Title: Basis of Presentation
Accounting Policies: Prepared in accordance with U.S. generally accepted accounting principles
De Minimis Rate Used: N
Rate Explanation: Auditee has a negotiated Federal Indirect rate and uses this rate unless the IDC rate is limited by statute.
The accompanying Schedule of Expenditures of Federal Awards (the Schedule) summarizes the
expenditures of Children’s Health Care and its subsidiaries (Children’s) under programs of the
U.S. government for the year ended December 31, 2023.
For purposes of the Schedule, federal awards include all grants, contracts, and similar agreements entered
into directly between Children’s and agencies and departments of the federal government and all
subawards made to Children’s by nonfederal organizations pursuant to federal grants, contracts, and
similar agreements. The awards are classified into program categories in accordance with the provisions of
the Uniform Guidance. For the year ended December 31, 2023, Children’s had no expenditures in the form
of noncash assistance, had no federally provided insurance in effect, or loans or loan guarantees
outstanding at year end.
This Schedule is presented using the accrual basis of accounting. The information in this schedule is
presented in accordance with the requirements of the Uniform Guidance.
Title: Indirect Cost Rates
Accounting Policies: Prepared in accordance with U.S. generally accepted accounting principles
De Minimis Rate Used: N
Rate Explanation: Auditee has a negotiated Federal Indirect rate and uses this rate unless the IDC rate is limited by statute.
Expenditures for federal programs are recognized using cost accounting principles contained in the
Uniform Guidance, Cost Principles for Non-Profit Organizations (2 CFR part 230). Under these cost
principles, certain types of expenditures are not allowed or are limited as to reimbursement. Expenditures
include a portion of costs associated with general activities (facilities and administrative costs or indirect
costs), which are allocated to federal awards under negotiated formulas. Indirect costs allocated to such
awards for the year ended December 31, 2023 were based on a predetermined rate of 58.6% negotiated
with Children’s oversight federal agency, the U.S. Department of Justice, and are included as a component
of the expenditures for applicable grants in the Schedule. Lower facilities and administrative cost rates
were used when specifically stated in respective grant agreements.
Title: Program Income
Accounting Policies: Prepared in accordance with U.S. generally accepted accounting principles
De Minimis Rate Used: N
Rate Explanation: Auditee has a negotiated Federal Indirect rate and uses this rate unless the IDC rate is limited by statute.
Program income, which is netted against the respective program expenses for the current year, was earned on Assistance Listing Number (ALN) 16.758 in an amount of $154,899.
Title: Reconciliation of Federal Awards to the Consolidated Financial Statements
Accounting Policies: Prepared in accordance with U.S. generally accepted accounting principles
De Minimis Rate Used: N
Rate Explanation: Auditee has a negotiated Federal Indirect rate and uses this rate unless the IDC rate is limited by statute.
A reconciliation of federal revenue reported in Children’s consolidated financial statements for the year ended December 31, 2023, to the schedule of expenditures of federal awards for the year ended December 31, 2023, is as follows: Other revenue per the consolidated financial statements $ 47,631,000 Plus — grant related program income 154,899 Plus — COVID-19 related period 5 PRF funding received and included on the schedule of expenditures of federal awards 11,740,887 Less: COVID-19 related period 5 PRF funding recorded as other revenue for the year-ended December 31, 2023 (1,000,000) Other nonfederal grant revenue (3,818,521) Other nonfederal operating revenue (36,404,891) Total per schedule of expenditures of federal awards $ 18,303,374
Title: COVID-19 Provider Relief Fund
Accounting Policies: Prepared in accordance with U.S. generally accepted accounting principles
De Minimis Rate Used: N
Rate Explanation: Auditee has a negotiated Federal Indirect rate and uses this rate unless the IDC rate is limited by statute.
The Provider Relief Fund (PRF) program is administered by the Health Resources and Services
Administration to support eligible providers during the COVID-19 pandemic and was approved for funding
originally under the Coronavirus Aid, Relief and Economic Securities Act. Funds were provided to eligible
providers to support healthcare related expenses or lost revenues attributable to the Coronavirus without
application but rather with terms and conditions. These terms and conditions required acceptance through
an online portal or the funds were to be returned. Children’s accepted the terms and conditions.
The accompanying schedule of expenditures of Federal awards includes PRF for Period 5 (defined as
payments received between January 1, 2022 to June 30, 2022) and for Period 6 (defined as payments
received between July 1, 2022 to December 31, 2022). Children’s did not receive payments related to
Period 6. The Tax Identification Number (TIN) for Children’s entities that received PRF funds for Period 5
are as follows: Children’s Health Care dba Children’s Minnesota is 41-1754276 and Children’s Health Care
Services, Inc. dba Children’s Minnetonka is 41-1756478.