"We look at a laundry list of factors in tryingto identify whether compensation is reasonable ornot," Owens said. "What we look at is...what arethe qualifications of the individual, what do theydo for that money, is their contract reduced towriting, what has been the historical compensationof that individual and what do individuals incomparative positions at other institutionsreceive for that job."

Owens said the current audits have alreadyuncovered some areas of noncompliance.

"What we've found in some cases is thatsubsidiaries are being used to pay compensation tothose in positions of influence in theorganizations," he said.

Officials: Audits Waste Money

In interviews with the Chronicle of HigherEducation, some officials at the universities nowunder investigation said they were concerned thatthe extensive audits would waste money and timeand result in the universities' paying highertaxes.

"It's our sense that the IRS is looking forways to increase revenue to the federalgovernment," said Walter L. Harrison, aspokesperson for the University of Michigan.

According to Peter Van Etten, Stanford's chieffinancial officer, Stanford has assigned a senioruniversity financial official to work full time onthe audit with the IRS agents.

Owens told The Crimson that adding revenue isnot a primary mission of the coordinated auditprogram.

"I don't think the intention in this area oftax administration is to balance the budget,"Owens said.

Scott said that he is not overly concernedabout the implications of a potential audit ofHarvard, adding that the University currently doespay taxes on unrelated business income.

"[The IRS has] a right to ensure that everyinstitution and individual who owes federal incometaxes is paying them," he said. "We believe thatwe are and we work very hard to make sure that wedo."

Scott said that, if audited, Harvard wouldcomply with any reasonable requests forinformation on its finances.

Still, he added, "If they came up with afinding that we didn't agree with, we'd contestit.