Report on Internal Control
Over Statewide Financial Reporting
Financial Audit Division Report 11-02
Released February 18, 2011
The State of Minnesota’s financial statements were fairly stated in all material respects. However, the state continued to have weaknesses in internal control over financial reporting, as noted below.
Our audit report contains five findings related to controls over the preparation of the state’s financial statements. Each finding includes concerns from our previous audit that have not been fully resolved.
- Prior Finding Partially Resolved: Several agencies lacked a comprehensive internal control structure over financial reporting to sufficiently mitigate the risk of potential misstatements in the financial statements.
- Prior Finding Partially Resolved: Several agencies allowed employees to have inappropriate access to state business systems or perform incompatible duties without establishing mitigating controls. (Includes prior audit findings not resolved for three agencies.)
- Prior Finding Partially Resolved: The Department of Management and Budget and other state agencies did not have adequate controls to prevent and detect errors in the financial information used to compile the financial statements. (Includes prior audit finding not resolved for one agency.)
- Prior Finding Partially Resolved: The Department of Management and Budget did not always prepare accurate footnote disclosures to the financial statements. (Includes prior audit finding not resolved for one agency.)
- Prior Finding Partially Resolved: The Department of Human Services did not reconcile child care assistance subsystem data to the state’s accounting system and did not reconcile the healthcare accounts payable reports to the Medicaid Management Information System data warehouse.
We audited the state’s financial statements for the fiscal year ended June 30, 2010. Our audit encompassed work at many large state agencies that managed financial activities that were significant to the financial statements.
The Department of Management and Budget is responsible for preparing the state’s annual financial statements, which are included in the State of Minnesota’s Comprehensive Annual Financial Report. To prepare the statements, the department uses information from a variety of sources, including information provided by other agencies. The issues contained in this report relate to weaknesses in internal controls in the state’s financial reporting process as a whole.