DHEW's Audit Agency, currently incorporated in the Office of Inspector General, conducts and supervises audits and investigations of DHEW programs and operations to promote efficiency and to prevent and detect fraud and abuse. GAO analyzed information on 269 completed reviews made by the New York, Philadelphia, Chicago, and San Francisco regional audit offices, as well as by the Washington area and the Social Security audit offices. Because the Audit Agency's workload had exceeded its staff, GAO suggested a method for the agency to select subjects for audit that will produce the best results. It also proposed that the agency more effectively monitor and evaluate audits by non-Federal auditors, make its automated information system more accurate by establishing controls to guarantee that all reported findings are included, and strengthen the procedures for monitoring corrective actions made after audit reports are issued. The Audit Agency should also change its method of gathering information to identify (1) whether the purpose of its audits is to review financial and compliance matters or to improve the economy and efficiency of DHEW operations, and (2) the relative importance of nonmonetary findings for the guidance of program officials responsible for acting on audit recommendations. Action taken by the Audit Agency and/or DHEW during GAO's review is noted. Correspondence and some supporting data are included. (Author abstract modified.