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Examination findings in this chapter discuss matters involving specific financial activity, reporting to those in governance, and monitoring of KSU finances. Findings in this chapter identify instances of excessive spending, questionable compensation and benefits, and questionable financial decisions and actions during the prior administration.
To understand the University’s budgeting process and Board oversight of the process, we interviewed board members, university management, and university staff about their understanding of the budget process. We also reviewed reports, board packets, and raw accounting data provided by the University. Our review found the University did not implement a comprehensive system of internal controls or policies and procedures to ensure an effective budget process of university revenues and expenditures. Spending was uncontrolled and there was no mechanism in place to prevent overspending the budget. Furthermore, the Board was either unaware or uninterested in identifying and correcting the system’s deficiencies. The University’s controls over budget execution were not adequate because they did not include key internal controls, including:
Standard policies and procedures for management, employees, and Board members to follow when developing, implementing, and amending the budget;
Adequate supporting documentation for budget reports;
Consistent financial reporting across reporting periods;
Controls to ensure the approved budget was not overspent, including controls within the accounting system that safeguard funds;
Staff with sufficient skills, knowledge, or experience to understand and effectively work with the existing accounting system;
A process to ensure the Board had the necessary knowledge and allowed sufficient time to review and examine the budget to ensure it was developed to further the University's goals and objectives within reasonable anticipated revenues.
There were no written policies and procedures for the budget process and no consistent procedure followed in budget development. The lack of consistency created a chaotic process where the budget format changed from period to period, which prevents a clear picture of the changing financial position of the University. An example of the changing format is when the former President requested that the format be changed to resemble another university's budget style. The budget could change format more than once during the same fiscal year. Another example of
Lack of consistency
prevented a clear picture of KSU's changing financial position.
Lack of consistency prevented a clear picture of KSU's changing financial position.
a change in format would be when a particular department would be moved from one activity type to another. During FY 2020, the campus police department was moved from finance to student engagement then back to finance, causing confusion when it was time to develop budget reports. The changing format and movement of departments from one activity type to another made it impossible to get a clear picture of the university’s financial position.