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NYS Comptroller


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State Education Department
Auditory Oral Learning Center
Compliance With the Reimbursable Cost Manual

Issued: December 31, 2019
Link to full audit report 2016-S-94

To determine whether the costs reported by the Auditory Oral Learning Center (AOLC) 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) Reimbursable Cost Manual (RCM) and the Consolidated Fiscal Reporting and Claiming Manual. Our audit covered the fiscal year ended June 30, 2014.

About the Program
AOLC is a New York City-based not-for-profit organization authorized by SED to provide Preschool Special Education Itinerant Teacher services, Preschool Special Class full day, and Preschool Integrated Special Class to children with disabilities who are between the ages of three and five years. For purposes of this report, these programs are collectively referred to as the SED cost-based programs. AOLC has an Executive Director (ED), who is responsible for the overall general administration of AOLC. The ED is appointed by, and under the general direction of, the governing board of the agency.

Based in Brooklyn, AOLC provides these SED programs to children in 21 different school districts in four counties in New York City excluding the Bronx. During the fiscal year ended June 30, 2014, AOLC reported serving 117 children. AOLC is reimbursed for the preschool special education services through rates established by SED. The reimbursement rates are based on the financial information that AOLC reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the RCM’s requirements and be reasonable, necessary, directly related to the special education program, and sufficiently documented. For the fiscal year ended June 30, 2014, AOLC reported approximately $9.09 million in reimbursable costs for the audited cost-based programs.

In addition to the cost-based preschool special education programs, AOLC operates two other SED programs: Evaluations and 1:1 Aides. However, payments for services under these other programs are based on fixed fees, as opposed to the cost-based rates established through CFR-reported financial information.

Key Findings
For the fiscal year ended June 30, 2014, we identified $1,025,977 in costs that AOLC reported on its CFR that did not compy with the RCM and recommend such costs be disallowed. Among the ineligible costs identified were:

  • $334,774 in employee compensation that was not properly supported by time and attendance records.
  • $691,203 in other than personal service costs and in depreciation that was not supported by appropriate substantiating documentation.

Key Recommendations

  • Review the recommended disallowances resulting from our audit and, if warranted, make the appropriate adjustments to the costs reported on AOLC’s CFRs and to AOLC’s tuition reimbursement rates.
  • Work with AOLC officials to help ensure their compliance with SED’s reimbursement requirements.


  • Ensure that costs reported on future CFRs fully comply with SED’s requirements.

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