GAO reviewed the need to improve the administration and effectiveness of the Department of Energy's (DOE) low-income weatherization assistance program. This program uses Federal funds to help low-income people improve the energy efficiency of their homes. GAO considered the program's effectiveness, energy savings, financial controls, and compliance monitoring. The number of homes weatherized by the program has substantially increased since the last GAO review. However, at the current level of funding, it is unlikely that DOE can maintain the present level of production beyond 1981. Program effectiveness has been hampered by: (1) continued overstatement of the number of homes weatherized; (2) incomplete or inadequate weatherization of homes; and (3) a low emphasis on rental units, where over half of the low-income population resides. Further, the energy efficiency of many homes served by the program may not have been improved very much because the weatherization work in many homes GAO inspected was incomplete or inadequate. The extent to which the weatherization program is actually reducing energy costs and consumption in low-income homes still is not known by DOE or the States. DOE recently completed a study of energy savings, but the reliability of the study is questionable because of sampling and data problems. Deficiencies in the financial management and monitoring systems continue to exist at all levels. Many of the local agency systems did not meet Federal requirements, and most of the State offices did not have financial management and monitoring systems which could be relied on for identifying and correcting accounting, inventory, and financial status reporting problems at local agencies.