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Finding 6 reports on KSU's ineffective system of internal controls over federal grant expenditures, including the expenditure of funds for unallowable purposes. KSU's failure to implement effective controls put over $3 million in federal funds at risk.
Finding 7 identifies a lack of budget controls and inconsistent reporting which made monitoring overspending difficult.
Finding 8 identifies insufficient controls over KSU's procurement process and failure by KSU to properly maintain an inventory of existing contracts.
Finding 9 explains KSU's draw of over $2.7 million in endowment earnings used to supplement its cash balances and KSU's failure to ensure funds were spent in accordance with donor restrictions.
Finding 10 reports on benefits unapproved by the Board, including bonuses given to select executives during the prior KSU administration.
Finding 16 identifies KSU lost retention of supporting documentation for travel expenses due to failing to pay its vendor.
accounts payable balance of up to $5.3 million while at the same time having already drawn the full amount of its $5 million line-of-credit and also owing the State an additional $5 million from funds advanced to KSU for capital projects.
Maintaining an appropriate level of qualified personnel is vital in the long-term planning and operations of an organization. Current and former personnel interviewed identified continuous turnover among KSU financial personnel and a lack of succession planning. Frequent turnover of key financial personnel, coupled with outdated or unknown policies and procedures and no succession planning, drains an organization of the institutional knowledge needed to ensure continuity of services and reduce inefficiencies.
While each finding of the report provides specific recommendations, we recommend that KSU management work to improve the “tone at the top” of its internal control environment. Internal controls should be enforced at all levels, expenditures should be fully supported by documentation that is properly retained, budget limits should be consistently enforced, and monitoring efforts should be fully implemented and supported.