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NYS Comptroller


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State Education Department
The Alcott School
Compliance With the Reimbursable Cost Manual

Issued: July 25, 2016
Link to full audit report 2015-S-97
Link to 90-day response

To determine whether the costs reported by the Alcott School (Alcott) on its Consolidated Fiscal Report (CFR) were properly calculated, adequately documented, and allowable under the State Education Department’s (SED) guidelines, including the Reimbursable Cost Manual (RCM). We audited costs that Alcott reported on its CFR for the year ended June 30, 2014.

Alcott is an SED-approved, not-for-profit special education provider located in Westchester County, New York. Alcott provides preschool special education services to children with disabilities who are between three and five years of age. Alcott is reimbursed for preschool special education services through rates set by SED. The reimbursement rates are based on financial information, including costs, that Alcott reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with RCM requirements. For the year ended June 30, 2014, Alcott reported about $4.3 million in reimbursable costs on its CFR for four rate-based preschool special education programs (Programs).

Key Findings

For the year ended June 30, 2014, we identified $55,969 in ineligible costs that Alcott reported on its CFR for the Programs. The ineligible costs included:

  • $52,442 in personal service costs, which consisted of $49,874 in unsupported staff time, and $2,568 in employee compensation that was reported as more than one full-time equivalent on the CFR; and
  • $3,527 in other than personal service costs, which consisted of $1,889 in inadequately documented expenses, $1,252 in working capital interest, and $386 in food and other nonreimbursable costs.

We also identified $15,030 in potentially reimbursable salary expenses for a marketing position that SED disallowed during its desk review of Alcott’s CFR costs, prior to our on-site audit. Finally, we identified certain control weaknesses and compliance deficiencies that Alcott officials should correct.

Key Recommendations


  • Review the audit findings identified by our audit and, if warranted, make the necessary adjustments to the costs reported on Alcott’s CFR and to Alcott’s tuition reimbursement rates.
  • Remind Alcott officials of the pertinent SED guidelines that relate to the deficiencies we identified.

To Alcott:

  • Ensure that costs reported on annual CFRs fully comply with SED’s requirements, and communicate with SED to obtain clarification as needed.
  • Improve compliance with the RCM by: submitting CFRs timely; ensuring proper independent review and approval of time records by supervisors; competitively bidding contracted services; and ensuring less than arm’s length transactions are disclosed on the CFR.

Other Related Audits/Reports of Interest

The Arc of Orange County: Compliance With the Reimbursable Cost Manual (2015-S-45)
Rivendell School: Compliance With the Reimbursable Cost Manual (2015-S-25)

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