Presented by David Fields, CPA, Senior Manager October 9, // experience perspective Pennsylvania Association of Community Health Centers PIN – Health Center Budgeting and Accounting Requirements
PIN 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 2
PIN 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… 3
HEADLINE ISSUE – COMPLIANCE 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 4
THE RULES 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
THE RULES Awarding agency guidance HHS Grants Policy Statement BPHC Policy Information Notices (“PINs”) & Program Assistance Letters (“PALs”) Notice of grant award (“NGA”) terms & conditions 6
FEDERAL REGULATION MAP HHS / HRSA / BPHC Section 330 CHC Grant Non-Profit CHC Organization (PRIVATE) Local / Tribal Government CHC Department (PUBLIC) 501(c)(3) Non-Profit Requirements A-110 – Grants Management Standards Agriculture 7 CFR 3019 HHS 45 CFR 74 HUD 24 CFR 84 A-122 – 2 CFR, Part 230 – Cost Principles Standards A-133 – Single Audit Local / Tribal Government Requirements A-102 –Grants Management Standards Agriculture 7 CFR 3016 HHS 45 CFR 92 HUD 24 CFR 85 A-87 – 2 CFR, Part 225 – Cost Principles Standards A-133 – Single Audit Office Supply Company Gov’t Contract - Paper Gov’t Contract - Staples Federal Contractor Requirements Federal Acquisition Regulation - FAR 7
PIN A GAME CHANGER 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
BUDGETING REQUIREMENTS 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
GRANT FUNDS VS. NON-GRANT FUNDS 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 non- grant expenditures This PIN adds new requirements for documentation of expenditures of non-grant funds 10 // experience perspective
GRANT FUNDS VS. NON-GRANT FUNDS 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
NON-GRANT EXPENDITURES 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
NON-GRANT EXPENDITURES 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
ACCEPTABLE NON-GRANT FUND EXPENDITURES 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
OTHER LINES OF BUSINESS 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
PUBLIC COMMENTS - BKD 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
PUBLIC COMMENTS - NACHC 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
CONTEXT OF PUBLIC COMMENTS 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
ITEMS NOT BEING DEBATED 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
ACTION PLAN 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
ACTION PLAN 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
ACTION PLAN 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 non- grant funds 22 // experience perspective
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