THE GAO CONCLUDES THAT INTERNAL AUDITING NEEDS MORE SUPPORT IN THE NATIONAL CREDIT UNION ADMINISTRATION. THE SMALL SIZE OF THE UNIT PREVENTS IT FROM CARRYING OUT ALL ITS RESPONSIBILITIES. AUDIT COVERAGE HAS BEEN SPARSE, AUDIT REPORTING TIMES LONG, AND THE PRACTICE OF OBTAINING SUPPORT STAFF DETAILED FROM OTHER ACTIVITIES HAS CREATED A POTENTIAL FOR COMPROMISING AUDIT INDEPENDENCE. IN ADDITION, THE FREQUENT TURNOVER IN THE LEADERSHIP OF THE INTERNAL AUDIT HAS BEEN DETRIMENTAL TO ACHIEVING STABILITY AND CONSISTENCY WITHIN THE UNIT. BECAUSE THE INTERNAL AUDIT UNIT HAS AN IMPORTANT ROLE IN NCUA'S MANAGEMENT CONTROL SYSTEM, IT IS RECOMMENDED THAT ITS PERMANENT STAFF SIZE BE INCREASED TO PROVIDE BETTER AUDIT COVERAGE. INSUFFICIENT STAFF HAS BEEN THE CAUSE OF NEGLECT TO REVIEW SUCH IMPORTANT AREAS OF NCUA ACTIVITY AS CREDIT UNION EXAMINATION AND SUPERVISION ACTIVITIES; CHARTERING, INSURANCE, AND LIQUIDATION ACTIVITIES; THE FORMULATION AND MONITORING OF CONSUMER PROGRAMS; AND NCUA'S COMPUTER SECURITY PLAN. FURTHER RECOMMENDATIONS ARE THAT INTERNAL AUDIT'S COMPUTER-AUDITING CAPABILITY BE STRENGTHENED, AND THAT THE UNIT RELY LESS ON STAFF DETAILED FROM LINE MANAGEMENT AND OTHER OFFICES BECAUSE OF THE WORK DELAYS THUS INCURRED. MOREOVER, SUCH PRACTICES JEOPARDIZE THE INDEPENDENT ATTITUDE THAT THE AUDIT ORGANIZATION AND ITS STAFF MANDATED TO MAINTAIN BY CREATING CIRCUMSTANCES IN WHICH PERSONAL BIASES MAY BE INVOLVED. IT IS ALSO NECESSARY THAT INTERNAL AUDIT'S LEADERSHIP BE STABILIZED, SINCE THE CHANGE OF FOUR DIRECTORS IN 6 YEARS HAS HAMPERED THE UNIT'S OPERATIONS AND EFFECTIVENESS. TABLES ARE INCLUDED.