Enterprise, Fiduciary, and Higher Education
and University Hospital Funds

All enterprise funds reported retained earnings for the year ended June 30, 1984. Maryland
Environmental Service and Maryland Higher Education Loan Corporation reported a decline in retained
earnings during the year. Overall the increase in retained earnings for enterprise funds during 1984 was
$64,691,000 as compared to an increase of $56,156,000 in 1983.

Fiduciary fund types include expendable and nonexpendable trust funds, pension trust fund and agency
funds. Agency funds are custodial in nature and do not report fund balances. All other fiduciary fund types
reported fund balances of $4,237,786,000 at June 30, 1984, as compared to $4,003,318,000 at June 30,
1983.

The total fund balance for the higher education and university hospital fund was $1,134,565,000 at
June 30, 1984, as compared to $1,078,998,000 at June 30, 1983.

General Fixed Assets

The general fixed assets of the State are those used in the performance of general governmental
functions and exclude the fixed assets of the proprietary fund type, fiduciary fund types and the higher
education and university hospital fund. As of June 30, 1984, the general fixed assets of the State amounted
to $2,770,469,000. This amount represents the actual or estimated cost of the assets. Depreciation of general
fixed assets is not recognized in the States accounting system. Infrastructure assets, consisting principally of
highways, roads and bridges are not recorded in the general fixed assets.

Audits

The statutes of the State require an audit of every unit of the Executive and Judicial branches of
government, including the Comptroller of the Treasury's records, by the Legislative Auditor at least every two
years. The Legislative Auditor is required to be and is a certified public accountant. The Legislative Auditor
makes fiscal, compliance and performance audits of the various agencies and departments of the State and
issues a separate report covering each of those audits. Although certain of those reports include
presentations of detailed financial data and contain expressions of opinion thereon, the audits are usually not
made for that purpose. The primary purpose of the reports is to present the Legislative Auditor's findings
relative to the fiscal management of those agencies and departments.

Additionally, my office requires an examination of the State s combined financial statements by a firm of
independent certified public accountants selected by an audit committee composed of members from the
Executive and Legislative branches of State government. This requirement has been complied with, and the
auditor's opinion has been included in this report.

Certificate of Conformance

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Conformance in Financial Reporting to the State of Maryland for its comprehensive annual
financial report for the fiscal year ended June 30, 1983.

In order to be awarded a Certificate of Conformance, a governmental unit must publish an easily
readable and efficiently organized comprehensive annual financial report, whose contents conform to
program standards. Such reports must satisfy both generally accepted accounting principles and applicable
legal requirements.

A Certificate of Conformance is valid for a period of one year only. We believe our current comprehensive
annual financial report continues to conform to Certificate of Conformance Program requirements, and we
are submitting it to the GFOA to determine its eligibility for another certificate.

15