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Audit (A-02-11-02001)

11-16-2012
Community Medical and Dental Care, Inc., Did Not Meet Select Financial Performance Measures and Claimed Unallowable Federal Grant Expenditures

Executive Summary

The Health Center Program, administered by the Health Resources and Services Administration (HRSA), provides grants to nonprofit private or public entities that serve designated medically underserved populations and areas, as well as vulnerable populations of migrant and seasonal farm workers, the homeless, and residents of public housing. These grants are commonly referred to as "section 330 grants." Under the American Recovery and Reinvestment Act of 2009, P.L. No. 111-5 (Recovery Act), enacted February 17, 2009, HRSA received $2.5 billion, $2 billion of which was to expand the Health Center Program.

Community Medical and Dental Care, Inc. (CMADC), is a nonprofit, community-based medical care provider that received approximately $3.2 million awarded by HRSA during calendar years 2008 through 2010, of which CMADC expended $3 million. Of this amount, approximately $2.1 million in section 330 grant funding was awarded to supplement CMADC health center operations. The remaining $1.1 million was awarded in fiscal year 2009 under the Recovery Act.

We found that CMADC did not meet select HRSA financial performance measures. In addition, CMADC claimed Federal grant expenditures totaling $3 million that were not separately accounted for. Specifically, CMADC commingled expenditures in its accounting system with other operational payments and did not maintain personnel activity reports for employees who worked on HRSA grants. Therefore, we could not determine whether these costs were allowable.

We recommended that HRSA either require CMADC to refund $3 million to the Federal Government or work with CMADC to determine whether any of the costs that it claimed against these grants were allowable. CMADC stated that it has been working with HRSA to achieve "financial recovery" and described steps that it has taken to improve its financial ratios. HRSA agreed with our recommendation and stated that CMADC is no longer a recipient of section 330 grant funds.

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