Abilities First, Inc. – Compliance With the Reimbursable Cost Manual

Issued Date
February 13, 2023
State Education Department (Preschool Special Education Audit Initiative)


To determine whether the costs reported by Abilities First, Inc. (AFI) 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) and the Consolidated Fiscal Reporting and Claiming Manual (CFR Manual). The audit covered expenses reported on AFI’s 2018 and 2019 CFRs for the fiscal year ended June 30, 2019.

About the Program

AFI is a not-for-profit special education provider located in Wappingers Falls, serving students from three counties in the Mid-Hudson region. Among other programs, AFI is authorized by SED to provide preschool special education services to children with disabilities who are between the ages of 3 and 5 years at four different locations. AFI is reimbursed for these services through rates set by SED. The reimbursement rates are based on financial information, including costs, that AFI 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, 2019, AFI reported more than $4.41 million in reimbursable costs for its 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).

Key Findings

For the fiscal year ended June 30, 2019, we identified $236,209 in ineligible costs reported by AFI on its CFRs for the Programs. The ineligible costs included:

  • $164,406 in personal service costs consisting of $157,881 in costs that were not appropriately allocated to the Programs and $6,525 in other ineligible costs.
  • $71,803 in other than personal service costs consisting of $49,025 in ineligible costs, $22,544 in unsupported costs, and $234 for SED rate adjustments.

Key Recommendations


  • Review the recommended disallowances identified by our audit and, if warranted, make the necessary adjustments to the costs reported on AFI’s CFRs and to AFI’s tuition reimbursement rates.
  • Remind AFI 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.

Heather Pratt

State Government Accountability Contact Information:
Audit Manager
: Heather Pratt
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