Minnesota state government collects and spends billions dollars every year, but the way the state accounts for this money continues to face the risk of "errors or fraud" because of weak internal controls in some agencies, the state legislative auditor said today.

In a report out this morning, Auditor James Nobles found ongoing vulnerablities in several agencies, including weak financial reporting systems, too many employees with inappropriate access to accounting systems and an inability to catch errors.

The Department of Management and Budget is charged with preparing the state's financial statements and auditors found errors on the financial statement footnotes. Overall, the state's financial statements were "fairly stated" but the continued weaknesses in reporting need to be corrected, the report said.

The audit also found problems with the way the Department of Revenue reconciles fuel tax collections, including errors of up to $2.4 million. Those mistakes were reconciled in later months, but the auditor found problems with the way the department corrected these differences. The department also did not properly reconcile income tax refunds within its systems.

Other departments highlighted in the report included Education, Transportation, the State Board of Investment and the Minnesota Retirement System -- all which had failed to make adequate progress in getting their internal controls in order, according to auditors.

The controls issues on business systems and lack of checks and balances in some agencies "increased the risk that errors or fraud could occur without detection and compromised the integrity of financial transactions underlying the financial statements," the report said.

The report also mentioned the Department of Human Services, which had several employee controls issues identified around its programs, including one involving nearly nearly $600 million a year in child support payments processed through the agency.

In his response to the audit, Management and Budget Commissioner James Schowalter said state agencies were making program to address internal control issues. He said the department would work to address the findings in the audit.