Information on the Federal Program: HEERF HBCU Portion (CFDA Number 84.425J) – U.S. Department of Education

Criteria: Consistent with the cost principles of the Uniform Guidance (2 CFR part 200 subpart E), the calculation of lost revenue must measure the amount of baseline revenue and lost revenue consistently.

Condition and context: Lost Revenue for Fall 2021 was calculated by applying the year over year percent increase in dining revenue to the Fall 2020 dormitory revenue and subtracting that amount from the actual Fall 2021 dormitory revenue.

Questioned Cost: $688,691

Cause: To measure the amount of baseline revenue and lost revenue consistently, lost revenue should have been calculated by subtracting Fall 2020 dormitory revenue from Fall 2021 revenue.

Effect: Lost Revenue was incorrectly calculated and therefore overstated.

Recommendation: We recommend the University improve its administration of federal grant funds. KSU should allocate sufficient staff and resources to ensure grant funds are spent in accordance with federal statutes, regulations, and the terms and conditions of the various federal awards. Specifically, the University should implement and maintain an effective system of internal controls over the administration of federal funds to ensure funds are spent appropriately and in accordance with the specific grant requirements. This includes establishing a chain of command that has the skills and knowledge to administer the funds and to ensure internal controls are not circumvented or overridden.

Management Response: The University concurs with finding. The Grant Accounting staff will be re-evaluating the previous submission and adjusting the lost revenue calculation according to federal grant guidelines. Appropriate internal controls have since been established and updated procedures have been established to prevent future miscalculations.

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