The U.S. Marshals Service is mismanaging more than $1.4 billion in property seized from drug dealers and other criminals, resulting in a significant income loss for the fight against illegal drugs, the General Accounting Office says.

A draft of the report by the GAO, a congressional investigative agency, was obtained by The Associated Press.The report said that the Marshals Service lost a $1.5 million profit on one property alone after utility bills went unpaid for a year.

The agency also caused "embarrassment to the government" by seizing an innocent person's property and once paid for an audit that consisted solely of comparing checks written by an apartment manager with the amounts recorded on check stubs by the same manager.

"The government has lost or is at risk of losing money on properties worth millions of dollars," said the report, which did not attempt to estimate a total income loss.

The GAO said the Marshals Service, a Justice Department agency, had custodial responsibility for some $1.4 billion worth of seized property as of Dec. 31. The program generated $311 million in fiscal 1989 for prison construction and for hiring new prosecutors, both part of the fight against illegal drugs.

GAO officials said the report will formally be issued in several weeks and there will be no significant changes in the draft copy.

The Justice Department released a response it sent to the GAO on April 1, which said the agency agrees the program "has experienced problems caused by substantial growth and change." But the department took issue with some of the findings and conclusions.

Harry Flickinger, assistant attorney general for administration, said in the response that the GAO report contained "broad generalizations from specific cases; and use of old cases to represent current program activities."

He added that the GAO had failed to mention the department's updated information system, which, he said, ensures that "adequate and accurate information" is available in Washington and the district offices.