Recently the Office of the New York State Comptroller (OSC) released three new audit reports to the public. This provides a great opportunity to take a look at the results and get some insight as to what the OSC is currently focusing on with regards to these “Compliance Audits”. We’ll specifically look at the Special Education Department (SED) audits on the Center for Disability Services and the Crossroads Center, focusing on the various guidelines outlined in the Reimbursable Cost Manual (RCM) that your agency should be aware of.
In their audit, the Center for Disability Services was hit for about $65,000 in Compensation for Personal Services. This was largely in part due to bonuses that were recorded that were ineligible for reimbursement. In order for a bonus to be reimbursed, it must be:
A) based on merit, with the support of documented employee performance evaluations
B) no greater than 3.5% of the employee’s salary (this is no longer the case for fiscal 2016 bonuses), and
C) restricted to direct care and certain non-direct care positions as outlined in the RCM. (Please note, for fiscal 2016, bonuses must be paid by the 15th day of the third month after the end of the year).
The rest of the denied compensation came from the salaries of their Executive Director and Assistant Executive Director. The RCM states that total compensation for these positions cannot exceed the regional median, and as a result part of their salaries were determined to be non-reimbursable.
Whether they’re costs for vehicles or for classroom materials, be sure to document your expenses as completely as possible. Documentation of vehicle expenses requires information about the date and time of travel, the to and from destinations, the mileage, the purpose of travel, and the name of the traveler. If any of these are missing, your vehicle expenses can be denied for reimbursement.
Another thing worth noting is that the RCM denies reimbursement for any food or gifts that are purchased for the staff, or any otherwise non-program-related expenses.
Lastly, Crossroads got denied a reimbursement for several non-audit services that they requested of the CPA firm that was in charge of their annual audit. This touches upon the RCM’s rule that non-audit work from a firm within 365 days of the performance of audit work is non-reimbursable.
These are just a few things to look out for when preparing your annual CFR. If you would like to read more about these audits or any of the others that were released, you can find them here. Any questions, call Al Borghese at 631-582-1600 x226 or Ken Cerini x203.
Albert Borghese, CPA
Albert is a member of Cerini & Associates’ audit and consulting practice where he focuses on serving the firm’s special education and nonprofit clients. Albert is also involved in the marketing and development of the firm, and frequently participates in recruiting efforts, and research.