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Presented by David Fields, CPA, Senior Manager October 9, 2013

Pennsylvania Association of Community Health Centers PIN 2013-01 – Health Center Budgeting and Accounting Requirements. Presented by David Fields, CPA, Senior Manager October 9, 2013. PIN 2013 - 01. Purpose: Clarification & documentation? Who? All CHCs including look-a-likes What?

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Presented by David Fields, CPA, Senior Manager October 9, 2013

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  1. Pennsylvania Association of Community Health CentersPIN 2013-01 – Health Center Budgeting and Accounting Requirements Presented by David Fields, CPA, Senior Manager October 9, 2013

  2. PIN 2013 - 01 • 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

  3. PIN 2013 - 01 • 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…

  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

  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

  7. Federal Regulation Map

  8. PIN 2013-01 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

  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

  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

  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

  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?

  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?

  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

  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

  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

  17. Public comments - NACHC • Provides legislative context for PIN issues • Strongly worded objections: • “It is contrary to law” • “It changes agency practice without explanation” • “It is a legislative rule that should be issue by regulation” • Challenges elements of the public & non-public parts of the PIN

  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

  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”

  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?

  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

  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

  23. Thank you • 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:

  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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