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

At the March 7 meeting of the Audit and Review Committee Coopers & Lybrand gave the Smithsonian a "clean opinion" on its financial statements for fiscal year 1988. Coopers & Lybrand's Report to Management pointed out weaknesses in the timely reconciliation of bank accounts in New York and Panama and in controls over inventories of several auxiliary activities. The Report also reiterated the need for a fully integrated and automated purchasing and accounts payable system and indicated that records of certain retirement agreements had not been located. Staff reported on follow up activities and the Committee asked to review some of these matters at its next meeting. In addition, Coopers & Lybrand presented recommendations stemming from their special reviews of the personnel-payroll system and the Smithsonian Astrophysical Observatory. 

The annual report of the Office of Audits and Investigations, now the Smithsonian's Office of the Inspector General, summarized findings of 15 studies, pointing out "significant" recommendations from six. 

The Committee encouraged direct communication from the internal and independent auditors where prudent, registered its support for adequate funding for the Office of Audits and Investigations, and offered the thought that augmentation of administrative functions at the Smithsonian may have failed to keep pace with the expansion of program activities over the last several decades. 

[[underlined]] REPORT OF THE INVESTMENT POLICY COMMITTEE [[/underlined]] 

It was noted that the market value of the endowment stands at more than $237,300,000. Meeting on April 11, the Investment Policy Committee heard presentations from each of the Institution's three investment managers as to the economic outlook and the status of the Smithsonian's portfolio. The Committee reaffirmed the guidelines under which the managers are currently operating, and the Committee recommended to the Regents a 4% increase over fiscal year 1989 Endowment income payout rate for fiscal year 1990. It was 

VOTED that the Board of Regents approves a total return income payout rate of $10.20 per share of the Consolidated Endowment Fund for fiscal year 1990. 

[[underlined]] THE SECRETARY'S REPORT [[/underlined]]

Mr. Adams noted that the legislative initiative to create a National Center for Biodiversity is unlikely to move in the current session of the Congress for technical reasons. Senator Wirth has proposed another initiative by which the Smithsonian would be involved in operating an environmental clearinghouse where members of Congress and other interested public officials, as well as scholars more generally, could find up-to-date information on environmental issues or be directed to such information at agencies of the government or other institutions. 

The Secretary noted that [[underlined]] Air & Space [[/underlined]] magazine, like the market generally, is experiencing a softening in its subscription renewals and