Office of the Legislative Auditor - Financial Audit Division

Report Summary
Department of Health
Internal Control and Compliance Audit

 

Financial Audit Division Report 08-19

Released August 28, 2008

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Conclusions

The department’s internal controls were not adequate to safeguard receipts and sensitive assets, monitor grantee financial activity, ensure compliance with statewide cell phone policies, or for monitoring of certain payroll transactions. The department’s internal controls were adequate to ensure that it accurately paid vendors, properly oversaw and authorized financial transactions, and produced reliable financial data. For the items tested, the department generally complied with finance-related legal requirements over its financial activities, except for certain licensing receipts and payroll transactions. The report contains 19 findings related to internal control and legal compliance deficiencies. We highlight the key findings below.

Key Findings

• The department did not adequately safeguard receipts.
• The department did not establish adequate computer system security controls for its licensing databases for several programs.
• The department did not properly reconcile receipt data.
• The department maintained excessive inventory of incentive items and did not adequately safeguard these assets.
• The department did not have effective controls over monitoring certain payroll and personnel processes.
• The department did not effectively monitor its nongovernmental grantees that received general fund grant awards.
• The department did not have effective controls to ensure that it safeguarded cell phones and other wireless devices, and that it complied with the state’s policies and Internal Revenue Service regulations.

Audit Objectives and Scope

Objectives	Period Audited
Internal Controls and Compliance	July 1, 2004, through June 30, 2007
Programs Audited
Payroll and other administrative expenditures, including travel, cell phones, and purchasing cards Selected regulatory and occupational licensing receipts

Background

The mission of the Department of Health is to protect, maintain, and improve the health of all Minnesotans. The department finances its operations primarily through General Fund appropriations and federal grants. In addition, the department collects approximately $35 million of receipts from regulatory and occupational licensure each year. The department provided grants and aid of approximately $274 million each year to individuals, local governments, and nonprofit organizations.