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David C. Acheson, Chairman
Jake Garn
Jeannine S. Clark
Charles McC. Mathias, Jr.

Also present were: Secretary Robert McC. Adams; Under Secretary Dean W. Anderson; Assistant Secretaries John F. Jameson, Tom L. Freudenheim, and Robert S. Hoffmann; Deputy Assistant Secretary for Public Service/Media Affairs Robert A. Dierker; Treasurer Ann R. Leven; General Counsel Peter G. Powers; Executive Assistant to the Secretary James M. Hobbins; Comptroller Shireen Dodson; Acting Inspector General John C. Fawsett; Deputy Director of Museum Shops Edward F. Sullivan; Assistant to Senator Garn, Louanne Ferrin; Assistant to Senator Sasser, John Callahan; Assistant to Mr. Mineta, Phyllis Guss; Assistant to Senator Morgan, Carroll Leggett; and Engagement Manager A. Robert Bloom, Engagement Partner John D. Strom, and Concurring Partner John F. Silton, all of Coopers & Lybrand.

At Mr. Acheson's request, Mr. Strom described the most significant aspects of Coopers & Lybrand's plan for their audit of fiscal year 1989 financial statements and transactions. He emphasized that their procedures and schedule will follow the terms of their contract for such services and will involve both experienced personnel and a new concurring partner, Mr. Silton (who was previously head of the Washington office of Coopers & Lybrand). In discussion it was noted that certain special studies to be requested by management are likely to raise the total cost of services from the contracted price of $125,000. After Mr. Bloom described the auditors' procedures, Mr. Silton reported on the proposal pending before the Financial Accounting Standards Board which would require museums to capitalize their collections as assets. It was recognized in discussion that such a requirement would place an unduly heavy burden on museums with large collections, since each item would need to be appraised. The Committee concurred with Coopers & Lybrand and staff that the implied purpose of the proposal, to ensure accountability for collections held in public trust, is worthy but ought to be met through more practicable means of museum registrars.

Miss Leven introduced the materials presented to the Committee describing actions taken to date on Coopers & Lybrand's recommendations to management stemming from their fiscal year 1988 audit. She noted that the banking activities of the Cooper-Hewitt Museum, as well as the New York operations of [[underlined]] Smithsonian [[/underlined]] magazine and the Archives of American Art, have been moved successfully to a new bank. Expressing appreciation for Coopers & Lybrand's review of auxiliary activities inventory procedures, she and Mr. Sullivan outlined the steps that have been taken specifically to reorganize Museum Shop management. They also described coordinated efforts with the Inspector General, the Protection Division, and the Office of Personnel Administration to screen personnel, provide for enhanced security in the shops, and initiate other measures to prevent fraud, waste, and abuse. The Committee encouraged the staff to continue to bear down on these matters, requested a report on further progress at its next meeting, and suggested that target dates be established for the completion of each of the improvements.

Mr. Powers presented the documentation which the Committee had requested on three special Trust fund annuity agreements for former Smithsonian officials or their spouses. He noted it had been found that one annuitant,