United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office Office of Special Investigations author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1999-06-22 monographic deposited born digital 27 p. GA 1.13:OSI-99-8 https://www.govinfo.gov/app/details/GAOREPORTS-OSI-99-8 P0b002ee180397a24 f:os99008 DGPO 2010-08-12 2011-03-24 GAOREPORTS-OSI-99-8 machine generated eng fdlp REPORT GAOREPORTS-OSI-99-8 OSI-99-8 Income taxes Research grants Federal grants Colleges and universities Internal controls Education or training costs Compensation College students Graduate education Foreign students Letter Report OSI S99008

Pursuant to a congressional request, GAO investigated the use of federal research and development grant funds by the University of California system in its payments to graduate student researchers (GSR), focusing on whether: (1) the compensation paid to GSRs was in accordance with the guidelines set forth in the Office of Management and Budget's (OMB) Circular A-21; (2) foreign students were receiving a larger share of federal research funds than resident students as compensation for performing as GSRs; (3) the university's treatment of GSR compensation for federal income tax purposes was consistent with its actions in charging such moneys to the federal grants under OMB Circular A-21; and (4) the Department of Health and Human Services (HHS) provided adequate oversight in safeguarding against the diversion of funds from federal research grant awards.<p/>GAO noted that: (1) GSRs receive a salary and tuition or fee remission from the University of California as compensation for their work on federally sponsored research projects; (2) according to the university, its practice of charging the salary and remissions against federally funded research grants complies with OMB Circular A-21; (3) however, based on GAO's review of the compensation paid to GSRs for services charged to federal research grants, GAO found that these payments sometimes exceeded the allowable costs that could be charged to such grants; (4) GAO compared the compensation paid to individual GSRs assigned to federally sponsored research projects against: (a) the National Institutes of Health (NIH) guideline that establishes an award level of $23,000 per GSR; and (b) the salary of a first-level postdoctoral researcher at the university performing comparable work at an equivalent level of effort; (5) of the $201 million charged by the university to federally sponsored research during school years 1995-1996 through 1997-1998, $4.4 million was charged in excess of the NIH maximum award in what GAO believes to have been unreasonable compensation; (6) the university also charged federally sponsored grants approximately $19.3 million for GSR compensation that exceeded the salary of a first-level postdoctoral researcher during the same period; (7) although all GSRs receive substantially the same salary for work performed on federal research grants, foreign students receive a proportionally larger share of fee and tuition payments charged to the grants because they pay a higher nonresident student tuition; (8) although the university treats GSRs' salary and tuition or fee remission as compensation for purposes of the OMB Circular, traditionally it has treated only the salaries as part of the GSRs' gross income for federal income taxes; (9) the Internal Revenue Service informed GAO that, as a general principle, reasonable tuition remission provided as a result of an employer-employee relationship can properly be considered a fringe benefit and excludable from the employee's gross income for tax purposes; and (10) when audits are conducted in response to specific requests for awarding agencies other than NIH, HHS determines only whether line-item amounts exceed the amounts approved by the awarding agencies. https://www.govinfo.gov/content/pkg/GAOREPORTS-OSI-99-8/html/GAOREPORTS-OSI-99-8.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-OSI-99-8/pdf/GAOREPORTS-OSI-99-8.pdf GAO/OSI-99-8 https://www.govinfo.gov/app/details/GAOREPORTS-OSI-99-8 Letter Report GAO/OSI-99-8; Federal Research Grants: Compensation Paid to Graduate; Income taxes Research grants Federal grants Colleges and universities Internal controls Education or training costs Compensation College students Graduate education Foreign students Title 26 Section 117 26 U.S.C. 117