Implications for colleges and universities of a proposed new audit guide for Office of Management and the Budget (OMB) Circular A-110 are considered. The Department of Health and Human Services (HHS) is considering issuance of an audit guide that will outline procedures to be followed to comply with the audit requirement in Circular A-110. With such a guide, HHS audit work previously done by the agency might be shifted to colleges and universities. It is suggested that although HHS officials initially assured auditors they would be able to exercise professional judgment in conducting the student financial aid audits, experience to date has indicated the opposite. Many regional audit agencies are treating these guides as if they were law and have required compliance with every detailed step. It is claimed that a balance between quality and cost effectiveness is needed. One way to assure some degree of equity among institutions is to relate the percentage of resources spent on A-110 audits to sponsored research volume. It is proposed that under ideal circumstances an audit guide would: be under the auspices of OMB; with the audit procedure, be voluntary; completely satisfy A-110 requirements; not be subject to frequent changes; allow the accountants or state auditors to exercise judgment in the selection of areas to evaluate and to determine the extent of testing necessary in the circumstances; and permit internal audit departments with a high level of independence to do A-110 audits. Developments since 1976 that pertain to audits of higher education institutions are also traced. (SW)