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State Education Department
Dynamic Center Inc.
Compliance With the Reimbursable Cost Manual

Issued: December 29, 2014
Link to full audit report 2014-S-3
Link to 90-day response

To determine whether the costs submitted by Dynamic Center Inc. on its Consolidated Fiscal Report were properly calculated, adequately documented, and allowable under the State Education Department’s guidelines, including the Reimbursable Cost Manual. The audit covered the fiscal year ended June 30, 2012.

Dynamic Center Inc. (Dynamic) is a State Education Department (SED)-approved special education provider located in Florida, New York. Dynamic provides preschool Special Education Itinerant Teacher (SEIT) services to children with disabilities between the ages of three and five years. Dynamic is reimbursed for SEIT Program services through rates set by SED. Dynamic’s reimbursement rate is based on financial information, including costs, it reports to SED on its annual Consolidated Fiscal Report (CFR). Costs reported on the CFR must comply fully with the guidelines in SED’s Reimbursable Cost Manual (RCM) regarding the eligibility of costs and documentation requirements. For the fiscal year ended June 30, 2012, Dynamic reported approximately $1.1 million in reimbursable costs on its CFR for the SEIT Program.

Key Findings

  • Dynamic reported $420,953 in non-reimbursable costs for the SEIT Program for the year ended June 30, 2012. This included $316,020 in personal service costs and $104,933 in other-thanpersonal- service (OTPS) costs that were either unsupported, not related to the SEIT Program, personal in nature, incorrectly calculated or allocated to the SEIT Program, or otherwise not allowable per the RCM.
  • For instance, Dynamic’s CFR claimed personal service costs that lacked supporting documentation for hours worked and fringe benefit expenses that were miscalculated. We also identified nonreimbursable OTPS expenses that included gifts, food for staff, holiday parties, and personal expenses such as personal laundry and phone service costs.
  • We identified several record-keeping weaknesses corresponding to the expenses reported by Dynamic on its CFR.

Key Recommendations

To the State Education Department:

  • Review the disallowances identified by our audit and adjust Dynamic’s CFRs and tuition reimbursement rates, as appropriate.
  • Remind Dynamic officials of the pertinent SED guidelines that relate to the deficiencies we identified.

To Dynamic:

  • 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

Bilinguals Inc.: Compliance With the Reimbursable Cost Manual (2012-S-65)
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