Mike Harmon, the Auditor for the state of Kentucky, announced today that his department had completed their audit of Kentucky State University, and was referring the audit findings to various prosecutors and agencies, including the state Attorney General.
According to a press release from Harmon’s office, the report includes the following findings:
- A poor internal communication system, which created a fear of retribution among employees, allowing known financial problems to go unaddressed.
- Failure to complete internal audit work associated with the Fiscal Year 2021 Board approved audit internal audit plan due, in part, to directives from the university’s former Executive Vice President for Finance to not assist the university’s internal auditor, as well as incomplete records.
- Missing or unsupported documentation on the expenditure of federal grant funds by KSU, putting the university at risk of having more than $3.34 million in questioned costs.
- More than $1.3 million in credit card transactions made each of the three-fiscal years reviewed, with little to no documentation on most of the purchases selected for review.
- Use of a fund designated for recognition of faculty, staff, and students by the former university president to pay for rental of the Kentucky Castle for a daylong retreat for the university’s board of trustees.
- Former university administrators receiving unallowable benefits, including bonuses, and supplemental health insurance. In addition, KSU’s former president received a retroactive housing allowance over $84,000 and the university spent nearly $4,000 towards the former President’s utilities at his personal residence.
- Inaccurate accounts payable amounts submitted by the former EVP for Finance to KSU’s former president and former board chair amid rumors of unpaid bills by KSU.
- KSU’s former EVP for Finance holding dual employment with Tennessee State University without notifying KSU.
Harmon announced that his office is referring the report and its findings to AG Daniel Cameron, the U.S. Attorney’s Office for the Eastern District of Kentucky, and specifically Finding 6 of the report to the U.S. Department of Treasury and the U.S. Department of Education.
“This is not the first time this office has conducted a special examination of Kentucky State University. In 2000, a report by former Auditor Ed Hatchett detailed 16 findings addressing university financial controls,” said Auditor Harmon. “Many of the issues identified in that report still appear to be problems within the university.”