Finding Text
Material Instance of Non-Compliance Cash Management of Federal Funds This finding impacts the cash management compliance requirement for the major program, Health Center Program Cluster, Assistance Listing Numbers 93.224 - Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and 93.527 - Grants for New and Expanded Services under the Health Center Program, funded by the Health Resources and Services Administration, Department of Health and Human Services. Criteria: The Health Center must follow the cash management standards set out in 2 CFR section 200.305 whereby they must minimize the time elapsing between the transfer of funds from the Federal awarding agency and disbursing the funds if they are not following the reimbursement method. Condition: During our audit of the Health Center, we noted unearned revenue (conditional grant advance) of $2,081,951 of Federal funds related to the Health Center Program Cluster. Cause: During fiscal year 2022, the Health Center had planned expenditures late in the fiscal year that they could fund from the Health Center Program. In order to have the cash on hand to fund these expenditures, they drew the funds in advance of incurring the expenses. Circumstances changed and they were unable to spend the funds in a timely manner and, therefore, the Health Center did not incur allowable expenses to recognize the revenue during fiscal year 2022. Effect: The Health Center is not in compliance with Federal regulations regarding cash management. Recommendation: Management should do a thorough review of all contracts to ensure they are not drawing funds prior to incurring expenditures to ensure they are properly following cash management regulations for Federal contracts. Management Response: Codman Square Health Center, Inc. (the Health Center) received a two-year $4.053 million HRSA Workforce Development grant from April 1, 2021, through March 31, 2023. The funding was provided to support staffing recruitment and retention efforts as summarized by HRSA ? ?On Thursday, April 1, 2021, HRSA awarded more than $6.1 billion in funding provided by the American Rescue Plan Act (ARPA) to 1,377 HRSA-funded health centers (activity code H8F). The purposes of the ARPA funding are to prevent, mitigate, and respond to Coronavirus disease 2019 (COVID-19) and to enhance health care services and infrastructure. Consistent with these purposes, funding may support a wide range of in-scope activities, which may change as COVID-19 circumstances and related community, patient, and organizational needs evolve over the two-year period of performance?. We began program implementation on September 6, 2021, and management drew down $1 million on November 17, 2021, to cover eligible spent monies for that period. An additional $1 million was drawn down on June 1, 2022, to cover eligible expenditures as of May 2022, in the amount of $1,176,844. It was anticipated that there was a total of $1.9 million in eligible expenses to be spent in the month of September 2022 which included items such as retention bonuses, leadership training, staff recruitment, and placement costs. These expenses were never realized prior to August 2022 draw down. The remaining HRSA ARPA funds were expended by March 31, 2023. The Health Center was consistent with adhering to the proper grant billing procedures for the first two drawdowns. The Health Center will follow HRSA Compliance requirements detailed in Compliance Requirements - Cash Management and will draw down HRSA grants on an incurred cost reimbursement basis.