Audit 354086

Title: NOTE 1 - GENERAL Accounting Policies: The accounting policies of the System conform to accounting principles generally accepted in the United States of America as applicable to not-for-profit agencies. The following is a summary of the more significant policies relating to the aforementioned grant programs. Basis of Accounting The consolidated financial statements contained in the System’s annual audit report are prepared on the accrual basis of accounting. The following is a summary of such basis:  Revenues are recognized when they are earned. Due to certain grants having fiscal periods different from the System, the revenue is prorated over the grant period as services are provided.  Expenses are recorded in the period when incurred. Non-cash Assistance The Schedule includes $1,122,508 of non-cash assistance (for the WIC program, CFDA 10.557) in the form of program vouchers issued at the WIC office on behalf of the United States Department of Agriculture (USDA) that allow for purchase of approved food items and $23,552 (for the Immunization Cooperative Agreement, CFDA 93.268) in the form of childhood vaccines administered at the System’s clinic office on behalf of the United States Department of Health and Human Services. These benefits are issued at the local level but tracked at the State of Connecticut pass-through level. De Minimis Rate Used: N Rate Explanation: The System has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Various departments and agencies of the Federal Government have provided financial assistance to Middlesex Health System, Inc. and Subsidiaries (the System) through grants and other authorizations in accordance with the federal laws and regulations. These financial assistance programs provide funding for several programs as listed on the Schedule of Expenditures of Federal Awards (the Schedule). 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 System, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the System. Expenditures are recognized following cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. The System has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.

Title: NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: The accounting policies of the System conform to accounting principles generally accepted in the United States of America as applicable to not-for-profit agencies. The following is a summary of the more significant policies relating to the aforementioned grant programs. Basis of Accounting The consolidated financial statements contained in the System’s annual audit report are prepared on the accrual basis of accounting. The following is a summary of such basis:  Revenues are recognized when they are earned. Due to certain grants having fiscal periods different from the System, the revenue is prorated over the grant period as services are provided.  Expenses are recorded in the period when incurred. Non-cash Assistance The Schedule includes $1,122,508 of non-cash assistance (for the WIC program, CFDA 10.557) in the form of program vouchers issued at the WIC office on behalf of the United States Department of Agriculture (USDA) that allow for purchase of approved food items and $23,552 (for the Immunization Cooperative Agreement, CFDA 93.268) in the form of childhood vaccines administered at the System’s clinic office on behalf of the United States Department of Health and Human Services. These benefits are issued at the local level but tracked at the State of Connecticut pass-through level. De Minimis Rate Used: N Rate Explanation: The System has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The accounting policies of the System conform to accounting principles generally accepted in the United States of America as applicable to not-for-profit agencies. The following is a summary of the more significant policies relating to the aforementioned grant programs. Basis of Accounting The consolidated financial statements contained in the System’s annual audit report are prepared on the accrual basis of accounting. The following is a summary of such basis:  Revenues are recognized when they are earned. Due to certain grants having fiscal periods different from the System, the revenue is prorated over the grant period as services are provided.  Expenses are recorded in the period when incurred. Non-cash Assistance The Schedule includes $1,122,508 of non-cash assistance (for the WIC program, CFDA 10.557) in the form of program vouchers issued at the WIC office on behalf of the United States Department of Agriculture (USDA) that allow for purchase of approved food items and $23,552 (for the Immunization Cooperative Agreement, CFDA 93.268) in the form of childhood vaccines administered at the System’s clinic office on behalf of the United States Department of Health and Human Services. These benefits are issued at the local level but tracked at the State of Connecticut pass-through level.