Office of the Legislative Auditor - Financial Audit Division

Report Summary
Minnesota Information Technology Services – Information and Telecommunications Account
Internal Controls and Compliance Audit

In 2006, the Legislature created the Information and Telecommunications Account (ITA) as a means to invest in information technology (IT) projects for state agencies.¹ At the end of each biennium, individual state agencies may transfer remaining appropriations, which would otherwise expire, to the Information and Telecommunications Account for IT projects that benefit the state.² Minnesota IT Services is responsible for oversight of the Information and Telecommunications Account.

The Office of the Legislative Auditor conducted this selected scope audit to determine whether Minnesota IT Services had adequate internal controls over and complied with significant legal requirements for the Information and Telecommunications Account. The audit scope included appropriation transfers and expenditures for ITA projects. The period under examination went from July 1, 2014, through February 28, 2018.

Conclusion

Minnesota IT Services’ internal controls over the Information and Telecommunications Account were generally not adequate.

For the projects and legislative report we tested, Minnesota IT Services generally did not comply with significant legal requirements, including Minnesota statutes and its own policies and procedures.

Throughout our audit, we had numerous discussions with Minnesota IT Services (MNIT) management to gain an understanding of the Information and Telecommunications Account and the processes used to administer the Account. Since the inception of the Account, MNIT has changed how it tracks projects and accounts for project budgets and expenditures. As a result, it was difficult to determine basic information, such as the number of projects approved for the Account. Additionally, MNIT management provided us with inconsistent explanations and timelines regarding which policies were applicable to projects funded through the Account.

Findings

• Minnesota IT Services did not provide adequate oversight for Information and Telecommunications Account (ITA) projects and did not comply with applicable policies.
• The law does not state how Minnesota IT Services should handle money remaining from older Information and Telecommunications Account (ITA) projects.
• Minnesota IT Services did not have controls in place to follow up on approved Information and Telecommunications Account (ITA) projects that had not spent money transferred into the Account.
• Minnesota IT Services submitted an inaccurate and incomplete Information and Telecommunications Account (ITA) report to the Legislature.

¹ Laws of Minnesota 2006, chapter 282, art. 14, sec. 9, codified as Minnesota Statutes 2017, 16E.21. The ITA is commonly known as the “Odyssey Investment Fund.”

² Remaining appropriations include any money appropriated by the Legislature, without legislative or federal restrictions, that the agency did not expend or encumber. “Encumbered” money has been formally set aside in the accounting system to pay for future expenditures.