Specifications include, but are not limited to: On December 7, 2023, the Kentucky Community and Technical College System (KCTCS) received an audit report from the Kentucky Auditor of Public Accounts covering distinct areas of concern raised by the KCTCS Board of Regents. The report identified 5 “Findings” with two “Observations,” each with subsequent “Recommendations.” Finding 1 of the report stated, “KCTCS System Office’s Unrestricted Carryforward Balance Is Not Accurately or Transparently Reported to the Board.” In response to that finding, it was recommended by the Auditor of Public Accounts: KCTCS engage a forensic accounting firm to conduct further analysis of its historical use of Account 10001 to determine the true nature of the account and whether this account should be reconciled annually. Due to the nature and complexity of this proposed analysis, and it being a specialty within the field of accountancy, APA lacked the time and resources to perform this analysis within the scope of this engagement. From this recommendation, KCTCS is seeking the assistance of a qualified forensic auditor to: • Statistically sample transactions in the 10001 account to determine whether the transactions are recorded in accordance with Generally Accepted Accounting Principles. • Provide guidance on proper financial reporting for transactions included in the statistical sample. • Investigate the impact of this account with all funds groups, including fund 99 (referenced in the Auditor of Public Accounts report). • Investigate the effect on the overall system audited financial statements and the reports of the sixteen accredited colleges within the System. • Determine whether fraud, theft, waste, abuse or collusion occurred in any transactions or other aspects of the financial dealings with the account. In addition, beyond the scope of the recommendation from the Kentucky Auditor of Public Accounts, KCTCS leadership is seeking the assistance of a qualified forensic auditor to: Ensure that the financial reports provided to external entities for each college are sound and accurate, specifically those given to SACSCOC when the accrediting body reviews the fiscal viability of the institutions. • Investigate practices relevant to procurement cards and other procurement processes for any uses not in compliance with policy or procedure and determine any internal changes that need implementation to avoid legal or fiscal repercussions. • Review and advise on personnel and unit investigations to determine whether KCTCS has instituted the recommendations provided from the reports of investigation. • Determine whether any fraud, waste, or abuse has occurred in Executive Compensation practices throughout the System. • Review KCTCS uses of System and affiliated foundations to determine whether the foundations are sufficiently independent and whether any use by KCTCS of the foundations has amounted to improper circumvention of legal requirements for the fundraising arm of KCTCS. • Review of all marketing and public relations budgets to determine whether policies and procedures have been violated and whether fraud, waste, and/or abuse occurred historically. • Review historic and current use of Voluntary Separation Agreements by the System and determine any internal changes that need implementation to avoid legal or fiscal repercussions. • Examine the relationship with Higher Education Innovation, LLC and top executives, as well as the KCTCS relationship with The Superlative Group. • Audit and review of other areas as identified by administration during the forensic audit planning phase. • Review the KCTCS Office of Financial Aid and historic FERPA compliance.
