Federal authorities investigate University’s accounting practices

Yale, a perennial recipient of lucrative federal funding and an influential advocate in Washington, D.C. for higher education, is now under a sweeping federal investigation for how it manages the millions of dollars it receives in research grants each year, University officials said last week.

At the end of June, Yale received subpoenas for documents from the U.S. Department of Health and Human Services, the Department of Defense, and the National Science Foundation, which together provide over 90 percent of the University’s research funding each year. Federal authorities have already interviewed numerous Yale employees involved with grant management, Yale President Richard Levin said in an e-mail to faculty and staff on Friday.

“Yale will cooperate fully with these government investigations,” Levin said in the e-mail. “I expect all members of the faculty and staff to give a top priority to any requests from the University counsel and others assisting them for information or documents.”

The federal agencies involved in the investigation have ordered the production of documents relating to how the University reports costs for activities funded by the federal government, which often come with many strings attached.

Deputy Provost Chip Long said many of the subpoenas, which grew out of a routine audit, focus on whether Yale has improperly transferred funding from one project to another. The accounting involved is complicated, Long said, and the discrepancies probably arose from errors rather than intentional efforts to defraud the government.

“Many of the faculty members have more than one grant covering the same area of research,” Long said. “We have to be extremely careful to be sure that each grant is covering only the portion of the research charged to that grant.”

In February, the Department of Health and Human Services released an audit claiming that Yale had not properly accounted for nearly $200,000 in government funding. The report also claimed that a researcher had not devoted enough time to a project as was specified under the terms of his grant. In its written response to the audit, Yale acknowledged about $80,000 in disallowances but disputed the report’s other allegations.

A representative for the Health Department said he could not comment on the ongoing investigation.

University officials have said they need to improve Yale’s accounting practices, and hired a consulting group to upgrade its procedures late last year.

Universities have been subjects of frequent audits since a scandal over a decade ago in which Stanford University abused its federal funding, said Ronald Ehrenberg, director of the Cornell Higher Education Research Institute. It is unlikely that investigation into Yale’s finances will impact the funding prospects for the University as a whole, Ehrenberg said, though it could do damage to individual research groups. The audit could also force Yale to adopt stricter accounting controls, and will likely subject it to greater scrutiny in the future, he said.

“It is big deal, because you don’t want to jeopardize your relationship with the government,” Ehrenberg said.

University officials have pledged full cooperation with the audit. In an e-mail to faculty and staff, Vice President and Counsel Dorothy Robinson said that “no segment of Yale is exempt from scrutiny,” and that employees may still be contacted by authorities for interviews. She also warned colleagues to preserve documents they think may be related to the investigation, as even accidental destruction of evidence can result in criminal prosecution.

In 2005, the University received about $350 million in federal funding.

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