Information Technology Revolving Fund

Michigan Office of the
Auditor General
Thomas H. McTavish, C.P.A.
Auditor General

EXECUTIVE DIGEST #0714097
Information Technology Revolving Fund

INTRODUCTION
This report contains the results of our financial audit of the Information Technology Revolving Fund (Fund) administered by the Department of Management and Budget for the period October 1, 1994 through September 30, 1996.

AUDIT PURPOSE
This financial audit was conducted as part of the constitutional responsibility of the Office of the Auditor General. Financial audits are conducted at various intervals to permit the Auditor General to express an opinion on the State's financial statements. Also, this audit complements the departmentwide financial audit.

BACKGROUND
The Fund was created from the Telecommunications Revolving Fund effective October 1, 1992. The Fund was established to account for various services provided by the Fund to all State agencies. These services include various items, such as telecommunications, data processing, customer service, and administration of master contracts. The cost of providing these services is charged to the user agencies on a monthly basis.

As of September 30, 1996, the Fund had 191 full-time employees. The Fund had operating expenses of $53,153,008, operating revenues of $51,519,844, and net losses of $1,716,475 for fiscal year 1995-96.

AUDIT OBJECTIVES AND CONCLUSIONS

Audit Objective: To assess the adequacy of the Fund's internal control structure.

Conclusion: Our assessment of the Fund's internal control structure did not disclose any material weaknesses. However, we noted reportable conditions related to fixed asset depreciation and the Fund's cash flows (Findings 1 and 2).

The departmentwide financial audit, including provisions of the Single Audit Act, for the period October 1, 1994 through September 30, 1996 reported two reportable conditions related to the internal control structure of the Department of Management and Budget that are applicable to the Fund's audit. Those findings related to incompatible user classes in the Michigan Administrative Information Network and cash receipting procedures. The findings are not repeated in this audit report.

Audit Objective: To assess the Fund's compliance with both State laws and regulations that could have a material effect on the Fund's financial statements.

Conclusion: Our assessment of the Fund's compliance with laws and regulations did not disclose any instances of noncompliance that could have a material effect on the Fund's financial statements.

Audit Objective: To audit the Department's financial statements for the fiscal years ended September 30, 1996 and September 30, 1995.

Conclusion: We expressed an unqualified opinion on the Fund's financial statements.
AUDIT SCOPE
Our audit scope was to examine the financial and other records of the Information Technology Revolving Fund for the period October 1, 1994 through September 30, 1996. Our audit was conducted in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States and, accordingly, included such tests of the records and such other auditing procedures as we considered necessary in the circumstances.
AGENCY RESPONSES AND PRIOR AUDIT FOLLOW-UP
Our audit report contains 2 findings and 5 recommendations. The agency's preliminary response indicated that the Fund agreed with all 3 recommendations, has complied with 1 recommendation, and will comply with the other recommendations.

The Fund complied with 4 of the 9 prior audit recommendations included within the scope of our current audit. The remaining 5 recommendations were no longer applicable to the Fund.
Full Audit Report - #0714097-Information Technology Revolving Fund

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This page was created on 3/28/98.