Board of Regents that, by the end of the process, all of the items the University had in the accounting system valued over $50,000 were identified.

Acting Vice President Rush reported that through the physical inventory process, assets with a combined value of approximately $6MM were either missing or fully depreciated and unusable. He stated that an adjusting entry was made last year of $6MM to recognize that and will be reflected in the 2014-2015 audited financial statements of the University. He stated that while the adjustment ensures that the financial statements are correct, the related items will also be removed from the fixed asset system within the next few months, which will complete the adjustments necessary as a result of the physical inventory. Acting Vice President Rush stated that going forward, we have an initial schedule to look at inventory that he and Paul Edwards, Assistant Vice President for Business Affairs, will discuss with the auditors.

Acting Vice President Rush stated that, upon entrance, the auditors established a schedule with proposed timelines detailing dates and activities to be performed but the schedule has not been met for a number of reasons.

He stated that the field work and testing were completed last week, and the auditors are down to a couple of footnotes for the Management Discussion and Analysis report that will be completed soon. Regent Henry inquired if the University was sanctioned due to not having the report in on time, Acting Vice President Rush stated that we were not and President Burse stated there was no sanction other than embarrassment. Acting Vice President Rush stated that the auditors are projecting the report to be completed and ready for review by the University by the end of October. The Commonwealth of Kentucky Office of the Controller has granted Kentucky State University an extension to November 15, 2015, for submittal to the Commonwealth. He stated that we should meet the deadline from the conversation we have had with the auditors.

Assistant Vice President Paul Edwards stated that an item of high interest is that the financial statements will look very different once the effects of GASB 68 are quantified and recorded. He stated Accounts Receivables has decreased $4.6MM since this time last year primarily due to two different items. First, the change in the allowance for doubtful accounts from this time last year to now is an increase of $3MM which reduces overall A/R and also, there have been reductions in student accounts receivable over the same time period of $1.6MM. Accounts payables and accrued liabilities have increased $1.8MM since this time last year and accounts payables rose $261K from this time last year. The change in this line was primarily due to payroll accruals which began in October of 2014 that were not captured this time last year, but are now reflective in the financial statements.

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