KCTCS conducts both an annual compliance and financial audit. The audit is performed by an independent external audit firm. The audit is conducted in accordance with Office of Management and Budget’s (OMB’s) Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations.
Federal Student Aid programs are required to have completed an independent audit to ensure:
- Transactions are properly recorded and accounted for to:
- Permit the preparation of reliable financial statements and federal reports;
- Maintain accountability over assets: and
- Demonstrate compliance with laws, regulations and other compliance requirements;
- Transactions are executed in compliance with:
- Laws, regulations and the provisions of contracts or grant agreements that could have a direct and material effect on a federal program; and
- Any other laws and regulations that are identified in the compliance supplement;
- Funds, property, and other assets are safeguarded against loss from unauthorized use or disposition.
KCTCS audit practices and standards provide for:
- Use of an external auditor that is independent from financial aid operations and management, to provide a review of operations for conformity with federal financial aid regulations and policies. The external auditor audits KCTCS’ annual financial report and presents it to the KCTCS BOR. KCTCS selects the independent external auditors thorough a competitive procurement process under Kentucky law, and the KCTCS BOR direction. For assurance of independence, KCTCS audit engagements do not extend beyond five years with the same firm.
- Recognition of KCTCS liability owed as a result of third party violation incurred in servicing Title IV programs. Current third party vendors include Barnes and Noble, HigherOne, and Presidium Learning.
- Engagement of both system office and college financial aid and business services staff regarding auditing of processes and awards of student financial aid.
- Management of the audit process though the KCTCS Assistant Vice President for Business Services.
- The KCTCS Assistance Vice President for Financial Aid will be the initial contact with the auditor
- Title IV records such as verification worksheet, tax returns, Return of Title IV calculation, enrollment information, and disbursements are provided to the auditor upon request. Some item must be requested from the local KCTCS college financial aid office.
- The KCTCS System Office Financial Aid office receives a copy of the audit findings and forwards any request onto the local college(s).
- The KCTCS System Office Financial Aid is responsible for addressing and reconciling any audit findings, as well as the time frame for doing so in conjunction with the local college(s).
- The KCTCS System Office Financial Aid is responsible for ensuring that the repayment of any improperly spent Title IV funds is made within the specified time frame in conjunction with the local college(s).
- The audit randomly selects the sample population and provided the KCTCS System Office a list to provide the requested records.
- The KCTCS System Office Financial Aid is responsible for coordinating with the auditor and providing the requested records from the local college(s).
- The KCTCS System Office Financial Aid is responsible is responsible in conjunction with the local college for documenting each file that is reviewed by an auditor and how this information is documented in the file.
- The KCTCS system financial aid office is notified of any audit findings as part of a weekly progress meeting with the auditors.
Compliance audits occur on a fiscal-year basis and cover all Title IV transactions that have occurred since the KCTCS’ previous compliance audit. The college’s audited financial statements are prepared using accrual basis accounting in accordance with Generally Accepted Accounting Principles (GAAP) and cover the most recently completed fiscal year.
The KCTCS Office of Treasury Services submits the compliance audit and audited financial statement to DOE via the EZ-Audit Website within six months of the end of the school’s fiscal year.