The audit also raises questions about the work Brown’s brother did for the campaign. It reveals that Brown failed to report nearly $170,000 in expenditures and $100,000 in contributions.
Brown says he eventually accounted for all of the funds.
"We’ve always had every single check, every single receipt, every single documentation. It was just an error of getting it in the system," he says.
The audit also found that the campaign made $380,000 in payments to a company called Banner Consulting Services, which was run by Brown’s former campaign treasurer.
The audit says 70 percent of this money -- $240,000 -- was then sent, often on the same day, to a firm owned by Kwame Brown’s brother, Che.
Che’s company, Partners in Learning, is unable to provide adequate documentation for how approximately $175,000 of this money was spent, according to the report.
Chairman Brown says all of the work completed by outside contractors, including his brother, went toward the campaign.
The audit concludes the campaign’s "reports, statements, and responses" are not in "substantial compliance" with campaign finance and conflict of interest laws, and refers the matter to the office's general counsel.
Virginia's attorney general Ken Cuccinelli will face former Democratic National Committee chairman Terry McAuliffe in November to become Virginia's 72nd governor.