Each year Medicare-participant hospitals submit a cost report to the Health Care Financing Administration (HCFA) to settle their reimbursement claims. These reports are subject to audit, and a decision by HCFA to audit can be costly to the auditee. This article uses data from 6,270 cost reports filed in 1986 to explore the factors related to the probability of an audit. Logistic regression equations are estimated to examine how hospital characteristics influence the chance of audit. The results suggest that audit probability can be predicted with reasonable accuracy by a hospital's bed size, ownership type, teaching status, function, proportion of Medicare inpatient days, and geographic location.