Noteworthy gifts were received for the Enid A. Haupt 

 Garden endowment, the Earl S. Tupper endowment for the 

 Smithsonian Tropical Research Institute, the Holenia Trust II 

 endowment for the Hirshhorn Museum and Sculpture Garden, 

 and the Luisita L. and Franz H. Denghausen endowment for 

 American art. 



Construction and Plant Funds (Table 6) 



In fiscal year 1994, the Smithsonian received federal appropria- 

 tions for construction totalling $39.8 million. More than half, 

 $24 million, was for general repair, restoration, and code com- 

 pliance projects throughout the Institution. Although a substan- 

 tial sum, it is less than half the estimated $50 million per year 

 required to keep up with the deterioration in the physical plant 

 described earlier in this report. Appropriations earmarked for 

 new construction, alterations, and modifications totalled $10.4 

 million, of which $6.2 million was to continue development of a 

 collections study, reference and support facility in Suitland, 

 Maryland, for the National Museum of the American Indian. An 

 appropriation of $5.4 million was received for renovations, re- 

 pairs and master plan projects at the National Zoological Park, 

 including in fiscal year 1994, construction of Aquatic Trail and 

 African Grasslands exhibits. 



Additions and transfers to nonappropriated trust construc- 

 tion funds, termed plant funds, totalled $12.7 million. Ap- 

 proximately $11 million was for constructing facilities for the 

 National Museum of the American Indian. 



Financial Management 



The Institution completed the first phase cf replacing its central 

 accounting system with the successful implementation of a pur- 

 chasing and payables module. Dramatic improvements in the 

 ability to ensure timely payments to vendors and to take advan- 

 tage of prompt payment discounts have resulted. Work is pro- 

 ceeding now on Phase II which involves the replacement of the 

 Institution's general ledger, financial reporting, and management 

 information system. 



Other financial management improvement initiatives under- 

 taken in 1994 include: 



♦ A comprehensive study assessing the effectiveness of the cur- 

 rent Institutional management controls program resulted in the 

 formation of an oversight council and the implementation of a 

 new process which will substantially enhance internal controls. 



♦ As part of the annual call for plans and budgets, organiza- 

 tions have developed strategic plans and planning processes 

 that are guiding them in more careful allocation of their scarce 

 resources. 



♦ The use of performance measurements has become an inte- 

 gral part of Finance and Administration operations, and their 

 use is expanding across the Institution. 



♦ Implementation of a single vendor concept for the purchase 

 of office supplies has resulted in decreased reliance on petty 

 cash, lower item pricing, and an efficient purchasing and 

 payment system. 



♦ Seven key information resources management (IRM) initia- 

 tives were identified through the work of the IRM Vision Pro- 

 ject, an Institution-wide, participative review and planning 

 process. The IRM Vision Project provided a blueprint for the 

 long-range direction of information technology and short-term 

 goals to set a course for the future. 



Audit Activities 



The Institution's financial statements are audited annually by 

 KPMG Peat Marwick, an independent public accounting firm. 

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

 internal control structure. KPMG Peat Marwick's Independent 

 Auditors' Report for fiscal year 1994 and the accompanying 

 financial statements are presented on the following pages. The 

 Smithsonian's internal audit staff, part 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 additional level of financial oversight and 

 review. 



In accordance with the government requirement for the use 

 of coordinated audit teams, the Defense Contract Audit Agency, 

 the Smithsonian Office of Inspector General, and KPMG Peat 

 Marwick coordinate the audit of grants and contracts received 

 from federal agencies. 



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