KENTUCKY STATE UNIVERSITY Schedule of Findings and Responses, continued

Year ended June 30, 2014

Section I – Summary of Auditors' Results:

Financial Statements:

  • The type of report issued on the financial statements: Unmodified Opinion
  • Internal control over financial reporting:
  • Material weaknesses: No
  • Significant deficiencies identified that are not considered to be material weaknesses: Yes
  • Non-compliance which is material to the financial statements: No

Section II – Financial Statement Findings:

Finding 2014-001:

Condition:

The student accounts receivable subsidiary ledger and the allowance for uncollectible student accounts receivable are not reconciled and adjusted periodically throughout the year. The student accounts receivable aging should be analyzed and reconciled to the general ledger at least quarterly. The aging should be analyzed in accordance with University policy to ensure that the allowance for uncollectible student accounts receivable is accurately reflected in accordance with University policy. This reconciliation and associated allowance calculation should be submitted to University management for review and approval.

Effect:

The University posted an adjusting journal entry to reconcile student accounts receivable subsidiary to the general ledger and to increase the allowance for doubtful accounts subsequent to year end. Increased management effort in this area could result in a reduction in the number and amount of delinquent and potentially worthless receivables. The positive results from this process may include significantly improved cash flow and profitability and should minimize the need for a year-end adjustment of this account.

Recommendation:

We recommend the University reconcile the student accounts receivable subsidiary ledger to the general ledger at least quarterly and assess the collectability of all student accounts receivable on a quarterly basis.