The United States Attorney for the District of Connecticut reached a settlement with Yale University on allegations that this fine institution of higher learning had violated federal regulations on grant administration and accounting. Without admitting guilt, Yale agreed to pay $7.6 million, one-half as damages and the other half as penalties. Ladies and gents, boys, and girls, we have been down this grant road before. In 1990, we had Stanford with its creative definition of what constituted overhead for purposes of federal grant reimbursement; sheets, flora, pianos, and yachts made their way into the labs’ overhead costs. In the Yale case, the investigation focused on the problem of funds left in federal grants. When the grant ends, the Feds get the funds back. The government alleged those at the university, however, transferred the funds to other unexpired grants for continuing use. Also, the investigation focused on faculty summer salaries. As anyone with a nine-month contract knows, you ain’t paid in the summer unless you are teaching or have research dollars. However, to get those research bucks, you must be devoted to research. Yale faculty, allegedly, did other things besides research but still billed the government for 100% of their salaries. Those activity reports certifying 100% devotion to the lab are signed under penalty of perjury and they do matter. Why do we keep making the same mistakes? Over the past few years we have seen Johns Hopkins, the University of Alabama, the University of Connecticut, Northwestern, and Cornell reach settlements over research grant issues. The Barometer offers some help.1. Get some checks and balances on the researchers. Of course they want summer salaries. Of course they don’t want to lose unspent money. zRemove the temptation by separating spenders and recipients and their ability to control both. Opportunity and need cause even the best and brightest to interpret rules creatively and even bend them on occasion. Grant administrators need to supervise even the star researchers.
2. Get some periodic reports. Why is it such a surprise that the researchers have money left and an expiring grant? Periodic reports would let researchers know how much they have used, how much remains, and when the grant expires. They can plan ahead, or, when all else fails, do what the Feds want them to do: Give the money back.
3. Get some random audits going. Pick some grants, any grants, and check for compliance. OSHA shows up unannounced to find violations. University auditors should do the same with major research grants.
4. Apply the lessons of each audit. If auditors find issues in one grant, assume widespread use of similar tactics and tools. Then self-correct those problems and self-report.
5. In your training on grants and grant administration, go beyond the technicalities of rules. Give the researchers and staff a basic lesson in ethics: Remember the intent of federal research grants and act accordingly. Public trust and stewardship were terms that emerged as Yale settled its allegations. When you are a steward of public funds, the very appearance of conduct matters. Use this test: If this were your money that you had given to someone to conduct research, how would you feel about the decisions being made on the use of those funds and the accounting for them?
About mmjdiary
Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD.
The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards.
Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio.
She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News.
In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles.
Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
