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-ii- Mr. Hughes reviewed the circumstances which led to the current, still incomplete audit of the exchanges and related practices in the gem collection. An independent appraiser is assisting in evaluating the various transactions. It was felt that the policies of the Smithsonian in gem transactions should have significantly higher standards than those common among dealers and private collectors. Mr. Jameson presented a report on the status of equal opportunity and affirmative action, concentrating on professional and administrative employment as areas of significant underrepresentation and the greatest difficulty with affirmative action, especially in higher grades. Traditional low turnover and government-wide hiring freezes are additional obstacles. Some improvement has recently been noted in hiring and promoting minorities and women in relation to prior years' statistics, but the Institution still lags behind national statistics. Steps were outlined for further improvement, including strengthened recruitment and development of academic opportunities and network contacts. Urging that careful analysis be give to recent improvements to ensure poorer results of previous years do not recur, Judge Higginbotham drew attention to specific occupation categories where representation is poor and candidates may be available in the work force. The Committee discussed reasons for continuing difficulties and acknowledged that the plans as presented should bring further improvements. Mr. Hughes introduced a report on the organization of book publishing at the Smithsonian. It was noted that the Smithsonian has taken steps to ensure that its popular book publishing would involve minimal direct competition with private industry. Through market testing the Institution has developed and marketed books which have served as stimuli, rather than competitors, in the book industry. Recent success and reorganization of the publishing activities has enabled the Smithsonian to be more creative in developing and marketing new titles, under the scrutiny of the Publishing Council. It was noted that relations with the publishing industry have been excellent and that the Smithsonian publications, discounted to Associates, now present a membership benefit which has contributed to the success of the Associate program. [[underlined]]Financial Report[[/underlined]] [[underlined]]FY 1982[[/underlined]]: The Institution has received a Federal supplemental appropriation of $2.7 million, some $400,000 above the Institution's request of $2.3 million. Unrestricted General Trust Funds are projected to provide a small surplus of $47,000, compared to an original breakeven budget. Substantial gains by the Magazine, National Associates and SI Press have been largely offset by higher administrative and program expenses and a substantial deficit in the Division of Performing Arts. The Audit and Review Committee will be examining the origin of the deficit and corrective measures at their October meeting. [[underlined]]FY 1983[[/underlined]]: House and Senate mark-ups of the Institution's FY 1983 appropriation request are not anticipated until late in September; as a result, the Institution will again be required to operate under a continuing resolution