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[[underlined]] Report of the Audit and Review Committee [[/underlined]]

The Audit and Review Committee met on March 6. Mr. Mann discussed Coopers and Lybrand's audit of the Smithsonian's fiscal year 1985 appropriated and trust funds, pointing out that Coopers and Lybrand has given an unqualified clean opinion on the financial statements. Mr. Anderson briefed the Committee on recent progress toward identifying a comprehensive, efficient, and economical alternative to the current personnel/payroll system and expressed his expectation that the preferred solution will be chosen in about 2 months.

Mr. Peratino introduced the report from the Office of Audits and Investigations which presents a summary of the internal auditors' most significant recommendations in fiscal year 1985.

Mr. Jameson outlined the recommendations contained in an October 1985 report of the Office of Audits and Investigations regarding the administration of the Restoration and Renovation of Buildings program and corrective actions being taken. Mr. Jameson also assured the Committee, as the public had been assured, that the Smithsonian's projected expenses for completing the replacement of electrical transformers containing PCBs in fiscal years 1987-1990 will remain a top priority of the Institution and will not be eliminated by cuts incurred under the Gramm-Rudman-Hollings legislation.

[[underlined]] Report of the Investment Policy Committee [[/underlined]]

The spring meeting of the Investment Policy Committee was held on April 17. The Committee conducted thorough reviews of the investment performance of two managers and concluded that the Committee should consider alternate investment managers for the future. Interviews with several leading managers will be arranged for the Committee in advance of its next meeting. In keeping with the payout practice of other educational institutions, the Committee endorsed a payout for fiscal 1987 equivalent to 5% of the five-year market value average of the funds, that is $9.29 per share, applied to all shares. This equates to 3.7% of the per share market value as of December 31, 1985. Accordingly, a motion to that effect was recommended by the Investment Policy Committee and was adopted by the Board of Regents.

[[underlined]] Report of the Secretary [[/underlined]]

Mr. Adams presented informal reports on a number of topics which were quite tentative or of rather recent origin as the business of the Institution and which therefore were not reflected in the status reports and other agenda papers distributed in advance of the meeting.

Giving a brief account of the hearings with the House appropriations subcommittee on the Interior Department and Related Agencies, Mr. Adams reported that the session focussed in large measure on the effects of Gramm-Rudman cuts on the Smithsonian bureaus and offices. At that hearing he suggested that it would be very helpful to the Institution if the subcommittee would, for purposes of making its recommendations on the fiscal year 1987 appropriations, reduce the