Objective

To determine whether the costs reported by Children’s Unit for Treatment and Evaluation (CUTE) on its Consolidated Fiscal Reports (CFR) were properly calculated, adequately documented, and allowable under the State Education Department’s (SED) guidelines, including the Reimbursable Cost Manual (RCM). The audit covered expenses reported on CUTE’s CFR for the fiscal year ended June 30, 2016 and certain costs reported on its CFRs for the two fiscal years ended June 30, 2015.

About the Program

CUTE, an SED-approved provider located in Broome County, New York, provides preschool special education services to children with disabilities who are between three and five years of age. CUTE is reimbursed for these services through rates set by SED. The reimbursement rates are based on financial information, including costs, that CUTE reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the RCM requirements. For the three fiscal years ended June 30, 2016, CUTE reported approximately $1.8 million in reimbursable costs for the Preschool Special Class that it provided.

Key Findings

For the three fiscal years ended June 30, 2016, we identified $232,606 in reported costs that did not comply with the RCM’s requirements for reimbursement. These costs included $232,464 in parent agency administrative costs and $142 in consultant travel expenses.

Key Recommendations

To SED:

• Review the findings identified by our audit and, if warranted, make the necessary adjustments to the costs reported on CUTE’s CFRs and to CUTE’s tuition reimbursement rates.
• Remind CUTE officials of the pertinent SED requirements that relate to the deficiencies we identified.

To CUTE:

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