Presented by
David Fields, CPA, Senior Manager
October 9, 2013
1 // experience perspective

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 Purpose:
 Clarification & documentation?
 Who?
 All CHCs including look-a-likes
 What?
 Budgeting
 Documentation & accounting records
 Accounting for CHC scope of project funding
 Other lines of business outside of scope

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 Why?
 GAO & OIG pressure to improve program integrity measures
 Warnings?
 Your organization
 Who knows
 Who is responsible
 Ignorance of law is no excuse
 NACHC & BKD responses
 To do…

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 OIG audits of CHCs
 New era of accountability – phrase spoken with
ARRA bill
 Seeing fruits of change – OIG est. 57 reports for 2013
 Accountability, not new rules
 HRSA scrutinized by OIG
 OIG audits of CHCs
 Significant questioned costs

 Federal laws & regulations
 Section 330 of the Public Health Services Act (42 U.S.C. 254b)
 Program specific: CHC (42 CFR 51c) & Migrant (42 CFR 56)
 Grant administrative regulations (OMB Circular A-110) :
 45 CFR 74 ~ Non-profits
 45 CFR 92 ~ State, Local, Tribal Government
 Cost principles: 2 CFR part 230 (OMB Circular A-122)
 Audit requirements: OMB Circular A-133

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 Awarding agency guidance
 HHS Grants Policy Statement
 BPHC Policy Information Notices (“PINs”) & Program
Assistance Letters (“PALs”)
 Notice of grant award (“NGA”) terms & conditions

HHS / HRSA / BPHC
Non-Profit CHC Organization
(PRIVATE)
Section 330 CHC Grant
Local / Tribal Government
CHC Department
(PUBLIC)
Office Supply
Company
Gov’t Contract
- Paper
Gov’t Contract
- Staples
Local / Tribal Government
Requirements
501(c)(3) Non-Profit
Requirements
A-110
– Grants
Management
Standards
Agriculture
7 CFR 3019
A-122 – 2 CFR,
Part 230
–
Cost Principles
Standards
A-133
– Single
Audit
A-102 –Grants
Management
Standards
Agriculture
7 CFR 3016
A-87
– 2 CFR,
Part 225 –
Cost Principles
Standards
A-133
– Single
Audit
HHS 45 CFR
74
HHS 45 CFR
92
HUD 24 CFR
84
HUD 24 CFR
85
Federal Contractor
Requirements
Federal Acquisition
Regulation - FAR
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 Expectations gap
 How CHCs are doing things?
 How the Bureau & OIG want CHCs to do things?
 Documentation
 Segregate grant expenditures from non-grant funds
 Clarification needed: definition of non-grant funds
 Program income
 Other income
8 // experience perspective

 Section IV addresses budgeting requirements and requires that “appropriate HRSA approvals are requested and received”
 Is this just for 330 grants funds or for all funds?
 How will this approval be documented – a separate form?
EHB?
 Budget revisions required for all funds or just 330 grant funds?
 Timing of approvals a concern
9 // experience perspective

 All Section 330 grant expenditures have to be documented in your accounting records
 There are different requirements for grant expenditures vs. non-grant expenditures as OMB
Circulars, CFRs, etc. generally do not apply to nongrant expenditures
 This PIN adds new requirements for documentation of expenditures of non-grant funds
10 // experience perspective

 Some CHCs feel like:
 We spent the money
 Trust us its all in there
 If asked we can “come up with the expenses”
 No one ever asked before
 The reality is:
 What do the rules say?
 Someone is asking
11 // experience perspective

 New PIN could conflict with other grant rules or donor intentions
 HRSA approval for such activity?
 PIN requires that every expenditure be matched with a corresponding revenue stream
 This is required to be documented
 All expenditures require a price or cost analysis to be performed
 What does that mean?
12 // experience perspective

 Is the expectation that the new PIN requirements on non-grant fund expenditures be tested by the Health
Center’s external auditors and if so, are violations questioned costs?
 PIN requires all non-grant funds be fully covered by a revenue stream – no more deficits?
13 // experience perspective

 Repair or minor renovations of physical plant not to exceed
$100,000
 Building financial reserves up to 3 months
 Interest payments on cash shortfalls
 Salary cost over HRSA cap
 Fundraising
 Meals to board or employees in special situations
 Incentives valued at $20 or less
 Special one-time costs
14 // experience perspective

 Health centers are prohibited by the PIN to transfer benefits received from being a Section 330 grantee
(e.g. program income) to out of scope activities
 All out of scope activities must be self sufficient and have adequate revenue streams to cover expenditures, including a reasonable allocation of overhead, if applicable
15 // experience perspective

 Financial perspective
 Outlines significant administrative & grants management changes
 Raises significant questions about implementation
 If implemented as published will have significant and far reaching impact
16 // experience perspective

 Provides legislative context for PIN issues
 Strongly worded objections:
1. “It is contrary to law”
2. “It changes agency practice without explanation”
3. “It is a legislative rule that should be issue by regulation”
 Challenges elements of the public & non-public parts of the PIN
17 // experience perspective

 Not a license to ignore PIN
 Recognize the environment of more program integrity measures not less
 Many of the concepts are not being debated
 The level of documentation may be argued, but more documentation will be required
18 // experience perspective

 That A-110 & A-122 rules that apply to federal grant dollars including time & effort reporting
 Must have plan & budget that meets requirements of
PHS Act section 330(k)(3)(I)(i), even if disagreement about having two budgets
 That program integrity measures have been increased
 “New Era of Accountability”
19 // experience perspective

 Know the rules…really know the rules
 Who in your Organization is responsible for which rules?
 Where & to whom do you go for answers?
 Document your compliance
 What are your policies?
 Where is you documentation maintained?
 How well is your activity documented?
20 // experience perspective

 Stay informed & connected
 Be aware of NACHC & PACHC updates
 Look for final PIN
 Take action
 Prioritize your weaknesses & fix now
 Despite dispute over some elements of PIN, address items not up for debate
21 // experience perspective

 Track CHC grant funds closely
 Even if two budgets is challenged, identifying & documenting grant expenditures is necessary
 Develop a game plan to ensure time and effort reporting is in compliance
 Begin to consider the recording requirements of the new PIN and develop a game plan to account for nongrant funds
22 // experience perspective

Please feel free to contact
David Fields dfields@bkd.com
417.865.8701
FOR MORE INFORMATION // For a complete list of our offices and subsidiaries, visit bkd.com or contact:

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The information in BKD seminars is presented by BKD professionals, but applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor before acting on any matters covered in these seminars.