During the 6-month period ending March 31, 1998, the Office of Inspector General assisted the Department of Education in ensuring that taxpayer-funded federal education programs and operations are implemented efficiency, effectiveness, integrity and accountability. In the executive summary, under "Goal 1: Programs and Operations Improvement," student financial-assistance programs offer a significant management challenge. An audit of 16 participating schools found that the Direct Loan program requires attention and better data. Audits of the 1973 Rehabilitation Act and the Elementary and Secondary Education Act (ESEA) are under way. ADP system audits revealed that the Chief Information Officer needs a stronger leadership role in the Information Technology Department and that Year 2000 school readiness efforts are behind schedule. Financial-statement audits, performance-measure advisory activities, and management reviews are also described. Under "Goal 2: Programs and Operations Integrity," OIG's work discloses significant fraud, waste, and abuse; results in enforcement and corrective actions; and promotes deterrence. Fraudulent practices in the student financial assistance program, the Foreign School Project, and the Collegiate Athletic Student Funding Project were investigated. Included are abstracts of significant audits and audit-related activities, significant prosecutive actions, and alternative products. (MLH)