Office of the Legislative Auditor - Financial Audit Division

Report Summary
Board of Barber and Cosmetologist Examiners
Internal Control and Compliance Audit

 

Financial Audit Division Report 08-27

Released October 23, 2008

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Conclusions

The Board of Barber and Cosmetologist Examiners (board) did not have adequate controls to safeguarded receipts and sensitive assets and did not properly oversee financial transactions. Approximately $10,000 in license fee receipts are missing.

The board generally had adequate internal controls to ensure that it accurately paid employees and vendors in accordance with management’s authorization, produced reliable financial information, and complied with finance-related legal requirements. However, the board did not review key payroll reports and did not comply with a key provision of the state’s cell phone policy.

For the items tested, the board generally complied with finance-related legal requirements over its financial activities. However, it did not always deposit receipts daily over $250, as required by statute.

Key Findings

• The Board of Barber and Cosmetologist Examiners did not adequately safeguard or promptly deposit its receipts and did not reconcile receipts to licenses issued. The board could not account for approximately $10,000 of license fee receipts.
• The board did not verify its payroll transactions to key payroll reports.
• The board did not have adequate inventory controls for its fixed assets and sensitive items.

Audit Objectives and Scope

Objectives	Period Audited
Internal Controls Compliance	July 1, 2004, through June 30, 2008
Programs Audited
License Revenue Payroll Expenditures	Other Administrative Expenditures

Background

The Board of Barber and Cosmetologist Examiners was established in 2004 by legislation that transferred the regulation of cosmetology from the Department of Commerce to the Board of Barber Examiners. The expanded board licenses more than 40,000 practitioners, instructors, establishments, and schools. It also sets education requirements and examination standards, standards of practice and conduct, and responds to inquiries and complaints. The board operates under Minnesota Statutes 2007, Chapter 154, and Minnesota Administrative Rules 2007, Chapters 2100, 2105, and 2110.