Office of the Legislative Auditor - Financial Audit Division

The Minnesota Department of Education’s (Education) internal controls provided assurance that it correctly recorded employee payroll, fee and license receipts, and American Indian scholarship payments in the accounting system.  However, we identified several findings with Education’s internal controls or compliance with financial-related legal provisions, as follows.

Findings:

• Education did not promptly deposit license and fee receipts, restrictively endorse checks upon receipt, or properly segregate receipt processing duties.
• The department did not give some employees timely performance reviews before authorizing salary increases as required.  Also, the department did not adequately review payroll expenditures including hours paid and compensation rates. 
• The department did not maintain adequate controls over fixed assets and did not comply with bidding requirements for some purchases.
• Education did not have adequate controls over the processing of American Indian scholarships.

Audit Period:
July 1, 2002, through June 30, 2005

• License and Fee Revenues
• Payroll
• Purchases of Supplies and Equipment
• American Indian Scholarships

The Minnesota Department of Education is responsible for establishing educational standards for grades kindergarten through twelfth grade.  The expenditure programs covered in the scope of this audit totaled about $34.9 million in fiscal year 2005.  Fiscal year 2005 license and fee revenues amounted to about $2.5 million.  (We annually audit the department’s largest expenditures, consisting of state and federal assistance to school districts, during the audit of the state’s financial statements.  Those programs totaled about $6.6 billion in fiscal year 2005.)