FAC Explorer

Finding 1218776 (2025-002)

Material Weakness Repeat Finding
Requirement
I
Questioned Costs
-
Year
2025
Accepted
2026-06-25
Audit: 404883
Organization: City of Lowell (MA)
Auditor: CBIZ CPAS PC

AI Summary

  • Core Issue: The City failed to follow federal procurement procedures, leading to noncompliance with OMB's Uniform Guidance.
  • Impacted Requirements: Missing required contract provisions, such as the Byrd Anti-Lobbying Amendment, and reliance on state exemptions for procurement.
  • Recommended Follow-Up: Strengthen internal controls and enhance procurement procedures to ensure all federal requirements are met, including regular reviews of contract templates.

Finding Text

2025-002 Improve Procurement Procedures Federal Program(s) Information Federal Agency: U.S. Department of Education Pass-Through Entity: Massachusetts Department of Elementary and Secondary Education Award Name: Special Education Grants to States Assistance Listing Number: 84.027 Award Year: 2024, 2025 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement OMB’s Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (UG) requires that grant recipients follow procurement procedures for the acquisition of property or services under a federal award. Management is also responsible for establishing and maintaining effective internal controls over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. In addition, per Uniform Guidance (2 CFR § 200.327 and 2 CFR Part 200, Appendix II), all contracts made by non-federal entities under federal awards must contain specific provisions as applicable, such as those for the Byrd Anti-Lobbying Amendment and others. These provisions are required to ensure compliance with federal program requirements for procurement. Condition and Context A sample of procurement transactions were tested in order to determine if appropriate procedures were performed in line with Uniform Guidance procurement requirements. As a result of our testing, it was determined that one of our four selections for services paid for by the Special Education Cluster grants did not follow UG procurement procedures and instead relied on state exemptions. In addition, two of our four selections did not contain the required Byrd Anti-Lobbying Amendment contract provision for contracts in excess of $100,0000. Cause The City’s procurement processes did not include sufficient controls to ensure that all federally required contract provisions were incorporated into every contract funded with federal awards and that the more restrictive procurement policies were followed. Effect or Potential Effect Due to the weaknesses in internal control noted above, there is a risk that procurements may be awarded to vendors in a manner that is not consistent with federal procurement requirements. Lack of inclusion of all required federal contract provisions increases the risk of noncompliance with Uniform Guidance and could lead to disputes or enforcement issues if regulatory or compliance matters arise. Questioned Costs Known questioned costs for the vendor not appropriately procured are as follows. No questioned costs were reported as it relates to the missing contract provision as the requirement is administrative in nature. AL Number(s) Name of Federal Program or Cluster Questioned Costs 84.027 Special Education Grants to States $384,018 Identification as a Repeat Finding This is a repeat of finding 2024-002 in the prior year. Recommendation The City should address the weaknesses in internal controls noted above in order to ensure that federal procurements are conducted in accordance with federal and state requirements. In addition, the City should enhance its procurement procedures to ensure all contracts funded by federal awards include every provision required by Appendix II to 2 CFR Part 200 as applicable. Regular review of contract templates and procurement checklists should be implemented to support compliance. View of Responsible Officials Management’s corrective action plan is included at the end of this report after the Summary Schedule of Prior Year Findings.

Corrective Action Plan

Audit Finding Reference: 2025-002 Improve Procurement Procedures Planned Corrective Action: The District will strengthen its procurement procedures for federally funded purchases to ensure compliance with Uniform Guidance requirements. Specifically, the District will: 1. Revise procurement procedures to clearly identify when federal procurement requirements apply in addition to state and local procurement regulations. 2. Develop and implement a federal procurement checklist that must be completed prior to the award of any contract funded in whole or in part with federal grant funds. 3. Work with the Law Department to establish standardized contract templates containing all required federal contract provisions, including the Byrd Anti-Lobbying Amendment when applicable. 4. Require a secondary review bythe Business Office or Grants Management personnel before contract execution to verify compliance with Uniform Guidance procurement standards and required contract clauses. 5. Provide annual training to Business Office staff, grant managers, and other personnel involved in procurement activities regarding federal procurement requirements and contract provisions. 6. Conduct periodic internal reviews of federally funded procurement transactions to ensure ongoing compliance. Planned Implementation Date of Corrective Action: The revised procedures, procurement checklist, and standardized contract templates will be implemented by7 /1/2026. Training will be completed for applicable staff during the current fiscal year and prior to the initiation of future federally funded procurements. Person Responsible for Corrective Action: Assistant Superintendent of Finance Derek Pinto, Assistant Superintendent of Finance

Categories

Procurement, Suspension & Debarment Subrecipient Monitoring Allowable Costs / Cost Principles Material Weakness Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties Special Tests & Provisions

Other Findings in this Audit

  • 1218767 2025-004
    Material Weakness Repeat
  • 1218768 2025-004
    Material Weakness Repeat
  • 1218769 2025-004
    Material Weakness Repeat
  • 1218770 2025-004
    Material Weakness Repeat
  • 1218771 2025-002
    Material Weakness Repeat
  • 1218772 2025-002
    Material Weakness Repeat
  • 1218773 2025-002
    Material Weakness Repeat
  • 1218774 2025-002
    Material Weakness Repeat
  • 1218775 2025-002
    Material Weakness Repeat
  • 1218777 2025-001
    Material Weakness Repeat
  • 1218778 2025-001
    Material Weakness Repeat
  • 1218779 2025-001
    Material Weakness Repeat
  • 1218780 2025-001
    Material Weakness Repeat
  • 1218781 2025-001
    Material Weakness Repeat
  • 1218782 2025-001
    Material Weakness Repeat
  • 1218783 2025-001
    Material Weakness Repeat
  • 1218784 2025-001
    Material Weakness Repeat
  • 1218785 2025-001
    Material Weakness Repeat
  • 1218786 2025-001
    Material Weakness Repeat
  • 1218787 2025-001
    Material Weakness Repeat
  • 1218788 2025-001
    Material Weakness Repeat
  • 1218789 2025-001
    Material Weakness Repeat
  • 1218790 2025-001
    Material Weakness Repeat
  • 1218791 2025-003
    Material Weakness Repeat
  • 1218792 2025-003
    Material Weakness Repeat
  • 1218793 2025-003
    Material Weakness Repeat
  • 1218794 2025-003
    Material Weakness Repeat
  • 1218795 2025-003
    Material Weakness Repeat
  • 1218796 2025-003
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
14.239 HOME INVESTMENT PARTNERSHIPS PROGRAM $9.19M
10.555 NATIONAL SCHOOL LUNCH PROGRAM $8.15M
66.458 CLEAN WATER STATE REVOLVING FUND $7.25M
14.218 COMMUNITY DEVELOPMENT BLOCK GRANTS/ENTITLEMENT GRANTS $4.32M
10.553 SCHOOL BREAKFAST PROGRAM $3.55M
21.027 COVID-19 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $721,580
16.838 COMPREHENSIVE OPIOID, STIMULANT, AND SUBSTANCE USE PROGRAM $363,176
10.559 SUMMER FOOD SERVICE PROGRAM FOR CHILDREN $313,682
16.922 EQUITABLE SHARING PROGRAM $307,087
93.243 SUBSTANCE ABUSE AND MENTAL HEALTH SERVICES PROJECTS OF REGIONAL AND NATIONAL SIGNIFICANCE $272,189
10.558 CHILD AND ADULT CARE FOOD PROGRAM $271,407
84.425 COVID-19 EDUCATION STABILIZATION FUND $270,210
14.900 LEAD HAZARD REDUCTION GRANT PROGRAM $251,900
17.207 EMPLOYMENT SERVICE/WAGNER-PEYSER FUNDED ACTIVITIES $177,329
84.215 INNOVATIVE APPROACHES TO LITERACY; PROMISE NEIGHBORHOODS; FULL-SERVICE COMMUNITY SCHOOLS; AND CONGRESSIONALLY DIRECTED SPENDING FOR ELEMENTARY AND SECONDARY EDUCATION COMMUNITY PROJECTS $174,534
16.738 EDWARD BYRNE MEMORIAL JUSTICE ASSISTANCE GRANT PROGRAM $165,598
93.566 REFUGEE AND ENTRANT ASSISTANCE STATE/REPLACEMENT DESIGNEE ADMINISTERED PROGRAMS $164,241
93.323 EPIDEMIOLOGY AND LABORATORY CAPACITY FOR INFECTIOUS DISEASES (ELC) $160,131
84.365 ENGLISH LANGUAGE ACQUISITION STATE GRANTS $158,335
14.231 EMERGENCY SOLUTIONS GRANT PROGRAM $144,257
93.959 BLOCK GRANTS FOR PREVENTION AND TREATMENT OF SUBSTANCE ABUSE $132,525
16.745 CRIMINAL AND JUVENILE JUSTICE AND MENTAL HEALTH COLLABORATION PROGRAM $126,879
66.468 DRINKING WATER STATE REVOLVING FUND $123,267
14.881 MOVING TO WORK DEMONSTRATION PROGRAM $115,480
84.027 SPECIAL EDUCATION GRANTS TO STATES $112,707
84.371 COMPREHENSIVE LITERACY DEVELOPMENT $91,830
16.590 GRANTS TO ENCOURAGE ARREST POLICIES AND ENFORCEMENT OF PROTECTION ORDERS PROGRAM $84,317
14.231 COVID-19 EMERGENCY SOLUTIONS GRANT PROGRAM $79,043
97.042 EMERGENCY MANAGEMENT PERFORMANCE GRANTS $72,494
93.576 REFUGEE AND ENTRANT ASSISTANCE DISCRETIONARY GRANTS $65,688
84.010 TITLE I GRANTS TO LOCAL EDUCATIONAL AGENCIES $61,508
93.788 OPIOID STR $53,881
17.258 WIOA ADULT PROGRAM $53,203
84.424 STUDENT SUPPORT AND ACADEMIC ENRICHMENT PROGRAM $41,229
16.609 PROJECT SAFE NEIGHBORHOODS $34,692
20.600 STATE AND COMMUNITY HIGHWAY SAFETY $34,014
84.367 SUPPORTING EFFECTIVE INSTRUCTION STATE GRANTS (FORMERLY IMPROVING TEACHER QUALITY STATE GRANTS) $23,939
10.582 FRESH FRUIT AND VEGETABLE PROGRAM $22,363
16.710 PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANTS $19,560
17.278 WIOA DISLOCATED WORKER FORMULA GRANTS $14,374
17.801 JOBS FOR VETERANS STATE GRANTS $14,249
16.203 PROMOTING EVIDENCE INTEGRATION IN SEX OFFENDER MANAGEMENT DISCRETIONARY GRANT PROGRAM $12,229
17.225 UNEMPLOYMENT INSURANCE $9,665
66.818 BROWNFIELDS MULTIPURPOSE, ASSESSMENT, REVOLVING LOAN FUND, AND CLEANUP COOPERATIVE AGREEMENTS $8,478
84.173 SPECIAL EDUCATION PRESCHOOL GRANTS $8,097
20.616 NATIONAL PRIORITY SAFETY PROGRAMS $5,784
10.579 CHILD NUTRITION DISCRETIONARY GRANTS LIMITED AVAILABILITY $5,464
17.285 REGISTERED APPRENTICESHIP $4,340
84.196 EDUCATION FOR HOMELESS CHILDREN AND YOUTH $3,517
84.287 TWENTY-FIRST CENTURY COMMUNITY LEARNING CENTERS $2,128
84.048 CAREER AND TECHNICAL EDUCATION -- BASIC GRANTS TO STATES $1,314
17.259 WIOA YOUTH ACTIVITIES $390