FAC Explorer

Finding 1218796 (2025-003)

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

AI Summary

  • Core Issue: Two invoices for the Special Education Grants were paid outside the grant's performance period, violating federal regulations.
  • Impacted Requirements: Costs must be allowable and incurred within the specified period, as per Uniform Guidance (2 CFR § 200.403, 200.309).
  • Recommended Follow-Up: Strengthen internal controls to monitor and document obligations, and implement procedures to review unliquidated obligations before final grant reporting.

Finding Text

2025-003 Improve Controls over Period of Performance 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 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles, Period of Performance Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Uniform Guidance (2 CFR § 200.403, 200.309) requires that costs charged to a federal award be allowable, allocable, and incurred within the grant’s period of performance. Expenditures incurred outside of the specified performance period are not allowable charges to the federal program. Condition and Context Of the twenty-five non-payroll transactions tested for the Special Education Cluster, two invoices charged to the 2024 award were incurred and paid outside of the grant’s period of performance. The City established purchase orders for these transactions in September of 2024. Due to staffing changes within the Grants and Special Education Departments, attention shifted to fiscal year 2025 activities under the assumption that all fiscal year 2024 obligations had been processed. Consequently, this encumbrance was inadvertently overlooked, and the final grant report was submitted in January based on the remaining available balance. The unprocessed payment was identified only after the vendor contacted the school regarding the outstanding balance, leading to the recognition that the payment was not timely processed. Cause The City did not have effective internal controls to ensure all obligations were identified, tracked, and paid within the grant’s period of performance, particularly during periods of staff turnover. Effect or Potential Effect Payments for obligations incurred outside the period of performance are unallowable under federal regulations. This increases the risk of unallowable costs being charged to the grant. Questioned Costs Known questioned costs are reported as follows: AL Number(s) Name of Federal Program or Cluster Questioned Costs 84.027 Special Education Grants to States $112,707 Identification as a Repeat Finding This is not a repeat finding. Recommendation The City should strengthen internal controls to ensure all purchase orders and obligations are monitored, documented, and paid within the grant’s period of performance. Additional procedures should be implemented to review unliquidated obligations prior to final grant reporting, especially during periods of staff transitions. 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: 2025-003 Improve Controls over Period of Performance Planned Corrective Action: The District has strengthened its grant management and closeout procedures to ensure that all expenditures charged to federal awards are incurred, processed, and paid within the applicable period of performance. Specifically, the District will: 1. Implement a formal grant closeout checklist that includes a review of all open purchase orders, encumbrances, unpaid invoices, and outstanding obligations prior to submission of final expenditure reports. 2. Require reconciliation of grant expenditures between the Grants Office, Special Education Department, and Business Office before final grant reports are submitted. 3. Establish periodic reviews of open encumbrances throughout the year to identify outstanding obligations and ensure timely processing of invoices. 4. Designate backup personnel and document grant management procedures to ensure continuity during staffing transitions or vacancies. 5. Require supervisory review and approval of all grant closeout documentation to verify that all allowable expenditures have been recorded and reported appropriately. 6. Provide training to personnel responsible for grant administration and financial reporting regarding federal period-of-performance requirements and grant closeout procedures. Planned Implementation Date of Corrective Action: The revised grant monitoring and closeout procedures have been implemented for all active federal grants and will be fully incoiporated into the District's grant management process beginning with the current fiscal year. Person Responsible for Corrective Action: Grants Manager Signature Derek Pinto, Assistant Superintendent of Finance

Categories

Allowable Costs / Cost Principles Period of Performance Reporting

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
  • 1218776 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

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