Construction and Plant Funds (Table 6) 



In fiscal year 1998, the federal appropriations for construction 

 were S68.8 million. This amount included $32.0 million for 

 general repair, restoration, and code compliance projects 

 throughout the Institution. With the support of Congress, 

 the Institution continues to seek the $50 million per year re- 

 quired to maintain systematic renewal of its physical plant. 

 Funds earmarked for new construction, alterations, and 

 modifications totaled $36.8 million. Included in this amount 

 is S29.0 million for the Mall museum for the National 

 Museum of the American Indian; $3.8 million for renovations, 

 repairs, and master plan projects at the National Zoological 

 Park; and $4.0 million for planning and design of the National 

 Air and Space Museum Dulles Center. 



Nonappropriated trust construction funds, also termed plant 

 funds, totaled $5.2 million. Approximately $3.5 million sup- 

 ported construction of facilities for the National Museum of the 

 American Indian; $1.4 million supported renovation of the 

 Cooper-Hewitt, National Design Museum; and $0.3 million con- 

 tributed to the reinstallation of the Janet Annenberg Hooker 

 Hail of Geology, Gems, and Mnerals at the National Museum of 

 Natural History. 



Financial Position 



The Smithsonian Institution's Statement of Financial Position 

 presents the total assets, liabilities, and net assets of the Insti- 

 tution. Total assets of $1.5 billion far exceed total liabilities of 

 $394.0 million and are indicative of the financial strength of 

 the Institution. During fiscal year 1998, the most significant 

 change in the Instirution's financial position was a $41 million 

 increase in debt to finance the Dscovery Center at the National 

 Museum of Natural History and a $37 million increase in invest- 

 ments levels. 



Financial Management 



During the year, the Smithsonian's Office of Information Tech- 

 nology conducted an analysis of the Year 2000 software problem. 

 That analysis indicated that for all major critical systems the In- 

 stitution will be Year 2000 compliant. In one instance, software 

 cannot be made compliant, but an alternative solution will be 

 employed to solve the problem. At present, all major financial 

 system software is warranted to be Year 2000 compliant. Never- 

 theless, the Institution will continue to conduct testing during 

 fiscal year 1995 to confirm these findings. 



Other financial management improvement initiatives 

 undertaken in fiscal year 1998 included: 



• Additional application modules for the Institution's 

 Budget Management, Planning, and Policy System. This 

 improvement has further automated the budget and plan- 

 ning process, eliminating duplication of data entry and 

 reducing error rates. 



• A system to facilitate use of a new travel credit card for 

 employees. The system includes an enhanced ability for 

 tracking and reporting activity. Use of the travel card will 

 be greatly increased over use of the previous card. 



• A new electronic fund transfer system for vendot payments 

 and employee reimbursements. Most paychecks are already 

 sent electronically. The system was scheduled to be 

 launched on January 1, 1999. 



• A major training effort for unit staff in procurement and 

 contracting. This ttaining is required to support the delega- 

 tion of greater procurement and contracting authonry to 

 program units and to implement othet changes to the 

 procurement and contracting process. 



Additional financial management improvement initiatives 

 planned to start in fiscal year 1999 include the following: 



• Electronic routing of monthly financial reports 



• Updating and stteamlining of financial policies 



• Automation of payroll data entry at the unit level 



• Implementation of softwate to facilitate accurate prepara- 

 tion of travel authorization and vouchet forms 



Audit Activities 



The Institution's financial statements are audited annually 

 by KPMG LLP, an independent public accounting fitm. The 

 audit plan includes an in-depth review of the Institution's in- 

 ternal control structure. KPMG LLP Independent Auditor's 

 Report fot fiscal year 1998 and the accompanying financial state- 

 ments are presented on the following pages. The Smithsonian's 

 internal audit staff, pan of the Office of Inspector General, assists 

 the external auditors and regularly audits the Institution's various 

 programs, activities, and internal control systems. The Audit and 

 Review Committee of the Board of Regents provides an addition- 

 al level of financial oversight and review. 



In accordance with the government requirement for the use 

 of cootdinated audit teams, the Defense Contract Audit Agen- 

 cy, the Smithsonian Office of Inspector General, and KPMG 

 LLP coordinate the audit of grants and contracts received 

 from federal agencies. 



A new database for sponsored project data that will increase 

 the efficiency and effectiveness of managing sponsored 

 projects. This database is also the source of critical financial 

 measures for sponsored project activity that is distributed 

 to senior management in weekly and monthly reports. 



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