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Finding 8: KSU Provided Insufficient Oversight of Its Procurement and Expenditure Processes.

Review of KSU procurement and expenditure activity found a consistent lack of documentation, and inadequate support to evidence the processes followed and approvals granted. While a significant lack of documentation limited reviews, questionable spending and poor fiscal management practices were identified, including a heavy reliance on credit card and store accounts and failure to reserve or encumber funds for travel and credit card usage. Additionally, KSU was not able to provide evidence that certain expenses selected for review were ever recorded in their accounting system. Such poor fiscal management and oversight places KSU at high risk for fraud, waste, and abuse of public funds under its control.

Procurement Testing

As documented in Finding 2, numerous attempts were made to determine KSU’s population of contracts from which a selection would be reviewed to ensure KSU was properly procuring goods and services. Each attempt was met with a new set of issues or challenges. Among the issues, it was found that KSU did not consistently maintain a central repository of its contracts, KSU’s accounting system was unable to produce a contract payment report, and KSU lost an unknown quantity of electronic procurement documents loaded into a previous contract repository system after failing to pay its bill and the vendor locking them out of the system. Though KSU was unable to provide all requested documentation, auditors proceeded with testing based on the limited information collected.

A selection of 24 vendors with whom KSU had procured goods or services between July 1, 2018, and June 30, 2021, was reviewed. From this review, the following issues were identified:

• KSU was not able to provide procurement documentation evidencing the selection method used to engage 10 vendors, or approximately 42% of the vendors selected for review. Further, KSU could not locate at least one element of the procurement process documentation needed to support the selection of an additional five vendors. Examples of missing information included the fully executed contracts, the Request for Proposals (RFP) issued, public notices, all successful and unsuccessful bids received, scoring sheets, and nondisclosure forms signed by selection committee members. See Finding 15 for discussion of record retention requirements.
• Due to limited information provided by KSU it could not be determined whether four contracts reviewed had been modified or amended.
• For one modified/amended contract, it could not be determined if the modification/amendment had been reviewed and approved prior to costs being incurred.
• For nine vendors, evidence could not be found to confirm KSU presented an associated contract or expenditure greater than $50,000 to the Board. KSU Board Bylaws require the Board to approve disbursements or contracts greater than $50,000.