Objective

To determine whether the costs reported by Through Ages, Inc. (Through Ages) on its Consolidated Fiscal Reports (CFRs) 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) and the Consolidated Fiscal Reporting and Claiming Manual (CFR Manual). The audit focused primarily on expenses claimed on Through Ages’ CFR for the fiscal year ended June 30, 2015 and certain expenses claimed on its CFRs for the two fiscal years ended June 30, 2014.

About the Program

Through Ages 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, Through Ages served 198 students. Through Ages also operated another SED-approved preschool special education program, Related Services. However, payments for services under this program are based on fixed fees.

The New York City Department of Education (DOE) refers students to Through Ages and pays for its services using rates established by SED. The rates are based on the financial information Through Ages reports to SED on its annual CFRs. For the three fiscal years ended June 30, 2015, Through Ages reported approximately $13.7 million in reimbursable costs for the SEIT preschool cost-based program.

Key Findings

For the three fiscal years ended June 30, 2015, we identified $137,377 in reported costs that did not comply with the requirements in the RCM and CFR Manual and recommend that such costs be disallowed. These costs included $350 in personal service costs and $137,027 in other than personal service costs, as follows:

• $121,317 in insufficiently documented and/or incorrectly allocated costs;
• $7,366 in unsupported or ineligible other than personal service costs;
• $5,200 in underreported offsetting interest revenue;
• $3,144 in overreported depreciation expenses; and
• $350 in excessive compensation costs.

Key Recommendations

To SED:

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

To Through Ages:

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