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Audit faults some state agencies for COVID emergency spending process

The Office of the Legislative Auditor found that state agencies largely followed the rules, but they also found some issues with emergency purchases.

ST PAUL, Minn. — An audit released Thursday faulted some state agencies for the way they spent emergency COVID money in the early months of the pandemic, although auditors found overall that they largely followed the rules and that no fraud was committed.

The Office of the Legislative Auditor's 60-page report looked at a portion of the $400 million in emergency purchase spending in 2020 and 2021.

"During times of crisis, there is an opportunity during that time for fraud, waste and abuse because there's an influx of money coming in," Deputy Legislative Auditor Lori Leysen said in an interview with KARE 11. "We're not saying that occurred. We're just saying, without strong controls in place, that's when the opportunity poses itself. And so, that's what we were looking at."

Leysen said the report shows some "areas of weakness" among state agencies. 

For example, the audit found that the Minnesota Department of Health "did not maintain accurate inventory records or conduct complete physical inventories in compliance with state policy." Specifically, auditors faulted MDH for not adequately tracking warehouse supplies, including masks, COVID-19 tests, face shields and respirators. Additionally, auditors wrote that MDH "did not restrict user access within the inventory management system" of the warehouse.

"We saw that their system access to that inventory was full access to all the employees that were in that warehouse," Leysen said. "Anyone at any time, they could have been the one entering those supplies into the inventory system and then they could have later made adjustments and no one would have known whether or not somebody had taken out a significant amount of supplies, like hand sanitizers or masks."

In a written response to the audit, MDH Commissioner Brooke Cunningham disputed some of the findings. Regarding the audit's findings on warehouse inventory and management, Cunningham noted that "MDH was not operating a warehouse before the COVID-19 pandemic. We did not have the luxury of time to be methodical in our planning for warehouse operations."

Although MDH made the majority of the emergency purchases during the early months of COVID, auditors also criticized several other state agencies in their report. For example, the audit found that the Department of Employment and Economic Development (DEED) and the Secretary of State's office "did not obtain emergency purchasing authority before bypassing required procurement processes." 

In another example, they faulted the Department of Education for using the emergency spending process for a $75,000 purchase of a "trauma information toolkit and training" that had been on the department's radar before the pandemic. Auditors said "we do not agree that the purchase was an emergency," although the Department of Education "continues to believe that the purchase identified in the report was an emergency purchase."

Also, the audit found that the governor's office spent more than $2,000 on federal COVID relief for civil unrest, "which is not a permissible use of those funds." In a written response, the governor's chief of staff said they've since removed that money from being charged through COVID relief. 


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