louche Ross & Co.
World Trade Center
Suite 2600

Baltimore, MD 21202-3015
Telephone: 301-659-6100

ToucheRoss

Independent Auditor's Report

The Honorable Louis L. Goldstein

Comptroller of the Treasury of Maryland

We have audited the accompanying general purpose financial statements of the State of Maryland, as of June
30, 1989, and for the year then ended, as listed in the table of contents. These general purpose financial
statements are the responsibility of the State of Maryland's management. Our responsibility is to express an
opinion on these general purpose financial statements based on our audit. We did not audit the financial
statements of the loan insurance programs and four loan programs of the Maryland Departments of Housing
and Community Development and Economic and Employment Development, Maryland Food Center
Authority, Maryland Transportation Authority, Maryland State Lottery, Maryland Stadium Authority and
Maryland Higher Education Loan Corporation, which represent total assets, revenues and expenses
constituting 92 percent, 96 percent and 93 percent, respectively, of the related combined totals for Enterprise
Funds. Those financial statements were audited by other auditors whose reports thereon have been furnished
to us, and our opinion, insofar as it relates to the amounts included for the above mentioned component units,
is based solely on the reports of other auditors.

We conducted our audit in accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts of disclosures in the general purpose financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
general purpose financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.

In our opinion, based upon our audit and the reports of other auditors, the general purpose financial
statements referred to above present fairly, in all material respects, the financial position of the State of
Maryland as of June 30, 1989, and the results of its operations and the changes in financial position of its
Enterprise Funds, Nonexpendable Trust Fund and Pension Trust Fund for the year then ended in conformity
with generally accepted accounting principles.

As discussed more fully in Note 15 to the financial statements, at June 30,1989, the State of Maryland Deposit
Insurance Fund Corporation (MDIFC), an agency of the State, insures the insured accounts of six member
savings and loan associations that are in receivership. The financial statements of MDIFC are included in
the combined Proprietary Fund Type financial statements. At June 30, 1989, the balance sheet of MDIFC
reflects a deficiency in assets of $173,483,000 after accrual of $395,700,000 for estimated losses on insured
savings deposits. In addition, MDIFC is a party to numerous lawsuits, the outcome of which cannot presently
be determined. As a result, the ultimate outcome of the savings and loan situation is uncertain at this time.

Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken
as a whole. The combining financial statements and schedules listed in the table of contents are presented
for purposes of additional analysis and to meet legal reporting requirements and are not a required part of
the general purpose financial statements of the State of Maryland. Except for the Schedules of Estimated
Revenues and General, Special, Federal, Current Unrestricted and Current Restricted Fund Appropriations-
Budgetary Basis for the year ending June 30,1990 (pages 77 and 78), the information has been subjected to
the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion,
is fairly presented in all material respects in relation to the general purpose financial statements taken as
a whole.

The other data included in this report have not been audited by us and, accordingly, we express no opinion
on such data.

Certified Public Accountants
October 31, 1989

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