Martin_Barell_Final_Audit_Report

Executive Summary

Background and Scope of the Audit

The Nassau Suffolk Services for the Autistic, Inc. operates the Martin C. Barell School (School). The School, located in Levittown, New York, Nassau County, is a private, non-profit school for children with autism. The School served 24 special education students with its staff of 27 and spent over $1.1 million during the 1996-97 school year. The audit examined selected management practices, records, and documentation for the period July 1, 1996 through June 30, 1997. This was a financial related audit and our primary objective was to assess the accuracy and reliability of information reported to the Department including expenses, revenue and FTE students.

Audit Results

The audit decreased net reimbursable expenses for the special education programs by $159,263 as shown on Exhibit A. A portion of these expenses was reallocated to other programs. A summary of the audit results follows. A more detailed discussion is presented in the main text of the report on the pages referenced.

· The School claimed certain non-reimbursable expenses including two aides, conference and travel expenses, fundraising expenses, employee bonuses, and other expenses (pages 4-7).

· The School did not properly classify and report certain expenses and revenue including unpaid accrued sick and personal days, prior period expenses, and grant revenue and expenses (pages 8-9).

· Certain expenses were not adequately documented including consultant services and amortized startup costs (pages 9-11).

· The School did not allocate or properly document certain expenses including program cost, direct care salaries, rent and agency administration costs (pages 11-14).

· The School accurately calculated FTE attendance, but did not adequately document student absences (page 16).

· The School implemented many of the necessary internal controls and complied, in all material respects, with applicable laws, regulations and policies. However, improvements are needed in accounting and reporting revenue and expenses. In addition, the School could also improve certain other areas including employee time sheets, inventory records, financial statement disclosures, and staff FTE (pages 17-19).

Comments of School Officials

School officials’ comments about the findings were considered in preparing this report. Their comments are included as Appendix B to the final report. School officials generally agreed with the recommendations and stated they have already addressed many of the recommendations. However, they disagreed with some of the specific audit adjustments.

Auditor’s Note

In regard to the audit adjustments, School officials did not provide adequate documentation to show the expenses were reasonable, necessary and directly related to the education program.

Exhibit A

The Martin C. Barell School Schedule of Audit Adjustments to Reported Expenses Revised 1996-1997

Item	School Age	Preschool	School Grant	Total School Programs		OMRDD Respite Program		Other Programs			Total Agency Admin	TOTALS

Reported Expenses:
Program Site	$793,974	$90,701	$0	$884,675		$99,388		$38,985					$1,023,048
Agency Administration	232,921	26,605		259,526		26,764					286,290		286,290
Total Reported Expenses	1,026,895	117,306		1,144,201		126,152		38,985			286,290		1,309,338

Adjustments to Reported Expenses:
Non-reimbursable Expenses	(66,021)	(7,565)			(73,586)					(31,671)		(105,257)
Accounting and Reporting Errors	(21,101)	(2,418)	10,192		(13,327)							(13,327)
Undocumented Expenses	(13,068)	(1,497)			(14,565)							(14,565)
Allocations - Program Expenses	(34,076)	(19,037)			(53,113)		(4,371)		30,000	57,484		30,000
Total Adjustments Program Expenses	(134,266)	(30,517)	10,192		(154,591)		(4,371)		30,000	25,813		(103,149)

Audited Program Expenses	659,708	60,184	10,192		730,084		95,017		68,985	312,103		1,206,189
Reallocation of Agency Administration	230,287	21,009	3,558		254,854		33,168		24,081	(312,103)		0
Reallocation of Agency Administration from Grants to School age and Preschool	2,513	229	(2,742)		-		-		-	-		-

Audited Net Expenses	$892,508	$81,422	$11,008		$984,938		$128,185		$93,066	0		$1,206,189

Reported Net Expenses	$1,026,895	$117,306	$0		$1,144,201		$126,152		$38,985			$1,309,338
Audit Adjustment	($134,387)	($35,844)	$11,008		($159,263)		$2,033		$54,081			($103,149)

Exhibit B

Martin C. Barell School

Schedule of Audit Adjustments to FTE Attendance

For the Period July 1, 1996 through June 30, 1997

	Two Month Program
	Preschool	School-age	Total
Reported FTE	2.000	22.000	24.000
Adjustment	0	0.334	0.334
Audited FTE	2.000	21.666	23.666

	Ten Month Program
	Preschool	School-age	Total
Reported FTE	2.00	22.000	24.000
Adjustment	0	0	0
Audited FTE	2.000	22.000	24.000

Introduction..................................................................................................................................................... 1

Background.................................................................................................................................................... 1

Scope, Objectives and Methodology................................................................................................ 1

Comments of School Officials............................................................................................................. 2

Report on Net Reimbursable Expenses........................................................................................... 4

Non-Reimbursable Expenses................................................................................................................. 4

Approved Staffing Ratio................................................................................................................................. 4

Conference and Travel................................................................................................................................... 5

Fundraising Expenses.................................................................................................................................... 5

Employee Bonuses........................................................................................................................................... 6

Other Questionable Expenses....................................................................................................................... 6

Severance Pay.................................................................................................................................................. 7

Accounting and Reporting Errors................................................................................................... 7

Accrued Sick and Personal Days.................................................................................................................. 7

Prior Period Expenses.................................................................................................................................... 7

Grant Expenses................................................................................................................................................ 8

Undocumented Expenses......................................................................................................................... 8

Consultant Services........................................................................................................................................ 8

Amortized Startup Expenses.......................................................................................................................... 9

Questionable Allocations................................................................................................................... 10

Program Costs............................................................................................................................................... 10

Direct Care Salaries..................................................................................................................................... 10

Rent Expense Allocation Not Accurate....................................................................................................... 12

Agency Administration Costs...................................................................................................................... 12

Recommendations..................................................................................................................................... 12

Comments of School Officials.......................................................................................................... 13

Report on FTE Attendance..................................................................................................................... 14

Undocumented Student Absences................................................................................................... 14

Recommendation....................................................................................................................................... 14

Comments of School Officials.......................................................................................................... 14

Report on Internal Controls and Compliance with Laws, Regulations and Policies................................................................................................................................................................ 15

Inadequate Employee Time Sheets................................................................................................... 15

Incomplete Inventory Records........................................................................................................ 16

Inadequate Financial Statements Disclosure......................................................................... 16

Misreported Staff FTE............................................................................................................................. 17

Recommendations..................................................................................................................................... 17

Comments of School Officials.......................................................................................................... 17

Appendix A - Contributors to the Report

Appendix B – Comments of The Martin C. Barell School Officials

Appendix C – Audit Review Proceedings

Table of Contents

Introduction

Background