Examination of Financial Statements of Gorgas Memorial Institute

GAO recently completed an examination of the financial statements of Gorgas Memorial Institute of Tropical and Preventive Medicine, Inc., for the fiscal year ended September 30, 1979. The Institute's appropriation legally constitutes a grant. Federal regulations require that interest earned on grant funds belongs to the United States rather than to the grantee. In recent years, the Institute has violated those requiremens by retaining interest income earned on grant funds provided by the Department of Health, Education, and Welfare (HEW) and transferring those earnings to the Institute's Endowment Fund. Those earnings exceeded $8,000 during fiscal year 1979. GAO recommended that the Institute discontinue that practice and return any future earnings realized from grant funds to HEW. It was noted at the Laboratory that (1) the distribution of payroll costs was based on predetermined estimates and (2) documentation was lacking on some procurement actions.