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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, NY 14202
INDEPENDENT AUDITORS' REPORT
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 (the "Corporation") for the year
ended December 31, 1997 (on which we have issued our report dated
January 16, 1998), we considered its internal control, including
control activities 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, and not to provide assurance on the
Corporation's internal control.
The management of the Corporation is responsible for establishing
and maintaining internal control. In fulfilling this
responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit
pertain to the entity's objective of preparing financial
statements for external purposes that are fairly presented in
conformity with generally accepted accounting principles. Those
controls include the safeguarding of assets against unauthorized
acquisition, use, or disposition.
Because of inherent limitations in any internal control, errors
or fraud may occur and not be detected. Also, projection of any
evaluation of internal control 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 Corporation's internal control would not
necessarily disclose all matters in internal control 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 one
or more of the internal control components does not reduce to a
relatively low level the risk that errors or fraud 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
Corporation's internal control and its operation, including
controls for safeguarding securities, that we consider to be
material weaknesses as defined above as of December 31, 1997.
This report is intended solely for the information and use of
management, the Board of Directors and the Audit Committee of
Rand capital Corporation, and the Securities and Exchange
Commission.
s/Deloitte & Touche LLP
January 16, 1998
<SEAL>
