Funding chiefs are debating whether to launch an investigation into claims that the University of Sheffield's School of East Asian studies unjustly improved its rating in the 1996 research assessment exercise.
The department increased its score from 2 to 3A in the exercise, and won about Pounds 1 million as a result. A department that performs well in the RAE is also better able to lever money from the research councils, industry and charities.
The funding council would want its money back if the department were found to have unfairly upped its rating.
Bahram Bekhradnia, head of policy at the Higher Education Funding Council, said: "If the University of Sheffield were to have benefited from (any discrepancies in the RAE submission), Hefce could have to withdraw the money retrospectively."
The allegations - which surfaced in The Guardian this week - centre on research papers submitted to the exercise that had not been published or even completed.
Under the stewardship of Ian Gow, now director of the business school at the University of Nottingham but who headed the University of Sheffield's School of East Asian studies at the time, staff produced a series of occasional papers that were submitted to the RAE.
However, in at least one case, copies of the papers were not published until after they were requested by the RAE panel that was assessing the school's performance.
A spokesman for the university said: "The university is concerned that there should have been any irregularities in the submission from the School of East Asian Studies in the 1996 research assessment exercise.
"In common with other institutions, the university relies on the integrity of individual heads of departments to ensure the accuracy of subject submissions. However, the head of department responsible for overseeing the submission in this case (Professor Gow) is no longer a member of staff at the University of Sheffield and therefore we will not be reviewing his position."
A spokesman for the funding council said that it had received no formal complaint.