Audit Committee Report Board of Trustees Meeting October 28, 2011 Washington, DC

Audit Activities A total of (7) audits since March 2011 DCAA Incurred Costs Audit of FY06 and FY07 As part of the audit resolution, NSF determined the unallowability of costs totaling $87,325 from the original DCAA questioned costs, which totaled $588K.  Also, the DCAA “Other Matters to Be Reported” concerning the NSF-approved allocation base exclusion of subcontract cost exceeding $100K per year has been resolved. NSF rejected DCAA’s stance and accepts the negotiated base without change. Rubino & McGeehin FY10 403(b) plan audit No significant findings and/or compliance issues reported.

Ongoing Audit Activities DCAA Audit of FY08 Disclosure Statement - recently started, will include evaluation of internal controls DCAA Audit of FY08 & FY09 Incurred Costs - recently started DCAA Audit of OOI Contingency - recently started, will include review of how the amount was derived, the basis of estimates, and the mechanisms/controls in place to fund contingency Rubino & McGeehin FY11 Internal Control Review - recently started, will focus on OOI internal controls Rubino & McGeehin FY11 Financial and OMB Circular A-133 Audit - fieldwork for the FY11 independent audit recently started

403(b) Audit No audit findings Total net assets total $15,283,000, as of December 31, 2010.