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For the fiscal year ended June 30, 1977, the University of Rochester Medical School received about $11 million in federal grants. The university's system for administering and accounting for grant funds provided sufficient documentation and used sufficient control procedures to enable it to comply with federal regulations for the financial management of grants. The funds were generally being used for the purposes intended, and costs claimed for reimbursement were adequately documented. Certain charges, however, were not in accordance with Department of Health, Education, and Welfare or National Science Foundation policies. These involved: charging 100 percent of a principal investigator's salary to federally supported grants, charging student stipends to research grants, and charging equipment purchases to research grants. The Defense Contract Audits Agency conducts audit activities on a continuous basis, and the work of the Audit Agency was sufficiently thorough to adequately and logically develop information. One of the principal investigators had received several grants which appeared to involve related research activities. These projects had been coordinated, and grant officials at both agencies were aware of the close relationship of the grants.