An audit was carried out to determine whether the Bureau of Indian Affairs (BIA) had implemented applicable portions of the Education Amendments of 1978, enacted to provide quality education to Native Americans. The Office of Inspector General of the Department of the Interior found that management of Indian education programs showed many deficiencies, and that 10 of the 17 principal provisions of the act had not been implemented effectively. With regard to five provisions selected for detailed review, it was found that the BIA: (1) had not adequately established and implemented academic standards; (2) had not developed an adequate management information system; (3) had not allocated education funds equitably; (4) had not provided Indian children with facilities that were safe, healthy, or conducive to a quality education; and (5) had not consulted the tribes to establish educational goals and policies. These conditions occurred because senior-level BIA managers have not given the program sufficient priority, and because of frequent changes in program leadership. As a result of these conditions, students in BIA schools are not receiving quality educations. In addition, the lack of an accurate management information system means that the BIA lacks the ability to make informed decisions about the education program. This report contains background on the BIA mission, schools, and funding, and recommendations addressing program deficiences. Appendices, which make up over half of the document, include major provisions of the Education Amendments of 1978, a summary of BIA funding for 1990, a list of schools visited, and BIA responses to the audit. (SV)