Objective

To determine whether the costs reported by Bilingual Care, Inc. (Bilingual) on its Consolidated Fiscal Reports (CFR) were reasonable, necessary, directly related to the special education program, and sufficiently documented pursuant to the State Education Department’s (SED) Reimbursable Cost Manual (RCM). The audit focused primarily on expenses claimed on Bilingual’s CFR for the fiscal year ended June 30, 2015 and included certain expenses claimed on its CFRs for the two fiscal years ended June 30, 2014.

About the Program

Bilingual is a New York City-based for-profit organization authorized by SED to provide preschool Special Education Itinerant Teacher (SEIT) services to children with disabilities who are between the ages of three and five years. During the 2014-15 school year, Bilingual served about 171 students in its SEIT program. In addition to the SEIT cost-based program, Bilingual operated one other SED-approved preschool special education program: Evaluations. Payments for services under the Evaluations program are based on fixed fees.

The New York City Department of Education refers students to Bilingual and pays for those services using rates established by SED. The rates are based on financial information that Bilingual reports to SED on its annual CFRs. To be eligible for reimbursement, reported costs must comply with RCM requirements. For the three fiscal years ended June 30, 2015, Bilingual reported approximately $8.9 million in reimbursable costs for the SEIT cost-based program.

Key Findings

For the three fiscal years ended June 30, 2015, we identified $370,685 in reported costs that did not comply with the requirements in the RCM, as follows:

• $236,117 in excess executive compensation costs;
• $47,945 in unapproved rent costs;
• $37,287 in ineligible other than personal service costs such as Evaluations expenses, personal vehicle expenses, non-reimbursable income taxes, and other miscellaneous expenses charged to the SEIT program;
• $27,887 in ineligible bonus payments; and
• $21,449 in non-allowable health insurance costs.

Key Recommendations

To SED:

• Review the recommended disallowances resulting from our audit and make the appropriate adjustments to Bilingual’s CFRs and tuition reimbursement rates, as warranted.
• Work with Bilingual officials to ensure their compliance with the provisions of the RCM.

To Bilingual:

• Ensure that all costs reported on future CFRs comply with SED’s reimbursement requirements.