Office of the Legislative Auditor - Financial Audit Division

Report Summary
Minnesota State Colleges and Universities
Internal Control and Compliance Audit

 

Financial Audit Division Report 08-23

Released October 8, 2008

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Conclusions

The Minnesota State Colleges and Universities (MnSCU) Office of the Chancellor and the nine colleges included in our scope generally had adequate internal controls over major financial areas, such as resident tuition, employee salaries, and operating expenses. These controls generally ensured they safeguarded assets, accurately paid employees and vendors in accordance with management’s authorization, produced reliable financial information, and complied with finance-related legal requirements. For the items tested, with certain exceptions, the Office of the Chancellor and the individual colleges complied with financial-related MnSCU policies and legal requirements.

However, the office and the colleges had a variety of control weaknesses and noncompliance over complex areas that have a high-risk for errors, such as tuition reciprocity, employee leave, and credit cards. In addition, the MnSCU system had not resolved some recurring prior audit findings.

Key Findings

• The Office of the Chancellor and the colleges we reviewed provided some employees with access to perform certain incompatible financial functions without a written plan to mitigate risk.
• One college did not effectively manage its bank balance causing overdraft fees, another college had inadequate collateral to protect bank balances, and eight colleges did not have bank contracts.
• Colleges unnecessarily retained student credit card information, and some cashiers shared cash drawers and did not document voids and refunds.
• Certain colleges did not retain evidence necessary to justify certain financial transactions.
• The Office of the Chancellor and colleges had errors accounting for leave benefits, which could cause possible future severance payment errors.
• The Office of the Chancellor and the colleges reviewed had control weaknesses and noncompliance with requirements for vendor procurements and payments, equipment, credit cards, and employee reimbursements.

Audit Objectives and Scope

We examined internal controls and compliance at the Office of the Chancellor and nine selected MnSCU colleges (Anoka-Ramsey, Hibbing, Itasca, Rainy River, and Vermilion community colleges; Mesabi Range and Minnesota West community & technical colleges; Fond du Lac Tribal & Community College; and Minnesota State College-Southeast Technical) for fiscal years 2005, 2006, and 2007 over:

Security Over Financial Applications Tuition and Fee Revenues Banking and Local Revenues

Payroll Expenses Administrative Operating Expenses Capital Projects

Background

MnSCU’s Office of the Chancellor provides system-wide administrative management and develops policies for 32 state universities and colleges. The colleges finance their operations from state appropriation allocations and tuition revenues.