Office of the Legislative Auditor - Financial Audit Division

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

 

Financial Audit Division Report 09-30

Released September 8, 2009

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Conclusions

The eight colleges in the Minnesota State Colleges and Universities (MnSCU) system included in our scope generally had adequate internal controls over their major financial activities, such as tuition payments, employee salaries, and operating expenses. These controls generally ensured that the colleges 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 colleges complied with financial-related MnSCU policies and legal requirements.

However, the colleges had some internal control weaknesses and noncompliance in certain areas that have a high-risk for errors, including security access to financial systems, employee leave benefits, and management of equipment and college-issued credit cards. In addition, the MnSCU Office of the Chancellor is working towards resolution of prior audit findings concerning security to financial systems, bids for banking services, and retention of sensitive student credit card payment information.

Key Significant and Systemic Findings

• Colleges inappropriately gave some employees computer system access to perform certain incompatible financial functions without a written plan to mitigate the risk.
• Colleges had errors in accounting for leave benefits.
• Colleges did not have controls to properly manage equipment and credit cards.
• One college did not document decisions supporting some faculty members’ compensation.
• One college inappropriately provided an early retirement incentive to a faculty member, and another college relied on ’past practices’ to inappropriately justify excessive severance payments to some faculty members.

Other Findings

The colleges we reviewed had numerous control weaknesses and noncompliance with requirements for employee compensation, vendor procurements and payments, and employee expense reimbursements.

Audit Objectives and Scope

We examined internal controls and compliance at eight MnSCU colleges: Alexandria, Anoka, and Dakota County Technical Colleges; Lake Superior, Saint Paul, and South Central Colleges; North Hennepin Community College; and Northland Community and Technical College. Our review examined fiscal years 2006, 2007, and 2008, over the following areas:

Financial Systems Security Access Tuition and Fee Revenues Bookstore Revenues Local Bank Accounts

Personnel and Payroll Expenses Operating Expenses Equipment Purchases and Inventory Capital Projects