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      P.    Audit Subcommittee Report

      Ms. Wickliffe, Chair of the Audit Subcommittee, reported that they met that
morning. Deloitte and Touche, who are the university's CPAs, and Jim Carpenter, the
partner assigned to the job, were there to discuss the audit with the subcommittee. The
audit scope was discussed, and the engagement letter was reviewed and voted on. They
also discussed the staffing requirements, changes in the accounting rules, and recent
pronouncements that have been made. The non-audit services performed by D & NT for
the university were reviewed, and there was discussion and recommendations for the
areas of focus.

      Ms. Wickliffe reported that the subcommittee met with Joseph Reed, who is the
senior director of internal audit for the university's Internal Audit Department. She
thanked Mr. Reed and his staff for their tremendous job.

      The subcommittee also reviewed and approved the internal audit charter, the
report on the progress of the internal audit plan for fiscal year 2004-05, and the internal
audit plan for fiscal year 2005-06.

      Q.    Finance Committee Report

      Ms. Wickliffe, Chair of the Finance Committee, reported that FCRs 1 through 20
were on the consent agenda. She did, however, call attention to FCR 17, the Dr. Michael
Karpf Gift and Pledge, and thanked Dr. Karpf for his generosity.

      R.    Approval of Lease (FCR 21)

      Ms. Wickliffe said that FCR 21 is the approval of leases. It includes leases with
the Center on Aging, Drug and Alcohol/Dentistry, and the College of Medicine, CATS
Project. The leases exceed $30,000; therefore, they need to be approved by the Board.
On behalf of the Finance Committee, she moved the adoption of FCR 21. Mr. Branscum
seconded her motion, and it passed without dissent. (See FCR 21 at the end of the
Minutes.)

      S.    Real Estate Exchange (FCR 22)

      Ms. Wickliffe said that FCR 22 is a real estate exchange. This is an exchange of
.8 acres of land that involves the UK Center for Rural Health building in Hazard. On
behalf of the Finance Committee, she moved the adoption of FCR 22.

      Mr. Hardymon asked Mr. Butler for any comments on the exchange of land.

      Mr. Butler reported that the property is adjacent to the Center for Rural Health in
Hazard, and the university has a request from Appalachian Regional Healthcare (ARH) to
exchange the property. ARH intends to build a radiation treatment facility on this