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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

State Education Department
Variety Child Learning Center
Compliance With the Reimbursable Cost Manual


Issued: May 31, 2017
Link to full audit report 2016-S-77
Link to 90-day response

Purpose
To determine whether the costs reported by Variety Child Learning Center (Variety) 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 the fiscal year ended June 30, 2014.

Background
Variety, a not-for-profit organization located in Syosset, New York, is an SED-approved provider of special education services. Variety offers a range of special education services and programs to children with disabilities from birth to eight years of age. During the period July 1, 2013 through June 30, 2014, Variety provided certain rate-based preschool special education services (Preschool Special Class and Preschool Special Education Itinerant Teacher services) to about 420 children from school districts located in Nassau and Suffolk Counties and New York City. Variety is reimbursed for preschool special education services through rates set by SED. These reimbursement rates are based on financial information, including costs, that Variety 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, 2014, Variety reported approximately $9.35 million in reimbursable costs for its rate-based preschool special education programs.

Key Finding

  • According to the RCM, costs reported on the CFR should be reasonable, necessary, directly related to the special education programs, and properly documented. For the fiscal year ended June 30, 2014, we identified $6,719 in other-than-personal-service costs that did not comply with the RCM’s requirements for reimbursement.

Key Recommendations

To SED:

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

To Variety:

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

Other Related Audits/Reports of Interest

SED: Ganrormic, Inc., Compliance With the Reimbursable Cost Manual (2016-S-58)
SED: New York League for Early Learning, Inc., Compliance With the Reimbursable Cost Manual (2015-S-43)


State Government Accountability Contact Information:
Audit Director: Andrea Inman
Phone: (518) 474-3271; 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