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State Education Department
ACDS, Inc.
Compliance With the Reimbursable Cost Manual

Issued: April 12, 2017
Link to full audit report 2016-S-76
Link to 90-day response

To determine whether the costs reported by ACDS, Inc. (ACDS) 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). The audit covered the fiscal year ended June 30, 2014.

ACDS, a not-for-profit organization located in Plainview, New York, is an SED-approved provider of preschool special education services. During the 2013-14 school year, ACDS provided four SED-funded, rate-based preschool special education programs to 213 children from school districts located in Nassau, Queens, and Suffolk counties. The counties pay tuition to ACDS for these services using reimbursement rates set by SED. The State, in turn, reimburses the counties 59.5 percent of the tuition that the counties pay. SED sets the rates based on financial information, including costs, that ACDS reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the provisions in the RCM. For the fiscal year ended June 30, 2014, ACDS reported $4,752,257 in reimbursable costs on its CFR for the rate-based preschool special education programs it operated.

Key Finding

  • For the fiscal year ended June 30, 2014, the personal service costs claimed by ACDS that we tested were in compliance with SED’s requirements. However, we identified $30,104 in other than personal service costs that ACDS claimed on its CFR that did not comply with SED’s prescribed requirements for reimbursement.

Key Recommendations


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


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

Other Related Audits/Reports of Interest

State Education Department: Ganrormic, Inc., Compliance With the Reimbursable Cost Manual: (2016-S-58)
State Education Department: Benchmark Family Services, Inc., Compliance With the Reimbursable Cost Manual (2016-S-47)

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