Dr. Ronald A. Johnson, Interim President Dr. Gerald Patton, Board Chair

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Detailed findings and recommendations based on our special examination are presented in this report to assist management in implementing corrective action. Overall, these findings indicate the following:

• Weak to non-existent internal controls and poor communication across the university, including over federal grants and internal endowed funds.
• Failure to ensure effective budget process to prevent overspending.
• Inaccurate and incomplete reporting of accounts payable.
• Extensive credit card usage without supervisory reviews or supporting documentation.
• Massive amount of employee turnover.
• Outdated accounting software that was improperly implemented and inadequate to keep track of financial activity.
• Outdated, rogue, or non-existent policies and procedures.
• Limited Board oversight, which was worsened by inaccurate or limited information provided from KSU administrators.
• Unallowable benefits awarded to members of former executive administration.
• Inadequate password and IT security controls.

Based on the seriousness of the findings, referrals will be made to the Kentucky Office of the Attorney General, the U.S. Attorney's Office for the Eastern District of Kentucky, the U.S. Department of Treasury, and the U.S. Department of Education.

We appreciate your assistance and the assistance of your staff throughout the examination and hope this report will help KSU make improvements for the university to thrive and continue to be an instrumental part of the public college education community of Kentucky. If you have any questions or wish to discuss this report further, please contact me, or Tiffany Welch, Executive Director.

Sincerely,

Farrah Petter

Assistant:Assistant State Auditor of Public Accounts