Audit Report on the Compliance of New York Foundling Hospital, Inc., with Its Contracts with the Administration for Children’s Services

AUDIT REPORT IN BRIEF

The Comptroller’s Office performed an audit to determine whether New York Foundling Hospital, Inc. (NY Foundling) spent funds in accordance with the terms of its contracts awarded by the Administration for Children’s Services (ACS). Under the terms of the agreements, NY Foundling provides various social service programs to individuals and families in New York City . In Fiscal Year 2002, ACS awarded NY Foundling six contracts covering nine programs: four general preventive programs, two specialized preventive programs, and three family rehabilitation programs. The total funding provided by ACS for those programs during Fiscal Year 2002 was approximately $5.4 million.

Audit Findings and Conclusions

Based on claims submitted for Fiscal Year 2002, NY Foundling received reimbursements of $5,326,792. However, based on our review of NY Foundling’s books and records, it was entitled to reimbursements of only $4,873,910. This resulted in NY Foundling owing the City $452,882. The amount owed consisted of:

•  Expenditures that NY Foundling charged to the wrong program.

•  Expenditures for which program files lacked sufficient supporting documentation.

•  One expenditure in which NY Foundling charged ACS twice.

It should be noted that subsequent to the issuance of the preliminary draft report-nearly three years after the close of the program year-ACS approved nine budget modifications which legitimized $409,651 of the $452,882 that we reported were improperly reimbursed to NY Foundling. Although it is within ACS’ purview to approve such budget modifications, we question the propriety of the approvals. Clearly, the approvals were not made to enhance the programs, rather they were simply made to ensure that NY Foundling did not have to return the funds improperly reimbursed where expenditures exceeded the approved budgets. As a result, NY Foundling only owes the City $43,231.

Audit Recommendations

To address these issues, NY Foundling should:

•  Immediately repay ACS $43,231 for the improper reimbursements identified in this report.

•  Properly maintain all documentation in program files to support program expenditures.

•  Charge expenses to the proper programs.

•  Ensure that ACS is not charged for expenses that exceed approved program budgets.

Additionally, ACS should:

•  Ensure that NY Foundling implements the report’s recommendations.

•  Discontinue the practice of approving budget modifications after the close of the program year.

arefully review each budget modification to ensure that changes conform to the requirements of the contracts.