To the Audit Committee of Kentucky State University

TRONCONISEGARRA ASSOCIATES. Certified Public Accountants Business Consultants

We are pleased to present an update of our risk assessment of the internal controls of Kentucky State University (the “University”). The purpose of our engagement is to assist you in the development of a risk assessment of University operations, to perform various internal audit services, and provide recommendations to strengthen controls and reduce the identified risks. This report was developed from inquiry of University faculty and staff, observations, inspection of various policies and procedures, and testing of the operating effectiveness of some controls. We plan to issue additional periodic reports throughout the course of the engagement, which will follow the proposed rotation plan for significant cycles as documented in the internal audit plan.

The importance of an adequate system of internal control is to promote effective and efficient operations so as to help the University carry out its mission; to provide reasonable, but not absolute, assurance that assets are safeguarded against inappropriate or unauthorized use; to promote the accuracy and reliability of accounting data and financial reporting to ensure transactions are executed in accordance with management's authorization and recorded properly in accounting records; to encourage adherence to management's policies and procedures for conducting programs and operations; and to ensure compliance with applicable laws and regulations. Furthermore, a successful system of internal control includes performing an annual assessment to identify potential weaknesses in policies and procedures and to implement corrective actions.

This report contains the final risk assessment for the fiscal year ended June 30, 2013, and our audit plan for the fiscal year ended June 30, 2014. Additionally included is the risk assessment for the fiscal year ended June 30, 2013. Since the previous update to the audit committee, we have performed observations within the areas of general control environment, and purchasing, account payable, and disbursements. Additionally, we have performed testing in the area of disbursements and return of title IV funds.

Internal control testing was performed through tailored procedures designed based on our understanding of the University's relevant policies and procedures in effect for the aforementioned cycles.

The University's risks are the risks that an action or event will adversely affect the University's ability to successfully achieve its objectives. The Risk Assessment section of the report analyzes the significant risk findings that were identified during our assessment.

The accompanying comments are intended solely for the information and use of the Audit Committee, Board of Regents, department heads, and others within the University and should not be used for any other purpose.

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