State agencies are sloppy with money, audits find

  • Article by: DAVID SHAFFER , Star Tribune
  • Updated: December 19, 2008 - 12:42 AM

Careless tracking of funds, poor accounting for travel and failure to report thefts were some questionablepractices.

Minnesota auditors say they are finding too many cases of sloppy money handling and other questionable practices by state agency officials.

In a series of audits since May, the Legislative Auditor has reported recurring, fundamental problems in financial management at 16 state departments and commissions, including the state Agriculture Department and Combative Sports Commission, whose audits were released Thursday.

"This is not the formula we would like to see continue," Legislative Auditor James Nobles said at a Capitol hearing.

Auditors found that Scott LeDoux, executive director of the commission overseeing boxing and related sports, accepted 18 free tickets to a fight event, including $600 ringside seats, from a promoter in violation of state conflict-of-interest rules. Auditors also reported such poor oversight over money that there was no way to tell if any was missing.

The Agriculture Department didn't keep proper tabs on money, either, especially for travel, a separate audit found. Auditors questioned Agriculture Commissioner Gene Hugoson's travel in first-class seats and his late filing of some expense reports. The department also overpaid other staffers for car travel, the audit found.

Worse problems have turned up in earlier audits, including:

• The Department of Natural Resources' unauthorized spending of $300,000 on a 2007 game warden conference.

• Lax accounting that allowed overcharges to residents and excessive overtime at the Minneapolis Veterans Home.

• Loose control of cash at the tiny Barbers and Cosmetologists Examiners Board, where $10,000 is missing and believed stolen.

Each agency has pledged to improve. Agriculture Department spokesman Mike Schommer said the commissioner's first-class airline seats were upgrades using frequent flyer miles earned on personal and state travel. Auditors said frequent-flyer miles earned for state travel are property of the state.

In an interview, LeDoux, a former prize-fighter, said that promoters have long handed out free tickets to fill unsold seats at events, and that members of the former State Boxing Commission, on which he also served, routinely handed them out to family and friends.

He said he didn't know the practice violated ethics rules, and said it would be stopped. He also said that the commission accounts are correct and that the discovery of harmful software on its website has been fixed.

Deputy Legislative Auditor Cecile Ferkul told the bipartisan Legislative Audit Commission that agencies are not properly controlling revenue, purchases, assets, overtime, cell phone bills and other basic money matters. She said too many agencies assign financial duties to a single worker instead of having multiple staff members checking the accounts.

"It's across the board," said Commission Chairman Rep. Rick Hansen, DFL-South St. Paul, who warned that problems are occurring at large and small agencies, and among agency officials of all levels of management experience.

Unauthorized spending, fraud and other losses in state agencies represent a tiny fraction of the $426 million deficit now confronting the state or the nearly $5 billion projected shortfall for the two-year period starting in July. Even so, Hansen and other legislators said legislative committees must press agency heads to deal with the problems identified in the audits.

Nobles said the new state Department of Management and Budget, created from the merger of two agencies, could play a central role in overseeing financial procedures and training agency officials to comply with them.

Curt Yoakum, director of communications and legislative affairs for the management agency, said it will work with the Legislative Auditor and other state agencies on the problems identified in the audits.

"The duty of financial oversight is something we take very seriously," he saidd.

Among the other problems discovered in audits of other agencies:

• Poor accounting, especially on travel, at the Department of Labor and Industry. An employee was allowed to improperly collect $10,000 on mileage and meals.

• At the Minnesota Department of Health, auditors found careless handling and tracking of money, assets and expenses.

• At the Perpich Center for the Arts, the poor financial practices included a failure to report two thefts totaling $2,700.

• The Minnesota State Academies were cited for sloppy handling of $1 million in receipts, but no known theft.

David Shaffer • 612-673-7090

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