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NYS Comptroller


Taxpayers' Guide to State and Local Audits

State Education Department
Northside Center for Child Development
Compliance With the Reimbursable Cost Manual

Issued: January 11, 2019
Link to full audit report 2017-S-15

To determine whether the costs reported by Northside Center for Child Development (Northside) on its Consolidated Fiscal Report (CFR) were reasonable, necessary, directly related to the special education program, and sufficiently documented pursuant to the State Education Department’s (SED) guidelines including the Reimbursable Cost Manual (Manual). Our audit covered the fiscal year ended June 30, 2014.

Northside was established in 1946 and was reapproved by SED on July 1, 2012 to operate full-day Preschool Special Class (SC) and full-day Preschool Special Class in an Integrated Setting (SCIS) to children with disabilities who are between three and five years of age. For purposes of this report, these programs are collectively referred to as the SED cost-based programs. During the 2013-14 school year, Northside served 65 to 75 students from nine different school districts in its cost-based programs. Northside is reimbursed for preschool special education services through rates established by SED. The reimbursement rates are based on the financial information that Northside reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the Manual’s requirements and be reasonable, necessary, directly related to the special education program, and sufficiently documented. For the fiscal year ended June 30, 2014, Northside reported approximately $2.5 million in reimbursable costs for the audited cost-based programs.

In addition to the cost-based preschool special education programs, Northside operates one other SED-approved preschool special education program: Evaluations. Payments for services under this program are based on fixed fees as opposed to reported costs on the CFR.

Key Findings
For the fiscal year ended June 30, 2014, we identified $270,040 in ineligible costs that Northside reported on its CFR and recommend such costs be disallowed. These ineligible costs included $152,373 in personal service costs and $117,667 in other than personal service costs. Among the ineligible costs identified were:

  • $75,737 in salaries charged to the cost-based programs where Northside did not provide documents to support that five employees worked for the program or the allocation of costs for one employee. The Manual requires that providers such as Northside maintain time records to support compensation costs claimed on the CFR.
  • $66,228 in non-mandated fringe benefits due to a lack of documentation regarding the allocations charged to the SC and SCIS programs. We also disallowed the Child Care Allowance because it was not proportionately similar for all employees who received the benefit.
  • $5,986 in Agency Administration costs that were unsupported: a one-time bonus payment to a non-direct care employee that was not proportionately similar for all employees, as the Manual requires, and a second payment due to an error in a journal entry resulting in increased salaries with no documentation to support the charge.

Key Recommendations


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

To Northside:

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

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