Westchester County Chapter NYSARC, Inc. – Compliance With the Reimbursable Cost Manual

Issued Date
September 29, 2021
State Education Department (Preschool Special Education Audit Initiative)


To determine whether the costs reported by Westchester County Chapter NYSARC, Inc. (WARC) 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 WARC’s 2015 and 2016 CFRs for the fiscal year ended June 30, 2016 and certain expenses for the fiscal year ended June 30, 2015.

About the Program

WARC is an SED-approved, non-profit special education provider located in Westchester County, serving students from Westchester and Putnam counties. Among other programs, WARC provides preschool special education services to children with disabilities who are 3 and 4 years of age. WARC is reimbursed for these services through rates set by SED. The reimbursement rates are based on financial information, including costs, that WARC reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with RCM requirements. For the fiscal year ended June 30,2016, WARC reported approximately $5.3 million in reimbursable costs on its CFR for the Preschool Special Class – over 2.5 hours per day and Preschool Integrated Special Class – over 2.5 hours per day (collectively referred to as the Programs) that it operated.

Key Findings

For the fiscal year ended June 30, 2016, we identified $49,605 in ineligible costs reported by WARC on its CFRs for the Programs. The ineligible costs included:

  • $6,416 in personal service costs, consisting of $1,723 in bonus payment to the Executive Director and $4,693 in duplicated reimbursements for services provided.
  • $13,294 in other than personal service costs, consisting of $4,094 in staff awards; $5,638 in incorrectly allocated legal fees; $3,245 for non-reimbursable food for staff/Board, a holiday party, a staff picnic, and a donation; and $317 in overreported expenses.
  • $29,895 in costs not offset by grant revenue received.

Prior to our audit, SED adjusted reported costs for staff awards and grant revenue, totaling $33,989, when establishing the Programs’ 2014-15 and 2015-16 tuition rates.

Key Recommendations


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


  • 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