NEW HAVEN, Conn.--Yale recently sent the federal government $175,000 as part of a $1 million settlement reached in October over charges that Yale had illegally manipulated federal grants by shifting costs between research projects.

Government auditors had charged that Yale over-billed government agencies by $400,000 in 1977 and that 20 out of 100 cases of cost transfers examined should be disallowed.

The government was prepared to investigate similar cases of overbilling since then, but in return for a promise not to investigate this period, Yale negotiators agreed to reimburse the government $1 million, the Yale Daily News reported last month.

Jerald Stevens, vice president for finance, said yesterday Yale could have won some of the cases, but "it would have been too costly."

But Lindsey Kiang, Yale General counsel, said "it would have been a close case," adding that "there was no assurance that we would win."

Yale has overhauled its accounting system to give researchers more up-to-date information on the state of their finances, Stevens said, adding that the new system should make massive audits unnecessary in the future.