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NYS Comptroller


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State Education Department
Rivendell School
Compliance With the Reimbursable Cost Manual

Issued: December 28, 2015
Link to full audit report 2015-S-25
Link to 90-day response

To determine whether the costs reported by Rivendell School (Rivendell) on its Consolidated Fiscal Reports (CFRs) were properly documented, program-related, and allowable pursuant to the State Education Department’s (SED) Reimbursable Cost Manual (Manual). The audit included the expenses claimed on Rivendell’s CFRs for the three fiscal years ended June 30, 2014.

Rivendell is a Brooklyn, New York-based not-for-profit organization that is authorized by SED to operate, among other SED-approved programs, a Preschool Special Education Itinerant Teacher (SEIT) program to disabled children between the ages of three and five years. During the 2013- 14 school year, Rivendell served 86 students. The New York City Department of Education (DoE) refers students to Rivendell based on clinical evaluations, and the municipality pays for the services Rivendell provides using rates established by SED. The rates are based on the financial information that Rivendell reports to SED on its annual CFRs. SED reimburses DoE for a portion of its payments to Rivendell based on statutory rates. For the three fiscal years ended June 30, 2014, Rivendell reported approximately $7.5 million in reimbursable costs for the audited programs.

In addition to the SEIT Program subject to our audit, Rivendell operates a Montessori preschool, which is primarily privately funded, and a program for Related Services and Evaluations. These non-SEIT programs are not subject to SED’s rate-setting function.

Key Findings

For the three fiscal years ended June 30, 2014, we identified $536,449 in reported costs that did not comply with Manual requirements and recommend such costs be disallowed. These ineligible costs included $70,644 in personal service costs and $465,805 in other than personal service costs. Among the disallowances we identified were:

  • $389,012 in over-allocated expenses, including bond interest ($202,162) and depreciation and amortization ($128,506). These costs should have been allocated to other Rivendell programs.
  • $70,644 in undocumented extra pay expenses. The teachers in question did not work sufficient hours to earn extra pay, or the hours worked did not pertain to the SEIT Program.
  • $12,699 in unnecessary and ineligible travel costs.

Key Recommendations


  • Review the recommended disallowances resulting from our audit and make the appropriate adjustments to Rivendell’s reimbursement rates.
  • Work with Rivendell officials to help ensure their compliance with Manual provisions.

To Rivendell:

  • Ensure that costs reported on future CFRs comply with all Manual requirements.

Other Related Audits/Reports of Interest

Whitestone School for Child Development: Compliance With the Reimbursable Cost Manual (2014-S-38)
Institutes of Applied Human Dynamics: Compliance With the Reimbursable Cost Manual (2014-S-39)

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