The food stamp program authorized by the 1964 Food Stamp Act, allows over 17 million low-income people to buy food stamp coupons having a face value greater than their purchase price and use them to buy food at participating stores. The program is administered nationally by the Department of Agriculture's (DOA) Food and Nutrition Services (FNS), and locally by agencies responsible for federally funded public assistance programs or welfare services. During 1974 and 1975, the General Accounting Office (GAO) reviewed records on the food stamp program and interviewed staff at FNS headquarters, 3 regional offices, and 8 food stamp projects in 5 States. State and local food stamp offices at the 8 projects were not effectively using available sources of information to identify overissued benefits, and consequently few overissuances were discovered. Recovery of overissued food stamp benefits and punishment of recipient fraud were given low priority as evidenced in poor investigative, monitoring, and collection procedures. States and local offices, however, have no incentive to pursue food stamp fraud because they must pay half of all administrative costs while the Federal Government pays the entire bonus value and keeps all money recovered. Neither the FNS nor the States have effective systems for monitoring and evaluating local claim and collection activities. Useless information is compiled on individual cases, and no centralized data system exists which could provide a complete picture of local programs. The DOA relies on State and local officials to investigate and prosecute suspected fraud, but gives little guidance on how such cases should be conducted. Procedures for penalizing fraud by means other than criminal proceedings have been little used. Administrative adjudication using suspension as a penalty could be a workable alternative. GAO recommends that Congress should authorize the DOA to allow States to keep some portion of monies recovered from overissued benefits. The DOA should also be permitted to handle fraud cases administratively and should encourage States to identify and collect overissued food stamp benefits and punish recipients who commit fraud. Comments from the Department of Justice on the report are appended. (Author abstract modified)