Buffalo Hearing & Speech Center, Inc. – Compliance With the Reimbursable Cost Manual

Issued Date
May 27, 2021
State Education Department (Preschool Special Education Audit Initiative)


To determine whether the costs and revenues reported by Buffalo Hearing & Speech Center, Inc. (Center) 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 the Center’s 2017 and 2018 CFRs for the fiscal year ended June 30, 2018, as well as Medicaid revenues reported for the three fiscal years ended June 30, 2018.

About the Program

The Center is an SED-approved special education provider located in Erie County. Among other programs, the Center provides preschool special education services to children with disabilities who are between three and five years of age in Western New York. The Center is reimbursed for these services through rates set by SED. The reimbursement rates are based on financial information, including costs, that the Center reports to SED on its annual CFRs. To be eligible for reimbursement, reported costs must comply with RCM requirements. For the fiscal year ended June 30, 2018, the Center reported approximately $9 million in reimbursable costs on its CFR for the Preschool Special Class – over 2.5 hours per day, Preschool Integrated Special Class – over 2.5 hours per day, and Preschool Integrated Special Class – 2.5 hours per day (collectively referred to as the Programs) that it operated.

Key Findings

For the fiscal year ended June 30, 2018, we identified $272,526 in ineligible costs reported by the Center on its CFRs for the Programs. The ineligible costs included:

  • $226,577 in personal service costs consisting of $208,482 in unsupported costs; $6,620 in excess staffing; $5,656 in bonuses; $5,259 in auto allowances; and $560 in personal service-driven allocations.
  • $45,949 in other than personal service costs consisting of $27,436 in unsupported costs; $4,356 in incorrectly allocated costs; and $14,157 in other non-reimbursable costs such as gifts, food for staff, and costs not relevant to the Programs.

For the three fiscal years ended June 30, 2018, SED failed to offset $307,735 in Medicaid fee-for-service revenue received by the Center when calculating the Center’s tuition rate. As a result, the Center received $216,451 in excess public funding reimbursements.

Key Recommendations


  • Review the disallowances identified by our audit and, if warranted, make the necessary adjustments to the costs reported on the Center’s CFR and to the Center’s tuition reimbursement rates.
  • Make necessary changes to ensure proper calculation of tuition rates and recover overpayments.
  • Remind Center officials of the pertinent SED requirements that relate to the deficiencies we identified.

To the Center:

  • Ensure that costs reported on annual CFRs fully comply with SED’s requirements, and communicate with SED to obtain clarification as needed.

Brian Reilly

State Government Accountability Contact Information:
Audit Director: Brian Reilly
Phone: (518) 474-3271; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236