Agenda

1. Program and Financial Integrity Preparing for the A-133September 17, 2013Presented byLawrence Horlamus, AuditorOffice of Federal Assistance ManagementDivision of Financial Integrity

2. 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

3. 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

4. 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

5. 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

6. 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 2013 6

7. Federal Cost Principles Federal Regulations 7

8. Allowable Costs 8

9. 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 segregategrant fund expenditures by grant to ensure accurate accounting of federal funds. 9

10. 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

11. 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

12. 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

13. Reporting • Information regarding submit audits, in accordance with OMB Circular A-133: • Federal Audit Clearinghouse • Phone (301) 763-1551 or (800) 253-0696 • http://harvester.census.gov/sac/facconta.htm 13

14. Sub-Recipient Requirements&Monitoring 14

15. 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

16. 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

17. Flow of Financial Assistance 17

18. 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 §__.210 18

19. Differences between Sub-recipients and Vendors 19

20. 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

21. Recipient Requirements • Provide information to sub-recipients • CFDA • Award information • Include requirements of Federal laws and regulationssub-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

22. 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

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

24. Public Policy Requirements (HHS Grants Policy Statement) 24

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

26. 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

27. What does monitoring look like? 27

28. 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

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

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

31. 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

32. 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

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

34. 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

35. 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

36. 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

37. 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

38. 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

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

40. 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

41. 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

42. Resources • 45 CFR 74 http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr;sid=85fa827d5b4cde0a8286b0541125d28e;rgn=div5;view=text;node=45%3A1.0.1.1.35;idno=45;cc=ecfr • 45 CFR 92 http://www.hhs.gov/opa/pdfs/45-cfr-92.pdf • OMB Circulars http://www.whitehouse.gov/omb/circulars_default • HHS Grants Policy Statement http://www.hrsa.gov/grants/hhsgrantspolicy.pdf • HRSA Manage Your Grant http://www.hrsa.gov/grants/manage/index.html • System for Award Management https://www.sam.gov/portal/public/SAM/ • Notice of Award Contact Section: PO and GMS 42

43. Questions To ask a question, please dial800-369-3346and use the passcode “HRSA”Press *1 to enter the question queue.Please mute your speakers when asking your question. 43

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