The independent auditing firm of KPMG Peat Marwick has provided the Council with a financial statement for 1997, concerning the financial operations of the Secretariat.

The Honorable Members of the Ministerial Council,
Commission for Labor Cooperation:

We have audited the accompanying statements of financial position of the Commission for Labor Cooperation (the Commission), as of December 31, 1997 and 1996 and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of The Secretariat of the Commission for Labor Cooperation. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perforrn 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 and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Commission, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Commission as of December 31, 1997 and 1996, and the changes in its net assets and its cash flows for the years then ended, in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The Schedule of Expenses - Budget and Actual for the year ended December 31, 1997 is presented for purposes of additional analysis and is not a required part of the basic 1997 financial statements of the Commission. Such information has been subjected to the auditing procedures applied in the audit of the 1997 financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. 

March 9, 1998

KPMG Peat Marwick LLP

* All figures are in U.S. dollars.

Statements of Financial Position

	December 31,
Assets	1997	1996
Cash and cash equivalents	$ 442,348	218,356
Investments	503,233	597,518
Accounts receivable	-	3,783
Fixed assets, net of accumulated depreciation	307,816	389,187
Total assets	$ 1,253,397	1,208,844
Liabilities and Net Assets
Liabilities:
Accounts payable	$ 45,132	32,160
Accrued liabilities	64,252	58,314
Deferred contributions	801,214	643,296
Capital lease obligation	32,587	87,327
Total liabilities	943,185	821,097
Unrestricted net assets	310,212	387,747
Commitments
Total liabilities and net assets	$ 1,253,397	1,208,844
Statements of Activities
	December 31,
Revenues:	1997	1996
Contributions	$ 1,842,083	1,823,154
Interest earned	57,370	44,298
Other income	8,243	1,072
Net appreciation in fair value of investrnents	3,759	5,9l6
Total revenues	1,911,455	1,874,440
Expenses:
Salaries and benefits	1,146,837	1,231,989
Relocation	36,254	39,574
Travel	68,281	69,924
Professional services	66,296	45,808
Research contracts	67,691	64,871
Office	415,730	299,330
Translation and publications	187,901	111,819
Total expenses	1,988,990	1,863,315
Change in net assets	(77,535)	11,125
Unrestricted net assets at beginning of year	387,747	376,622
Unrestricted net assets at end of year	$ 310,212	387,747
Statements of Cash Flows
	December 31,
	1996	1997
Cash flows from operating activities:
Change in net assets	$ (77,535)	11,125
Adjustments to reconcile change in net assets to net cashprovided (used) by operating activities:
Depreciation	89,830	60,120
Net appreciation in fair value of investments	(3,759)	(5,916)
Decrease in accounts receivable	3,783	159
Increase (decrease} in accounts payable and accrued liabilities	18,910	(9,717)
Increase (decrease) in deferred contributions	157,918	(223,154)
Net cash provided (used) by operating activities	189,147	(167,383)
Cash flows from investing activities:
Purchase of fixed assets	(8,459)	(72,011)
Proceeds from maturity of investments	3,091,231	2,500,000
Purchase of investments	(2,993,187)	(2,494,182)
Net cash provided (used) by investment activities	89,585	(66,193)
Cash flows from financing activities - payments on capital leases	(54,740)	(41,230)
Net increase (decrease) in cash and cash equivalents	223,992	(274,806)
Cash and cash equivalents at beginning of year	218,356	493,162
Cash and cash equivalents at end of year	$ 442,348	218,356
Supplemental disclosure - cash paid for interest	$ 13,077	15,503