HRSA is the largest funding source for most federally qualified heath centers and rural health centers. Since COVID funding has substantially increased the reporting requirements it is a good time to review some basic FQHC 330 grant management requirements.
For proper FQHC 330 grant management, the health center’s financial management system is required to account for all Federal awards by source and expenditure. Usually this is done by setting up grant segment codes. The revenue (receipt) will be recorded by program using the grant code segment and revenue chart of account. Some grants will have a non-federal portion and a coordinating grant segment code will need to be established for ease of reporting. The expenditures, approved by HRSA as part of the budget, will need to be coded to both the federal and nonfederal (if applicable) grant segments. Documentation showing the source of funds, authorizations, obligations, unobligated balances, expenditures and assets under the federal awards should be maintained and easily cross referenced to the entries in the accounting system.
The most common expenditure under the FQHC 330 grant is salaries and wages. The health center policies and procedures should ensure the payroll is property allocated to the grant. The nonfederal activities must be identified and properly segregated.
The most common nonfederal source of funds is program revenue as defined by 45 CFR § 74.2:
Pursuant to 45 CFR § 74.2, program income is defined as gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award. Program income includes, but is not limited to, income from fees for services performed. Under a section 330 grant, non-grant funds, such as program income, may be used to further the objectives of the project (42 U.S.C. § 254b(e)(5)(D)).
With the proper use of segments in the chart of accounts, reports can easily be obtained to comply with expenditure analysis. Reports to compare expenditures with budget amounts for each award to ensure total costs do not exceed the amounts budgeted for the grant period. Any significant variances should be researched and resolved. All documentation cross referenced to the budget to actual variance should be maintained for audit purposes and OSV.
In addition to properly setting up the accounting system to track grants. The health center also must establish policies and procedures to minimize the time elapsing from drawdown of the grant to the expenditure of the funds. Again, since salaries and wages are the most common expenditure, the funds should be drawn down in time to meet payroll obligations. Once funds are transferred from the Payment Management System (PMS) the disbursement should occur within two to three days. Per the Bureau of Primary Health Care, the disbursement cannot be for future cost; rather, be timed in accordance with the actual immediate cash requirements.
Recipients of FQHC 330 grants are required to obtain annual audits in accordance with the Uniform Guidance when expenditures reach $750,000. We offer expertise in audits of Federally Qualified Health Centers and nonprofit organizations.
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