Compliance 201 for Grantees
The Department of Health and Human Service (HHS) administers Federal funds intended to provide critical services to American Indian and Alaska Native (AI/AN) communities. These funds go to programs in Indian Country including the Head Start and Low Income Home Energy Assistance programs, as well as programs operated by the Indian Health Service.
Unfortunately, vulnerabilities in the integrity of these programs can divert program funds intended to improve the health and well-being of AI/AN communities, disrupt the services these programs offer, and leave them open to fraud and abuse. To reduce these vulnerabilities, organizations can create compliance programs.
Compliance is the term used to describe an organization’s responsibility to conform its activities to internal policies and procedures and applicable laws and regulations, including Federal requirements. Compliance is important for many reasons, but most importantly, it ensures funds are used appropriately to provide quality services to your community.
This course gives an overview of the fundamental elements of a compliance program to help ensure your organization—as a recipient a Federal grant funds—adheres to applicable statutes, regulations, and program requirements. The information in this course does not reflect mandatory components of a compliance program, but instead includes concepts, ideas, and suggestions to consider as beneficial compliance practices addressing relevant risk areas.
For grantees with existing compliance programs, this training may serve as a roadmap for updating or refining their compliance plans. For grantees with emerging compliance programs, this training may facilitate discussions among facility leadership about including specific compliance components and risk areas. Also, consider taking our Compliance 101 training.
Course Objectives:
At the end of this course, you will be able to:
- explain the purpose and benefits of a compliance program,
- identify the Seven Fundamentals of Compliance, and
- describe what you can do if you find a compliance error.
Resources to Help You
In this course, you will find a job aid and helpful resources. If you miss a resource as you go through the training, you can find them all in the last section of the course.
What is Compliance and Why is it Important?
What is Compliance?
Compliance is the term used to describe an organization’s responsibility to conform its activities to internal policies and procedures and applicable laws and regulations, including Federal requirements. Compliance is important for many reasons, but most importantly, it ensures funds are used appropriately to provide quality services to your community.
For example, recipients of HHS grants must comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly called “Uniform Grants Guidance”) and a variety of HHS policies and regulations such as those found in the HHS Grants Policy Statement.
Organizations often ensure compliance with these applicable rules and regulations by using a compliance program to deploy compliance plans and institute internal controls. While the fundamental elements of a compliance program are generally the same, the specific components of a compliance program depend on the organization’s size and needs.
Why is Compliance Important?
Compliance is a key component of grants management. Compliance is important for many reasons, but most importantly, compliance ensures funds are used to provide high-quality services to your community. It does this in several ways.
- Compliance helps you better understand who your program serves, how program services are used, and helps you identify opportunities to strengthen program services.
- Compliance helps you protect your scarce program dollars from fraud, waste, and abuse to ensure your funds most efficiently support your community.
- Compliance helps you avoid mistakes and practices that will cause audit findings, disallowances, or other investigations.
- Compliance allows any organization to be proactive rather than reactive. It is a way for you to identify and address issues within your organization on your own and to take appropriate action.
- Compliance ensures that your organization is providing high-quality services, using limited resources efficiently, and being a good steward of Federal funds.
Benefits of Compliance Programs
OIG recognizes that most grantees strive daily to provide high-quality, compassionate, and cost-effective care. A successful compliance program addresses the public and private sectors’ common goals of reducing fraud and abuse, enhancing the program's mission and operations, improving the quality of services, and being diligent stewards of funds. Meeting these goals benefits your grant program, the Government, and beneficiaries. Compliance programs help grantees fulfill their legal duty by:
- using Federal funds as intended;
- avoiding unallowable or unreasonable costs;
- avoiding engaging in other illegal practices;
- demonstrating the grantee’s commitment to honest and responsible conduct;
- increasing the likelihood of preventing unlawful and unethical behavior or identifying and correcting such behavior at an early stage;
- encouraging employees and others to report potential problems;
- minimizing potential financial loss to the Government and taxpayers, as well as corresponding financial loss to the grantee; and
- enhancing the quality of the grantee’s services.
While improper, unethical, or inefficient practices may not be entirely eliminated from a grantee’s operations, the implementation of an effective compliance program serves to mitigate risks and minimize vulnerabilities. An effective compliance program demonstrates a grantee’s good faith effort to comply with applicable statutes, regulations, and other Federal and State compliance requirements, and may significantly reduce the risk of unlawful or inefficient practices.
Tailor Your Compliance Program
Given the diversity of the grantee community, there is no single ‘‘best’’ grantee compliance program. OIG recognizes the complexities of the programs and the differences among grantees. Some grantee organizations are small and may have limited resources to devote to compliance measures; others are affiliated with well-established, large, multi-facility organizations with a widely dispersed work force and significant resources to devote to compliance.
Accordingly, OIG does not intend this training to be a ‘‘one-size-fits-all’’ guidance. OIG strongly encourages grantees to identify and focus their compliance efforts on those areas of potential concern or risk that are most relevant to their organization.
A grantee should tailor its compliance measures to address identified risk areas and to fit the unique environment of the grant program (including its structure, operations, resources, the needs of its population, and prior enforcement experience). In short, OIG recommends that each grantee adapt the objectives and principles underlying this training to its own particular circumstances.
The 7 Fundamental Elements of a Compliance Program
While no single factor is conclusive of an effective compliance program, the following seven elements form a useful starting point for developing and maintaining an effective compliance program. The job aid, Guide to the Seven Fundamentals—in downloadable format below—includes more information on each fundamental and questions to ask yourself as you build or improve your compliance program. Click on the plus sign to read more about each fundamental.
The purpose of compliance policies and procedures is to establish rules that help employees carry out their job functions in a manner that ensures compliance with Federal grant program requirements and furthers the mission and objective of the organization itself. Typically, policies and procedures are written to address identified risk areas for the organization.
The Compliance Officer and Committee is the backbone of the organization’s compliance program. A Compliance Officer should be knowledgeable and experienced in compliance and be empowered to run the program. The Compliance Officer should be a member of senior management and should report directly to the person at the top of the managerial hierarchy. The Compliance Officer may have to make some difficult recommendations, so they need to be at a level where other senior managers are colleagues and respect these recommendations. They also need to be able to go right to the top of the managerial structure so that their issues are heard. They should not be subordinate to the lawyers or the finance staff and should not have any responsibilities that involve acting in any capacity as legal counsel or supervising legal counsel functions.
In addition to designating a Compliance Officer, bringing together a group of top leadership and management representatives from across the organization to form a Compliance Committee is helpful. The Compliance Officer should lead the Compliance Committee. The Compliance Committee’s responsibility is to implement the organization’s compliance program and to ensure that the organization complies with all applicable award requirements. Each organization should conduct an annual review of its Compliance Committee to ensure the Compliance Committee meets its objective.
Sometimes small organizations may not have the ability or the capacity to have a designated Compliance Officer or a Compliance Committee. Even if this is the case, the function of compliance monitoring, reporting, and evaluating should be addressed somewhere in the grantee’s operations. There are other resources that the grantee could utilize to address this function. For example, the grantee might hire compliance contractors, or an existing grantee official could take on this function as part of their overall daily role.
Employee training and education are key parts of an effective compliance program. The purpose of having a training and education program is to ensure that each employee, contractor, or any other individual that functions on behalf of the grant is fully capable of executing their role in compliance with rules, regulations, and other standards.
Open communication is essential to maintaining an effective compliance program. The purpose of developing open communication is to increase the grantee’s ability to identify and respond to compliance problems. Generally, open communication is a product of organizational culture and internal mechanisms for reporting instances of potential fraud and abuse.
Effective lines of communication can include tools such as routine compliance reports. Such reports can, among other things, demonstrate a commitment to quality of care and foster an organization-wide culture that values compliance.
By enforcing standards, or a code of conduct, grantees help create an organizational culture that emphasizes ethical behavior. OIG commends grantees that have adopted a code of conduct that details the fundamental principles, values, and framework for action within the organization, and that articulates the organization’s commitment to compliance. OIG encourages those grantees that have not yet adopted codes of conduct to do so.
Effective auditing and monitoring plans that examine not only fiscal operations, but also programmatic operations are key. Auditing and monitoring plans can help grantees avoid the submission of costs that are not allowable, allocable, and reasonable. These plans can also ensure the grantee is meeting the programmatic objectives and goals of the grant.
By consistently responding to detected deficiencies, grantees can develop effective corrective action plans and prevent further losses of funds from Federal awards.
If you identify a compliance error, you can take certain steps such as conducting an internal audit, changing policies to prevent the error moving forward, and educating employees. If the compliance error rises to the level of fraud, you can self-report to OIG here or call 1-800-HHS-TIPS.
Below is the job aid, Guide to the Seven Fundamentals. For each element, you’ll find questions to consider as you advance your program. The suggestions are not mandatory but are instead suggestions for grantees to consider as they develop beneficial compliance practices or assess relevant risk areas.
Course Summary
In today’s complex grantee regulatory environment and increasingly large expenditures for grant programs, it is imperative for grantees to establish and maintain an effective compliance program. These programs should foster a culture of compliance and a commitment to delivery of quality services that begins at the highest levels and extends throughout the organization. We hope this training has served as a resource for grantees to help them operate effective compliance programs that decrease errors, fraud, and abuse, and increase quality of services and compliance with Federal grant program requirements for the benefit of the grantee and their beneficiaries.
Resources to Help You
The document below, Compliance 201 for Grantees Resources, contains links to additional compliance resources such as our Tips for Implementing an Effective Compliance Program video. These resources may be helpful as you build or improve your compliance program.
Compliance_201_for_Grantees_Resources.pdf
Additional Trainings
After you complete this training, consider taking our additional compliance related trainings that can be found on our website. Below are three courses in which you may be interested.
Compliance for Governing Boards: This training focuses on the role of Governing Boards in providing compliance oversight. It describes the four actions OIG recommends Governing Boards take to effectively exercise their oversight responsibilities.
Compliance 101: This training gives an overview of compliance, what it is, why it is important, who is responsible for it, where and when it happens, and how to get started with a compliance program for your organization. If you have not thought about compliance before, this training is a great place to start.
Compliance 201 for Health Care Providers: This training, specifically for health care providers, goes into greater depth than Compliance 101. It focuses on the Seven Fundamentals of Compliance; important Federal fraud and abuse laws; and the remedies available to the Government if an entity commits violations.
Job Aid
Knowledge Check
Please take the short knowledge check assessment by clicking the link below. After you answer questions about what you’ve learned, you’ll be asked a few questions that can help us improve this course in the future. After you click submit, you’ll receive your Certificate of Completion.