THE MONTANA BOARD OF CRIME CONTROL IS THE SOLE STATE AGENCY TO ADMINISTER FUNDS, CREATE PLANS, AND OTHERWISE EXERCISE THE FUNCTIONS REQUIRED UNDER THE OMNIBUS CRIME CONTROL AND SAFE STREETS ACT OF 1968. AS SUCH, IT IS RESPONSIBLE FOR MONITORING FUNDS GIVEN TO AGENCIES UNDER THE ACT. THE AUDIT FINDS THAT GRANT RECIPIENTS TRY TO ACCOUNT FOR THESE FUNDS WITHIN THEIR EXISTING ACCOUNTING SYSTEMS. THESE SYSTEMS OFTEN ARE NOT CONSISTENT WITH BOARD REPORTING REQUIREMENTS AND, OCCASIONALLY, RECIPIENTS WERE NOT AWARE OF THESE REPORTING REQUIREMENTS. INVENTORY RECORDS FOR EQUIPMENT PURCHASED WITH GRANT FUNDS WERE PARTICULARLY LACKING. THIS IS BEING CORRECTED IMMEDIATELY. THE BOARD RELIES PRIMARILY ON A MANUAL RECORDKEEPING SYSTEM. DURING RECENT YEARS AN ATTEMPT HAS BEEN MADE TO COMPUTERIZE PARTS OF THIS SYTEM, BUT EXTENSIVE DUPLICATION EXISTS AND CONTROL PROCEDURES ARE NOT STRONG. SEVERAL RECOMMENDATIONS ADDRESS THIS PROBLEM. INTERNAL ACCOUNTING WEAKNESSES INCLUDE THE AREAS OF CASH DISBURSEMENTS, VOUCHERS PAYABLE, PAYROLL, AND FIXED ASSETS. THE BOARD IS IN THE PROCESS OF COMPLYING WITH THESE RECOMMENDATIONS. THE REPORT PRESENTS EACH RECOMMENDATION, A DISCUSSION OF THE PROBLEM WHICH LED TO THE RECOMMENDATION, AND THE BOARD'S RESPONSE. FINANCIAL STATEMENTS, A LIST OF GRANT AWARDS DURING THE PERIOD UNDER AUDIT, AND A LIST OF SPECIFIC STEPS BEING TAKEN TO CORRECT THE AUDIT DEFICIENCIES ARE INCLUDED. (GLR)