Office of the Legislative Auditor - Financial Audit Division

Report Summary
Minnesota State Lottery
Internal Controls and Compliance Audit

 

Financial Audit Division Report 13-12

Released June 20, 2013

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Conclusion

The Minnesota State Lottery’s internal controls were generally adequate to ensure that it safeguarded cash, and retailers accurately remitted all cash for net lottery sales. The Minnesota State Lottery’s internal controls were also generally adequate to ensure it created reliable financial data, and it accurately paid employees, vendors, prize claims, in-lieu-of-sales tax, and net proceeds in accordance with management’s authorization and in compliance with finance-related legal requirements. However, the Lottery had some control weaknesses related to its cash, banking, and payroll.

For items tested, the Minnesota State Lottery generally complied with finance-related legal provisions. However, the Lottery did not comply with some requirements related to employee travel benefits and nonmonetary prize winners.

The Lottery resolved three of four prior audit findings related to purchasing and personnel, but it did not resolve the prior audit finding about payroll verification.

Key Findings

• The Minnesota State Lottery is unable to resolve an $85,000 cash difference between its accounting system ledger and the balance held in the state treasury by the Department of Management and Budget.
• The Minnesota State Lottery did not remove limited bank file access for two former employees.
• Prior Finding Not Resolved: The Minnesota State Lottery did not review some key payroll reports, and two employees could authorize their own timesheets.

Audit Objectives and Scope

Objectives	Period Audited
Internal Controls Legal Compliance	July 1, 2010, through December 31, 2012
Programs Audited
Cash and Accounting Controls Retailer Oversight Distributions to the State	Direct and Operating Expenses Payroll and Business Expenses