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SIGNATURE THOMAS C. SMITH
TITLE CHAIRMAN
FORM NSAR - ITEM 77.B ACCOUNTANT'S REPORT ON INTERNAL CONTROL
Board of Directors
KPM Funds, Inc.
Omaha, Nebraska
In planning and performing our audit of the financial statements of KPM Funds,
Inc., KPM Equity and KPM Fixed Income Portfolios (the KPM Funds, Inc.
Portfolios) for the year ended June 30, 1997, on which we have issued our report
dated July 25, 1997, we considered its internal control, including controls over
safeguarding securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, not to provide assurance on internal control.
The management of KPM Funds, Inc. is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of controls. Generally, controls that are relevant to an audit pertain to
the entity's objective of preparing financial statements for external purposes
that are fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use, or disposition.
Because of inherent limitations in internal control, errors or irregularities
may occur and may not be detected. Also, projection of any evaluation of
internal control to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of any
specific internal control component does not reduce to a relatively low level
the risk that errors or irregularities in amounts that would be material in
relation to the financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving internal control,
including controls over safeguarding securities, that we consider to be material
weaknesses as defined above as of June 30, 1997.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
Omaha, Nebraska
July 25, 1997
FORM N-SAR, ITEM 77K (CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT)
Effective as of June 30, 1997, KPMG Peat Marwick LLP was dismissed as the
independent auditor of the Registrant.
In the past two years the Accountant's Report on the Registrant's financial
statements did not contain an adverse opinion or disclaimer of opinion or was
not qualified or modified as to uncertainty, audit scope, or accounting
principles. The dismissal of KPMG Peat Marwick LLP was approved by the
Registrant's Board of Directors. There were no disagreements between the
Registrant and KPMG Peat Marwick LLP on any matter of accounting principles,
practices, financial statement disclosure, or auditing scope or procedure of any
nature, which disagreements, if not resolved to the satisfaction of KPMG Peat
Marwick LLP would have caused it to make reference to the subject matter of the
disagreements in connection with its report.
Included as an exhibit to this filing is a copy of KPMG Peat Marwick LLP's
letter acknowledging and agreeing with this disclosure.
<PAGE>
Peat Marwick LLP
Two Central Park Plaza Telephone 402-348-1450 Telefax 402-348-0152
Suite 1501
Omaha, NE 68102
233 South 13th Street
Suite 1600 Telephone 402-476-1216 Telefax 402-476-1944
Lincoln, NE 68508-2041
August 14, 1997
Securities and Exchange Commission
Washington. D.C. 20549
Ladies and Gentlemen.:
We were previously principal accountants for KPM Funds, Inc. and under the date
of July 12, 1996, we reported on the financial statements of KPM Funds, Inc.
(comprised of KPM Equity and KPM Fixed Income Portfolios) as of and for the year
ended June 30, 1996 and the period from July 5, 1994 (commencement of
operations) to June 30, 1995. On August 1, 1997, our appointment as principal
accountants was terminated. We have read KPM Funds, Inc.'s statements included
under Item 77K of its Form N-SAR dated August 28, 1997, and we agree with such
statements.
Very truly yours,
/s/KPMG Peat Marwick LLP
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Pursuant to Item 602(c)(2)(i) of Regulations S-K and S-B.
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<NAME> KPM FUNDS, INC.
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<NAME> KPM EQUITY PORTFOLIO
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Pursuant to Item 602(c)(2)(i) of Regulations S-K and S-B.
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<CIK> 0000922379
<NAME> KPM FUNDS, INC.
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<NAME> KPM FIXED INCOME PORTFOLIO
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