Independent Auditors' Report 



BOARD OF REGENTS 

 SMITHSONIAN INSTITUTION: 



We have audited the accompanying statement of financial 

 position of the Smithsonian Institution (Smithsonian) as of 

 September 30, 1998, and the related statements of financial 

 activity and cash flows for the year then ended. These 

 financial statements are the responsibility of the 

 Smithsonian's management. Our responsibility is to express 

 an opinion on these financial statements based on our audit. 



We conducted our audit in accordance with generally ac- 

 cepted auditing standards. Those standards require that we 

 plan and perform the audit to obtain reasonable assurance 

 about whether the financial statements are free of material 

 misstatement. An audit includes examining, on a test basis, 

 evidence supporting the amounts and disclosures in the 

 financial statements. An audit also includes assessing the 

 accounting principles used and significant estimates made 



by management, as well as evaluating the overall financial 

 statement presentation. We believe that our audit provides a 

 reasonable basis for our opinion. 



In our opinion, the financial statements referred to above 

 present fairly, in all material respects, the financial position 

 of the Smithsonian Institution as of September 30, 1998, and 

 its changes in net assets and its cash flows for the year then 

 ended, in conformity with generally accepted accounting 

 principles. 



Washington, D.C. 

 January 13, 1999 



KPMG LLP 



SMITHSONIAN INSTITUTION 



Statement of Financial Position September 30, 1998 (in thousands) 







Total Funds 



Trust 



Funds 



Federal 

 Funds 







1998 



1997 



5,193 



200,636 



205,829 



197,048 



69.460 



16,066 



85,526 



69,529 



15,663 



— 



15,663 



16,956 



4,300 



— 



4,300 



4,300 



20.254 



921 



21,175 



18,959 



646,455 



— 



646,455 



609,660 



119,739 



440,103 



559,842 



516,496 



Assets: 



Cash and balances with the U.S. Treasury- 

 Receivables and advances (note 3) 

 Prepaid and deferred expenses (note 2) 

 Other assets (note 5) 

 Inventory 



Investments (note 6) 

 Property and equipment, net (note 9) 

 Collections (note 5) 



Total assets 



S 881,064 



657,726 



1,538,790 



1,432,948 



Liabilities: 



Accounts payable and accrued expenses 



Net payable for investment securities purchased 



Deferred revenue 



Debt (note 10) 



Deposits held for affiliates (note 11) 



Accrued annual leave 



Unexpended federal appropriations 



35.790 

 24,963 

 50,505 

 41,526 

 4,864 

 4.984 



34.080 



14,752 

 182, o23 



69,870 



69,512 



24,963 



1,001 



50,505 



53,602 



41,526 



1,000 



4,864 



3,933 



19,736 



19,290 



82,623 



173,800 



Total liabilities 



162,632 



231,455 



394,087 



322,138 



Net assets: 

 Unrestricted: 

 Funds functioning as endowments (note 7) 

 Operational balances 



387,608 

 63,673 



426,271 



387,608 

 489,944 



404,005 

 471,377 



Total unrestricted net assets 



451,281 



426,271 



877,552 



875,382 



Temporarily restricted: 

 Funds functioning as endowments (note 7) 

 Donor contributions for ongoing programs 



138,686 

 63.538 



— 



138,686 

 63,538 



149,089 

 29,877 



Total temporarily restricted net assets 



202,224 



- 



202,224 



178,966 



Permanently restricted: 

 True endowment (note 7) 

 Interest in perpetual and other trusts 



62,972 



1.955 



— 



62,972 

 1,955 



54,560 

 1,902 



Total permanently restricted net assets 



64,927 



— 



64,927 



56,462 



Total net assets 



718,432 



426,271 



1,144,703 



111,0810 



Commitments and contingencies (note 12) 

 Total liabilities and net assets 



S 881,064 



657,726 



1,538,790 



1,432,948 



See accompanying notes to the financial statements. 



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