THROUGH COOPERATIVE RELATIONSHIPS WITH THE STATE AUDITORS AND INDEPENDENT PUBLIC ACCOUNTANTS (IPA'S), AUDITS WERE OBTAINED OF APPROXIMATELY 40 PERCENT OF THE REVENUE SHARING RECIPIENTS REPRESENTING PROBABLY 80 PERCENT OF THE FUNDS. KEY FACTORS CONTRIBUTING TO THE HIGH LEVEL OF COOPERATION INCLUDED PREPARATION OF AN AUDIT GUIDE BY ORS, GOOD LINES OF COMMUNICATION, AND THE DEVELOPMENT OF A REVIEW PROGRAM TO EVALUATE THE AUDITS. REVIEWS INDICATED THAT MOST STATE AUDITORS WERE PERFORMING SATISFACTORY AUDITS, AND FOLLOW-UP ASSESSMENTS A YEAR LATER SHOWED THAT MOST DEFICIENCIES HAD BEEN CORRECTED. IT IS BELIEVED THAT ORS OBTAINED THROUGH THIS PROGRAM THE LARGEST VOLUME OF AUDIT WORK EVER PERFORMED BY STATE AUDITORS FOR THE FEDERAL GOVERNMENT WITHOUT DUPLICATION OF EFFORT AND AT NO COST TO THE FEDERAL GOVERNMENT. THE 1976 AMENDMENTS TO THE REVENUE SHARING ACT CONTAINED COMPREHENSIVE AUDITING AND RECORDKEEPING REQUIREMENTS AND CONSIDERABLY INCREASED ORS'S AUDIT REVIEW RESPONSIBILITIES. RECIPIENTS MUST EMPLOY THE SAME FISCAL ACCOUNTING, INTERNAL AUDIT, AND EXPENDITURE PROCEDURES FOR REVENUE SHARING FUNDS AS FOR THEIR OWN RESOURCES. IN ADDITION, EACH RECIPIENT WHO RECEIVES MORE THAN $25,000 PER YEAR MUST HAVE AN INDEPENDENT AUDIT CONDUCTED AT LEAST ONCE EVERY 3 YEARS TO INSURE COMPLIANCE WITH THE ACT. ORS'S CRITERIA FOR INDEPENDENT AUDITORS ARE DETAILED, ALONG WITH PROCEDURES GOVERNING FINANCIAL STATEMENTS, SECONDARY RECIPIENTS, AND WAIVERS. THIS PROGRAM WHICH MONITORS COMPLIANCE WITH THE 1976 AMENDMENTS, THAT A SINGLE AUDIT PROGRAM CAN BE DEVELOPED THAT WILL RESULT IN QUALITY AUDITS WITH A MINIMUM EXPENDITURE OF TIME AND MONEY. (AUTHOR ABSTRACT MODIFIED - MJM)