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State Education Department
Kinderwise Learning Associates, LLC
Compliance With the Reimbursable Cost Manual

Issued: October 23, 2018
Link to full audit report 2018-S-21
Link to 90-day response

To determine whether the costs reported by Kinderwise Learning Associates, LLC (Kinderwise) on its Consolidated Fiscal Reports (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 expenses reported on Kinderwise’s CFR for the fiscal year ended June 30, 2015.

Kinderwise is an SED-approved, for-profit special education provider located in North Salem, New York. Kinderwise provides preschool special education services to children with disabilities who are between three and four years of age. Kinderwise is reimbursed for preschool special education services through rates set by SED. The reimbursement rates are based on financial information, including costs, that Kinderwise reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the RCM requirements. For the fiscal year ended June 30, 2015, Kinderwise reported approximately $1.65 million in reimbursable costs on its CFR for one rate-based preschool special education program (Program) that it operated.

Key Findings
For the fiscal year ended June 30, 2015, we identified $1,946 in ineligible costs that Kinderwise reported on its CFR for the Program. The ineligible costs included:

  • $1,194 in costs that were incorrectly reported on the CFR, which consisted of $1,080 that should have been allocated to another Kinderwise program and $114 that should have been reported as agency administration costs; and
  • $752 in costs that were incorrectly reported on the CFR, which consisted of: $492 in unsupported compensation for a Program teacher, $166 in unsupported costs for supplies, and $94 for bottled water and other items for staff that were not reimbursable.

Key Recommendations

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

To Kinderwise:

  • Ensure that all 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
Kennedy Child Study Center: Compliance With the Reimbursable Cost Manual (2017-S-7)
School for Language and Communication Development: Compliance With the Reimbursable Cost Manual (2017-S-59)

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