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NYS Comptroller


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State Education Department
Advanced Therapeutic Concepts, Inc.
Compliance With the Reimbursable Cost Manual

Issued: November 28, 2017
Link to full audit report 2016-S-42
Link to 90-day response

To determine whether the costs reported by Advanced Therapeutic Concepts, Inc. (ATC) on its Consolidated Fiscal Reports (CFRs) were reasonable, necessary, directly related to the special education program, and sufficiently documented pursuant to the State Education Department’s (SED) Reimbursable Cost Manual (Manual). The audit included expenses claimed on ATC’s CFRs for the three fiscal years ended June 30, 2015.

ATC was incorporated June 2000 in the State of New York as a for-profit organization, and is approved by SED to provide preschool special education services to children with disabilities who are between three and five years of age. ATC operates in New York City (excluding Staten Island) as well as Westchester and Rockland counties. We audited the Special Education Itinerant Teacher (SEIT) program. During the three fiscal years ended June 30, 2015, ATC served between 162 and 213 students.

ATC is paid for its services using rates established by SED. The rates are based on the financial information that ATC reports to SED on its annual CFR. To qualify for reimbursement, ATC’s expenses must comply with the criteria set forth in SED’s Manual, which provides guidance to special education providers on costs eligible for reimbursement, the documentation necessary to support these costs, and cost allocation requirements for expenses relating to multiple programs. Reimbursable costs must be reasonable, necessary, directly related to the special education program, and sufficiently documented pursuant to the Manual.

Section 4410-c of the Education Law requires the State Comptroller to audit the expenses reported to SED by special education providers for preschool children with disabilities. For the three fiscal years ended June 30, 2015, ATC reported approximately $5.5 million in reimbursable costs for the cost-based programs.

In addition to the SEIT cost-based preschool special education program, ATC operates two other SED-approved preschool special education programs: Evaluations and Related Services. ATC also operates an Early Intervention program approved by the Department of Health. Payments for services under these three programs are based on fixed fees, as opposed to reported costs on the CFR.

Key Findings
For the three fiscal years ended June 30, 2015, we identified $181,938 in reported costs that did not comply with the Manual’s requirements and recommend such costs be disallowed. The ineligible costs consisted of $85,104 in personal service costs and $96,834 in other than personal service costs. Among the ineligible costs identified were:

  • $53,569 in health insurance costs for which there was no documentation to support that the employees who were reimbursed actually incurred any cost or provided ATC any documentation to support the reimbursement.
  • $31,535 paid to nine teachers at an hourly rate above the per-session rate stated in their contracts. ATC did not have an amended agreement with the new higher hourly rate, and in the absence of such an agreement, we recommend the difference between the original agreement and the new rate be disallowed.
  • $70,992 for computer software for the three years ended June 31, 2015. ATC did not provide sufficient documentation to support the purchase of the software, such as original invoices, canceled checks, or evidence showing how the software was used in operations, such as reports.
  • $25,842 for various other than personal service costs that are not allowed.

Key Recommendations


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


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

Other Related Audits/Reports of Interest

East River Child Development Center: Compliance With the Reimbursable Cost Manual (2016-S-3)
Lifeline Center for Child Development, Inc.: Compliance With the Reimbursable Cost Manual (2016-S-95)
Building Blocks Developmental Preschool, Inc.: Compliance With the Reimbursable Cost Manual (2017-S-1)

State Government Accountability Contact Information:
Audit Director: Carmen Maldonado
Phone: (212) 417-5200; Email:
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236