The Office of Inspector General (OIG) describes its provision of audit, investigation, fraud detection and prevention, and certain security services to the U.S. Department of Education (ED). Audit activities are reviewed in the first section, which discusses audit accomplishments, OIG audits by government and independent auditors, audits on various ED programs, funds recovered, recent federal court decisions, and the "single audit" concept. Data on OIG investigation activities and workloads, and highlights of significant investigations, are presented in the second section. The third section describes fraud control activities, including operation of a complaint center, review of internal controls at the National Institute of Education, and actions to promote ED employee awareness of fraud, waste, and mismanagement. The fourth section outlines OIG staffing and budgetary constraints, reviews of proposed legislation and regulations, participation in the President's Council on Integrity and Efficiency, issuance of subpoenas, and processing of General Accounting Office reports for ED. Appendices list OIG audits for the reporting period and provide data on ED's accounts receivable. (Author/RW)