Office of the Legislative Auditor - Financial Audit Division

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

 

Financial Audit Division Report 10-29

Released September 14, 2010

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Conclusion

The five colleges in the Minnesota State Colleges and Universities (MnSCU) system included in our scope (Central Lakes, Ridgewater, Inver Hills, Riverland, and Pine) generally had adequate internal controls over their major financial activities, such as 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, the colleges generally complied with finance-related 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.

The Office of the Chancellor did not resolve the four systemic findings from our 2009 audit report. We repeat those findings in this report (Findings 2, 4, 5, and 6). The MnSCU colleges resolved some of the prior audit findings related to the areas we audited specific to this group of colleges. However, the colleges did not resolve some findings now classified as systemic findings and one other finding that we repeat in this report. (Finding 11)

Key Significant and Systemic Findings

• Systemic Finding: The colleges did not adequately assess their business risks or monitor the effectiveness of their internal controls.
• Prior Systemic Finding Not Resolved: The colleges did not design, document, or monitor detective controls to mitigate risks created by giving employees incompatible and unnecessary access to computer system functions.
• Systemic Finding: The Office of the Chancellor did not justify payments of early retirement incentives, as required by the Minnesota State College Faculty bargaining agreement.
• Prior Systemic Finding Not Resolved: Colleges did not accurately account for faculty and administrator leave benefits.
• Prior Systemic Findings Not Resolved: Colleges did not have controls to properly manage equipment and credit cards.

Other Findings

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

Audit Objectives and Scope

We examined internal controls and compliance at five MnSCU colleges: Central Lakes, Ridgewater, Inver Hills, Riverland, and Pine. Our review examined fiscal years 2008, 2009, and 2010, through December 31, 2009, over the following areas:

Financial systems security access Operating expenses Local bank accounts

Personnel and payroll expenses Equipment purchases and inventory Capital Projects