Complete 2012 forensic audit documents - Kansas Bioscience ...

With a higher concentration in the early years, invoice authorization for payment was missing.
Our review looked for the signature or initials of the CFO, CEO, COB, etc., to authorize the
payment of the expenditure within the terms of the contract. There were 127 instances where
invoices did not appear to be approved, with dates before the first issue of the Accounts Payable
Policy on March 1, 2007. Between March 1, 2007 and the second issue of the Accounts Payable
Policy, dated June 30, 2008, there were 25 instances without proper approval. Subsequent to the
second issue of the Accounts Payable Policy, we found 91 instances without proper approval.
These findings are detailed at Exhibit 53 - Contract Exhibit H- Payment Approval Findings.
KBA’s Response:
While BKD notes the level of documentation, organization and completeness of KBA files has
improved over the years, KBA management will consider revisions to further improve
documentation and practices in the areas of RFPs and sole source contracts, vendor/consulting
contracts, vendor expense reimbursement, use of electronic signatures and invoice pre-approval.
PAYMENTS BY OUTSIDE PARTIES
BKD’s scope included the review of payments by outside entities from inception to the present,
including but not limited to compensation, travel and entertainment received by current and past
KBA management, employees and BOD members with voting rights.
Discussions with KBA management and accounting staff and the review of the QuickBooks
accounting software indicated that KBA has received no payments by outside parties that were
passed on to current or past KBA management, employees and BOD members with voting
rights. Management indicated that if a KBA employee or BOD member would be asked to speak
at a conference or event, the host usually pays those expenses directly.
POTENTIAL CONFLICTS OF INTEREST
The issue of potential conflicts of interest that exist with regard to KBA’s employees and BOD
members, client companies, vendors and collaborating organizations was reviewed. In doing so,
BKD created a large database of information to identify relationships. The relationships are
multifarious.
To determine if a relationship represented a potential conflict of interest, we considered various
regulations and policies related to potential conflicts of interest that apply to KBA.
K.S.A. 74-99b08(a) requires that any member of the BOD and any employee, other agent or
advisor of KBA, who has a direct or indirect interest in any contract or transaction with the
authority, shall disclose this interest to the authority in writing. This interest shall be set forth in
the minutes, and no BOD member, employee, other agent or advisor having such interest shall
participate on behalf of the authority in the authorization of any such contract or transaction;
except that, the provisions of this section shall not be construed to prohibit any employee of
bioscience research institutions, or any public institute or private enterprise engaged in the
business of bioscience who is a member of the BOD, who has no personal interest, from voting
on the authorization of such contract or transaction between KBA and such employee’s
employer.
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