Audit Uncovers “K-Cash” Theft, President Orders Comprehensive Audit of Auxiliary Enterprises

 

The audit findings, which cited a lack of adequate internal controls of KSU’s K-Cash processes prior to calendar year 2011, have led Kennesaw State University President Daniel S. Papp to order a comprehensive audit of all university auxiliary enterprises, which is now underway.  In addition, KSU Police are conducting an investigation, and appropriate disciplinary actions have been taken to address the lack of appropriate fiscal oversight in the impacted operating unit.

 

The University’s Auxiliary Services and Programs (ASaP) unit is comprised of vending services, copy and print services, culinary and hospitality services, the Department of Parking & Transportation, and the KSU Bookstore.  Prior to December 2010, ASaP was a department within the university’s Financial Services Office.  KSU Vice President For Operations Dr. Randy Hinds began supervising ASaP in December 2010, and he asked the university’s auditor to audit the K-Cash operation due to concerns regarding loose protocols.  

The University’s K-Cash program allows KSU faculty, staff and students to access nine terminal locations throughout the campus where they can deposit money into machines to create fund balances on their KSU ID cards.  Eight machines accept cash only, and one machine accepts both cash and credit card deposits.  The funds can be applied to two different accounts:  A General Declining Balance Account, which can be used by faculty, staff and students to make meal and service purchases on campus; and a Food Restricted Account, which can be used only by students to purchase food at campus venues. No faculty, staff or students who deposited funds into either account lost any funds or balance credits.  The missing money involved the collection of cash after the monies were deposited into the K-Cash terminals and were properly credited to the respective purchasers’ accounts.

 

“I was extremely disturbed by the initial concerns which led to this audit,” Hinds stated, “and I commend the auditors for the thorough review that they conducted of the K-Cash operations.  The improved processes and tightened controls that have been and will be implemented are giant steps in the right direction. Meanwhile, I look forward to the results of the comprehensive audit to determine if additional improvements are needed.  We must and will ensure that all auxiliary enterprises are functioning appropriately with effective internal controls.”

 

The K-Cash audit covered the period from February through October 2010. The audit addressed the adequacy, integrity, and effectiveness of K-Cash internal controls; and the level of compliance with Kennesaw State University and Board of Regents’ policies, procedures, and regulations.  In particular, the review focused on: identifying material control weaknesses that were inherent in the K-Cash collection and deposit processes prior to calendar year 2011; identifying control weaknesses within the current K-Cash collection and deposit processes; and making recommendations for improvement.

 

The audit report put forward eight recommendations to address its findings and to tighten internal controls, all of which the management team has implemented or will implement, with a specific timeline cited for the implementation of each recommendation. A copy of the full audit report, including the findings and management responses, can be accessed by clickinghere.

 

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