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State Education Department
Kids & the Training Institute, Inc.
Compliance with the Reimbursable Cost Manual

Issued: February 7, 2013
Link to full audit report 2010-S-69
Link to 90-day response

To determine whether the costs reported by Kids & the Training Institute, Inc. (KTI) on the Consolidated Fiscal Report (CFR) were properly calculated, adequately documented, and allowable under the Reimbursable Cost Manual (Manual) issued by the New York State Education Department (SED). The audit covers the two fiscal years ended June 30, 2009..

KTI, a privately-owned company located in New York City, provides special education itinerant teacher (SEIT) and related services to disabled preschool children. KTI subleases from and shares office space with another privately-owned special education company, Kids Quality Care, Inc. (KQC). The New York City Department of Education (DoE) pays tuition and fees to KTI using rates set by SED, which are based on financial information KTI presents in an annual CFR filed with SED. The State reimburses the DoE for a portion of its payments to KTI. For the two fiscal years ended June 30, 2009, KTI claimed and received $3.3 million in public support.

Key Findings

  • KTI claimed $287,952 in costs that were not properly calculated, adequately documented, or allowable for the two years covered by our audit. The disallowances include $215,592 in personal services, and $72,360 in other-than-personal services.
  • The personal service disallowances consisted of $44,824 in excess salary costs for its Executive Director, $169,648 in unsupported bonus payments, and $1,120 in gift cards to employees.
  • The other-than-personal-service disallowances we identified included (among a range of improper charges) $31,577 for ineligible vehicle costs, $16,389 for numerous personal expenses, and $3,753 in expenses claimed for the private residence of the Executive Director.
  • KTI did not comply with provisions of the Manual pertaining to a less-than-arm's-length relationship with KQC, time and attendance records, and the classification of expenses.

Key Recommendations

  • SED should review disallowances resulting from our audit and make the appropriate adjustments to costs reported on the CFRs and the tuition reimbursement rates.
  • SED should direct KTI officials to comply with provisions of the Manual pertaining to less-thanarm's- length (LTAL) relationships, time and attendance records and classification of expenses.
  • KTI should comply with the procedural guidance provided by the Manual (e.g. LTAL business relationships, program modifications for business location) and ensure that costs reported on the CFR comply fully with the requirements in the Manual.

Other Related Audits/Reports of Interest

Bilingual SEIT & Preschool, Inc: Compliance with the Reimbursable Cost Manual (2011-S-13)
Special Education Associates, Inc: Compliance With the Reimbursable Cost Manual (2010-S-31)

State Government Accountability Contact Information:
Audit Director: Brian Mason
Phone:(518) 474-3271; Email:
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236