Institutes of Applied Human Dynamics – Compliance With the Reimbursable Cost Manual

Issued Date
December 31, 2014
State Education Department (Preschool Special Education Audit Initiative)


To determine whether the costs reported on the Consolidated Fiscal Reports (CFRs) of the Institutes of Applied Human Dynamics were calculated properly, documented adequately, program related, and allowable pursuant to the State Education Department’s (SED) Reimbursable Cost Manual (Manual). The audit included all expenses claimed for the fiscal year 2012-13 and certain expenses for the two fiscal years ended June 30, 2012.


The Institutes of Applied Human Dynamics, Inc. (Institutes) is a not-for-profit organization that provides full-day preschool special education programs and half-day preschool special education programs, collectively referred to as SED Programs, to disabled children between the ages of three and five years. Institutes, based in Tarrytown, New York, provides preschool services at its St. Mary’s facility located in the Bronx, New York. During the 2012-13 school year, Institutes served 80 students. For the fiscal year ended June 30, 2013, Institutes reported about $2.3 million in reimbursable costs on its CFR.

Key Findings

For the three fiscal years ended June 30, 2013, we identified $456,292 in reported costs that did not comply with Manual requirements; we recommend such costs be disallowed. These ineligible costs included $386,469 in personal service costs and $69,823 in other than personal service costs. Among the disallowances we identified were:

  • $228,479 in salaries and fringe benefits, for 30 employees, that were improperly allocated to the SED Programs. Institutes did not maintain time studies or other acceptable records to support the allocations of employees’ compensation costs. Further, Institutes did not maintain records to show the actual amount of time each of these employees devoted to the preschool special education programs;
  • $113,088 in unapproved program costs; and
  • $57,146 in rent, utility, repair, and tax expenses that were improperly allocated to the SED Programs.

Key Recommendations


  • Review the recommended disallowances resulting from this audit and make the appropriate adjustments to the Institutes’ CFRs and reimbursement rates.
  • Work with Institutes officials to help ensure their proper reporting of reimbursable costs.

To Institutes:

  • Ensure that costs reported on annual CFRs comply with Manual requirements.

Other Related Audits/Reports of Interest

State Education Department: Bilingual SEIT & Preschool, Inc. - Compliance With the Reimbursable Cost Manual (2011-S-13)
State Education Department: IncludED Educational Services, Inc. - Compliance With the Reimbursable Cost Manual (2010-S-59)

Frank Patone​​​​​​​

State Government Accountability Contact Information:
Audit Director: Frank Patone
Phone: (212) 417-5200; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236