Federally Sponsored Research at Educational Institutions: A Need for Improved Accountability

In fiscal year 1977, over $3.8 billion in grants and contracts was awarded to educational institutions for the conduct of research. Over 70 federal agencies sponsor or otherwise support basic research involving over 2,000 educational institutions. The federal government generally relied on the integrity of the institutions to provide assurance that research funds are used for intended purposes. Federal guidelines under Federal Management Circular (FMC) 73-8 provide principles designed to recognize all costs of such research under generally accepted accounting principles. A review was conducted to evaluate the reliability and integrity of the methods and systems educational institutions used for classifying and allocating costs to federal research grants.