Due to the increasing bankruptcy caseload and the requirement of the Bankruptcy Reform Act of 1978 that trustees furnish information about estate administration, the House Judiciary Committee directed the General Accounting Office (GAO) to analyze the extent of trustee fraud and efforts to prosecute it, Department of Justice oversight of bankruptcy trustees, the potential for conflict of interest in the U.S. Trustee (UST) program, and whether political appointees meet the criteria for UST positions. GAO audit work conducted between December 1991 and September 1992 found that the bankruptcy trustee system is vulnerable to fraud. Trustee fraud is committed when assets of bankruptcy estates are misappropriated by trustees. Fraudulent activities by trustees include the embezzlement of estate funds, the theft and/or sale of estate assets to insiders, and illegal fee arrangements. Steps taken by the Department of Justice to improve its oversight of bankruptcy trustees include more rigorous review of trustee candidates, enhanced trustee reporting requirements, and more extensive trustee audit coverage. Challenges faced in addressing the bankruptcy system's vulnerability to fraud concern the number of cases open for long periods of time, problems identified by Inspector General audits, and funding limitations. Appendixes identify UST regions and compare bankruptcy case filings by region for 1986-1991. 4 tables and 2 figures