THE EFFECTIVENESS OF THE CIVIL SERVICE COMMISSION'S (CSC) FINANCIAL DISCLOSURE SYSTEM WAS AUDITED FOR HEADS OF AGENCIES, PRESIDENTIAL APPOINTEES WHO ARE NOT SUBORDINATE TO THE HEAD OF AN AGENCY IN THE EXECUTIVE OFFICE OF THE PRESIDENT, AND FULL-TIME MEMBERS OF A COMMITTEE, BOARD, OR COMMISSION APPOINTED BY THE PRESIDENT. THE GOVERNMENT ACCOUNTING OFFICE (GAO) REVIEWED FINANCIAL DISCLOSURE STATEMENTS FILED WITH CSC AS OF JUNE 30, 1975, FOCUSING ON THE CSC SYSTEM'S EFFECTIVENESS TO IDENTIFY AND RESOLVE CONFLICTS-OF-INTEREST. PROBLEMS EXIST BECAUSE THE SYSTEM'S DESIGN AND OPERATION ARE INEFFECTIVE, THE SYSTEM LACKS ENFORCEMENT AUTHORITY FROM THE PRESIDENT, POLICIES AND CRITERIA FOR BLIND TRUSTS HAVE NOT BEEN FORMALIZED AND ENFORCED, AND THE SYSTEM HAS BEEN MANAGED WITH LIMITED SUPPORT AND INSUFFICIENT FUNDS. CURRENT (1977) LEGISLATION BEFORE CONGRESS COULD EFFECT MANY CHANGES IN THE FINANCIAL DISCLOSURE SYSTEM FOR HIGH-LEVEL FEDERAL OFFICIALS. HOWEVER, SHOULD SUCH LEGISLATION NOT BE ENACTED, GAO OFFERS THESE RECOMMENDATIONS FOR THE PRESIDENT: (1) DELEGATE ENFORCEMENT AUTHORITY TO THE CSC TO DEAL WITH CONFLICT-OF-INTEREST MATTERS CONCERNING HIGH-LEVEL FEDERAL OFFICIALS INCLUDING THE AUTHORITY TO INVESTIGATE AND RESOLVE CONFLICT-OF-INTEREST SITUATIONS; (2) INCLUDE, IN THE APPOINTMENT-SELECTION PROCESS, A FORMAL REVIEW OF THE PROPOSED APPOINTEE'S INTERESTS BY CSC AND THE JUSTICE DEPARTMENT FOR POTENTIAL CONFLICTS, WITH RECOMMENDATIONS TO RESOLVE ANY CONFLICTS; AND (3) REQUIRE THE CSC CHAIRMAN TO FILE FINANCIAL DISCLOSURE STATEMENTS WITH THE EXECUTIVE OFFICE OF THE PRESIDENT. APPENDIXES CONTAIN EXECUTIVE ORDER 11222, A PRESIDENTIAL LETTER, PERTINENT LEGISLATION AND REPORTS, AND PRINCIPAL OFFICIALS OF THE CSC. (PRG)