KRS 164A.610: Organization and operation of affiliated corporations.

(1) An institution may organize and operate one (1) or more affiliated corporations to

assist it in carrying out its programs, missions or other functions. A qualified firm

of certified public accountants experienced in the auditing of colleges and

universities and their affiliated corporations shall be engaged to conduct an annual

examination of the corporation's financial statements in accord with generally

accepted auditing standards for the purpose of rendering an independent opinion

thereon and preparing a report of findings and recommendations concerning

appropriate accounting controls and compliance with applicable statutes. The

affiliated corporation shall adhere to the principles of accounting and purchasing

used by the institution with which it is affiliated.

(2) The affiliated corporation shall provide the institution with an accounting at least

quarterly, of all income and expenditures of said corporation in connection with

contracts or grants with entities external to the institution and the corpo ration, for

the conduct of research or other projects carried out, in whole or in part, through the

use of institutional facilities or personnel.

(3) The affiliated corporation shall pay to, or for the benefit of, the institution any and

all funds receive d by it from any person, corporation, association or governmental

agency external to the institution and the affiliated corporation as reimbursement for

indirect expenses incurred by the institution in carrying out research or furnishing

other goods or ser vices, deducting from such payments only the expenses

attributable to the procurement and performance of research grants and contracts

and other contracts for the provision of such goods and services and such sums as

may be essential to meet contractual ob ligations incurred at the request of the

institution's governing board.