Grant Compliance & Tracking for FQHCs: A Guide for Finance Teams

Your finance team just wrapped up the monthly close when an email lands in your inbox. It’s from HRSA, and your Section 330 grant report is due in two weeks. Meanwhile, your CFO wants an update on the 340B audit preparation, your cost allocation plan needs reviewing and your financial auditor just asked for a meeting to go over some changes to the single audit requirements.

Welcome to life as an FQHC finance professional, where multiple grant requirements, shifting federal policies and tight reporting deadlines create a compliance puzzle that would challenge even the most experienced teams.

The High-Stakes World of FQHC Grant Funding

The funding outlook for FQHCs has never been more uncertain. The Community Health Center Fund expired on Sept. 30, 2025, leaving federal grant funding in limbo. Without long-term reauthorization, FQHCs face the threat of halting expansion projects, scaling back services or cutting essential patient services. Nearly half of health centers operate with unsustainable margins and 42% maintain only 90 days or less of cash reserves, making short-term funding extensions particularly challenging for strategic planning.

Medicaid accounts for about 43% of FQHC operating revenue while Section 330 grants represent 11%, meaning these two funding sources combine to provide nearly well over half of total health center funding. When you’re managing millions of dollars across multiple federal programs, each with its own compliance requirements, the margin for error becomes razor thin.

Build a Solid Foundation Through Proper Systems

Understanding HRSA compliance requirements is fundamental to FQHC compliance. The HRSA 19 Program Requirements outline the essential standards that Health Center Program grantees and FQHC Look-Alikes must follow to deliver high-quality care, operate effectively and remain financially sustainable. They address everything from conducting community needs assessments and delivering required health services to maintaining an effective governing board, managing financial systems and ensuring proper staff credentialing

Your financial management system must account for all federal awards by source and expenditure, typically accomplished through grant segment codes.

The regulations found in 45 CFR Part 75 establish the uniform administrative requirements for all HHS awards. Your accounting and internal control systems must reflect Generally Accepted Accounting Principles while maintaining appropriate separation of functions. Policies must address how payroll is allocated to grants, the most common expenditure under Section 330 funding. Whether you’re handling these functions in-house or working with outsourced accounting services specialized in nonprofit grant management, your systems need to demonstrate clear compliance with federal standards.

Single Audit Requirements: What Changed in 2024

The Office of Management and Budget raised the single audit threshold from $750,000 to $1,000,000, effective for fiscal years beginning on or after October 1, 2024. This means nonfederal entities expending less than $1 million in federal awards in a fiscal year are typically not required to commission a single audit. However, if your FQHC crosses that threshold, you’re subject to a more rigorous examination.

Single audits are far more detailed than traditional audits and focus on programmatic compliance. They require strict compliance and must be conducted in accordance with Generally Accepted Government Auditing Standards. The audit concludes with reports on internal control over financial reporting, compliance and internal control over compliance, plus a Schedule of Federal Awards.

Manage Multiple Grant Programs Simultaneously

Beyond Section 330 grants, many FQHCs participate in the 340B Drug Pricing Program and the Ryan White HIV/AIDS Program. Each program has distinct compliance requirements. The 340B program requires verification of eligibility, maintaining auditable records, verification of internal controls to prevent diversion and duplicate discounts, and testing of drug transaction records. Ryan White programs require audit reports every two years consistent with 45 CFR Part 75 Subpart F.

Your accounting and controllership services need to track program income versus grant funds. Per 45 CFR § 74.2, program income is gross income earned by the recipient that is directly generated by a supported activity. Under Section 330 grants, non-grant funds such as program income may be used to further project objectives. This distinction matters for reporting and compliance.

Protect Your Funding Through Strategic Financial Management

HRSA expects health centers to minimize the time between drawdown and expenditure of grant funds. Since salaries and wages are the most common expenditure, funds should be drawn down in time to meet payroll obligations. Once funds transfer from the Payment Management System, disbursement should occur within two to three days. Drawdowns cannot be for future costs but must align with actual immediate cash requirements.

The current environment of short-term funding extensions makes strategic financial planning challenging. Finance leaders need robust tracking systems, clear policies and procedures, and regular communication with the HRSA. Documentation showing the source of funds, authorizations, obligations, unobligated balances, expenditures and assets under federal awards should be maintained and easily cross-referenced to accounting system entries.

Compliance isn’t just about checking boxes. It’s about building systems that protect your ability to serve your community. When you’re managing complex grant requirements while dealing with funding uncertainty, having experienced support makes all the difference. Your mission depends on it.

Partner With FQHC Grant Compliance Experts

Managing FQHC grant compliance requires specialized knowledge of federal regulations, meticulous tracking systems and constant attention to changing requirements. Our nonprofit outsourced accounting team understands the unique challenges facing Federally Qualified Health Centers, from Section 330 grant management to single audit preparation. We help finance leaders build compliant systems, navigate complex reporting requirements and protect their funding so they can focus on their mission. Contact a James Moore professional today to discuss how we can support your health center’s financial compliance needs.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.