At the October committee meeting, Regent Farris raised a question about the connection between the fixed assets inventory report and the insurance coverage the University has in place.
University buildings are valued annually for insurance purposes by adjusting the recorded value of the buildings for current construction costs. This adjustment is made by the State Risk Management Office in the Commonwealth of Kentucky's Finance Cabinet.
Contents are valued for insurance purposes based on reports provided to State Risk Management by the University. After an internal search for valuation reports failed to locate any reports, State Risk Management was contacted. That office indicated that they had not received a comprehensive contents report from the University in at least eight years.
A review of the contents coverage in place compared to the fixed asset values is now underway. As discrepancies are discovered, State Risk Management will be notified and the coverage amounts updated. When the review is complete, a comprehensive report will be provided to State Risk Management.
A number of state universities have now released their financial statements for the 2014-2015 fiscal year. Below is a comparison of how the unrestricted net assets position of these universities has been affected by the implementation of this accounting change.
(amounts in millions)
| University | 2015 | 2014 |
|---|---|---|
| Eastern Kentucky University | ($332.7) | $49.0 |
| Northern Kentucky University | ($133.2) | $83.9 |
| Western Kentucky University | ($355.8) | $54.3 |
| Kentucky State University | ($71.0) | $22.3 |
The administrative areas of a university should be able to provide information that is on time and accurate. Measured by this standard, the Business Affairs organization at Kentucky State University is not effective.
In addition to the issues outlined earlier in this report:
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