1.1 	A bill for an act
1.2 	relating to state government; assigning duties relating to internal controls and 
1.3 	internal auditing in state government; requiring a report;amending Minnesota 
1.4 	Statutes 2008, section 16A.055, subdivision 1; proposing coding for new law 
1.5 	in Minnesota Statutes, chapter 16A.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2008, section 16A.055, subdivision 1, is amended to 
1.8 	read:
1.9 		Subdivision 1. List. (a) The commissioner shall: 
1.10 	(1) receive and record all money paid into the state treasury and safely keep it until 
1.11 	lawfully paid out; 
1.12 	(2) manage the state's financial affairs; 
1.13 	(3) keep the state's general account books according to generally accepted 
1.14 	government accounting principles; 
1.15 	(4) keep expenditure and revenue accounts according to generally accepted 
1.16 	government accounting principles; 
1.17 	(5) develop, provide instructions for, prescribe, and manage a state uniform 
1.18 	accounting system; and
1.19 	(6) provide to the state the expertise to ensure that all state funds are accounted for 
1.20 	under generally accepted government accounting principles; and.
1.21 	(7) coordinate the development of, and maintain standards for, internal auditing in 
1.22 	state agencies and, in cooperation with the commissioner of administration, report to the 
1.23 	legislature and the governor by January 31 of odd-numbered years, on progress made.
1.24 	(b) In addition to the duties in paragraph (a), the commissioner has the powers and 
1.25 	duties given to the commissioner in chapter 43A. 

2.1 	Sec. 2. [16A.056] INTERNAL CONTROLS AND INTERNAL AUDITING.
2.2 		Subdivision 1.Establishment of system. The commissioner is responsible for 
2.3 	the system of internal controls across the executive branch. The commissioner must 
2.4 	coordinate the design, implementation, and maintenance of an effective system of internal 
2.5 	controls and internal auditing for all executive agencies. The system must:
2.6 	(1) safeguard public funds and assets and minimize incidences of fraud, waste, 
2.7 	and abuse;
2.8 	(2) ensure that programs are administered in compliance with federal and state 
2.9 	laws and rules;
2.10 	(3) require documentation of internal control procedures over financial management 
2.11 	activities, provide for analysis of risks, and provide for periodic evaluation of control 
2.12 	procedures to satisfy the commissioner that these procedures are adequately designed, 
2.13 	properly implemented, and functioning effectively; and
2.14 	(4) provide for periodic internal audit of major systems and controls, including 
2.15 	accounting systems and controls; administrative systems and controls; and, in conjunction 
2.16 	with the office enterprise technology, information and telecommunications technology 
2.17 	systems and controls.
2.18 		Subd. 2.Standards. The commissioner must adopt internal control standards 
2.19 	and policies that agencies must follow to meet the requirements of subdivision 1. These 
2.20 	standards and policies may include separation of duties, safeguarding receipts, time entry, 
2.21 	approval of travel, and other topics the commissioner determines are necessary to comply 
2.22 	with subdivision 1.
2.23 		Subd. 3.Training and assistance. The commissioner shall coordinate training 
2.24 	for accounting personnel and financial managers in state agencies on internal controls 
2.25 	as necessary to ensure financial integrity in the state's financial transactions. The 
2.26 	commissioner shall provide internal control support to agencies that the commissioner 
2.27 	determines need this assistance.
2.28 		Subd. 4.Sharing internal audit resources. The commissioner must administer a 
2.29 	program for sharing internal auditors among executive agencies that do not have their own 
2.30 	internal auditors and for assembling interagency teams of internal auditors as necessary.
2.31 		Subd. 5.Monitoring Office of the Legislative Auditor audits. The commissioner 
2.32 	must review audit reports from the Office of the Legislative Auditor and take appropriate 
2.33 	steps to address internal control problems found in executive agencies.
2.34 		Subd. 6.Budget for internal controls. The commissioner of finance may require 
2.35 	that each executive agency spend a specified percentage of its operating budget on internal 
2.36 	control systems. The commissioner of finance may require that an agency transfer a 
3.1 	portion of its operating budget to the commissioner to pay for internal control functions 
3.2 	performed by the commissioner.
3.3 		Subd. 7.Annual report.  The commissioner must report to the legislature and the 
3.4 	governor by January 31 of each odd-numbered year on the system of internal controls 
3.5 	and internal auditing in executive agencies.
3.6 		Subd. 8.Agency head responsibilities. The head of each executive agency is 
3.7 	responsible for designing, implementing, and maintaining an effective internal control 
3.8 	system within the agency that complies with the requirements of subdivision 1, clauses (1) 
3.9 	to (4). The head of each executive agency must annually certify that the agency head has 
3.10 	reviewed the agency's internal control systems, and that these systems are in compliance 
3.11 	with standards and policies established by the commissioner. The agency head must 
3.12 	submit the signed certification form to the commissioner of finance, in a form specified by 
3.13 	the commissioner.

3.14 	Sec. 3. [16A.057] FINANCIAL CONTROLS COUNCIL.
3.15 		Subdivision 1.Membership. The executive council shall appoint a five-member 
3.16 	financial controls council.  Members must  have public or private sector experience in 
3.17 	internal control issues. The council shall annually elect a chair and vice-chair from 
3.18 	among its members.
3.19 		Subd. 2.Duties. (a) The council  shall advise the commissioner of finance, the 
3.20 	governor, and the legislature on the system of internal controls for executive agencies. 
3.21 	In performing this duty, the council shall:
3.22 	(1) review audits and other reports of the Office of the Legislative Auditor and 
3.23 	from internal auditors in executive agencies;
3.24 	(2) review the state's system of internal controls and make recommendations for 
3.25 	changes in practices of specific executive agencies or on general changes needed in state 
3.26 	laws, procedures, or policies;
3.27 	(3) recommend guidelines and best practices to produce an effective system of 
3.28 	internal controls;
3.29 	(4) recommend the number of internal audit employees required for executive 
3.30 	agencies, individually and in total; and
3.31 	(5) review and comment on the performance of the commissioner of finance in 
3.32 	carrying out duties under section 16A.056.
3.33 	(b) The council may:
3.34 	(1) require reports from any executive agency relative to an internal control or 
3.35 	an internal audit matter;
4.1 	(2) receive and review reports from internal auditors in executive agencies;
4.2 	(3) conduct hearings relative to attempts to interfere with, compromise, or intimidate 
4.3 	an internal auditor; and
4.4 	(4) conduct hearings on the effectiveness of internal control or internal audit 
4.5 	functions within an executive agency.
4.6 		Subd. 3.Terms; compensation; removal; vacancies; expiration. The membership 
4.7 	terms, compensation, removal of members, and filling of vacancies shall be as provided in 
4.8 	section 15.059, except that council members shall not receive a per diem. The council is 
4.9 	not subject to the expiration date provisions of section 15.059.
4.10 		Subd. 4.Administrative support. The commissioner of finance shall provide 
4.11 	administrative support to the council upon request of its chair.