|Financial Audit Division Report 08-02||Released February 11, 2008|
The state’s financial statements and federal schedule of expenditures were fairly stated in all material respects. However, the state continued to have weaknesses in internal control over financial reporting as noted below.
The Department of Finance’s (Finance) controls, including controls over information provided by other agencies, did not sufficiently mitigate the risk of potential misstatements in the financial statements.
Finance misclassified some account balances in the draft financial statements. Finance also misclassified some information in a draft footnote disclosure and had not updated another disclosure with current year information.
Several other state agencies need to improve controls over financial reporting, including: Natural Resources, Human Services, Transportation, and Revenue.
Finance and other agencies administering federal funds had a material weakness in their controls over the preparation of the federal schedule of expenditures.
We audited the state’s financial statements and the federal schedule of expenditures for the year ended June 30, 2007. Our audit encompassed work at many large state agencies that managed financial activities that were significant to each of these financial reports.
The Department of Finance is responsible for preparing the state’s annual financial statements, which are included in the State of Minnesota’s Comprehensive Annual Financial Report. Finance also prepares the federal schedule of expenditures that is included in the Minnesota Financial and Compliance Report on Federally Assisted Programs.
In developing this audit report, we applied criteria included in the American Institute of Certified Public Accountants’ Statement on Auditing Standards #112, Communicating Internal Control Matters Identified in an Audit, for assessing the sufficiency of internal controls over financial reporting. The issues contained in this report relate to internal controls in the state’s financial reporting process as a whole.