State Education Department


Skip to Content

Login   Subscribe   Site Index   Contact Us   Google Translate™

NYS Comptroller


Taxpayers' Guide to State and Local Audits

State Education Department
TheraCare Preschool Services, Inc.
Compliance with the Reimbursable Cost Manual

Issued: April 02, 2014
Link to full audit report 2012-S-21
Link to 90-day response

To determine whether the costs reported by TheraCare Preschool Services, Inc. (TheraCare), on its Consolidated Fiscal Reports (CFRs), were properly calculated and adequately documented pursuant to the State Education Department's Reimbursable Cost Manual (Manual). The audit covers the three fiscal years ended June 30, 2011.

TheraCare provides special education services to children between the ages of three and five who live in New York City as well as Westchester, Nassau and Suffolk counties. Pursuant to New York State's Education Law, providers, such as TheraCare, are reimbursed by the State Education Department (SED) based on their annual CFRs which detail program-related expenses. To be eligible for reimbursement, the provider's reported expenses must comply with Manual guidelines. For the three fiscal years ended June 30, 2011, TheraCare claimed approximately $50.1 million in reimbursable expenses for the programs we audited.

Key Findings
We disallowed $876,898 in costs claimed by TheraCare because they did not comply with applicable provisions of the Manual. The disallowances include:

  • $316,539 in compensation paid to TheraCare's Executive Director, Chief Financial Officer and acting Assistant Executive Director in excess of SED's allowable compensation levels;
  • $474,080 in employee bonus payments that were not in compliance with Manual guidelines;
  • $76,766 in unnecessary and inappropriate South American recruitment-related costs;
  • $9,513 in other non-personal service expenses that were either unsupported or not program-appropriate.

Key Recommendations

  • SED should review the disallowances resulting from our audit, make the appropriate adjustments to costs reported on the CFRs and to TheraCare's tuition reimbursement rates, and recover the overpayments as appropriate.
  • SED should work with TheraCare officials to help ensure that only eligible costs are included on their CFRs.
  • TheraCare should ensure that requests for SED reimbursement include only those expenses that are allowed by the Manual.

Other Related Audits/Reports of Interest

Bilingual SEIT, Inc.: Compliance With the Reimbursable Cost Manual (2011-S-13)
IncludED Educational Services Inc.: Compliance With the Reimbursable Cost Manual (2010-S-59)

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