The Minnesota State Arts Board should improve its monitoring of grants issued with state Legacy funds, according to a new state audit.
The report, released Thursday by the Legislative Auditor, says that between 2010 and 2012 the arts board failed to monitor grantees "in accordance with the specific appropriations and grant agreements."
Overall, the audit found no misuse of Legacy funds and said the board has generally adequate financial controls.
But it did find gaps in grant monitoring. For example, state policies require that the arts board must have grantees who receive more than $50,000 submit documents, such as receipts or payroll records, to verify their expenses. This procedure, known as financial reconciliation, should have occurred at least once during the grant period, but the audit found the board had not complied.
The report also said the arts board did not effectively collect and review final reports submitted by grant recipients. Final reports are required 30 days after the grant ends to show outcomes, impact and cost of grant projects. As of February 2012, the board had not received 443 final grant reports within those 30 days. Some of the reports, the audit states, were more than 90 days past due.
The arts board receives the majority of its funding from state Legacy funds, which flow from a special tax approved by voters in 2008. The Legislative Auditor's office is auditing the agencies that received those funds. In a response letter to the audit, Arts Board Director Sue Gens said the board has put new procedures in place for grant oversight, including taking past performance into account when awarding new grants. Additionally, she said they are moving to an online grant management system. Gens wrote that the review of final reports has been done manually.
Audit manager Brad White said the Minnesota Management Board will confirm that the Arts Board makes the necessary changes. He also said another audit will likely be conducted in two years.
"They are going to move in the right direction and are building their accountability strategy," White said. "There is a high bar here, and we have to make sure they meet it."
Alejandra Matos • 612-673-4028
