Audit 338778

Title: Note A – Basis of Presentation Accounting Policies: Note B – Summary of Significant Accounting Policies 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 wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: Note B – Summary of Significant Accounting Policies - The District has not elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of Public Hospital District No. 1 of Skagit County, Washington (the District) under programs of the federal government for the year ended December 31, 2022. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (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 District, it is not intended to, and does not, present the financial position, change in net assets, or cash flows of the District.

Title: Note C – Subrecipients Accounting Policies: Note B – Summary of Significant Accounting Policies 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 wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: Note B – Summary of Significant Accounting Policies - The District has not elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The District did not provide any federal awards to subrecipients during the year ended December 31, 2022.

Title: Note D – Provider Relief Fund Accounting Policies: Note B – Summary of Significant Accounting Policies 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 wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: Note B – Summary of Significant Accounting Policies - The District has not elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. The District received funds under the Provider Relief Fund, administered by the U.S. Department of Health & Human Services (HHS) under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), of $0 and $4,352,645 in 2022 and 2021, respectively, of which the District recognized the amounts received as nonoperating revenue in accordance with generally accepted accounting principles in the United States (U.S. GAAP) during the year ended December 31, 2021. In accordance with guidance from HHS, the District included expenditures for Provider Relief Fund Assistance Listing No. 93.498 of $4,352,645 for reporting periods three and four, respectively, in the Schedule for the year ended December 31, 2022, to align with HHS reporting guidelines. The District’s tax ID number that received Provider Relief assistance is 56-2392010.