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generally related to improving data processing security and internal financial controls.  Smithsonian management has concurred with and implemented virtually all of these recommendations.

Leading a discussion on construction priorities, Mr. Peyton noted that the Smithsonian has traditionally relied on Federal appropriations for major construction projects, with the recent exceptions of two instances in which trust funds augmented (the Hirshhorn Museum and Sculpture Garden and the Museum Support Center) and one (the Quadrangle) in which they matched Federal appropriations.  He then discussed the individual projects which are in various stages of approval.  The Committee discussed the desirability of continuing to plan on the Cooper-Hewitt improvements as coming wholly from raised funds rather than from a combination of appropriated, trust, and raised funds.  It was felt that any major change in financing arrangements would require a difficult reconsideration of project priorities, particularly if their life-cycle costs are to be thoughtfully identified.  It was also seen as a difficulty that any use of trust funds in Cooper-Hewitt construction would involve a troublesome question of precedent with far larger implications than the relatively small scale of the Cooper-Hewitt project.

Mr. Peratino highlighted the Office of Audits' most significant recommendations and management's follow-up in 1983.  It was noted that cases of alleged fraud or abuse have been investigated effectively and corrective action has been taken where warranted.

Mr. Burke reviewed actions taken to improve security, including increased funding, improved security devices, initial installation of a proprietary alarm system, increased numbers of guards, a personnel security system, and various health and safety programs (asbestos, nitrate film, diving safety, and fire prevention).  He noted that still more needs to be done, especially in bringing the guard personnel up to full strength and in bringing buildings up to higher standards of fire prevention.

[[underlined]] The Annual Report [[/underlined]]

The Secretary presented to the Board [[underlined]] Smithsonian Year [[/underlined]] 1983, the Institution's annual report for fiscal year 1983.  It was

VOTED that the Board of Regents accepts the Annual Report of the Secretary for Fiscal Year 1983.

[[underlined]] Financial Report [[/underlined]] 

The Institution is working to correct an unfunded Federal requirement of over $2 million, primarily attributable to the need to absorb half of the legislative pay raise for Civil Service employees and further exacerbated by the recent additional one-half percent pay raise for the same employees.  It is expected that cost controls being instituted on other object expenditures will permit operations to continue smoothly for the balance of the year without disruption to public programs and activities.  Revised projections for Unrestricted General Trust Funds reflect a $3.8 million increase to income, largely a result of Magazine, Mail Order, and 
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