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3 golden objects Minnesota Legislature

Office of the Legislative Auditor - Financial Audit Division

Report Summary
Department of Management and Budget
Federal Compliance Audit


Financial Audit Division Report 16-09 Released March 24, 2016


The Department of Management and Budget generally complied with and had controls to ensure compliance with certain provisions of laws, regulations, contracts, and grants applicable to the state’s major federal programs for fiscal year 2015. However, the department approved rates for information technology services provided by the Office of MN.IT Services to other state agencies that overcharged federal programs for those services, as noted in the finding presented in this report.1

Audit Finding

  • The Department of Management and Budget approved rates for centralized information technology services that exceeded the cost of those services and overcharged federal programs.

Audit Scope

The objective of our audit was to determine whether the Department of Management and Budget complied with federal program requirements in its oversight and administration of the state’s federal programs. These requirements include general compliance requirements related to federal assistance (including cash management, allocation of statewide indirect costs, and oversight of internal service fund rates2 ) and the preparation of the state’s Schedule of Expenditures of Federal Awards for fiscal year 2015. This audit is part of our broader federal single audit objective to obtain reasonable assurance about whether the State of Minnesota complied with the types of compliance requirements that are applicable to each of its federal programs.


1 Information technology services include developing and maintaining the computer applications and networks used by state agencies to process, store, transmit, and secure electronic data.

2 Governmental Accounting Standards Board, Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments states that, “Internal service funds may be used to report any activity that provides goods or services to other funds, departments, or agencies [of the state] . . . on a cost-reimbursement basis.”

More Information

Office of the Legislative Auditor, Room 140, 658 Cedar St., St. Paul, MN 55155 : or 651‑296‑4708