UTILIZING FNS RECORDS, THE OA OF THE DEPARTMENT OF AGRICULTURE IDENTIFIED ABOUT 1,300 PROBLEM VENDORS. THE REVIEW SURVEYED FNS RECORDS OF CASH COLLECTIONS AND DEPOSITS FOR 6,700 AGENTS DESIGNATED AS REPORTING POINTS, WHICH REPRESENTED SALES ACTIVITY OF ABOUT 14,000 ISSUING AGENTS DURING THE PERIOD FROM JULY 1974 THROUGH OCTOBER 1975. ALSO EXAMINED WERE SEVERAL TYPES OF COMPUTER PRINTOUTS, FEDERAL RESERVE BANK (FRB) DEPOSIT LISITINGS, AND OTHER DOCUMENTS ALLOWING A REASONABLE RECONCILIATION OF REPORTED CASH COLLECTIONS WITH DEPOSITS TO FRB. MOREOVER, A SURVEY WAS MADE OF THE COUPON INVENTORY SYSTEM AT FNS. ISSUING AGENTS IDENTIFIED THE FOLLOWING PROBLEMS: (1) 224 CASES IN WHICH REPORTED DEPOSITS COULD NOT BE CONFIRMED, AND (2) 1,096 CASES WITH PATTERNS INDICATING SERIOUS LATE DEPOSITING. ACCOUNTABILITY PROBLEMS WERE FIRST NOTICED WHEN AN AGENT FAILED TO ACCOUNT FOR OVER $1 MILLION OF DEPOSITS REPORTED BUT NOT MADE, AND WHOSE CONNECTION WITH FNS FOR SELLING FOOD COUPONS WAS THEREFORE TERMINATED IN 1975. AS A CONSEQUENCE, OA DEVELOPED ACTION PLANS TO DETECT AND CORRECT THESE PROBLEMS NATIONWIDE. THESE PLANS ARE DETAILED IN THE REPORT. CORRECTIONS OF FNS PROCEDURAL AND SYSTEMATIC WEAKNESSES HAVE SINCE BEEN PARTIALLY IMPLEMENTED, AND CONSIDERABLE ACCOUNTABILITY IMPROVEMENTS HAVE RESULTED. (MRK)