State Audit Uncovers Issues at Minn. Lottery

Updated: 06/21/2013 6:55 AM By: Stephen Tellier

An audit has uncovered issues at the Minnesota Lottery. Could some winners owe back taxes and child support before they hit it big, but pocket the full jackpot anyway?
"Generally adequate," but some "weaknesses related to its cash, banking and payroll." That's the verdict from a state audit of the Minnesota Lottery.
"I think it showed that we're operating properly," Minnesota Lottery Executive Director Ed Van Petten said.

Auditors found minor problems related to payroll reports, employee frequent flier miles, and an $85,000 accounting error that auditors said, "increased the risk that error or fraud could occur without detection." The Lottery blames the issue on a new accounting system and said it's been corrected.
But another problem involves potential prize winners.
Auditors said the Lottery didn't report the winners of non-cash prizes, like cars, to the Department of Revenue. That means officials couldn't check to see if winners owed back taxes or child support. That check is routine for cash prizes. But auditors stated, "The Lottery would allow a winner to receive a nonmonetary prize without settling past due taxes or other debts, such as child support," and no one has any way of knowing whether that's ever happened.
"I've never heard of a lottery reporting non-cash prizes," Van Petten said.
Van Petten said the Lottery is just following the law and has asked the Attorney General to weigh in on the issue.
When asked why the Lottery doesn't report non-cash prize winners to the Department of Revenue out of an abundance of caution, Van Petten replied, "We don't determine that there's a mechanism to do that because of the way the statute is worded."
Despite the findings, the Lottery is quite confident its books are in order.
"There was nothing indicating that there's any cash walking out the door," Van Petten said.