HF 2270

as introduced - 86th Legislature (2009 - 2010) Posted on 02/09/2010 02:01am

A bill for an act
relating to state government; assigning the Legislative Audit Commission
and the commissioner of finance duties relating to financial management and
internal controls; amending Minnesota Statutes 2008, sections 3.97, by adding a
subdivision; 16A.055, subdivision 1; proposing coding for new law in Minnesota
Statutes, chapter 16A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2008, section 3.97, is amended by adding a subdivision
to read:

new text begin Subd. 2a. new text end

new text begin Review of financial management and internal controls. new text end

new text begin The
commission shall monitor internal control systems in state government to the extent
necessary to ensure that management has established and implemented effective systems
and procedures. The commission shall also review legislative auditor audits and reports
and make recommendations, as the commission determines necessary, for improvements
in the state's system of financial management. In furtherance of these duties, the
commission shall:
new text end

new text begin (1) receive reports and recommendations from the legislative auditor and from
internal auditors in state agencies;
new text end

new text begin (2) review significant findings and recommendations from the legislative auditor's
financial audits of state agencies and from agency internal auditors, together with state
agency management's responses and action plans;
new text end

new text begin (3) review the scope of annual audit plans for the state's internal audit function;
new text end

new text begin (4) review the qualifications, performance, and objectivity of the state's internal audit
function, including the activities of the commissioner in section 16A.056;
new text end

new text begin (5) review with the legislative auditor any audit problems or difficulties and
management's responses, any difficulties the auditor encountered during the course of
the audit work, including any restrictions on the scope of the auditor's activities or on
access to requested information, and any significant disagreements between the auditor
and management;
new text end

new text begin (6) make recommendations to the governor and the legislature for changes in laws or
policies necessary to deal with agencies that have not satisfactorily addressed repeated
problems with financial controls;
new text end

new text begin (7) make recommendations to the governor and the legislature for changes needed in
state laws, policies, procedures, or personnel, to ensure an effective system of internal
controls that safeguards public funds and assets and minimizes incidences of fraud, waste,
and abuse;
new text end

new text begin (8) conduct hearings as necessary regarding the effectiveness of internal control or
internal audit functions of any state agency; and
new text end

new text begin (9) contract with outside auditors as the commission determines is beneficial for the
state's internal audit function and internal controls.
new text end

Sec. 2.

Minnesota Statutes 2008, section 16A.055, subdivision 1, is amended to read:

Subdivision 1.

List.

(a) The commissioner shall:

(1) receive and record all money paid into the state treasury and safely keep it until
lawfully paid out;

(2) manage the state's financial affairs;

(3) keep the state's general account books according to generally accepted
government accounting principles;

(4) keep expenditure and revenue accounts according to generally accepted
government accounting principles;

(5) develop, provide instructions for, prescribe, and manage a state uniform
accounting system; new text begin and
new text end

(6) provide to the state the expertise to ensure that all state funds are accounted for
under generally accepted government accounting principles deleted text begin ; and deleted text end new text begin .
new text end

deleted text begin (7) coordinate the development of, and maintain standards for, internal auditing in
state agencies and, in cooperation with the commissioner of administration, report to the
legislature and the governor by January 31 of odd-numbered years, on progress made. deleted text end

(b) In addition to the duties in paragraph (a), the commissioner has the powers and
duties given to the commissioner in chapter 43A.

Sec. 3.

new text begin [16A.056] INTERNAL CONTROLS AND INTERNAL AUDITING.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment of system. new text end

new text begin The commissioner is responsible for
the system of internal controls across the executive branch. The commissioner must
coordinate the design, implementation, and maintenance of an effective system of internal
controls and internal auditing for all executive agencies. The system must:
new text end

new text begin (1) safeguard public funds and assets and minimize incidences of fraud, waste,
and abuse;
new text end

new text begin (2) ensure that programs are administered in compliance with federal and state
laws and rules;
new text end

new text begin (3) require documentation of internal control procedures over financial management
activities, provide for analysis of risks, and provide for periodic evaluation of control
procedures to satisfy the commissioner that these procedures are adequately designed,
properly implemented, and functioning effectively; and
new text end

new text begin (4) provide for periodic internal audit of major systems and controls, including
accounting systems and controls; administrative systems and controls; and, in conjunction
with the Office of Enterprise Technology, information and telecommunications technology
systems and controls.
new text end

new text begin Subd. 2. new text end

new text begin Standards. new text end

new text begin The commissioner must adopt internal control standards
and policies that agencies must follow to meet the requirements of subdivision 1. These
standards and policies may include separation of duties, safeguarding receipts, time entry,
approval of travel, and other topics the commissioner determines are necessary to comply
with subdivision 1.
new text end

new text begin Subd. 3. new text end

new text begin Training and assistance. new text end

new text begin The commissioner shall coordinate training
for accounting personnel and financial managers in state agencies on internal controls,
as necessary to ensure financial integrity in the state's financial transactions. The
commissioner shall provide internal control support to agencies that the commissioner
determines need this assistance.
new text end

new text begin Subd. 4. new text end

new text begin Sharing internal audit resources. new text end

new text begin The commissioner must administer a
program for sharing internal auditors among executive agencies that do not have their own
internal auditors and for assembling interagency teams of internal auditors as necessary.
new text end

new text begin Subd. 5. new text end

new text begin Monitoring Office of the Legislative Auditor audits. new text end

new text begin The commissioner
must review audit reports from the Office of the Legislative Auditor and take appropriate
steps to address internal control problems found in executive agencies.
new text end

new text begin Subd. 6. new text end

new text begin Budget for internal controls. new text end

new text begin The commissioner of finance may require
that each executive agency spend a specified percentage of its operating budget on internal
control systems. The commissioner of finance may require that an agency transfer a
portion of its operating budget to the commissioner to pay for internal control functions
performed by the commissioner.
new text end

new text begin Subd. 7. new text end

new text begin Annual report. new text end

new text begin The commissioner must report to the legislature and the
governor by January 31 of each odd-numbered year on the system of internal controls
and internal auditing in executive agencies.
new text end

new text begin Subd. 8. new text end

new text begin Agency head responsibilities. new text end

new text begin The head of each executive agency is
responsible for designing, implementing, and maintaining an effective internal control
system within the agency that complies with the requirements of subdivision 1, clauses (1)
to (4). The head of each executive agency must annually certify that the agency head has
reviewed the agency's internal control systems and that these systems are in compliance
with the standards and policies established by the commissioner. The agency head must
submit the signed certification form to the commissioner of finance in a form specified by
the commissioner.
new text end