SUMMARY OF: of Alaska, Single Audit for the Fiscal Year Ended June 30, 2003.

Purpose and Scope of the Report

This report summarizes our review of the State of Alaska’s basic financial statements and the State’s compliance with federal laws and regulations in the administration of almost $2.4 billion of federal financial assistance programs. The audit was conducted in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States. It also complies with the federal Single Audit Act Amendments of 1996 and the related Circular A-133 issued by the U.S. Office of Management and Budget.

The report contains an opinion on the basic financial statement of the State of Alaska for fiscal year 2003, recommendations on financial and compliance matters, auditor’s reports on internal controls and compliance and the Schedule of Expenditures of Federal Awards.

Report Conclusions

For a second year, the basic financial statements for the State of Alaska are fairly presented in accordance with accounting principles generally accepted in the United States of America without qualification.

During FY 03, over $498 million was transferred from the Constitutional Budget Reserve Fund (CBRF) to the General Fund in accordance with Chapter 1, SSSLA 2002, section 94(b) to fund the State’s FY 03 shortfall between revenues and general fund appropriations. Other significant transactions between the General Fund and the CBRF during this fiscal year included $130.7 million returned from the CBRF to the General Fund after being swept at the end of FY 02, and $88.8 million being swept from a variety of General Fund sub-funds and accounts, then transferred to the CBRF at the end of FY 03.

Additionally, except for federal financial reporting requirements for the Military Construction program administered by the Alaska Aerospace Development Corporation, the State has complied with the applicable laws and regulations in the administration of its major federal financial assistance programs.

Findings and Recommendations

This report contains 42 recommendations, of which seven were presented last year. Also included in this year’s report are six recommendations made to various state corporations and the University of Alaska, whose audits were performed by other auditors. Many of the recommendations made in this report require significant changes in procedures or a shifting of priorities and, therefore, may take more than one year to implement. The Summary Schedule of Prior Audit Findings in Section IV identifies the current status of most prior audit recommendations not resolved by the release of the FY 02 Statewide Single Audit.