‘‘(d) EDUCATION ACTIVITIES.—Except for reason-
able and usual preliminary costs for activity planning be-
fore its approval, a corporation established under this sub-
chapter may not spend funds for an education activity un-
less the activity is approved in accordance with procedures 
prescribed by the Under Secretary for Health. 
‘‘(e) POLICIES AND PROCEDURES.—The Under Sec-
retary for Health may prescribe policies and procedures 
to guide the spending of funds by corporations established 
under this subchapter that are consistent with the purpose 
of such corporations as flexible funding mechanisms and 
with Federal and State laws and regulations, and execu-
tive orders, circulars, and directives that apply generally 
to the receipt and expenditure of funds by nonprofit orga-
nizations exempt from taxation under section 501(c)(3) of 
the Internal Revenue Code of 1986.’’. 
(b) CONFORMING AMENDMENT.—Section 7362(a) of 
such title, as amended by section 3(a)(1) of this Act, is 
further amended by striking the last sentence. 
SEC. 6. REDESIGNATION OF SECTION 7364A OF TITLE 38, 
UNITED STATES CODE. 
(a) REDESIGNATION.—Section 7364A of title 38, 
United States Code, is redesignated as section 7365 of 
such title. 
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(b) CLERICAL AMENDMENTS.—The table of sections 
at the beginning of chapter 73 of such title is amended— 
(1) by striking the item relating to section 
7364A; and 
(2) by striking the item relating to section 7365 
and inserting the following new item: 
‘‘7365. Coverage of employees under certain Federal tort claims laws.’’. 
SEC. 7. IMPROVED ACCOUNTABILITY AND OVERSIGHT OF 
CORPORATIONS. 
(a) ADDITIONAL INFORMATION
IN ANNUAL RE-
PORTS.—Subsection (b) of section 7366 of title 38, United 
States Code, is amended to read as follows: 
‘‘(b)(1) Each corporation shall submit to the Sec-
retary each year a report providing a detailed statement 
of the operations, activities, and accomplishments of the 
corporation during that year. 
‘‘(2)(A) A corporation with revenues in excess of 
$300,000 for any year shall obtain an audit of the cor-
poration for that year. 
‘‘(B) A corporation with annual revenues between 
$10,000 and $300,000 shall obtain an audit of the cor-
poration at least once every three years. 
‘‘(C) Any audit under this paragraph shall be per-
formed by an independent auditor. 
‘‘(3) The corporation shall include in each report to 
the Secretary under paragraph (1) the following: 
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‘‘(A) The most recent audit of the corporation 
under paragraph (2). 
‘‘(B) The most recent Internal Revenue Service 
Form 990 ‘Return of Organization Exempt from In-
come Tax’ or equivalent and the applicable schedules 
under such form.’’. 
(b) CONFIRMATION OF APPLICATION OF CONFLICT 
OF INTEREST REGULATIONS TO APPROPRIATE CORPORA-
TION POSITIONS.—Subsection (c) of such section is 
amended— 
(1) by striking ‘‘laws and’’ each place it ap-
pears; 
(2) in paragraph (1)— 
(A) by inserting ‘‘each officer and’’ after 
‘‘under this subchapter,’’; and 
(B) by striking ‘‘, and each employee of 
the Department’’ and all that follows through 
‘‘during any year’’; and 
(3) in paragraph (2)— 
(A) 
by 
inserting 
‘‘, 
officer,’’ 
after 
‘‘verifying that each director’’; and 
(B) by striking ‘‘in the same manner’’ and 
all that follows before the period at the end. 
(c) ESTABLISHMENT OF APPROPRIATE PAYEE RE-
PORTING THRESHOLD.—Subsection (d)(3)(C) of such sec-
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tion is amended by striking ‘‘$35,000’’ and inserting 
‘‘$50,000’’. 
Æ 
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