Title: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Policies: The accompanying schedule of expenditures of federal and state awards (the Schedule) includes the federal and state award activity of Cumberland County Hospital System, Inc. dba: Cape Fear Valley Health System (the Health System), under programs of the federal government for the year ended September 30, 2023. The information in this Schedule is presented in accordance with the requirements of 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Health System, it is not intended to and does not present the net position, changes in net assets, or cash flows of the Health System.
De Minimis Rate Used: Y
Rate Explanation: The Health System has elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance.
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance for all awards. Under these principles, certain types of expenditures are not allowable or are limited as to reimbursement. Any negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.
The combined financial statements reflect revenue recognized from COVID-19 Provider Relief Funds of approximately $-0- and $8,155,000 for the years ended September 30, 2023 and 2022, respectively. The SEFA includes COVID-19 Provider Relief Funds of approximately $6,394,000 that is received in period 4 in accordance with the requirements of the compliance supplement for assistance listing number 93.498. All of $6,394,000 was recognized in the financial statements for the year ended September 30, 2022.
Title: LOAN PROGRAM
Accounting Policies: The accompanying schedule of expenditures of federal and state awards (the Schedule) includes the federal and state award activity of Cumberland County Hospital System, Inc. dba: Cape Fear Valley Health System (the Health System), under programs of the federal government for the year ended September 30, 2023. The information in this Schedule is presented in accordance with the requirements of 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Health System, it is not intended to and does not present the net position, changes in net assets, or cash flows of the Health System.
De Minimis Rate Used: Y
Rate Explanation: The Health System has elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance.
In March 2013, Hoke Healthcare obtained permanent financing for Health Pavilion Hoke from the United States Department of Agriculture (USDA) in the form of a $38,448,000, fixed rate, 40-year direct loan (the phase 1 Direct loan). The USDA also provided permanent financing for Phase 2 through its Community Facilities Direct Loan and Guaranteed Loan Program through a fixed-rate, 40-year, $30,000,000 direct loan (the Phase 2 Direct Loan) and a fixed-rate, 30-year, $27,311,000 guaranteed loan (the Guaranteed Loan). As of September 30, 2023, the outstanding balance of the total loan was $80,395,625.
In 2011, Harnett Health obtained a construction loan of $63,000,000 from a financial institution. In March 2013, Harnett Health entered into an additional series of obligations for eight notes payable to the USDA. The proceeds of the USDA notes were used to pay off the construction loan noted above. As of September 30, 2023, the outstanding balance of the total loan was $53,623,730.
In accordance with 2 CFR 200.502, since the federal government is at risk for loans until the debt is repaid, the value of federal awards expended under loan programs in a given period is calculated as the value of new loans made or received during the fiscal year, plus the balance of loans from previous years for which the federal government imposes continuing compliance requirements, plus any interest subsidy, cash, or administrative cost allowance. As of September 30, 2023, the expenditures included in the Schedule consist of the highest outstanding loan balance during the fiscal year.