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State Education Department
Whispering Pines Preschool, Inc.
Compliance With the Reimbursable Cost Manual

Issued: June 02, 2015
Link to full audit report 2013-S-48
Link to 90-day response

To determine whether the costs reported by Whispering Pines Preschool, Inc. (Whispering Pines) on its Consolidated Fiscal Reports (CFRs) were properly calculated, adequately documented, and allowable under the State Education Department’s (SED) guidelines, including the Reimbursable Cost Manual (RCM). Our audit covered the two fiscal years ended June 30, 2012.

Whispering Pines is a SED-approved, for-profit special education provider of center- and homebased services to infants, toddlers, and preschool-age children in nine counties. Whispering Pines has three sites (Delanson, Cobleskill, and Amsterdam, New York). Its Director and owner is Dr. Martha Frank (Director). Whispering Pines is reimbursed for preschool special education services through rates set by SED. These reimbursement rates are based on financial information, including costs, that Whispering Pines reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with RCM requirements. For the two fiscal years ended June 30, 2012, Whispering Pines reported about $6.1 million in reimbursable costs on its CFRs for three rate-based programs.

Key Findings

Whispering Pines claimed $146,972 in ineligible costs for three rate-based programs for the two years covered by our audit. The ineligible costs included:

  • $71,397 in personal service costs consisting of salary and fringe benefits paid to the Director’s husband and bonuses paid to some personnel; and
  • $75,575 in non-personal service costs, including $33,688 in ineligible or unnecessary vehicle and equipment costs, $25,644 in ineligible interest expense, $3,798 in unnecessary contracted services, and $12,445 in other non-reimbursable costs.

In addition, Whispering Pines did not disclose non-interest-bearing advances to its Director that should have been reported on its CFRs as other compensation and benefits.

Key Recommendations

To the State Education Department:

  • Review the recommended disallowances resulting from our audit and adjust Whispering Pines’ CFRs and tuition reimbursement rates as appropriate.
  • Remind Whispering Pines officials of the pertinent SED guidelines that relate to the deficiencies we identified.

To Whispering Pines:

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

Other Related Audits/Reports of Interest

Dynamic Center Inc.: Compliance With the Reimbursable Cost Manual (2014-S-3)
LaSalle School: Compliance With the Reimbursable Cost Manual (2012-S-68)

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