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from which fund this expense would be paid. The Foundation’s ledger shows that the funds were paid from the “KSUF0369 Presidential Recognition Other” subaccount.

Another expense, payable to a fraternity was also recorded against the “KSUF0369 Presidential Recognition Other” subaccount in the amount of $3,700 on November 29, 2018. Documentation provided by the Foundation to support this expenditure included only a Bill History printout from the Foundation’s accounting software on September 20, 2022. The memo for this payment states “Full Page Ad and Reserved KSU Table;” however, no invoice or expenditure request form documenting the expenditure purpose or authorizations given were evidenced.

As noted in Finding 6 of this report, KSU also transferred to the Foundation over $671,000 in federal Higher Education Emergency Relief Fund (HEERF) Student Aid portion funds during the period examined. The first two payments to the Foundation were made in April 2020 and May 2020, for $18,886 each. A third payment of $633,556 was made on July 16, 2020. In review of Foundation ledgers for the HEERF Student funds, the Foundation failed to recognize these first two payments, totaling $37,772. After inquiry of the Foundation, it was determined that the Foundation had erroneously identified and recorded the first two payments of federal funds as privately sourced donations.

It appears KSU failed to properly notify the Foundation of the source for the $37,772 as KSU did not address this matter with the Foundation until June 18, 2020, when they sent a request to the Foundation to “Hold And Release” HEERF Student funds. Finally, by its actions, KSU denied the Foundation and its Board the opportunity to consider the request. The MOU between KSU and the Foundation identifies that the Foundation “shall not accept grants from state or federal agencies except in special circumstances when approved by the Foundation Board and the governmental agency.” It is also not known if KSU ever notified the U.S Department of Education of this arrangement, let alone received federal approval.

Recommendations

We recommend:

• KSU follow its own MOU and establish more consistent and clear communication with the Foundation. This should include not only the President's office, but KSU's Accounting and Institutional Advancement offices, as appropriate, to promote integrity, accountability, and transparency in this process.
• KSU establish written policies and procedures to provide guidance for how requests for support from the Foundation are to be made and approved.
• KSU establish written policies and procedures to provide guidance for how University funds sent to the Foundation are to be processed and approved.
• KSU maintain its own records documenting expenditure requests and amounts the Foundation paid.