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We hope that the Senate Rules Committee will proceed cautiously, will consider the manifold dimensions of the opportunities at hand, and will ensure that the interests of the Smithsonian Institution and American Indian people are well served.

[[underlined]]REPORT OF THE AUDIT AND REVIEW COMMITTEE[[/underlined]]

Mr. Acheson introduced the report of the Audit and Review Committee (summarized below) and highlighted the Committee's deliberations on the proposal to establish a policy of periodic rotation of the independent auditors or other means of introducing into the auditor relationship a degree of competition and assurance of objectivity. The Committee recommended that the Smithsonian issue a Request for Proposals and select the most highly qualified firm from respondents to conduct the annual audits for the next ten years; that the incumbent independent auditors not be excluded from bidding; and that a contract with the successful respondent be completed in time for work on the audit of fiscal year 1989 financial statemnts and records. It was noted that as at present the contract would be from year to year, could be terminated for cause at any time, and would in any case be opened up for competition every ten years. Mr. Acheson added that the Committee's consensus on this recommendation would serve as guidance to the staff.

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At the Committee's meeting of March 16, Dr. Harwit first presented an overview of research currently being conducted in the National Air and Space Museum's Department of Space Science and Exploration, Department of Aeronautics, and Center for Earth and Planetary Studies. In future research and exhibitions Dr. Harwit foresees a fundamental shift from the purely technical aspects of air and space craft toward the important questions about what those vehicles reveal about the biosphere and geosphere. Questions such as these, and the social consequences of technologies related to air and space, will draw the Museum into closer scholarly cooperation with other Smithsonian museums (and the Zoo) and will become an integral part of the mission of the proposed Extension at a nearby airport. In meeting the major challenges of how to preserve and effectively utilize the world's largest collection of air and space craft the Museum will need to face squarely the highly complex prospects of limiting acquisitions as well as increasing rates of deaccessioning and loaning artifacts to kindred institutions.

The Coopers and Lybrand report gave a "clean opinion" on the Smithsonian's financial statements for fiscal year 1987. Coopers and Lybrand's Report to Management prompted discussion of the Smithsonian's continuing lag in the posting of transactions and need for a fully automated purchasing, receiving, and accounts payable system, and it was noted that a prototype financial system, which can handle the Smithsonian's Federal as well as nonappropriated trust fund accounting, is to be tested over the next six to eight months.

Mr. Stanton reported that the Office of Audits and Investigations conducted the following audit reports in calendar year 1987:
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