COMPLIANCE AND CONTROL AUDIT REPORT

Transcription

1 COMPLIANCE AND CONTROL AUDIT REPORT KANSAS STATE UNIVERSITY Fiscal Year F A Reprt t the Legislative Pst Audit Cmmittee By the Legislative Divisin f Pst Audit State f Kansas June 1994

2 Legislative Pst Audit Cmmittee Legislative Divisin f Pst Audit The Legislative Pst Audit Cmmittee and its audit agency, the Legislative Divisin f Pst Audit, are the audit arm f Kansas gvernment. The prgrams and activities f State gvernment nw cst abut $6 billin a year. As legislatrs and administratrs try increasingly t allcate tax dllars effectively and make gvernment wrk mre efficiently, they need infrmatin t evaluate the wrk f gvemment agencies. The audit wrk perfrmed by Legislative Pst Audit helps prvide that infrmatin. We cnduct ur audit wrk in accrdance with applicable gvernment auditing standards set frth by the U. S. General Accunting Office. These standards pertain t the auditr's prfessinal qualificatins, the quality f the audit wrk, and the characteristics f prfessinal and meaningful reprts. These audit standards have been endrsed by the American Institute f Certified Public Accuntants and adpted by the Legislative Pst Audit Cmmittee. The Legislative Pst Audit Cmmittee is a bipartisan cmmittee cmprising five senatrs and five representatives. Of the Senate members, three are appointed by the President f the Senate and tw are appointed by the Senate Minrity Leader. Of the representatives, three are appinted by the Speaker f the Huse and tw are appinted by the Huse Minrity Leader. As part f its audit respnsibilities, the Divisin is charged with meeting the requirements f the Legislative Pst Audit Act which address audits f financial matters. Thse requirements call fr tw majr types f audit wrk. First, the Act requires an annual audit f the State's financial statements. Thse statements, prepared by the Department f Administratin's Divisin f Accunts and Reprts, are audited by a certified public accunting firm under cntract with the Legislative Divisin f Pst Audit. The firm is selected by the Cntract Audit Cmmittee, which cmprises three members f the Legislative Pst Audit Cmmittee (including the Chairman and Vice-Chairman), the Secretary f Administratin, and the Legislative Pst Auditr. This audit wrk als meets the State's audit respnsibilities under the federal Single Audit Act f Secnd, the Act prvides fr a regular audit presence in every State agency by requiring that audit wrk be cnducted at each agency at least nce every three years. Audit wrk dne in additin t the annual financial statement audit fcuses n cmpliance with legal and prcedural requirements and n the adequacy f the audited agency's internal cntrl prcedures in areas nt cvered by the annual audit. These cmpliance and cntrl audits are cnducted by the Divisin's staff under the directin f the Legislative Pst Audit Cmmittee. LEGISLATIVE POST AUDIT COMMITTEE Senatr Alicia L. Salisbury, Chair Senatr Anthny Hensley Senatr Phil Martin Senatr Lana Oleen Senatr Tdd Tiahrt Representative James E. Lwther, Vice-Chair Representative Duane Gssen Representative Walker Hendrix Representative Sheila Hchhauser Representative Ed McKechnie LEGISLATIVE DIVISION OF POST AUDIT 800 SW Jacksn Suite 1200 Tpeka, Kansas Telephne (913) FAX (913) The Legislative Divisin f Pst Audit supprts full access t the services f State gvernment fr all citizens. Upn request, Legislative Pst Audit can prvide its audit reprts in large print, audi, r ther apprpriate alternative frmat t accmmdate persns with visual impairments. Persns with hearing r speech disabilities may reach us thrugh the Kansas Relay Center at Our ffice hurs are 8:00 a.m. t 5:00 p.m., Mnday thrugh Friday.

3 COMPLIANCE AND CONTROL AUDIT REPORT KANSAS STATE UNIVERSITY Fiscal Year 1993 OBTAINING AUDIT INFORMATION This audit was cnducted by Randy Tngier, Financial-Cmpliance Audit Manager, and Tm Vittitw, Auditr, f the Divisin's staff. If yu need any additinal infrmatin abut the audit's findings, please cntact Mr. Tngier at the Divisin's ffices.

4 TABLE OF CONTENTS SUMMARY OF AUDIT FINDINGS KANSAS STATE UNIVERSITY Backgrund n Kansas State University... 2 Did Kansas State University Adequately Manage Its Revenues and Cmply With Applicable State Requirements?... 3 Did Kansas State University Adequately Manage Its Lcally Administered Funds and Cmply With Applicable State Requirements?... 5 Did Kansas State University Prvide Central Services In Accrdance With Applicable State Requirements?... 7 APPENDIX A: Agency Respnse... 9

5 KANSAS STATE UNIVERSITY Summary f Legislative Pst Audit's Findings Legislative Pst Audit cnducted cmpliance and cntrl audit wrk at Kansas State University in partial fulfillment f the Legislative Pst Audit Act's requirement that audit wrk be cnducted at each State agency at least nce every three years. This cmpliance and cntrl audit addressed the areas f revenues, lcally administered funds, and central services. The perid cvered by this audit was fiscal year Did Kansas State University adequately manage its revenues and cmply with applicable State requirements? The University adequately managed its revenues and cmplied with State requirements. This cnclusin applies nt nly t the cllectin f revenues but als t the depsit f thse revenues in a lcal bank accunt and the subsequent transfer f thse revenues t the State Treasury. Did Kansas State University adequately manage its lcally administered funds and cmply with applicable State requirements? The University's lcally administered funds include imprest funds and the rganizatinal safekeeping accunt, which primarily is used t accunt fr mneys f student rganizatins. The University managed its lcally administered funds adequately and cmplied with applicable State requirements. Did Kansas State University prvide central services in accrdance with applicable State requirements? The University prvided central services nly t authrized users. In additin, during the mst recent five fiscal years, the University's central service clearing fund cllected enugh revenues t cver its csts. We wuld be happy t discuss these findings r any ther items in the reprt with legislative cmmittees, individual legislatrs, r ther State fficials. Barbara J. Hintn Legislative Pst Auditr

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7 KANSAS STATE UNIVERSITY The Legislative Pst Audit Act requires that audit wrk be cnducted at each State agency at least nce every three years. In partial fulfillment f that requirement, the Legislative Divisin f Pst Audit has cnducted cmpliance and cntrl audit wrk at Kansas State University cvering fiscal year Cmpliance and cntrl audits identify nncmpliance with applicable requirements and pr financial management practices. Althugh the resulting audit findings usually d nt result in significant prgram imprvements r cst savings, they ften identify needed imprvements that can help minimize the risk f ptential future lss r misuse f State resurces. T avid duplicatin f audit wrk cnducted as part f the statutrily required audit f the State's financial statements, ur audit wrk generally fcused n areas nt cvered by that audit. These areas included revenues, lcally administered funds, and central services. This audit addresses the fllwing specific questins: 1. Did Kansas State University adequately manage its revenues and cmply with applicable State requirements? 2. Did Kansas State University adequately manage its lcally administered funds and cmply with applicable State requirements? 3. Did Kansas State University prvide central services in accrdance with applicable State requirements? T answer these questins, we identified applicable State requirements by reviewing relevant statutes, administrative regulatins, and sectins f the Divisin f Accunts and Reprts' Plicy and Prcedure ManuaL We als interviewed agency persnnel, reviewed written prcedures, and examined related dcuments t identify the agency's prcedures. We then cmpared thse prcedures with the applicable requirements. In additin, we assessed the ptential fr lss r misuse, and the level f cntrl prvided by the University's prcedures in preventing and detecting lss r misuse. Finally, we reviewed accunting recrds and tested a sample f transactins. In cnducting this audit wrk, we fllwed all applicable generally accepted gvernment auditing standards set frth by the U. S. General Accunting Office. We fund that Kansas State University adequately managed its revenues and lcally administered funds, and cmplied with applicable State requirements. Our review f central services fund that the University prvided thse services nly t authrized users, and cllected fees sufficient t cver csts. These findings are described fllwing a backgrund sectin n Kansas State University. 1.

8 Backgrund n Kansas State University Kansas State University was riginally established in 1863 as a land grant cllege. The University prvides three majr prgrams--educatin and research. The educatin prgram prvides undergraduate instructin thrugh seven undergraduate clleges, including agriculture, arts and sciences, engineering, business administratin, architecture and design, human eclgy, and educatin. The graduate schl ffers masters' degrees in areas such as accunting, agriculture, architecture, business administratin, landscape architecture, music, reginal and cmmunity planning, and fine arts. The graduate schl als ffers a dctrate in areas such as bichemistry, chemistry, human eclgy, histry, hrticulture, and mathematics. The research prgram is cnducted thrugh the Engineering Experiment Statin, Bureau f General Research, and Center f Excellence. The public service prgram includes the Divisin f Cntinuing Educatin, Regents Educatinal Cmmunicatins Center, Internatinal Trade Institute, and Institute fr Rural Develpment. Kansas State University als perates the Extensin Systems and Agriculture Research Prgrams, the Veterinary Medical Center, and the Cllege f Technlgy in Salina Accrding t the Gvernr's Budget, during fiscal year 1993 the University spent $291.1 millin, including $179.3 millin fr salaries and wages. The Gvernr's Budget reprted that the University had abut 4,600 full-time emplyee psitins in fiscal year

9 Did Kansas State University Adequately Manage Its Revenues and Cmply With Applicable State Requirements? Fr fiscal year 1993, we cncluded that Kansas State University adequately managed its revenues and cmplied with applicable State requirements. The basis fr ur cnclusins is discussed in the fllwing sectins. University Prcedures Shuld Ensure Cllectin and Depsit f All the Mney Due And Cmpliance With Applicable Requirements A State agency's primary bjective in managing its revenues is t ensure that it cllects and depsits all the mney it shuld. T ensure that the prper amunts f mney are cllected and depsited, Kansas State University shuld fllw a number f basic prcedures. These prcedures wuld nt nly ensure that the University cllects and depsits all the mney it shuld, but wuld als help prevent lss r misuse. The fllwing list includes the basic prcedures necessary: The University shuld establish a system f recrdkeeping and reprting, including recnciliatins with ther State recrds, that will ensure that amunts due are cllected and depsited. The University shuld ensure that receipts are cllected and depsited prmptly. The University shuld put the abve plicies and prcedures in writing t increase the likelihd that emplyees will fllw them. A State agency als must cmply with State requirements applicable t revenues. The fllwing list includes the basic State requirements applicable t the University'S revenues. The University shuld cllect fees as authrized by the Bard f Regents. The University's lcal bank fr handling revenues shuld be designated by the Pled Mney Investment Bard. The University shuld use these lcal bank: accunts nly fr depsit and transfer f receipts t the State Treasury and refunds. The University shuld depsit and transfer receipts n a timely basis. 3.

10 Our Review and Evaluatin f the University's Revenue Prcedures Fund N Prblems We reviewed and evaluated the University's prcedures fr managing its revenues. In particular, we fcused n the general Business Office prcedures that apply t cllectin and depsit f all University revenues, and n the specific prcedures that apply t cllectin f the tw majr types f revenues we actually tested--enrllment fees and drmitry fees. Based n ur review, we cncluded that the University's revenue prcedures are adequate t ensure that prper revenues are cllected and depsited in the prper funds n a timely basis. Our Tests f the University's Prcedures, Recrds, and Reprts Fund N Prblems We tested samples f revenue transactins, including cllectins f amunts due, depsits in the University's lcal bank accunt, and depsits in the State Treasury. In testing these transactins, we determined that the University cllected the crrect amunts, that these receipts were prperly recrded, that they were depsited n a timely basis, and that transfers t the State Treasury were made in the prper amunt and n a timely basis. Our tests f specific revenues fcused n enrllment fees and drmitry fees, which accunt fr abut 69 percent f the University's revenues ther than transfers amng University departments and federal grant mneys. (Federal grant mneys are cvered by the annual Statewide audit cnducted by a certified public accunting finn under cntract with Legislative Pst Audit.) 4.

11 Did Kansas State University Adequately Manage Its Lcally Administered Funds and Cmply With Applicable State Requirements? Fr fiscal year 1993, we cncluded that Kansas State University adequately managed its lcally administered funds and cmplied with applicable State requirements. The basis fr ur cnclusins is discussed in the fllwing sectins. University Prcedures Shuld Cntrl The Risk f Lss r Misuse and Ensure Cmpliance With Applicable Requirements Lcally administered funds are mneys the University primarily keeps in lcal bank accunts rather than in the State Treasury. These mneys are spent by writing checks n the lcal bank accunt rather than by issuing State warrants. The University's lcally administered funds cmprise its imprest fund, including related petty cash and change funds, and its rganizatinal safekeeping accunt. The imprest fund is used t make small payments that need t be paid faster than they culd be paid by using the nrmal State payment prcedures. The University peridically reimburses this fund frm its ther funds. In general, the rganizatinal safekeeping accunt is used fr mneys that belng t student rganizatins. The University administers this accunt n behalf f thse rganizatins. A State agency's primary bjectives in managing its lcally administered funds are t make sure that these mneys are used nly fr authrized purpses and t prtect these mneys frm lss r misuse. T accmplish these bjectives, the University shuld fllw a number f basic prcedures: The University shuld establish a system f recrdkeeping, recnciling, and reprting, including recnciliatins with ther State recrds, that will ensure that lcally administered fund are prperly accunted fr. The University shuld prvide adequate security fr any mneys n hand. The University shuld prvide fr a system f apprvals and authrizatins t ensure that mneys are used nly fr prper purpses. The University shuld ensure that advances frm the imprest fund are reimbursed n a timely basis. The University shuld put the abve plicies and prcedures in writing t increase the likelihd that emplyees will fllw them. 5.

12 A State agency als must cmply with State requirements applicable t lcally administered funds. The fllwing list includes the basic State requirements applicable t the University's lcally administered funds. The individual funds shuld be prperly established. The lcal banks fr handling lcally administered funds shuld be designated by the Pled Mney Investment Bard. The University shuld use the funds nly fr the purpses authrized. The University shuld adhere t any limitatins placed n the nature and amunt f payments frm these funds. The University shuld adhere t the recrdkeeping and reprting requirements f the Divisin f Accunts and Reprts. Our Review and Evaluatin f the University's Basic Prcedures fr Lcally Administered Funds Disclsed N Prblems We reviewed and evaluated the University's basic prcedures fr managing its lcally administered funds. In particular, we fcused n the general Business Office prcedures that apply t these funds, as well as the specific prcedures that apply t the individual funds we actually tested-the imprest fund and the rganizatinal safekeeping accunt. Based n ur review, we cncluded Lhat the University's established prcedures generally are adequate t ensure prper accuntability f the funds and t minimize the risk f lss r misuse Our Tests f the University's Prcedures, Recrds, and Reprts Fund N Prblems We tested samples f imprest fund transactins, including payments and reimbursements, and reviewed recnciliatins f the lcal bank accunts and reprts submitted t the Divisin f Accunts and Reprts. In ding this testwrk, we determined that payments made were prper, advances were reimbursed, and recnciliatins and reprts were prepared as required. 6.

13 Did Kansas State University Prvide Central Services in Accrdance With Applicable State Requirements? During fiscal year 1993, Kansas State University prvided central services nly t authrized users. In additin, fr the perid cvering fiscal years 1989 thrugh 1993, the central service clearing fund cllected enugh revenues t cver its csts. These findings are described in mre detail belw. The State Requires That University Central Services Be Prvided Only t Authrized Users, and That the Services Cllect Enugh Revenue t Cver Their Csts State law (K.S.A ) specifies that the University's internal services, such as telecmmunicatins and printing, shuld be prvided nly t its wn departments, ther University-related rganizatins such as the Student Unin Crpratin, and specific rganizatins and individuals apprved by the Bard f Regents. In additin, that law calls fr the University's services taken tgether t be self-supprting, which means that they cllect enugh revenues t cver their csts. The University prvided internal services nly t authrized users. We fcused ur review n tw prviders f internal services-telecmmunicatins and printing. Fr each f thse services, we reviewed all users fr ne test mnth. In additin, we reviewed the Telecmmunicatins Department's current custmer list. We identified n unauthrized users. During fiscal years 1989 thrugh 1993, the University's central services cllected sufficient revenues t cver csts. Using the University's annual financial reprts, we cmpared ttal revenues and csts fr thse central services still in peratin during fiscal year We identified ttal revenues f $61.4 millin and ttal csts f $60.3 millin. 7.

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15 Appendix A Agency Respnse On June 1, we prvided cpies f the draft audit reprt t Kansas State University. Its respnse is included as this appendix. 9.

16 I':!II KANSAS STATE UNIVERSITY June 7 / 1994 Office f the President Andersn Hall Manhattan, Kansas Ms. Barbara Hintn Legislative Pst Auditr 800 S.W. Jacksn l Suite 1200 Tpeka l Kansas R _E e El V ED,-'UN LEGISLATIVE POST AUDIT Dear Ms. Hintn: Thank yu fr sending the draft cpy f yur recently cmpleted cmpliance and cntrl audit reprt n Kansas State University. I am very pleased that the reprt cntains n audit findings. It is reassuring t knw that ur University plicies and prcedures are prducing apprpriate results. We appreciate the thrughness and prfessinalism f Tm Vittitw as he cnducted the audit n ur campus. I knw that he spent many days reviewing the detailed accunting recrds and reprts fr Fiscal Year Please let me knw if members f the Legislative Pst Audit Cmmittee have any questins abut ur audit when they meet n June 13. cc: Vice President Rawsn 10.

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