of the state, except those where a political subdivision provides its own electrical inspections. The primary purpose of the inspection is to assure consumers that electrical wiring installations conform to accepted construction standards. The board also licenses electricians, electrical contractors, and alarm and communication contractors. In fiscal years 2001 and 2002, the board issued about 16,500 personal licenses and about 3,000 business licenses.

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