Satisfaction of Grantee Debt

A decision was requested with regard to recovery of claims arising out of administration of Federal grants by a university which was found to have insufficient fund controls and which was unable to account for grant funds. Setoff against grant funds may not be allowed if it would interfere with the purposes for which the grant was made, but there is no objection to the use of indirect costs earned under the grant to pay off a debt incurred by the grantee when it made ineligible expenditures under those grants. The grantee is responsible for providing satisfactory evidence of allowable expenditures of grant funds, and failure by the university to comply with this requirement is a serious breach of duties under the grants.