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3 golden objects Minnesota Legislature

Office of the Legislative Auditor - Financial Audit Division

Report Summary

Information Technology Audit

Department of Revenue

Selected Individual Income Tax Processing Controls

Overall Audit Conclusions

The Minnesota Department of Revenue developed multiple layers of security to protect the integrity and confidentiality of individual income tax data. However, we found shortcomings in this security infrastructure that exposed tax data to an unnecessary risk of loss or misuse. The department needs to remedy the specific security weaknesses that we brought to its attention and strengthen its policies, procedures, and standards to reduce the possibility of additional weaknesses surfacing in the future.

Key Findings

  • The department’s overall security program lacks important ingredients. Specifically, the department has not conducted formal information technology risk assessments or documented baseline security procedures and standards for its income tax processing systems. The department also has not validated the effectiveness of or adequately monitored its security controls.
  • The department had weaknesses in its controls over authenticating the identity of system users and managing their security clearances.
  • The department had too many points of access into its private network.
  • The department had weaknesses in its server configuration and maintenance procedures.
  • The department also has not established sufficient monitoring controls to identify and promptly respond to potential security breaches.

This information technology audit assessed the adequacy of selected individual income tax processing controls. We designed our work to determine if the department had adequate controls to protect the integrity and confidentiality of individual income tax data. We also assessed the adequacy of controls over the depositing and recording of individual income tax revenues. Individual income taxes are the largest revenue source for the State of Minnesota. During fiscal year 2003, the $5.5 billion of individual income tax accounted for approximately 43 percent of all revenue in the State of Minnesota’s General Fund.

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