As the cognizant audit agency for Princeton University (Princeton), we audited Princeton's costs claimed under 20 Government-funded, cost-reimbursement grants and contracts (agreements). The Defense Contract Audit Agency had advised us that several Princeton employees, including two principal investigators, were also employed by a commercial business. These 2 principal investigators were responsible for 28 Government-funded agreements at Princeton between October 1, 1986, and December 31, 1996. After becoming aware that Princeton employees were also working at a commercial business, we initiated this audit of the agreements assigned to the two principal investigators. The audit covered 20 of the agreements with claimed costs of $19 million. We did not audit the remaining eight agreements because the record retention period had expired.