The OSC Corner

24 Jun 2016

Return to Three Year Audits: As you know, the OSC has been mandated by the State to perform audits of all special education providers by 2018. During 2014, the OSC was performing one-year audits of SED providers and requesting information for additional years if issues were uncovered. Even though the OSC has more than 200 audits left to perform for 2015, they have once again begun requesting three years’ worth of information. While the OSC has said that they are only focusing on the most recent year and gathering prior year information should they need it during their audit, we have seen that the OSC is asking questions about all years, and it appears that they are performing three year audits.

Recent Reports Issued: Thus far in 2015, the OSC has not issued many new reports, but we anticipate additional reports over the next few months. The issues that continue to be prevalent are:

  • Staff Bonuses: Bonuses need to be linked to performance or they are not allowable.
  • Allocation of Costs: You need to have clear allocation methodologies that follow CFR and SED guidelines. These allocation methodologies need to make sense and they must be supportable by proper documentation.
  • Vehicle Expenses: If you do not have a detail log, it is not allowable.
  • Lack of Documentation: If it is not documented, it is not allowable. For example, if you cannot provide time sheets for an employee or if time studies are not performed, you will have issues.
  • Advertising Costs: The RCM is clear as to what type of advertising cost are allowable. Advertising for student recruitment is not allowable.
  • Staff/Parent “Perks”: Food costs for staff or parent meetings are not allowable. Similarly, gifts for holidays, illnesses, etc. are not allowable.
  • Telephone Costs: The OSC continues to review the cost of cell phones, etc.

A few things you need to understand about these audits are that materiality does not come into play; they are looking at transactions of all sizes and investigating minor differences. Additionally they have hired a large level of new auditors to help with the process so the field auditors do not always have a strong understanding of the SED reimbursement process. Finally, they are there primarily to uncover areas of noncompliance. One of the auditors recently told one of my clients that they were not concerned about the good things the agency was doing, but that they were there to find all the things they were doing wrong.

C&A Blog: Several of our clients have gone through OSC and OAG audits over the last few years. As a result, we have become very familiar with the process. We started a blog outlining the audit process and how you can begin to prepare for it now before you are one of the “lucky” chosen. In our blog, we have covered such things as the initial letter, the OSC’s request list and questionnaire, the initial meeting, the arrival of the OSC auditors, etc. To read the blog, go to our website – Ceriniandassociates.com or type the following URL into your browser https://ceriniandassociates.com/category/special-education/