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Examination findings in this chapter discuss wide-ranging management and policy weaknesses at KSU that impact its overall operations. The findings in this chapter highlight the importance of having a solid foundation from which internal controls are implemented. Establishing this foundation is a basic responsibility of management.

KSU failed to fully implement and maintain an effective system of internal controls over its financial and administrative operations. KSU’s administration for the period examined, July 1, 2018, through June 30, 2021, permitted and enabled poor fiscal management practices to persist, including: excess spending above budgets, consistent reliance on credit cards and charge accounts allowing for funds to be spent without encumbrance, growing outstanding accounts payable, incomplete accounting records, and an inadequate accounting system. These practices indicate a weak financial condition; however, as seen in later findings the former KSU president and KSU Board were not consistently given accurate information to understand the true picture of the University’s financial condition. Failure by KSU to establish, and foster, strong internal controls and sound fiscal management practices has led to a lack of accountability to the University’s students, supporters, alumni, and to the taxpayers of Kentucky.

Interviews with current and former KSU representatives identified a siloed communication environment based on hierarchy. While a hierarchy is important to help define roles and responsibilities, it can breed poor communication across departments, isolate personnel, and prevents valuable information from reaching decision makers. Current and former KSU personnel describe a communication system where information was not to be shared or discussed outside of select groups, which created a fear of retribution if communication lines Information was not shared or discussed outside of select groups, creating fear of retribution.

Information was not shared or discussed outside of select groups, creating fear of retribution.

were crossed. This lack of communication and fear permitted known problems identified in Findings 3, 4, 5, and 17 of this report to go unaddressed. Additionally, it permitted the abuse of spending and authority described in Findings 10 and 12, and improper reporting to decision makers as evidenced in Finding 11 of this report.

As evidenced by the findings of this report, KSU’s prior administration did not implement needed controls to ensure funds were monitored and used in compliance with applicable policies. Additionally, the prior administration was largely reactive, addressing certain issues only after they became critical; however, as evidenced by the findings of this report, for issues communicated, short-lived solutions or controls would be created but not fully implemented or maintained to resolve the issue. To be effective and efficient in its operations, KSU must move beyond acting only in response to crises. When reacting, the organization is prone to apply a short-term fix rather than develop a long-term solution. The entire administration, top to bottom, must be vested in correcting its operations for KSU to be successful.