Memorandum for the Board of Trustees		March 27, 1994

Subject: Initial Audit Committee Meeting

An initial meeting of the ISOC Audit Committee took place
on February 9th, at CNRI, following the regularly scheduled
ISOC Board Meeting. The Audit Committee, consisting of Trustees
Frode Greisen, Michael Roberts and Robert Kahn, and having just
been formed at the aforementioned Board meeting, determined to
develop a written charge for the Audit Committee for the Audit
Committee for presentation to the Board at its next regularly
scheduled meeting.

Among the tasks to be included are the oversight of all ISOC
financial matters including financial controls, auditing and
accounting procedures and liaison with the Auditors.

It was recognized by the Audit Committee that certain timely actions
need to be taken by ISOC given the imminent change in status from
the use of CNRI as secretariat to having ISOC operate independent
of any secretariat. These are assumed to be the responsibility of
the executive director unless stated otherwise and are listed below.

1. Develop a manual describing the internal controls and accounting
procedures to be used by ISOC for managing its finances. We recommend
that a draft of this manual be made available to the Audit Committee
no later than April 30, 1994. In addition, we recommend that
an accounting methodology be developed which enables ISOC finances to be
accounted for and reported in a consistent way from year to year.

2. Engage the CNRI auditors, Coopers & Lybrand, to prepare the 1993
ISOC financial statements. This selection of auditors was dictated
by the fact that the bulk of the 1993 expenses were incurred by CNRI
and will already have been scrutinized by Coopers & Lybrand as part of
their audit of CNRI; thus the incremental cost to ISOC for 1993 will
be minimized by this approach. Coopers and Lybrand should be asked to
provide cost estimates to ISOC for conducting a "review" (which is less
than a full audit) as well as an "audit" for a subsequent decision by
the President.

3. For 1994, the Audit committee will obtain competitive bids for
providing the audit function. This action will be deferred until
mid-year (or as soon thereafter as both the 1993 financial statements
and the internal controls and accounting manual are available  for
external scrutiny). Following that, The Audit Committee will formulate
a view on how and when to proceed with engaging an outside Auditor for
fiscal year 1994 and will make its recommendations to the Board.

4. In the meantime, before such a manual has been prepared and reviewed,
the Audit Committee recommends that the following interim procedures be
adopted by the Board to be followed by ISOC:

	a. In the absence of a full-time business office manager, the
	ISOC accountant shall hold all ISOC checks and be personally
	involved in all transactions that involve the expenditure of funds
	from the ISOC bank accounts.

	b. At least two parties shall be involved in all transactions that
	involve the expenditure of funds from the bank accounts. In particular,
	and to the extent possible, the requestor of a disbursement should not
	be the one to sign the check.

	c. All revenue and expenditures of ISOC shall be properly vouchered.

	d. Provide quarterly financial updates to the Board of Trustees
	including at a minimum 1) the then current income statement and
	balance sheet and 2) fiscal year projections in both cash and
	accrual form. The projections shall be actual to date and estimates
	to the end of the year.

	e. Provide a plan to the Audit Committee by April 30, 1994
	for management of cash, limiting bank exposure (i.e. staying within
	FDIC insurance limits, and investment of current assets)

	f. If other than IRS guidelines are to be used for depreciation,
	please let the audit committee know as soon as possible. Else, we
	will assume the IRS guidelines will be used.

	g. Expense all items under $1000 and capitalize all long term
	assets of $1000 or more.

	h. Operate as near as possible to cash so as to avoid long-term
	ISOC obligations whenever possible.

	i. Develop and document reasonable travel policies for all ISOC
	travel (including employees, officers, trustees, contractors,
	consultants, etc) and provide to the Audit Committee before the
	next ISOC Board meeting.

	j. Develop compensation and fringe benefit guidelines for timely
	approval by the Board. The guidelines should require that employees
	be paid at prevailing wages for the job, area and level of experience.

	k. Obtain Board of Trustees approval for any additional benefits
	including especially non-cash benefits, if any.




	Frode Greisen
	Robert Kahn
	Michael Roberts