Michigan U. Billed U.S. for IRS Penalties, Audit Finds

Calling the expenditures research-related, the University of Michigan billed the federal government for IRS penalties, flowers, football tickets, television commercials and Rose Bowl parties, according to an audit obtained Tuesday.

The costs are listed in a federal audit challenging $7.9 million in expenses at the school in 1989. The audit is the latest in a series of examinations questioning the way big universities try to pass on school overhead costs to the federal government as research-related.

The draft report on Michigan’s expenditures by the inspector general’s office of the Department of Health and Human Services obtained by The Times said that such costs did not benefit federally sponsored research at the school.

The audit indicated that the school already had agreed to withdraw $5.9 million of the costs. University officials did not return telephone calls.

Among the costs labeled inappropriate by the auditors were $22,240 in tax penalties paid to the Internal Revenue Service, $64,000 for television commercials promoting the school, $37,764 for three cars for university officials, $1,911 for football tickets and $4,329 in first-class air fare and other expenses so that a university official and his wife could attend the 1989 Rose Bowl in Pasadena. The final item included an unspecified amount for a gift to an unidentified ABC sports host.

Rep. John D. Dingell (D-Mich.), who has been crusading to rein in such costs, said that the Michigan audit will be one of the subjects of a hearing on research costs planned for this fall.

“The unallowable or inappropriate charges made by the University of Michigan are typical of those we have seen at other universities, so I cannot say that the draft report’s findings come as a surprise,” Dingell said.

As many as 60 universities are under scrutiny by federal and congressional investigators. The nationwide examination began last year after Dingell’s staff discovered $1.3 million in inappropriate bills at Stanford University.