Office of the Legislative Auditor - Financial Audit Division

The Minnesota State Lottery’s financial management controls provided reasonable assurance that it operated within legal spending limits established in Minnesota Statutes, adequately safeguarded cash held outside the state treasury, and accurately recorded its financial activities in the accounting records.  However, we have four findings related to internal controls and legal compliance.

Findings:

• Lottery management did not document its resolution of concerns revealed in a criminal background check.

• The Lottery did not always comply with state purchasing policies and procedures for some goods and services it procured.

• The Lottery did not always retain evidence to support management authorization for changes to employee pay rates.

• The Lottery did not adequately document its monitoring of payroll transactions and changes made to payroll data.

Audit Period:
July 1, 2004, through December 31, 2005

• Financial Management
• Direct Costs and Operating Expenses
• Employee Payroll

The Minnesota State Lottery was created in June 1989.  The current executive director of the Lottery is Clint Harris, who was appointed by Governor Tim Pawlenty in October 2004.  Lottery proceeds benefit the state’s General Fund and the Environmental and Natural Resources Trust Fund.  For fiscal year 2005, the Lottery’s administrative operating costs totaled $22.6 million.

Program Evaluation:

The Office of the Legislative Auditor issued a February 2004 program evaluation report that was critical of Lottery operations.  As a result, the Lottery ended questionable sponsorships and promotions, terminated certain contracts, and reduced administrative personnel and space.  In July 2004, the Lottery issued a formal report showing resolution of each audit concern.