This report presents the results of Ernst & Young's (certified public accountants) audits of the three subject National Institutes of Health's (NIH) Funds for Fiscal Year 1994. The Ernst & Young auditors reported that they could not express an opinion on each Fund's financial condition because NIH management was unable to provide the auditors with sufficient competent evidential matter to support the material account balances on the statements of financial position. The auditors also reported several significant deficiencies in the design and operation of the internal control structure, and were unable to determine whether management complied with applicable laws and regulations. Ernst & Young recommended that a Fund manager be selected to oversee the; (a) maintenance and preparation of financial statements, (b) drafting of an accounting policies and procedures document, (c) preparation of client assistance supporting schedules, and (d) timely and accurate recording of the Funds' transactions. The NIH officials concurred.