State Education Department


Skip to Content

Login   Subscribe   Site Index   Contact Us   Google Translate™

NYS Comptroller


Taxpayers' Guide to State and Local Audits

State Education Department
Pinnacle Organization
Compliance With the Reimbursable Cost Manual

Issued: December 27, 2018
Link to full audit report 2018-S-6
Link to 90-day response

To determine whether the costs reported by Pinnacle Organization (Pinnacle) 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 expenses reported on Pinnacle’s CFR for the fiscal year ended June 30, 2015 and certain expenses reported on Pinnacle’s CFRs for the two fiscal years ended June 30, 2014.

Pinnacle is an SED-approved, not-for-profit special education provider located in Oswego County. Pinnacle provides preschool special education services to children with disabilities who are between three and five years of age. Pinnacle is managed by an eight-member Board of Trustees.

Pinnacle is reimbursed for preschool special education services through rates set by SED. The reimbursement rates are based on financial information, including costs that Pinnacle reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the RCM requirements. For the three fiscal years ended June 30, 2015, Pinnacle reported approximately $2.8 million in reimbursable costs on its CFRs for the two rate-based preschool special education programs (Programs) that it operated.

Key Findings
For the three fiscal years ended June 30, 2015, we identified $103,220 in ineligible costs that Pinnacle reported on its CFRs for the Programs. The ineligible costs included:

  • $66,329 in other than personal service costs, which consisted of $58,667 in contracted personal services payments related to less-than-arm’s-length (LTAL) transactions, $3,550 in lease payments related to LTAL transactions, and $4,112 in non- reimbursable expenses; and
  • $36,891 in personal service costs, which consisted of $35,770 in non-reimbursable compensation for Pinnacle employee lunch breaks and $1,121 in salary costs for a related-party employee wherein the compensation received was for more than one full-time-equivalent.

Key Recommendations

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

To Pinnacle:

  • 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
Hawthorne Foundation, Inc.: Compliance With the Reimbursable Cost Manual (2017-S-3)
The Network for Children’s Speech, Occupational & Physical Therapy, LLC: Compliance With the Reimbursable Cost Manual (2017-S-79)

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