Purpose

To determine whether the costs submitted by the Early Education Center (Center) on its Consolidated Fiscal Report (CFR) were properly calculated, adequately documented and allowable under the State Education Department’s (SED’s) guidelines, including the Reimbursable Cost Manual (RCM). The audit covered the fiscal year ended June 30, 2014.

Background

The Center, for-profit organization located in Highland, New York, provides preschool special education services to children with disabilities between the ages of three and five years. The Center is reimbursed for preschool special education services through rates set by SED. These reimbursement rates are based on financial information, including costs the Center reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the guidelines specified in the RCM. For the fiscal year ended June 30, 2014, the Center reported about $2.4 million in reimbursable costs on its CFR, for the Preschool Special Class and the Preschool Integrated Special Class programs (the Programs) we audited.

Key Finding

We identified $11,508 in other than personal service costs charged to the Programs that did not comply with SED’s requirements for reimbursement. The ineligible costs included vehicles expenses, food for meetings and advertising.

Key Recommendations

To SED:

• Review the disallowances identified by our audit and make the necessary adjustments to the costs reported on the Center’s CFRs and to the Center’s tuition reimbursement rates, as appropriate.

To the Center:

• Ensure that costs reported on annual CFR’s fully comply with SED’s requirements.

Other Related Audits/Reports of Interest

State Education Department: The Arc of Orange County – Compliance With the Reimbursable Cost Manual (2015-S-45)