Fiscal year 1995 marks the first year during which an independent audit was conducted of the U.S. Department of Education's financial statements. This first annual accountability report describes the department's history, current mission, priorities, and progress. It highlights the department's program and fiscal accomplishments and describes future customer-service efforts. The report includes other reporting requirements on finance management: the overall condition of management controls, a progress report on audit followup, and a status report on the timelines of the department's vendor payments. The data indicate that the department has improved the control and accountability over student loan defaults, increased direct-loan program volume from 104 schools to approximately 1,350 schools, and initiated improvement to management processes. Six exhibits, three figures, the department's response to the audit, and the auditor's evaluation of department comments are included. (LMI)