Audit 55263

Title: Federal Student Loan Programs Accounting Policies: The accompanying schedule of expenditures of federal and state awards (the Schedule) summarizes thefederal and state awards expended by Hospital Sisters Health System and Subsidiaries (HSHS) for theyear ended June 30, 2022. For purposes of the Schedule, federal and state awards include all grants,contracts, loans, and loan guarantee agreements entered into directly between HSHS and agencies anddepartments of the federal government and the State of Wisconsin. For the year ended June 30, 2022,HSHS had no expenditures in the form of noncash assistance, no subrecipients, and no federally provided insurance in effect. Expenditures for federal and state award programs are recognized on the accrual basis of accounting. De Minimis Rate Used: Y Rate Explanation: The auditee used the de minimis cost rate. Expenditures consist of direct and indirect costs. Direct costs are those that can be easily identified with an individual federal or state sponsored program. The salary of a social worker or a sponsored program and the materials consumed by the program are examples of direct costs.Unlike direct costs, indirect costs cannot easily be identified with an individual federal or state sponsoredprogram. Indirect costs are the costs of services and resources that benefit many sponsored programs, aswell as nonsponsored projects and activities. Indirect costs consist of expenses incurred for such items asadministration, plant maintenance, and building and equipment depreciation.The federal or state agencies use an indirect cost rate to charge indirect costs to individual federal or stateprograms. The rate is the result of a number of cost allocation procedures that HSHS uses to allocate itsindirect costs to both sponsored and nonsponsored activities. The costs allocated to sponsored programsare divided by the direct costs of sponsored programs to arrive at a rate. The U.S. Department of Healthand Human Services (DHHS) must approve the rate before HSHS can use it to charge indirect costs tofederal or state sponsored programs. HSHS has elected to use the 10% de minimis indirect cost rateallowed under Uniform Guidance. HSHS is responsible only for the performance of certain administrative duties with respect to the Federal Family Education Loan programs, and accordingly, these loans are not included in its consolidated financial statements, and it is not practical to determine the balance of loans outstanding to students and former students of HSHS under these programs at June 30, 2022.