MINUTES

Kansas Bioscience Authority
Audit Committee
of the
Board of Directors

Monday, May 10, 2010
9:00 a.m. – 10:00 a.m. CT
The Courtyard by Marriott
Shawnee, Kansas

Call to Order: A quorum being present, the meeting of the Audit Committee of the Kansas Bioscience Authority was called to order at 10:19 a.m. on May 10, 2010, by Chairman Jerry Boettcher. Additional members of the Committee in attendance were Reggie Robinson, in person, and John Carlin by phone. KBA staff members in attendance were Tom Thornton, Janice Katterhenry and Marsh LoScalzo. Catherine P. Logan, Lathrop & Gage, was present representing legal counsel. Shelly Hammond, CPA with Allen, Gibbs & Houlik, L.C., CPAs, was also present.

Approval of Minutes: Mr. Boettcher introduced the agenda item of approval of minutes of the January 10, 2010 Audit Committee meeting. Mr. Boettcher noted that the minutes should be corrected to reflect that he was in attendance. Mr. Boettcher asked the committee if there were any other corrections or additions to the minutes. There were none. With the correction, Mr. Boettcher declared the minutes approved as read.

Allen, Gibbs & Houlik Firm Engagement Letter: Ms. Hammond was introduced to answer questions about the proposed audit engagement letter for FY 2010, contained at Tab 3 of the Committee booklet. She discussed the firm’s policy regarding rotation, explaining that because the firm does not audit for SEC registered companies, it does not have a rotation policy per se, although for clients who request it does rotate audit partners. The FY 2010 audit will be the fifth KBA audit by Allen, Gibbs & Houlik. Mr. Boettcher noted that KBA has not adopted a formal rotation policy but may do so in the future. He has observed two practices followed by non-profits, one is rotation of the auditing partner, and the other is rotation of the review partner.

Ms. Hammond noted that within the firm’s quality control review processes there are a number of reviews, an on-site review with the supervisor and people who are actually out in the field working with KBA staff, and a secondary independent review by a second partner within the firm who comes in not being familiar with the job at all and looks at everything kind of cold. There is no current formal rotation policy for KBA but the firm can accommodate KBA with respect to rotation requirements.

Motion. Mr. Robinson moved to approve the engagement letter and recommend approval of the engagement letter by the full Board as part of the Audit Committee report. The motion was seconded by Mr. Carlin and unanimously approved.

Motion to Recess into Executive Session. Mr. Robinson moved that the Audit Committee of the Kansas Bioscience Authority recess into executive session pursuant to K.S.A. 75-4319(b)(4) and K.S.A. 74-99b07 to discuss confidential data related to financial affairs or trade secrets of corporations, partnerships, trusts, and individual proprietorships and to discuss operational strategies of the Authority, the disclosure of which, in the opinion of the Audit Committee, would be harmful to the competitive position of the Authority if disclosed. The executive session will commence at 9:30a.m and continue for 15 minutes. The Audit Committee will reconvene in open session at 9:45 a.m. in this conference room. Included in the executive session will be members of the committee, Ms. Hammond, Tom Thornton, Janice Katterhenry and Katie Logan.

Return to Open Session: The Audit Committee reconvened in open session at 9:45 a.m.

Motion to Recess into Executive Session. Mr. Robinson moved that the Audit Committee reconvene the recess into executive session under the same authority as the previous executive session to continue its discussion of a proposal or proposals for funding and to discuss confidential data related to financial affairs or trade secrets of corporations, partnerships, trusts, and individual proprietorships and to discuss operational strategies of the Authority, the disclosure of which, in the opinion of the Audit Committee, would be harmful to the competitive position of the Authority if disclosed. This continued executive session will begin at 9:45 a.m. and continue until 9:55 a.m. Included in the executive session will be members of the committee, Ms. Hammond, Tom Thornton, Janice Katterhenry and Katie Logan. The motion was seconded by Mr. Boettcher and unanimously approved.

Return to Open Session: The Audit Committee reconvened in open session at 9:55 a.m.

Adjournment: There being no further business to come before the meeting, the meeting was adjourned at 9:55 a.m.