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NYS Comptroller


Taxpayers' Guide to State and Local Audits

State Education Department
The Norman Howard School
Compliance with the Reimbursable Cost Manual

Issued: July 15, 2013
Link to full audit report 2012-S-18
Link to 90-day response

To determine whether costs reported by the Norman Howard School (NHS) on the Consolidated Fiscal Report (CFR) were properly calculated, adequately documented and allowable under the Consolidated Fiscal Report Manual (CFR Manual) and the Reimbursable Cost Manual (RCM). This audit covered the period July 1, 2008 through June 30, 2011.

NHS, located in Rochester, New York provides special education services to children with learning disabilities in grades 5 through 12. NHS is reimbursed for these services based upon financial information contained in the CFR it files with the New York State Education Department (SED). To be eligible for reimbursement, the expenses must comply with the guidelines contained in the CFR Manual and RCM. For the three fiscal years ended June 30, 2011, NHS reported costs totaling $11.3 million for the special education program we audited.

Key Findings

  • We disallowed $208,305 in personal service and other-than-personal-service costs for the three fiscal years ended June 30, 2011 because they were unnecessary or unallowable, or were not correctly reported on the CFR.
  • The disallowances for personal services consisted of $170,325 in compensation for uncertified teachers and teachers' assistants.
  • The disallowances for other-than-personal-services included $30,000 in overstated mortgage interest costs and $7,980 in contracted direct care expenses that were not reasonable or necessary for NHS' special education program.
  • We also questioned personal services costs totaling $67,295 for two employees who did not have the required professional certifications during portions of our audit period. Further, we questioned $21,729 in other-than-personal-service costs for a contracted program that might no longer be necessary.

Key Recommendations

  • SED should review the disallowances resulting from our audit, make the appropriate adjustments to the costs reported by NHS, and reduce NHS reimbursement rates, as appropriate.
  • NHS should ensure that the reporting of reimbursable expenses complies with SED requirements and that professional employees have the certifications required for the positions they hold.

Other Related Audits/Reports of Interest

Capital District Beginnings, Inc.: Compliance With the Reimbursable Cost Manual (2011-S-1)
Achievements, PLLC: Compliance With the Reimbursable Cost Manual (2011-S-18)

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