State Auditor General Jack Wagner said the school's trustees must show leadership, and, "If Penn State's leaders -- in this case, the board of trustees -- refuse to show that leadership in this time if need, then the General Assembly and governor must fill the void," the Centre (County) Daily Times reported.
Penn State's president has too much power as a member of the board of trustees, the board's secretary and a member of several board committees, and the governor's role of a voting trustee on the board creates several conflicts of interest, Wagner said.
The state auditor said the state Legislature should enact reforms to Penn State's governing structure, the newspaper said.
Wagner recommended the board to be reduced from 32 members to 21, saying Penn State has the highest number of people on its governing board than any of the largest 20 public universities, the Daily Times reported.
The state auditor said the board has done little to advance transparency in the year since the Sandusky scandal broke.
Jerry Sandusky, 68, a former assistant football coach, was sentenced in October to not less than 30 years, and not more than 60 years in prison on 45 counts of sexually assaulting boys.
The school's legendary football coach, the late Joe Paterno, lost his job in the scandal.