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We requested reports from KSU accounting and budgeting staff that would support the budget totals provided to the Board in the board packets for FYs 2019, 2020, and 2021. We received numerous reports from the accounting system, but none tied directly to the totals provided to the Board. Staff were unable to recreate the reports and did not understand the accounting system sufficiently to obtain historical information. Furthermore, because account reconciliations and financial statement audits were not completed timely, we were unable to determine whether the information provided to us was accurate.

As noted in Finding 4, the University failed to implement the most basic level of internal control necessary to prevent overspending, a mechanism in the accounting system that would prevent overspending an account where no budget remained. Because the purchase order process was not followed consistently, staff could order supplies or engage services with vendors without first ensuring budgeted funds were available. Staff reported being able to contact the former EVP for Finance or former President directly to ask that payments be made even if no budget was available in the account. This override of the purchase order control or the procurement process increased the risk that funds could be used for improper purposes or that vendors were paid without a review of invoices by knowledgeable personnel.

Staff interviews indicate that the accounting system was not properly set up and that internal controls were not implemented within the system. In addition, staff turnover, personnel transferring between departments, and insufficient training for new employees caused the reporting function to be ineffective and inaccurate. Without proper training and information retention, the University cannot ensure consistent accounting and reporting.

Auditors requested the funds and account codes used in the budget to actual reports submitted to the Board of Regents for FY 2019, FY 2020, and FY 2021, so that we could recreated those reports. Although we verified that we were given accurate information about the accounts and codes, we found that we could not recreate the actual amounts in the budget to actual reports provided to the Board of Regents. Differences were noted, as evidenced in Figure 8.