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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

State Education Department
United Community Services, Inc.
Compliance With the Reimbursable Cost Manual


Issued: December 30, 2015
Link to full audit report 2015-S-44
Link to 90-day response

Purpose
To determine whether the costs reported by United Community Services, Inc. (United) on its Consolidated Fiscal Reports (CFRs) were properly documented, program-related, and allowable pursuant to the State Education Department’s (SED) Reimbursable Cost Manual (Manual). The audit covered expenses claimed on United’s CFRs for the three fiscal years ended June 30, 2014.

Background
United is a Brooklyn, New York for-profit organization authorized by SED to operate, among other SED-approved programs, the Special Class in an Integrated Setting (SCIS) program to disabled children between the ages of three and five years. During the 2013-2014 school year, United provided services to 108 students. The New York City Department of Education (DoE) refers students to United based on clinical evaluations and pays for these services using rates established by SED. The rates are based on the financial information that United reports to SED on its annual CFRs. The State reimburses DoE for a portion of its payments to United based on the SED-established rates. For the three fiscal years ended June 30, 2014, United reported approximately $7.3 million in reimbursable costs for the audited programs. Also, United has a collaboration agreement with Bushwick United Headstart (Bushwick) and provides services to disabled students at four Bushwick locations.

Key Findings

For the three fiscal years ended June 30, 2014, we identified $207,295 in reported costs that did not comply with the Manual’s requirements and recommend such costs be disallowed. These ineligible costs included $154,991 in personal service costs and $52,304 in other than personal service costs, as follows:

  • $81,068 in compensation paid to the Assistant Executive Director. This individual is also the fulltime Executive Director at Bushwick;
  • $73,923 in pension contributions that did not comply with the Manual’s guidelines;
  • $17,931 in undocumented vehicle expenses;
  • $17,347 in miscellaneous expenses, including $4,695 for staff food, $4,285 for utilities, $3,392 in cell phone expenses, $2,781 for staff gifts, and $2,194 for office expenses. These expenses were insufficiently documented and/or not program-related; and
  • $17,026 for car services and other travel expenses. These expenses include car services for parents and monthly MetroCards for an office worker.

Key Recommendations

To SED:

  • Review the disallowances resulting from our audit and make the appropriate adjustments to the costs reported on United’s CFRs and to United’s tuition reimbursement rates.
  • Work with United officials to help ensure their compliance with the provisions in the Manual.

To United:

  • Ensure that costs reported on future CFRs comply with the requirements in the Manual.

Other Related Audits/Reports of Interest

Whitestone School for Child Development: Compliance With the Reimbursable Cost Manual (2014-S-38)
Institutes of Applied Human Dynamics: Compliance With the Reimbursable Cost Manual (2014- S-39)


State Government Accountability Contact Information:
Audit Director: Frank Patone
Phone: (212) 417-5200; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236