The Office of the Legislative Auditor was created in 1973 following the recommendation of a private-sector study group called the Loaned Executive Action Program (LEAP). Between 1878 and 1973, state agencies and local governments were audited by the Public Examiner, an appointee of the Governor. LEAP argued that this arrangement did not provide for a true independent, or "arms-length", examination of the executive branch. LEAP recommended creation of an office in the legislative branch comparable to the Government Accountability Office (GAO), a non-partisan Congressional watchdog at the national level.
Initially, Minnesota's Office of the Legislative Auditor conducted only financial audits of state agencies. In 1975, its duties were expanded when a Program Evaluation Division was created within the office to examine the management and impact of state-funded programs (Laws 1975 c204 s90). In 1994, the Program Evaluation Division was directed by law to also conduct best practice reviews of local government functions. This responsibility was shifted to the State Auditor in 2004. The State Auditor is also responsible for auditing local governments.