Objective

To determine whether the costs reported by Children’s Education Services, Inc. (CES) 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). We audited the costs that CES reported on its CFR for the fiscal year ended June 30, 2015.

About the Program

CES is an SED-approved, for-profit special education provider located in Jamestown. CES provides preschool special education services to children with disabilities who are between three and four years of age. CES is reimbursed for these services through rates set by SED. The reimbursement rates are based on financial information, including costs, that CES reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with RCM requirements. For the fiscal year ended June 30, 2015, CES reported $725,856 in reimbursable costs for the two rate-based preschool special education programs it operated.

Key Findings

We identified $2,509 in other than personal service costs reported by CES on its CFR for the fiscal year ended June 30, 2015 that were ineligible for reimbursement. The ineligible costs included $1,952 for non-allowable expenses and $557 in unsupported agency administration expenses for rent and supplies.

Key Recommendations

To SED:

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

To CES:

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