THE STUDY COVERS FEDERAL AUDITS OF THE ADMINISTRATION OF FEDERAL EDUCATION PROGRAMS AT THE STATE AND LOCAL LEVEL, STATE AUDIT AGENCY AUDITS OF STATE AND LOCAL EDUCATION AGENCIES, SEA INTERNAL AUDITS, SEA EXTERNAL AUDITS OF LOCAL PROGRAMS, AND SEVERAL OTHER CATEGORIES OF AUDITING, SUCH AS AUDITS OF SCHOOL DISTRICTS. AN INDEPTH REVIEW OF THE DEVELOPMENT OF CONTEMPORARY AUDITING PROVIDES BACKGROUND ON HOW AND WHY AUDITING HAS BEEN CHANGING. A CONCEPTUAL FRAMEWORK THAT IDENTIFIES IMPORTANT AUDITING CONCEPTS IS THEN DEVELOPED, AND THE PROPER CONDUCT OF CONTEMPORARY AUDITS IS DISCUSSED. ATTITUDES, CONCERNS, AND PERCEPTIONS OF SEA MANAGERS AND OF FEDERAL AND STATE AUDITORS ARE CONSIDERED, ALONG WITH THE WEAKNESSES AND STRENGTHS OF THE FEDERAL-STATE-LOCAL AUDIT NETWORK. NEW FEDERAL AUDIT STANDARDS AND WHAT THEY MEAN FOR AUDITS OF SEA'S AND LEA'S ARE EXAMINED. THE MEMBERS OF THE SEA AND LEA AUDIT NETWORK ARE IDENTIFIED AND THEIR WORK DISCUSSED, FOLLOWED BY A PRESENTATION OF VARIOUS AUDIT PROJECT FINDINGS AND RECOMMENDATIONS FOR AUDITORS AND EDUCATIONAL MANAGERS. THE APPENDIXES CONTAIN THE SEA QUESTIONNAIRE AND INTERVIEW GUIDE, A LIST OF INTERVIEW AND QUESTIONNAIRE RESPONDENTS, AND A SELECTED BIBLIOGRAPHY. (AUTHOR ABSTRACT MODIFIED--RCB)