P rogram and Financial Integrity Preparing for the A-133 September 17, 2013 Presented by Lawrence Horlamus, Auditor Office of Federal Assistance Management Division of Financial Integrity

Agenda Program Integrity Initiative at HRSA A-133 Audit Findings Allowable/Unallowable Costs Allocation and Segregation of Costs Grant Personnel Charges Financial Management – Good and Bad Practices Reporting Sub-Recipient Requirements & Monitoring Procurement Questions and Answers 2

Program Integrity Initiative “The Program Integrity Initiative is designed to target the greatest risks of fraud, waste and abuse and reduce those risks by enhancing existing program integrity operations, share new and best program integrity practices and measure the results of our efforts.” 3

Program Integrity at HRSA Agency-wide Workgroup Grantee Outreach: Technical Assistance, Webinars, Social Media Increased collaboration amongst Bureaus, Divisions, and Grants Management Operations Training 4

A-133 Audit Findings Grantees can do their part to strengthen Program Integrity by having policies and procedures that help them avoid audit findings! 5

Audit Finding Trends in 2012 Reporting Special Tests and Provisions Allowable Costs/Cost Principles Eligibility Other (i.e. Segregation of Duties, Bank Reconciliations, Management Over-ride of internal controls) As of April

Federal Cost Principles Entity Type OMB Circulars Cost Principles Uniform Admin. Reqs. Education Institutions OMB A-212 CFR CFR State and Local Governments OMB A-872 CFR CFR Non-Profits OMB A-1222 CFR CFR Federal Regulations 7

Allowable Costs 8

Cost Allocation and Segregation Grantees should be sure to fairly and accurately charge direct costs to their grant and non-grant activities. Grantees should be sure to segregate grant fund expenditures by grant to ensure accurate accounting of federal funds. 9

Personnel/Labor Charges Allowed to charge grants for actual labor not budgeted labor Actual labor charges help an organization create accurate budgets and applications. Accurate labor charges help an organization determine the true cost of a project or meeting grant objectives. 10

Good Practices Financial Management - Good Practices Having well documented Policies and Procedures. Periodically performing internal audits of grant performance and grant fund management. Providing plenty of training on managing grants and the OMB Circulars, including cost principles. 11

Bad Practices Financial Management - Bad Practices Not adequately documenting grant costs – would be unallowable if audited/reviewed. Time sheets reflect budgeted hours instead of actual hours worked. Drawing down funds in excess of immediate needs. Not segregating grant expenditures from non-grant expenditures or other grant expenditures attributable to other funding sources (not separating expenditures by funding source). 12

Reporting Information regarding submit audits, in accordance with OMB Circular A-133: Federal Audit Clearinghouse Phone (301) or (800)

Sub-Recipient Requirements & Monitoring 14

Sub-award Legal instrument to provide support for the performance of any portion of the substantive project/program for which the recipient received an award and that you as the recipient award to an eligible subrecipient May be provided through any legal agreement, even if the agreement is called a contract The term does not include procurement of property and services needed to carry out the project or program (i.e.. general services) 15

Sub-recipient An entity that: Receives a sub-award from the recipient under the award; Is accountable to the recipient for the use of the Federal funds provided by the sub-award 16

Flow of Financial Assistance Recipient HRSA Sub-recipient 17

Who is not a sub-recipient? Vendor means a seller providing goods or services that are required for the conduct of a Federal program (i.e. computers, equipment, supplies) Does not perform substantive work Provides goods or services that are ancillary to the operation of the program OMB A-133 §__

Differences between Sub-recipients and Vendors Subrecipient Vendor (routine goods and services) Terms and conditionsAll terms and conditions apply Governed by procurement rules of grantees and term of contract Subject to A-133 auditYesNo Receive profits or feesGenerally may notMay receive PaymentCost reimbursement Advance for immediate cash needs Follow written procurement procedures 19

Requirements Recipient and any sub-recipient must have DUNS # Register annually with SAM Keeping this information current and accurate Recipient must ensure the subs have not been debarred or suspended (EPLS) Recipient must monitor activities of sub- recipients 20

Recipient Requirements Provide information to sub-recipients CFDA Award information Include requirements of Federal laws and regulations sub-recipients must comply NoA terms and conditions Reporting requirements Sub-recipients expending $500 K or more in Federal awards have A-133 requirement All sub-awards in excess of $25K must be reported in FSRS 21

Recipient Requirements Seeking approvals Method of payment and documentation The prime recipient must have copies/access to subrecipient’s records HHS, HRSA, the HHS OIG, GAO, or another duly authorized representative of the Federal Govt may request that the prime recipient provide sub-recipient records. 22

Keep in mind… Grantees are responsible for including the applicable requirements in agreements with collaborating organizations 23

Public Policy Requirements (HHS Grants Policy Statement) Requirement Applicability Recipient Sub-recipient Contractor under grant (routine goods/services) Acknowledgment of Federal Funding All types of awardsYYNA Age Discrimination Act of 1975 All applications from and awards to domestic entities Y (NA to foreign and international organizations) Y (NA to foreign and international organizations) Y (NA to foreign and international organizations) Hatch Act Awards to State or local governments YYNA Health Insurance Portability and Accountability Act (HIPAA) All awards to covered entities Y (if a covered entity) Y (if a covered entity) Y (if a covered entity) Limited English Proficiency All types of awardsYYNA Smoke-Free Workplace All awardsYNA Drug-Free WorkplaceAll covered applications and awards YNA 24

What is Monitoring? A process whereby programmatic and business management performance are assessed by reviewing reports, audits, site visits, other sources 25

Who is Responsible? Monitoring efforts of recipients must provide a reasonable assurance that sub- recipients administer Federal funds in compliance with laws and regulations and that performance goals are achieved 26

What does monitoring look like? 27

Risk Indicators Complexity of program requirements Dollar amount Audit findings History of non-compliance Number of sub-recipients can affect frequency of monitoring actions Sub-recipient experience Sub-recipient environment 28

Resource Assessment Determine the amount and type of resources needed Identify available resources Address resource limitation 29

Monitoring Plan Written policies and procedures Monitoring schedule Monitoring checklist Risk assessment 30

Monitoring To ensure grant funds are used for approved purposes Reconcile sub-recipient budgeted expenditures to actual expenditures Perform site visits to review financial and programmatic operations Offer TA where needed Track report submission 31

Monitoring Regular communications with sub- recipients Determine if sub-recipient is required to submit an audit report Follow-up with sub-recipient if audit report has not been submitted Review reports and follow-up on areas of concern Track and follow-up on reported deficiencies; ensure corrective action is taken 32

Procurement Written Procedures Competition Avoiding Conflict of Interest Suspension and Debarment 45 CFR 74 or 45 CFR 92 33

Document, Document, Document Maintain a file Schedule, perform, and document site visits Document corrective action Retain audit reports Maintain other monitoring records Post-award changes 34

Provisions Federal agencies May require changes, remedies, changed conditions, access and records retention, suspension of work, and other clauses Must have access to any records pertinent to that specific project 35

Record Retention Must retain all records for three years after submitting the final FFR (including subrecipient records) Sub-recipients retention schedule must meet the requirements of HRSA grantees 45 CFR 74 or 45 CFR 92 36

Equipment and Supplies Title to equipment and supplies acquired by a recipient or subrecipient with HHS funds vests in the recipient or sub-recipient upon acquisition 45 CFR 74 or 45 CFR 92 37

Program Income Income earned by a recipient, sub-recipient, or a contractor under a grant—directly generated by the grant-supported activity or earned as a result of the award May be used only for allowable costs in accordance with the applicable cost principles and the terms and conditions of the award Sub-awards are subject to the terms of the sub- award with regard to any income generated 38

Reporting Requirements Progress reports Federal Financial Report (FFR) Payment Management System (PMS) Federal Funding Accountability and Transparency Act (FFATA) 39

Sub-recipient Agreement Identification of the PD and individuals responsible for the programmatic activity Procedures for directing and monitoring the programmatic effort Procedures to be followed in providing funding to the sub-recipient CFDA # Title of equipment Disposition of program income 40

Sub-recipient Agreement Documentation necessary for travel reimbursement and salaries and fringe benefits (time sheets, travel expense reports, payroll) Incorporation of applicable Public policy requirements administrative requirements cost principles audit requirements FFATA 41

Resources 45 CFR 74 idx?c=ecfr;sid=85fa827d5b4cde0a8286b d28e;rgn=div5;view=text;node=45%3A ;idno=45;cc=ecfr 45 CFR 92 OMB Circulars HHS Grants Policy Statement HRSA Manage Your Grant System for Award Management Notice of Award Contact Section: PO and GMS 42

43 To ask a question, please dial and use the passcode “HRSA” Press *1 to enter the question queue. Please mute your speakers when asking your question. Questions

Contact Information Health Resources and Services Administration U.S. Department of Health and Human Services 44