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SIGNATURE ALLEN F. GRUM
TITLE PRESIDENT
DELOITTE & TOUCHE LLP
Suite 250 Telephone: (716)843-7200
Key Bank Tower Facsimile: (716)856-7760
50 Fountain Plaza
Buffalo, New York
To the Board of Directors and Stockholders
Rand Capital Corporation
Buffalo, New York
In planning and performing our audit of the financial statements
of Rand Capital Corporation for the year ended December 31, 1996,
we considered its internal control structure, including
procedures for safeguarding securities, in order to determine our
auditing procedures for the purpose of expressing our opinion on
the financial statements and to comply with the requirements of
Form N-SAR, not to provide assurance on the internal control
structure.
The management of Rand Capital Corporation is responsible for
establishing and maintaining an internal control structure. In
fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and
related costs of internal control structure policies and
procedures. Two of the objectives of an internal control
structure are to provide management with reasonable, but not
absolute, assurance that assets are safeguarded against loss from
unauthorized use or disposition and transactions are executed in
accordance with management's authorization and recorded properly
to permit preparation of financial statements in conformity with
generally accepted accounting principles.
Because of inherent limitations in any internal control
structure, errors or irregularities may occur and may not be
detected. Also, projection of any evaluation of the structure to
future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control
structure that might be material weaknesses under standards
established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the
design or operation of the specific internal control structure
elements does not reduce to a relatively low level the risk that
errors or irregularities in amounts that would be material in
relation to the financial statements being audited may occur and
not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted
no matters involving the internal control structure, including
procedures for safeguarding securities, that we consider to be
material weaknesses as defined above as of December 31, 1996.
This report is intended solely for the information and use of the
Audit Committee, management, Securities and Exchange Commission
and the National Association of Security Dealers, Inc.
/s Deloitte & Touche LLP
------------------------
January 24, 1997
DELOITTE TOUCHE
TOHMATSU
INTERNATIONAL
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<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 3,737,286
<INVESTMENTS-AT-VALUE> 4,075,174
<RECEIVABLES> 102,992
<ASSETS-OTHER> 825,529
<OTHER-ITEMS-ASSETS> 1,605,501
<TOTAL-ASSETS> 6,609,196
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<PAID-IN-CAPITAL-COMMON> 4,810,369
<SHARES-COMMON-STOCK> 4,225,477
<SHARES-COMMON-PRIOR> 4,225,477
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