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SIGNATURE THOMAS C. SMITH
TITLE CHAIRMAN
Deloitte & Touche LLP
1040 NBC Center
Lincoln, NE 68508-1469
Telephone: 402-437-3110
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, 1998, on which we have issued our report
dated July 24, 1998, we considered its internal control, including control
activities for 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 fraud 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 fraud 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 and its
operation, including controls for safeguarding securities, that we consider to
be material weaknesses as defined above as of June 30, 1998.
This report is intended solely for the information and use of management, the
Board of Directors, and the Securities and Exchange Commission.
Omaha, Nebraska
July 24, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Pursuant to Item 602(c)(2)(i) of Regulations S-K and S-B.
</LEGEND>
<CIK> 0000922379
<NAME> KPM FUNDS, INC.
<SERIES>
<NUMBER> 1
<NAME> KPM EQUITY PORTFOLIO
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Pursuant to Item 602(c)(2)(i) of Regulations S-K and S-B.
</LEGEND>
<CIK> 0000922379
<NAME> KPM FUNDS, INC.
<SERIES>
<NUMBER> 2
<NAME> KPM FIXED INCOME PORTFOLIO
<S> <C>
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</TABLE>
