This report discusses federally sponsored research at educational institutions and suggests ways to improve accountability for these funds. The following suggestions are made for minimizing problems presented in this report: (1) development of more definitive cost principles for both the institutions and the Federal auditors to follow; (2) more active involvement of internal auditors at the institutional level; (3) more oversight by grantor agencies with respect to how research moneys are being spent; and (4) increased Federal audit effort. (JD)