The Office of Inspector General (OIG) continues to focus its energies on some of the significant challenges facing the U.S. Department of Education. It completed implementation and end-to-end testing of its internal systems for Y2K compliance, though it could not ensure compliance of its trading partners. The OIG advised the Department as it developed a sound and integrated information-technology architecture. The OIG also found that the Department needed to improve its contract-monitoring oversight and recommended corrective actions. The Department's new accounting system poses problems, including its inability to perform a year-end closing process, resulting in auditors not being able to express an opinion for fiscal year 1998. The OIG is working with the Department to resolve these problems. Issues regarding student financial assistance were examined, such as inappropriate discharge of student loans, eligibility, default, and refund fraud, and cost-study follow-ups. Schoolwide programs now allow schools to use federal funds for whole-school improvement projects instead of specific programs. Concluding charts include reporting requirements, Inspector General's reports with questioned costs and recommendations for better use of funds, a list of unresolved reports prior to April 1, 1999, cumulative prosecutive actions, and a statistical profile for April 1-September 30, 1999. (RT)