Objective

To determine whether the costs reported by St. Anne Institute (St. Anne) on its Consolidated Fiscal Report (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 St. Anne’s CFR for the fiscal year ended June 30, 2016.

About the Program

St. Anne is an SED-approved, not-for-profit private school located in Albany that provides preschool special education services to children with developmental disabilities. St. Anne is reimbursed for these services through rates set by SED. The reimbursement rates are based on financial information, including costs, that St. Anne reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the RCM requirements. For the fiscal year ended June 30, 2016, St. Anne reported about $450,000 in reimbursable costs on its CFR for the rate-based preschool special education program that it provided.

Key Findings

For the fiscal year ended June 30, 2016, we identified $14,204 in in ineligible costs that St. Anne reported on its CFR for the Program. The ineligible costs included:

• $7,287 in non-program-related personal service costs, consisting of $6,010 in salaries and $1,277 in fringe benefits for employees who were not directly related to the preschool program; and
• $6,917 in other than personal service costs, consisting of $2,434 in non-reimbursable account adjustment and bad debts, $1,505 in insufficiently documented vehicle expenses, $1,362 in excess audit and legal costs, $805 in working capital interest, $570 in non-audit services, and $241 in other non-reimbursable costs such as food, gifts, and donations.

Key Recommendations

To SED:

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

To St. Anne:

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