IN OCTOBER, 1975, GAO REPORTED THAT THE LABOR DEPARTMENT'S EMPLOYMENT AND TRAINING ADMINISTRATION HAD A LARGE BACKLOG OF EXPIRED CONTRACTS AND GRANTS. THIS FOLLOW-UP SURVEY SHOWED LITTLE IMPROVEMENT THROUGH MARCH 31, 1978. SOME INITIAL PROGRESS IN BACKLOG REDUCTION WAS MADE, BUT RECENT FIGURES INDICATE THE PROBLEM IS BECOMING MORE SEVERE. THE INCREASE IN UNLIQUIDATED OBLIGATIONS AND OUTSTANDING ADVANCES ASSOCIATED WITH THE BACKLOG ARE OF PARTICULAR CONCERN. COMPLETE ASSURANCE THAT FUNDS HAVE BEEN FULLY ACCOUNTED FOR DOES NOT EXIST UNITL CLOSEOUT. LABOR SHOULD INCREASE ITS EMPHASIS ON TIMELY CLOSEOUT WITHOUT SACRIFICING THE QUALITY OF CLOSEOUT ACTION. ACCORDINGLY, THE SECRETARY OF LABOR SHOULD ESTABLISH SPECIFIC CRITERIA FOR MEASURING THE TIMELINESS OF CLOSEOUT ACTIONS, SET GOALS AND ALLOCATE RESOURCES NECESSARY TO ELIMINATE THE CLOSEOUT BACKLOG, AND IMPROVE THE CLOSEOUT REPORTS' CONSISTENCY AND ACCURACY BY SEEING THAT THOSE RESPONSIBLE FOR PREPARING THE REPORTS RECEIVE AND FOLLOW PROPER INSTRUCTIONS. LABOR AGREED TO IMPLEMENT THE RECOMMENDATIONS. LABOR DEPARTMENT REPLIES ON THE RECOMMENDATIONS ARE APPENDED. (AUTHOR ABSTRACT MODIFIED--RCB)