Objective

To determine whether the costs reported by Mary Cariola Children’s Center, Inc. (Mary Cariola) 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) and the Consolidated Fiscal Reporting and Claiming Manual (CFR Manual).The audit covered expenses reported on Mary Cariola’s 2015 and 2016 CFRs for the fiscal year ended June 30, 2016.

About the Program

Mary Cariola is a not-for-profit organization located in Monroe County. Among other programs, Mary Cariola provides preschool special education services to children with disabilities who are three and four years of age. Mary Cariola is reimbursed for these services through rates set by SED. The reimbursement rates are based on financial information, including costs that Mary Cariola 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, Mary Cariola reported approximately $2.6 million in reimbursable costs on its CFR for the Preschool Special Class – over 2.5 hours per day and Preschool Special Class – 2.5 hours per day (collectively referred to as Programs) that it operated.

Key Findings

For the fiscal year ended June 30, 2016, we identified $12,744 in ineligible costs that Mary Cariola reported on its CFRs for the Programs. The ineligible costs included:

• $10,063 in personal service costs consisting of $9,025 in non-reimbursable compensation not supported by employee time records and $1,038 in executive bonus compensation.
• $2,681 in other than personal service costs, consisting of $2,604 in non-allowable agency administration costs and $77 in non-allowable food and miscellaneous items.

Key Recommendations

To SED:

• Review the disallowances identified by our audit and make the necessary adjustments to the costs reported on Mary Cariola’s CFRs and to Mary Cariola’s tuition reimbursement rates, as appropriate.
• Remind Mary Cariola officials of the pertinent SED guidelines that relate to the deficiencies we cited.

To Mary Cariola:

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