CORRECTIVE ACTION PLANS Oversight Agency for Audit: U.S. Department of the Treasury The City of Haverhill, Massachusetts respectfully submits the following corrective action plans for the year ended June 30, 2024. Name and address of the independent public accounting firm: CBIZ CPAs P.C. 9 Executive Park Drive, Suite 100 Merrimack, NH 03054 Audit Period: July 1, 2023, through June 30, 2024 The findings from the June 30, 2024, schedule of findings and responses are discussed below. The findings are numbered consistently with the number assigned in the schedule. Finding 2024-006: Improving Controls over Procurement Requirements Federal Agency: U.S. Department of Education Award Name(s): Special Education Cluster Assistance Listing Number(s): 84.027, 84.173 Award Year: 2024 Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement: Per Uniform Guidance, all non-federal entities must follow documented procurement procedures which ensure that purchases are made in compliance with applicable federal, state, and local laws and regulations. Uniform Guidance does not provide an exemption for special education services from these requirements. Condition and Context: During the audit of federal expenditures, we noted that the City did not properly procure special education services provided by The Academy in accordance with the procurement standards set forth in 2 CFR Part 200 (Uniform Guidance). The City used a “blanket” purchase order for these services but did not formally conduct a competitive procurement process. Cause: The City was not aware that special education costs incurred under federal awards are not exempt from Uniform Guidance procurement requirements. As a result, the City did not initiate a formal procurement process for The Academy and relied on a blanket purchase order. Effect or Potential Effect: Failure to follow the required procurement procedures increases the risk of noncompliance with federal regulations and results in potential questioned costs. Questioned Costs: $101,963. Recommendation: The City should strengthen its controls and staff training regarding federal procurement requirements. Specifically, the City should ensure all purchases of professional services, including special education services, are subject to the appropriate procurement procedures under Uniform Guidance, and that documentation of competitive selection or other required steps is maintained. Views of Responsible Official: The audit revealed deficiencies in the procurement process, including an instance where a service that should have been competitively bid was not. There appeared to be confusion regarding proper practices, especially in areas such as special education and grant-funded purchases. In May 2025, the School Department hired a new Business Manager/CFO. This individual has acknowledged that the previous approach prioritized expediency over compliance. He stated, “This is not a strategy that will be employed under my leadership.” To enhance oversight, the Business Manager/CFO is currently pursuing procurement certification to ensure that all purchases undergo proper review and compliance checks before reaching the City Procurement Officer. At the beginning of the new fiscal year, he centralized the authority to approve or edit purchase orders, eliminating this ability for multiple staff members, including the Grants Manager, Assistant Business Manager, Assistant Superintendent of Operations (a position that no longer exists but was present during the period in question), and Budget Analyst. As a result, purchase orders can no longer be modified without proper authorization, and blanket purchase orders have been nearly eliminated. Now, any expenditure exceeding the applicable threshold must include three quotes prior to approval, along with any additional requirements based on the value. Furthermore, all payments must go through the accounting purchase order system or be physically signed and approved by the Business Manager/CFO with assigned account coding. This marks a significant change from past practices, where invoices were sometimes paid without proper approval. Finally, the Business Manager/CFO is now reviewing all existing contracts to ensure they comply with procurement requirements.