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Audit of University Affiliated Organizations

Chapter 3270
Revised May 26, 2020

Table of Contents

.010 Introduction
.020 Requirements
.030 Responsibilities
.040 Procedures
.050 Questions

.010  Introduction

The records of organizations whose operations are substantially controlled by the Kansas Board of Regents or any state educational institution shall be public records and an annual audit is required in accordance with K.S.A. 76-721. In addition, the Kansas Board of Regents requires an additional review of university controlled and non-controlled affiliated corporations.

.020  Requirements

If a contract is entered into with a corporation whose operations are substantially controlled by the Board or any state educational institution, such contract shall provide that the books and records of such corporation shall be public record. In accordance with K.S.A. 76-721, an annual audit by an independent certified public accountant is required of the books and records of the corporation.

The Kansas Board of Regents requires an additional review by the University Internal Audit Department to review university controlled affiliated corporations, including a review of the IRS form 990 for each such corporation, with a focus on potential conflicts of interest and transactions between the university and university controlled affiliated corporations. The scope of the independent certified public accountant of non-controlled affiliated corporations is to include identification of actual or potential conflicts of interest involving unrestricted, non-public funds under the authority or direction of the university CEO or the CEO's direct subordinates. The state university CEO shall request that such review include an examination of fund transfers and other transactions between and among the university, its affiliated corporations, and external entities reported on statements of substantial interest forms, and that the university non-controlled affiliated corporation share a report of each such review with the President and CEO of the Board.

.030  Responsibilities

The affiliated controlled and non-controlled corporation is responsible for employing an independent certified public accountant to conduct an annual audit of the books and records. Six copies of each annual audit is to be submitted to the Kansas State University Internal Audit Office 214 Anderson Hall, Manhattan, KS 66506-0118. The Internal Audit Office will distribute copies of the audit to the Kansas Board of Regents, Office of the Chief Financial Officer and the Division of Financial Services. A copy of each university controlled corporation audit will also be sent to the Legislative Division of Post Audit.

.040  Procedures

The university affiliated controlled or non-controlled corporation is to negotiate the annual audit contract to employ the independent certified public accountant. The certified public auditor is to be changed at least every three years. An agreement with a different partner of the previous audit firm constitutes a change of the auditors and is acceptable on the condition that the audit is conducted solely by a totally new group of professionals. This change in auditors is a good audit practice and will provide a different audit approach or at least a different group of auditors every three years.

.050  Questions

Questions are to be directed to the Internal Audit Office, telephone number (785)532-7308.