Criteria: The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) allow non-Federal entities to request advance payments, provided that the timing and amount of such advances are limited to the entity’s immediate cash needs and that funds are expended only for allowable costs incurred within the approved period of performance. Under cash management requirements, advance payments must be limited to the minimum amounts needed and timed to align with the actual, immediate cash requirements of the non-Federal entity (2 CFR §200.305(b)(1); 2025 OMB Compliance Supplement, Cash Management). Additionally, regarding the period of performance, federal awards may only be charged for obligations incurred during the approved period of performance stated in the Notice of Award, and costs incurred outside that period are considered unallowable unless specifically authorized by the federal awarding agency (2 CFR §200.309; 2025 OMB Compliance Supplement, Period of Performance). Condition: During the fiscal year ended June 30, 2025, NeoMed Center requested and received advance payments through the Payment Management System (PMS) under the Health Center Program (93.224). The advances included funds related to a grant budget period running from May 2025 through April 2026; however, management intended to use a portion of these funds to support operations in the subsequent fiscal year (July 1, 2025 through June 30, 2026). As of June 30, 2025, a portion of the advanced federal funds had not been expended for allowable costs incurred within the applicable period of performance. While advance payments are permitted under federal regulations, the timing of the drawdowns exceeded NeoMed Center Inc.’s immediate cash needs for allowable expenditures incurred during the approved period of performance. Effect: As a result of this condition, federal funds were drawn earlier than necessary relative to allowable expenditures as of and for the yar ended June 30, 2025 and were held to be expended and recorded as revenues in the next fiscal year ending June 30, 2026. This situation exposed NMCI to an increased risk of noncompliance with federal cash management and allowability requirements. Additionally, cash balances as of June 30, 2025, included federal funds that were not eligible to be recognized as expenditures as of that date. Cause: Management stated that the advance payments were requested as a preventive measure in response to uncertainty related to federal funding disruptions during calendar year 2025. However, lack of internal controls to ensure that advance drawdowns were limited only to immediate cash needs and aligned with the applicable grant period of performance permitted excess drawdown with no support. Recommendations: We recommend that the Institution implement the following corrective actions: 1. Strengthen internal controls over federal cash management and grant expenditure monitoring to ensure compliance with Uniform Guidance requirements. 2. Revise policies and procedures manuals and Implement procedures to ensure that advance drawdowns from the Payment Management System (PMS) are limited to the entity’s immediate cash needs. 3. Ensure that federal funds are drawn only for allowable expenditures expected to be incurred within the approved period of performance. 4. Provide training to relevant personnel on federal cash management requirements and the proper administration of advance payments.
Criteria: In accordance with 2 CFR § 200.305(b)(12), a recipient or subrecipient may retain up to $500 per year in interest earned on Federal funds for administrative expenses. Any interest earned in excess of $500 per year must be remitted annually to the Department of Health and Human Services (HHS) through the Payment Management System (PMS) via the Automated Clearing House (ACH) network or Fedwire Funds Service. This requirement applies regardless of whether the recipient or subrecipient was paid through PMS. Condition: For the fiscal year ended June 30, 2025, the entity earned interest on Federal funds in excess of the $500 allowable retention limit. The entity did not remit the excess interest to the Payment Management System (PMS) within the required timeframe. The amount of excess interest retained and not remitted totaled $1,417.45. Effect: Noncompliance with 2 CFR § 200.305(b)(12) may result in several consequences, including questioned costs, required reimbursement of federal funds, findings or enforcement actions by the federal awarding agency, and potential sanctions or the imposition of additional compliance requirements. Cause: The entity did not have adequate internal controls or formal procedures in place to periodically monitor interest earned on federal funds, identify when interest exceeded the $500 allowable threshold, and timely remit excess interest to HHS through the Payment Management System (PMS). Recommendations: We recommend that the Institution implement the following corrective actions: 1. Develop and implement formal written policies and procedures for monitoring interest earned on federal funds in accordance with 2 CFR § 200.305(b)(12). 2. Establish internal controls to periodically calculate and track interest earned on federal cash balances throughout the fiscal year. 3. Implement a process to identify when interest earned exceeds the allowable $500 annual retention threshold. 4. Assign responsibility to designated personnel for reviewing interest calculations and ensuring compliance with federal requirements. 5. Provide training to relevant staff on federal cash management requirements related to interest earned on federal funds.
Criteria: Health centers receiving federal funding under the Health Center Program (93.224) and Ryan White Part C (93.918) are required to maintain and consistently apply a sliding fee discount program in accordance with federal regulations and program guidance. Specifically, 42 CFR §51c.303(f) requires health centers to have a schedule of fees and discounts based on patients’ ability to pay and to apply the schedule consistently. The HRSA Health Center Program Compliance Manual, Chapter 9, mandates documented eligibility determinations, defined timeframes for eligibility reassessment, proper application of the sliding fee scale, and retention of documentation. Similarly, the Ryan White HIV/AIDS Program Part C Manual requires eligibility determinations and fee assessments consistent with approved policies and program requirements. Additionally, federal standards under 2 CFR §200.303 require non-federal entities to establish and maintain effective internal controls over federal awards, 2 CFR §200.302(b) requires financial management systems to adequately identify and document eligibility determinations, and 2 CFR §200.328 requires accurate programmatic reporting and monitoring. Condition: During testing of the sliding fee discount program for the fiscal year ended June 30, 2025, we identified multiple instances of noncompliance with established policies and federal program requirements. Specifically, patient financial information was updated over prior evaluations, which eliminated historical tracking and resulted in files not being properly closed in accordance with the health center’s policies. Effect: As a result of these deficiencies, NeoMed Center Inc. is at increased risk of improper fee discounts being applied to patients who may not meet eligibility requirements, noncompliance with federal and program-specific requirements, inaccurate financial reporting related to patient service revenue, lack of proper and accurate collection of services provided and potential loss of federal funds awards. Cause: The noncompliance is caused by inadequate implementation of internal controls policies and procedures designed over the sliding fee program. Also, it caused by lack of appropriate staff training and missing standardized monitoring policies and procedures, as well as inadequate supervisory review of eligibility determinations and documentation. Recommendations: We recommend that the Institution implement the following corrective actions: 1. Review current policies and procedures to improve and establish robust internal controls to ensure that patient financial information is updated without overwriting prior evaluations, preserving historical tracking and maintaining properly closed files. 2. Provide training to staff responsible for eligibility determinations and fee assessments to ensure consistent application of the sliding fee scale and compliance with federal program requirements. 3. Implement standardized monitoring and supervisory review procedures to verify that eligibility determinations, fee assessments, and documentation are accurate, complete, and retained in accordance with program requirements. 4. Implement and perform, on a recurrent basis, audit and/or review of patient files to ensure ongoing compliance, timely reassessment, and proper application of the sliding fee discount program. 5. Maintain clear records and documentation to support all eligibility determinations and fee discounts, ensuring the entity can demonstrate compliance during internal reviews or external audit