The Church Audit Committee Report

Presented by Ted E. Davis

Chairman, Church Audit Committee

To the First Presidency of The Church of Jesus Christ of Latter-day Saints

Dear Brethren: The Church Audit Committee consists of three members who are independent of all Church officers, employees, departments, and Church-affiliated organizations. We report directly to the First Presidency and have access to Church records and personnel necessary to perform our responsibilities.

The Church Auditing Department is separate and independent from the Church Audit Committee. This department performs internal audits of worldwide Church operations and audits the various financial statements of the Church in accordance with recognized professional auditing standards. It also monitors contributions and expenditures of local ecclesiastical units.

The Church Audit Committee has reviewed the controls over contributions and expenditures of Church funds that safeguard assets of the Church. We have also reviewed budgeting, accounting and reporting, and auditing systems for the year ended 31 December 1999. Expenditures of Church funds for 1999 were authorized by the Council on the Disposition of the Tithes according to written policies. This Council is composed of the First Presidency, the Quorum of the Twelve Apostles, and the Presiding Bishopric, as prescribed under revelation. Administration of approved budgets is controlled through the Budget Department under direction of the Appropriation and Budget Committees.

Based on our review of financial, budgeting, and other controls and our review of Church audit reports for 1999 and responses thereto, the Church Audit Committee is of the opinion that, in all material respects, Church contributions received and expended during the year ended 31 December 1999 have been managed in accordance with revelation and established Church policies and procedures.

Church-affiliated organizations, including Deseret Trust Company and Deseret Management Corporation and its subsidiaries, are operated separately from the Church. The financial activities of these affiliated organizations were not reviewed by the Church Audit Committee in 1999. However, we have verified that these organizations, as well as Brigham Young University and other institutions of higher education, are being audited annually by independent public accounting firms.

Respectfully submitted,

CHURCH AUDIT COMMITTEE

Ted E. Davis, Chairman

Donald D. Salmon

Frank M. McCord