1. Uniform Grant Guidance
Key Changes and Impacts on Community
Health Centers & FQHCs
MAY 17, 2016

2. The material appearing in this presentation is for informational purposes
only and is not legal or accounting advice. Communication of this
information is not intended to create, and receipt does not constitute, a
legal relationship, including, but not limited to, an accountant‐client
relationship. Although these materials may have been prepared by
professionals, they should not be used as a substitute for professional
services. If legal, accounting, or other professional advice is required, the
services of a professional should be sought.

3. Presenters
Kinman Tong, CPA
Senior Manager
415‐677‐8267
kinman.tong@mossadams.com
Kate Jackson, CPA
Senior Manager
916‐503‐8197
katherine.jackson@mossadams.com
Matt Parsons, CPA
Senior Manager
949‐221‐4093
matt.parsons@mossadams.com
3

4. Objectives
• Understand the changes and developments and how they
impact FQHC’s grant activities.
• Learn the key grant administrative areas such as allowable
costs, time and effort reporting, procurement, internal
controls, subrecipient monitoring, and audit requirements.
• Discuss best practices for the key grant administrative areas.
4

5. 5
Timing Considerations Related to the Uniform Guidance

6. 6

7. Approximately how much does your Organization
expend in federal awards each year?
A. <$750,000
B. $750,000 to $5 million
C. $5 million to $10 million
D. $10 million to $50 million
E. > $50 million
F. No clue…that’s what a
Controller is for
7
A. B. C. D. E. F.
2%
60%
5%
7%
5%
21%

8. Most common federal grants awarded for FQHCs
• 93.217 – Family Planning Services
• 93.224 – Consolidated Health Centers
• 93.526 – ACA Grants for Capital Development in Health Centers
• 93.914 – HIV Emergency Relief Project Grants
• 93.940 – HIV Prevention Activities Health Department Based
• 10.557 – Special Supplemental Nutrition Program for Women,
Infants, and Children
8

9. Other common federal grants awarded for
FQHCs
• 93.243 – Substance Abuse and Mental Health Services Projects of
Regional and National Significance
• 93.527 – Affordable Care Act (ACA) Grants for New and Expanded
Services under the Health Center Program
• 93.569 – Community Services Block Grant
• 93.917 – HIV Care Formula Grants
9

10. How many of these awards does your
Organization receive?
A. None
B. 1 to 2
C. 3 to 4
D. 5 or more
E. You expect me to
remember CFDA #’s? 10
A. B. C. D. E.
5%
44%
5%
20%
27%

11. 11
0
50
100
150
200
250
Entities with funding Tested in 2014
Family Planning Svcs
Consol Health Centers
ACA Grants for Capital Dev
HIV Emerg Relief
HIV Prevention
WIC
*data obtained from the Federal Audit Clearinghouse as of March 15, 2016
2014 Statistics for California Organizations*

12. Has your Organization received a single audit
compliance finding in the past two years?
A. Yes
B. No
12
Yes
No
71%
29%

13. 2014 Statistics for California Organizations*
13
0
5
10
15
20
25
Number with findings Qualified Opinions
Family Planning Svcs
Consol Health Centers
ACA Grants for Capital Dev
HIV Emerg Relief
HIV Prevention
WIC
*data obtained from the Federal Audit Clearinghouse as of March 15, 2016

14. Summary of Findings
14
21%
18%
14%
14%
13%
9%
7%
4%
Program Income ‐12
Reporting ‐ 10
Allowable Costs ‐ 8
Other* ‐ 8
Eligibility ‐ 7
Procurement ‐ 5
Matching ‐ 4
Cash Mgmt ‐ 2
Compliance area ‐ # of findings
*includes 1 ‐ Davis Bacon; 2 – Equipment management; 1 – Subrecipient monitoring; 3 – Special Tests

15. OIG Review of Submitted Single Audits for the
period of 10/1/14 – 3/31/15*
15
Results Number
Total audit reports evaluated 1,986
Requiring no changes or minor changes 1,185
Requiring major changes 93
Significant technical inadequacies 8
*Data obtained from the HHS OIG Spring Semi‐Annual Report to Congress

16. Program income
• Not previously defined under Circular A‐133
• Health centers must
• Have a schedule of fees for the provision of their health services
• Have a schedule of discounts (adjusted based on patient’s ability to
pay)
• Ability to pay is determined using HHS poverty guidelines
• Make every reasonable effort to collect reimbursement through
Medicare and Medicaid at gross rates (not discounted rates)
16

17. Program income: How am I likely to get in
trouble?
• No documentation to demonstrate how the schedule of fees
covers a reasonable cost of operation.
• Discounts not updated using annual HHS guidelines
• Improper billing (not using updated schedule of fees)
17

18. Reporting: How am I likely to get in trouble?
• Requirements vary by program
• Most common deficiencies:
• Reporting is not timely
• Line items not supported at the time of the reporting
• No evidence of review
• Calculation errors
18

19. What am I most likely to get a finding for in
the future under the Uniform Grant Guidance?
Areas of Concern
Internal Control
Procurement
Subrecipient
Monitoring
Allowable Costs
• Indirect Costs
• Compensation for
Personal Services
19

20. “Must” vs. “Should”
• Must = required
• Shows up 844 times in 2 CFR 200
• COFAR FAQ 303‐1, 2, and 3 clarifies that should indicate a
“best practice” and is not a presumptively mandatory
requirement.
• Shows up 140 times in 2 CFR 200
20

21. Internal controls
• The non‐federal entity must: (a) Establish and maintain effective internal
control over the Federal award that provides reasonable assurance that
the non‐federal entity is managing the Federal award in compliance with
Federal statutes, regulations, and the terms and conditions of the
Federal award. These internal controls should be in compliance with
guidance in “Standards for Internal Control in the Federal Government”
[Green Book] issued by the Comptroller General of the United States or
the “Internal Control Integrated Framework”, issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
21

22. Internal controls
• Internal controls are referenced 48 times in 2 CFR 200
• Opportunity to revisit internal controls.
• Update policies and procedures.
• Not just general controls, but also compliance requirements.
• Changes from the Uniform Guidance need to be reflected in
internal controls.
22

23. • Do you have written procedures?
• Written procedures are required for:
• Implementation of the payment system according to §200.305.
• Procedures for determining the allowability of costs in accordance with
Subpart E (Cost Principles) and the terms and conditions of the Federal
award.
• Standards of conduct covering conflicts of interest governing performance
of employees engaged in selection of award and administration contracts.
• Standards for procurement transactions.
Internal controls: How am I likely to get
in trouble?
23

24. How many of these policies does your
Organization have in written form already?
A. None
B. 1
C. 2
D. 3
E. 4
24
None
1
2
3
4
5%
19%
17%
24%
36%

25. Internal controls: How am I likely to get
into trouble?
• Does your Organization have the following control activities?
• Reporting
• Supervision
• Documentation
• Separation of duties
• Safeguarding of assets
• Approval and authorization
• Verification/reconciliation
25

26. Internal controls: What have we seen so far?
• Control procedures exist – but not well documented.
• Risk assessment is not clear or comprehensive. How would
your controls actually prevent or detect errors or fraud?
• Review procedures are not detailed
• Training is not frequent enough for reviewers to remember
their responsibility.
26

27. Internal controls: Best Practices
• Get credit for what you’re already doing – DOCUMENT.
• There are 5 elements of COSO. A simple memo with bullet points
under each of these elements will go a long way to impress
auditors.
• Control Environment
• Risk Assessment
• Control Activities
• Information and Communication
• Monitoring
27

28. COSO – Control Environment Examples:
• Ethics policy.
• Fraud hotline.
• Annual e‐mail from CEO emphasizing values and the
importance of following policies and procedures.
• Serious consequences for policy violations.
• HR’s use of policies and procedures to promote strong ethical
values.
• Use of an audit committee.
28

29. COSO – Risk Assessment Examples:
• Does management hold bi‐weekly or monthly department head meetings?
• When information arises that affects reporting or transactions does
management act on that? Is there a strong chain of communication?
• Every 6 months, ask every person in Finance and Grants Management to
provide errors they see in their department or others
• Start developing a checklist to detect those errors.
• Do concerns from performance evaluations get followed up on to ensure
that behaviors haven’t impacted reporting or compliance?
29

30. COSO – Control Activity Examples:
• Review policies and procedures and highlight the key controls.
• Discuss each transaction cycle associated with the grants:
• Is payroll charged directly to the grant?
• Support for disbursements is reviewed by two individuals
knowledgeable of how it benefitted the grant (so usually two people
outside of Finance).
• Federally acquired equipment is properly secured.
30

31. COSO – Information and Communication
Examples:
• Finance is involved at the beginning when the Organization is
applying for a grant.
• Meetings with Department Heads to discuss budgets /
changes to grant compliance.
• Staff meetings are open to provide opportunity for staff to
share questions / concerns.
31

32. COSO – Monitoring Examples:
• Periodic comparison of actual expenses to grant budgets.
• Management responds right away to information on unusual
occurrences or trends.
• Interaction with vendors that provide third party services
• (i.e. obtaining a SOC 1 report from payroll processors and
understanding the controls described in the report).
• Implement best practices from monitoring reviews/visits.
32

33. Procurement
• Not for profit and health care entities follow the five
procurement methods.
• These entities will likely be affected more significantly.
• Auditees should review carefully to determine the
impact on their procurement procedures
• Think special considerations for procurement card
programs.
33

34. 34

35. Has your Organization already implemented
procedures for these procurement levels?
A. Yes.
B. No, but planning to.
C. I’m retiring before it’s
effective – good luck to
the rest of you!
35
A. B. C.
33% 33%33%

36. Procurement
o Review procurement card/credit card
purchasing policies to ensure policies are
consistent with new procurement methods.
o Procurement implementation given a grace
period of two full fiscal year after effective date
of Uniform Guidance. (§200.110)
36

37. Procurement: How am I likely to get into
trouble?
o Need to start now (if not already
started)
o Policies
o Procedures
o Internal control
o Training of staff
37

38. Procurement: What have we seen so far?
• Procrastination of implementation
• Management trying to break up invoices to avoid
bidding
• Staff are not sufficiently trained
38

39. Procurement: What have we seen so far?
• Suspension and debarment
• Reviewed for at the time of procurement but no documentation
was retained. During the audit, management struggles to produce
documentation and runs the search the day of the audit.
39

40. Procurement: Best Practices
• Start reviewing requirements now!
• Review overall budget, not just current invoice, in considering
whether it might need to follow a different procurement
procedure.
• Work with other FQHCs to piggy‐back off their procurement
procedures (as long as you can prove to auditors the legitimacy of
the original procurement).
• Maintain procurement details in grant folders.
40

41. Subrecipient monitoring
Changes in Audit Threshold that Can
Affect Subrecipient Monitoring
• Audit threshold increased to $750,000.
• Type A/B threshold is a sliding scale
with new minimum.
• Minimum increases from $300,000 to
$750,000.
41

42. Subrecipient monitoring
Subrecipient / Contractor
Determination
• Contractor replaces the term “Vendor”
from OMB Circular A‐133.
• All characteristics need not be present.
• Judgment should be used in the
determination process.
• Substance of the agreement is more
important than the form.
42

43. Subrecipient monitoring
Checklist: http://www.mossadams.com/articles/2015/november/uniform‐guidance‐subrecipient‐monitoring
Subrecipient Contractor
Creates a Federal assistance relationship. Purpose is to obtain goods and services for the
non‐Federal entity’s own use. Creates a
procurement relationship.
Determines who is eligible to receive what
Federal assistance.
Provides the goods and services within normal
business operations.
Has its performance measured in relation to
whether objectives of a Federal Program were
met.
Provides similar goods or services to many
different purchasers.
Has responsibility for programmatic decision
making.
Normally operates in a competitive environment.
Responsible for adhering to Federal program
compliance requirements.
Is not subject to Federal program compliance
requirements.
43

44. Subrecipient monitoring: How am I likely to
get into trouble?
• The sub‐award agreement / contract does not:
• Clearly identify award – see 13 required information list in
200.331(a)(1).
• Clearly identify requirements imposed originally.
• Clearly identify additional requirements imposed so the Pass‐
Through Entity (PTE) can meet responsibilities to federal
awarding agency.
44

45. Subrecipient monitoring: How am I likely to
get into trouble?
• The sub‐award agreement / contract does not:
• Clearly identify indirect cost information.
• Subrecipient permission for PTE and auditors to access
records.
• Closeout terms and conditions.
• May use fixed award up to simplified acquisition threshold
($150,000).
45

46. Subrecipient monitoring: How am I likely to
get into trouble?
• No evidence that you evaluated the subrecipient’s risk of
noncompliance with Federal statutes, regulations, and
terms and conditions of the award:
• Prior experience
• Results of previous audits
• Consider if there is new personnel or systems
• Extent and results of Federal awarding agency monitoring
46

47. Subrecipient monitoring: Best Practices
• Monitor if subaward used appropriately.
• Subaward Agreement Templates:
http://sites.nationalacademies.org/PGA/fdp/PGA_06
3626
• Consider if results indicate adjustment to the PTEs’
own records.
• Issue management decision for audit findings.
47

48. Subrecipient monitoring: Best Practices
• Other PTE Monitoring Tools Depending on Risk
• Providing training and technical assistance.
• Performing on‐site reviews of program operations.
• Arranging for agreed‐upon procedures (AUP)
engagements that meet certain requirements.
• Verifying each subrecipient is audited as required by
Subpart F.
48

49. Allowable costs
Refresher – Is it…?
• Necessary & Reasonable
• Allocable to the federal award
• Limited or excluded (unallowed costs)
• Consistent with Policies & Procedures and Treatment (direct vs indirect)
• In accordance with GAAP
• Not included as part of cost sharing or matching requirement
• Net of any credits
• Adequately documented
49

50. How does your Organization recover
indirect (F&A) costs?
A. Simplified Allocation Method (one pool).
B. Multiple Allocation Method (multiple
pools, i.e. interest, operations and
maintenance, admin).
C. Direct Allocation Method (all costs get
directly charged somewhere).
D. I can charge for indirect costs?
50
A. B. C. D.
0% 0%0%0%

51. Indirect (F&A) costs
NEW (under Subpart E) (200.412‐.414)
• Federal agencies must accept negotiated IDCR unless:
• statute or regulation allows for an exception or approval by federal
agency.
• A de minimis rate of 10% accepted if no IDCR
• Based on modified total direct costs
• May be used indefinitely.
51

52. Indirect (F&A) costs
• NEW Any Non‐federal entity that has a federally
negotiated IDCR:
• May apply for a one‐time extension (for a period up to four
years).
• If extension granted, may not request a rate review until
extension period ends.
• At the end of the extension period, MUST re‐apply to
negotiate a rate.
52

53. What is your current approved indirect
cost rate?
A. <10%
B. Between 10% and 15%
C. Between 15% and 25%
D. >25%
E. We’re going to use the
new 10% de minimis rate
53
A. B. C. D. E.
0% 0% 0%0%0%

54. Indirect (F&A) costs ‐ How am I likely to get
into trouble?
• Direct costs also included in the allocation pool.
• Capital costs included in the base.
• Costs charged using a rate with old data or data
with unallowable costs included in the pool.
54

55. Indirect (F&A) costs – What have we seen?
• Many grants have rates stated below the 10% de
minimis.
• Direct allocation of administrative employees is
hard to support through documentation.
55

56. Compensation
• Principles based.
• Internal Controls are KEY.
• Same concept as current but less
prescriptive on documentation.
• “Confirmation”,
“statement…signed by employee”
REMOVED.
Purpose is to reduce the burden of
time and effort reporting
56

57. Compensation ‐ How am I likely to get into
trouble?
1. Not supported by a system of I/C (meaningful reviews and
approvals of time).
2. Not incorporated into official record.
3. Does not total activity for employee.
4. Does not encompass all activities.
5. Distribution of salary not supported.
6. Budget estimates alone do not qualify.
57

58. Compensation
Effort Reporting vs. Payroll Certification
Description Current Practice Effort Reports Payroll Certification
Certification focus Individuals. Grant/Contract (award).
Certification Cycle Semi/annual fiscal periods. End of each award budget
year (every 12 mos.) and at the
end of the award.
Approver Individual or manager. Manager.
Confirmation focus Individual’s percentage of
effort is reasonable based
on overall effort.
All salaries/wages directly
charged to the award are
reasonable based on work
Performed.
Type of funds All sponsored funds. Federal funds.
58

59. Changes in audit requirements
• Increases audit threshold from $500,000 to $750,000.
• Type A/B threshold – minimum increases from $300,000 to
$750,000.
• Loan/loan guarantee treatment in major program determination.
• High‐risk Type A program criteria.
• High‐risk Type B program criteria.
• Percentage of coverage from 50/25% to 40/20%.
• Low‐risk auditee criteria.
• Audit findings (threshold from $10,000 to $25,000).
59

60. Schedule of Expenditures of Federal Awards
• Amounts provided to subrecipients from each federal
program.
• Loan programs (loans outstanding at the beginning of period
plus loans disbursed during the period.
• Loan guarantee programs.
• Noncash assistance (free rent, food commodities, and
donated property, for example).
• Total for each cluster of programs.
60

61. Schedule of Expenditures of Federal Awards
• Opportune time to revisit SEFA.
• Often areas where not compliant with regulations, but not
materially wrong.
• Federal programs by federal agency.
• Show federal clusters.
• Special options for research & development.
• Pass‐through information.
• Footnotes to SEFA.
61

62. Key changes to Data Collection Form
• Clarified CFDA field and how to treat when the 3 digit extension
is unknown
• Identifying numbers assigned by a pass‐through entity
• The “name of the federal program” will be auto‐generated once
the CFDA number is input
• Will collect cluster name instead of cluster identification number
• FAC will automatically generate federal program total and cluster
total
• Auditee and auditor statements
62

63. Other considerations
• Engagements may be more complex
• Transitional auditing
• Some grants may be audited under old guidance and some under new.
• New requirements
• Updated internal control
• Potential increase in time to prepare for and conduct the audit
• Potential increase in findings
• New AIPCA Single Audit certifications
• HRSA conducting more reviews / observations
63

64. Implementation
• Read the guidance
• Identify what needs to changed
• Create a plan/timeline
• Talk with your auditors
• Don’t procrastinate
• Collaborate with others‐ willingness to share in the community
64

65. Other Resources
• Council on Financial Assistance Reform (COFAR)
• https://cfo.gov/cofar/
• FAQs – use latest version
• Webcasts
• Office of Management and Budget (OMB)
• http://www.whitehouse.gov/omb/grants_docs.
• Uniform Guidance Crosswalk to Predominant Source in Existing Guidance
• Uniform Guidance Cost Principles Text Comparison*
• Uniform Guidance Audit Requirements Text Comparison*
*Note – these are not updated for any technical corrections
65

66. Other Resources
• Moss Adams Uniform Grant Guidance Launch Page
• http://www.mossadams.com/industries/not‐for‐profit/uniform‐
guidance‐for‐federal‐awards
• Government Audit Quality Center (GAQC)
• http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/Pages
/GAQC.aspx
• Auditee tools
• Internal control information
• Open web events on Uniform Grant Guidance
• Committee of Sponsoring Organizations of the Treadway Commission
(COSO)
• http://www.coso.org/
66

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70

71. Moss Adams by the Numbers
71

72. Kinman Tong
kinman.tong@mossadams.com
(415) 677‐8267
Kate Jackson
katherine.jackson@mossadams.com
(916) 503‐8197
Matt Parsons
matt.parsons@mossadams.com
(949) 221‐4093