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Presented by David Fields, CPA, Senior Manager October 9, 2013 1 // experience perspective Pennsylvania Association of Community Health Centers PIN 2013-01.

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Presentation on theme: "Presented by David Fields, CPA, Senior Manager October 9, 2013 1 // experience perspective Pennsylvania Association of Community Health Centers PIN 2013-01."— Presentation transcript:

1 Presented by David Fields, CPA, Senior Manager October 9, // experience perspective Pennsylvania Association of Community Health Centers PIN – Health Center Budgeting and Accounting Requirements

2 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

3 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

4 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

5 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

6 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

7 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

8 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

9 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

10 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

11 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

12 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

13 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

14 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

15 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

16 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

17 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

18 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

19 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

20 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

21 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

22 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

23 THANK YOU FOR MORE INFORMATION // For a complete list of our offices and subsidiaries, visit or contact: Please feel free to contact David Fields

24 24 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.

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