THE LACK OF ADEQUATE GUIDELINES AND EFFECTIVE PROCEDURES AT LEAA AND SOME OF THE STATE PLANNING AGENCIES PREVENT ALL AUDIT FINDINGS FROM BEING PROMPTLY AND PROPERLY RESOLVED. THIS IS COSTLY BECAUSE GRANTEES AND SUBGRANTEES KEEP FUNDS TO WHICH THEY ARE NOT ENTITLED UNDER APPLICABLE LAWS, LEAA AND SOME STATE PLANNING AGENCIES MISS THE OPPORTUNITY TO IMPROVE GRANT PROGRAMS BY DELAYING OR FOREGOING NEEDED CORRECTIVE ACTIONS, AND LEAA DOES NOT GET FULL RETURN ON ITS EXPENSES OF THE AUDIT. DELAYS OCCUR IN TWO AREAS--WHEN AUDIT REPORTS ARE FORWARDED TO PROGRAM MANAGERS RESPONSIBLE FOR RESOLVING THE FINDINGS AND WHEN PROGRAM MANAGERS PROCRASTINATE IN ACTING ON AUDIT FINDINGS. OF 268 AUDIT REPORTS LEAA LISTED AS UNRESOLVED IN JANUARY 1979, AN AVERAGE OF 31 MONTHS HAD ELAPSED SINCE THE REPORTS WERE TRANSMITTED TO PROGRAM OFFICES AS COMPARED TO THE AVERAGE TRANSMITTAL TIMES OF 7 MONTHS FOR REPORTS PREPARED BY OTHER THAN LEAA AUDITORS. LEAA'S RESOLUTION OF SOME FINDINGS ALSO APPEARS QUESTIONABLE. MANY FINDINGS WERE CLEARED BASED ON PROMISES OF CORRECTIVE ACTIONS OR ON CERTIFICATIONS THAT UNDOCUMENTED OR QUESTIONED EXPENDITURES WERE PROPER. INADEQUATE AUDIT RESOLUTION PROCEDURES AND PRACTICES WERE ALSO FOUND AT SOME STATE PLANNING AGENCIES. LEAA AUDITORS FOUND THAT 31 OF THE 47 STATE PLANNING AGENCIES REVIEWED NEED TO IMPROVE THEIR FOLLOWUP ON AUDIT FINDINGS. RECOMMENDATIONS DIRECT THE LEAA ADMINISTRATOR TO DEVELOP A COHERENT AND COMPREHENSIVE POLICY FOR ACHIEVING ADEQUATE AUDIT COVERAGE OF ALL ITS GRANT RECIPIENTS, ISSUE GUIDELINES FOR PROGRAM MANAGERS TO USE IN RESOLVING AUDIT FINDINGS, HOLD PROGRAM MANAGERS RESPONSIBLE FOR TIMELY AND PROPER RESOLUTION OF FINDINGS, REQUIRE WRITTEN DECISIONS JUSTIFYING WHY AMOUNTS SHOWN TO BE DUE BY THE AUDITORS' REPORTS WERE NOT COLLECTED, AND DESIGNATE AN INDEPENDENT OFFICIAL TO MONITOR THE SUBSTANCE OF AUDIT FINDINGS AND THE PROPRIETY OF RESOLUTIONS. FURTHER RECOMMENDATIONS AND COMMENTS BY THE DEPARTMENT OF JUSTICE ARE OUTLINED. SOME TABULAR DATA ARE INCLUDED. (AUTHOR ABSTRACT MODIFIED--WJR)