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State Education Department
Gingerbread Learning Center, Inc.
Compliance With the Reimbursable Cost Manual

Issued: October 26, 2016
Link to full audit report 2014-S-79
Link to 90-day response

To determine whether the costs reported by the Gingerbread Learning Center, Inc. (Gingerbread) 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 focused primarily on expenses claimed on Gingerbread’s CFR for fiscal year 2012-13 and certain expense categories on Gingerbread’s CFRs for the two fiscal years ended June 30, 2012.

Gingerbread is a not-for-profit organization that provides center-based (full-day, half-day, and integrated) preschool programs and a Special Education Itinerant Teacher (SEIT) program to children ages three through five years. During the 2012-13 school year, Gingerbread served about 145 students. The New York City Department of Education (DoE) refers students to Gingerbread based on clinical evaluations and pays for its services using rates established by SED. The rates are based on the financial information that Gingerbread reports to SED on its annual CFRs. Reimbursable costs must be reasonable, program-appropriate, and properly documented. SED reimburses DoE for a portion of its payments to Gingerbread based on statutory rates. For the three fiscal years ended June 30, 2013, Gingerbread reported approximately $12.2 million in reimbursable costs for its SED programs.

Key Findings

For the three fiscal years ended June 30, 2013, we identified $942,998 in reported costs that did not comply with Manual requirements and recommend such costs be disallowed. These ineligible costs included $621,356 in personal service costs and $321,642 in other than personal service (OTPS) costs. Among the disallowances we identified were:

  • $246,777 in fringe benefit expenses that were unsupported, ineligible, and did not comply with the Manual’s guidelines;
  • $243,693 in inadequately documented and undocumented OTPS expenses;
  • $219,459 in over-allocated compensation costs associated with shared employees; and
  • $142,093 in employee bonuses that were not in compliance with the Manual’s guidelines.

Key Recommendations


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

To Gingerbread:

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

Agency Comments

SED officials agreed with our recommendations and indicated that they will take certain steps to address them. Gingerbread officials, however, disagreed with our findings and recommendations. Gingerbread’s response is replete with incorrect and false assertions as well as misleading statements. The response also includes several baseless assertions intended to impugn the professional integrity of the auditors. Rather than making false accusations, we encourage Gingerbread officials to take the reasonable steps necessary to fully comply with the financial reporting and recordkeeping requirements of their publicly funded program.

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: Kenrick Sifontes
Phone: (212) 417-5200; Email:
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236