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KSU’s policy setting process was not defined during the period examined, July 1, 2018, through June 30, 2021. Many of KSU’s official policies and resources providing operational guidance to personnel, such as a chart of accounts and salary schedules, are outdated and do not reflect current operations or industry standards. Additionally, though efforts were made by KSU staff to establish, revise, and update select KSU policies in their work areas, often no feedback or official action was provided by management to formalize and openly communicate the policies. Due to the lack of updated policies and procedures, KSU staff have been using informal guidance to provide some level of information and operational consistency. Additionally, there were instances when policies were approved by the Board but were not communicated to employees or when revisions to policy were approved by the Board and not memorialized in formal policy. Policies are a fundamental element of providing good governance and establishing internal controls. Without properly managing, maintaining, and communicating relevant and effective policies, management is perpetuating a weak internal control environment.
Prior to initiating this examination, requests were made for policies and procedures in place for certain financial processes, including procurement, budgeting, contracting, receipts, and disbursements. In response, KSU’s former interim President provided excerpts from KSU’s Business Policies and Procedures Manual dated April 30, 2010. The policies provided predate KSU’s accounting system, Banner, which was fully implemented in 2011. Interviews with current and former KSU financial personnel identified that revised policies were created but acknowledged these policies were not presented to or approved by KSU’s Board.
One attempt to correct this deficiency began with KSU’s former Purchasing Director who informed the former EVP for Finance that she would be drafting updated policies and procedures for the Board’s consideration because the current ones were a decade old. After spending a significant amount of time drafting updated procedures, she then submitted them first to the former EVP for Finance and then to the former General Counsel, but nothing was ever presented to the KSU Board. Though the policies did not go to the Board for approval, the former Purchasing Director distributed the policies to staff within Purchasing and Accounts Payable. The former Purchasing Director felt she had the authority to develop procedures because the Board approved policies were broad. When the external CPA firm performing KSU’s annual financial statement audit requested policies, the Former Purchasing Director noted that she provided them both the 2010 policies and the draft policies she developed as a show of effort.
While KSU’s former General Counsel acknowledged receiving draft documents from the former Purchasing Director, she stated that these documents were guidance to staff, not policy that would be approved by the Board. Review of the revised University Credit Card Policies and Procedures Manual, part of what the former Procurement Director had drafted, provides not only guidance to personnel but establishes what is considered a violation of policy and the consequences that the employee may face after the first, second, or third violation. Guidance consists of recommendations not required actions. Additionally, based on the former Purchasing Director’s