Med School Audit Nears Completion

A federal audit of Harvard Medical School is nearing its final stages, auditors said yesterday. The audit is scheduled to conclude with a Congressional hearing next month and an official report in February or March.

The U.S. General Accounting Office (GAO) has completed its work at the Medical School and is currently sifting through data, according to Joseph S. Cohen, the lead auditor on the project.

"As of now, we've completed the work we're going to do on site," Cohen said. "We're analyzing data and we're interpreting data."

GAO officials would not reveal any preliminary figures from the audit. But Medical School Administrative Dean for Financial Affairs John M. Deeley told the school's faculty council last month that the GAO has disallowed $75,000 in expenditures for fiscal 1991, according to a Faculty of Medicine newsletter published late last month.

The Medical School had already reduced its 1991 request for reimbursements of overhead costs by $500,000 after accounting firm Coopers & Lybrand conducted an independent audit for the University.

Harvard acknowledged that its reimbursement request had listed a number of inappropriate expenses, including the cost of a retirement party for a senior administrator and expenditures relating to the home of then-President Derek C. Bok.

The GAO began auditing the school's research overhead costs last April at the behest of a Congressional subcommittee on oversight and investigations. The subcommittee, part of the Energy and Commerce Committee, is chaired by Rep. John D. Dingell (D-Mich.).

The audit was the first started after an investigation at Stanford revealed overbillings that some federal officials say reached $200 million. Since then, the GAO has begun audits at MIT and the University of California at Berkeley.

The federal government reimburses schools for overhead spend- ing on grant research. In the investigation at Stanford, the government found that the university had claimed a number of costs that the subcommittee deemed inappropriate--including depreciation on a yacht and decorations for the home of former Stanford President Donald Kennedy '52.

At the hearing, which was originally scheduled for next week, GAO representatives will present the audits of the four schools--Stanford, Berkeley, MIT and Harvard Medical School. The GAO's report will cover all four audits, said Kenneth J. Croke, a GAO official in Boston.

Expansion Nixed

Although the GAO had considered expanding the probe at Harvard to include the School of Public Health and the Faculty of Arts and Sciences, Cohen said yesterday that it will not do so.

The Medical School is currently negotiating with the Department of Health and Human Services (HHS) to determine a new indirect cost rate. Currently, the Medical School has a provisional rate of 88 percent, which means the University can claim up to 88 cents in indirect cost reimbursement for every dollar spent on grant research.

The Medical School collected $13.5 million in reimbursements for 1990, when the rate was 77 percent, and under the provisional rate, the school expected to collect $16.3 million for 1991.

But earlier this year, HHS proposed to slash the Medical School's indirect rate to less than 65 percent, a move that would cost the school $6 million a year. The Medical School is appealing the decision.

An Office of Management and Budget order will cap administrative cost reimbursement, a significant portion of indirect cost recovery, at 26 percent of direct costs. This cap, effective next July, will translate into a $2 million loss for the Medical School, according to the school's newsletter