7



might be obtained. Under the proposed contract with the bank, the bank will
not make final decisions on investments or reinvestments.  Recommendations
will be given to the Board through appropriate channels and the Board will re-
tain the right to determine whether or not it will follow the recommendations.

       Mr. Smith put the recommendation of the Finance Committee in the
form of a motion which was seconded by Dr. Murray, and without dissent, was
approved. (See FCR 1 at the end of the Minutes.)


       K. External Audit Accepted (FCR 2)

       Copies of the audit reports of the financial records and related statements
for the fiscal year ended June 30, 1966 from the firm of Haskins and Sells were
mailed in advance of the meeting, not only to members of the Finance Committee,
but to the entire membership of the Board. Mr. Smith indicated that the Finance
Committee had reviewed the audit reports and the related statements. He
pointed out that under the present policy of the Board of Trustees, the obligations,
assets, and liabilities of the University of Kentucky and its affiliated non-profit
corporations are brought together as public records so that the administrative
officers, Board members, and the public have access to the complete financial
picture of the University-. At the last session of the Legislature, all assets and
liabilities of the University of Kentucky were presented in our budget as a matter
of public record.

       Mr. Kerley noted that a special audit was prepared of the University of
Kentucky Housinag and Dining System. Although it is also a part of the University
of Kentucky audit, it is desirable to have a separate document prepared by a
national audit firm for distribution to bond holders and investment firms showing
the operation of the facilities supporting the bonds in order to insure their
marketability. The same policy will be followed for all bonds on academic facili-
ties to maintain them in the market.

       Mr. Smith asked for a report of the Medical Center and Hospital audit
which was authorized several months ago. Mr. Kerley replied that he, Dr.
Willard, and the hospital administrator Fad gone over a draft. The final
report and the findings will be available by January 8. At that time, it will be
mailed to all Board members including members of the Hospital Subcommittee.
Incident to or prior to the January 20 meeting, the Board will be asked to con-
sider the report and representatives of Haskins and Sells will be at the meeting
to present a detailed report.

       Mr. Kerley said that the Finance Committee had requested a full inven-
tory, particularly on farm holdings  The external auditor has done this and an
internal audit is being done on the same subject.



As chairman of the Finance Committee, Mr. Snlith moved that the audit