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Comptroller's audit: Capital District Beginnings

Comptroller's audit: Capital District Beginnings

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Published by Casey Seiler

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Published by: Casey Seiler on Jun 25, 2012
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New York State Oce of the State Comptroller
Thomas P. DiNapoliDivision of State Government Accountability
Report 2011-S-1June 2012
Compliance with theReimbursable Cost ManualState Educaon DepartmentCapital District Beginnings, Inc.
Division of State Government Accountability
Execuve Summary
To determine whether the costs reported by Capital District Beginnings (Beginnings) on theConsolidated Fiscal Report (CFR) were properly calculated, adequately documented and allowable
under the Reimbursable Cost Manual (Manual). This audit covers the two scal years ended June
30, 2009 and 2010.
Beginnings, located in Troy, provides special educaon services to children from birth throughve years of age. Beginnings is reimbursed for these services based upon nancial informaoncontained in the CFR it les with SED. To be eligible for reimbursement, the expenses mustcomply with the guidelines contained in SED’s Manual. During scal years 2008-09 and 2009-10,
Beginnings claimed and received $16.5 million in State support, of which about $12.1 million wasrelated to the three programs we audited.
Key Findings
We disallowed a total of $831,244 in personal service and other than personal service costs for thetwo scal years ended June 30, 2010 because they were unnecessary, unreasonable, unallowable,or undocumented; or were incurred for the personal benet of ocials at Beginnings. The$462,748 in disallowed personal service costs include:• $240,041 to Beginnings owner/execuve directors. One owner/execuve director received afull-me salary. However, she lives in a southern State and spent an average of only 55 days inNew York State during the two scal ended June 30, 2010. The other owner/execuve directoralso received a full-me salary but performed limited service during the same period.$121,158 in salary expenses related to certain undisclosed less-than-arms-length (LTAL)transacons• $101,549 in administrave and employee bonuses that were not merit based, as required.The $368,496 in disallowed other than personal service costs include the costs related to otherundisclosed LTAL relaonship transacons, an unapproved site, undocumented vehicle and travelexpenses, and the charges for hotel rooms used by the out-of-State owner/execuve directorwhen she travelled to Troy from her home in the southern State. Beginnings ocials advisedthat conferences would take place in these hotel rooms. However, appropriate oce space wasalways available at Beginnings’ administrave sites.
Key Recommendaons
• SED should review the excepons idened by our audit and make the necessary adjustmentsto Beginnings’ tuion reimbursement rates.• Beginnings should ensure that the reporng of reimbursable expenses complies with SED
Other Related Audits/Reports of Interest
Division of State Government Accountability
State of New YorkOce of the State ComptrollerDivision of State Government Accountability
June 22, 2012Dr. John B. King, Jr.Commissioner
NYS Educaon Department89 Washington AvenueAlbany, New York 12234Dr. Mary K. Garre
DirectorCapital District Beginnings
597 Third AvenueTroy, NY 12182Dear Dr. King and Dr. Garre:The Oce of the State Comptroller is commied to helping State agencies, public authoriesand local government agencies manage government resources eciently and eecvely and, byso doing, providing accountability for tax dollars spent to support government funded servicesand operaons. The Comptroller oversees the scal aairs of State agencies, public authories
and local government agencies, as well as their compliance with relevant statutes and their
observance of good business pracces. This scal oversight is accomplished, in part, through ouraudits, which idenfy opportunies for improving operaons. Audits can also idenfy strategies
for reducing costs and strengthening controls that are intended to safeguard assets.
Following is a report of our audit of Capital District Beginnings, Inc.:
Compliance with theReimbursable Cost Manual 
. This audit was performed pursuant to the State Comptroller’sauthority under Arcle V, Secon 1 of the State Constuon and Arcle II, Secon 8 of the StateFinance Law.This audit’s results and recommendaons are resources for you to use in eecvely managingyour operaons and in meeng the expectaons of taxpayers. If you have any quesons aboutthis dra report, please feel free to contact us.Respecully submied,
Oce of the State Comptroller Division of State Government Accountability 

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