Summary Report on Indirect Cost Reviews at Universities and Nonprofit Organizations for Fiscal Years 1992 and 1993

This final report summarizes the results of 17 audits of indirect cost rate proposals completed in Fiscal Years 1992 and 1993. The Office of Inspector General (OIG) identified 180 findings with adjustments totaling $507 million. Using the OIG findings, the Division of Cost Allocation (DCA) negotiated indirect cost rates which were as much as 34 percentage points lower than the rates initially proposed. Based on the results of completed negotiations at all 17 institutions, DCA credited the OIG with the Federal share of actual savings (funds put to better use) of $179 million. Because of continuing interest in and concern with indirect costs and the continued specter of staff shortages in both DCA and OIG, future plans are to; (1) identify high risk areas and concentrate efforts in those areas, (2) encourage universities to improve the systems they use to prepare indirect cost proposals, and (3) identify improvements that will strengthen Office of Management and Budget Circular A-21.