Purpose

To determine whether the costs reported by the Center for Disability Services (CFDS) on its Consolidated Fiscal Reports (CFRs) were properly calculated, adequately documented, and allowable under the State Education Department’s (SED) guidelines, including the Reimbursable Cost Manual (Manual). Our audit covered the calendar year ended December 31, 2013.

Background

CFDS is an SED-approved not-for-profit special education provider located in Albany, New York. CFDS provides preschool special education services to children with disabilities between the ages of three and five years. CFDS is reimbursed for preschool special education program services through rates set by SED. These reimbursement rates are based on financial information, including costs, that CFDS reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with Manual requirements. For the calendar year ended December 31, 2013, CFDS reported about $4.8 million in reimbursable costs on its CFR for five preschool special education programs.

Key Findings

For the year ended December 31, 2013, we identified $81,581 in costs that were not in compliance with the Manual. These costs included:

• $64,954 in personal service costs that consisted of ineligible bonuses and executive compensation above the allowed regional median; and
• $16,627 in non-personal service costs that were either not supported by proper documentation, not allowable, or not related to the programs. 

Key Recommendations

To SED:

• Review the disallowances identified by our audit and make the necessary adjustments to the costs reported on CFDS’ CFR and to CFDS’ tuition reimbursement rates, as appropriate.
• Remind CFDS officials of the pertinent SED guidelines that relate to the deficiencies we identified.

To CFDS:

• Ensure that costs reported on annual CFRs fully comply with SED’s requirements, and communicate with SED to obtain clarification as needed.

Other Related Audits/Reports of Interest

State Education Department: Newmeadow, Inc. - Compliance With the Reimbursable Cost Manual (2015-S-48)
State Education Department: Upstate Cerebral Palsy - Compliance With the Reimbursable Cost Manual (2014-S-71)