Commonwealth of Massachusetts | Public Employee Retirement Administration Commission
Five Middlesex Avenue, Suite 304, Somerville, MA 02145
Ph 617 666 4446 | Fax 617 628 4002 | TTY 617 591 8917 |
Domenic J. F. Russo, Chairman
Auditor Suzanne M. Bump | Kate Fitzpatrick | John B. Langan | James M. Machado | Robert B. McCarthy 

Joseph E. Connarton, Executive Director

January 29, 2016

Mr. Joseph Mahoney, Chairman
Lowell Retirement Board
City Hall, Room 3
375 Merrimack Street
Lowell, MA 01852

REFERENCE: Report of the Examination of the Lowell Retirement Board for the three-year period from January 1, 2011 through December 31, 2013.

Dear Chairman Mahoney:

The Public Employee Retirement Administration Commission has completed a follow-up review of the findings and recommendations contained in its audit report of the Lowell Retirement Board for the period referenced above. We conduct these visits as a regular part of the oversight process. They are designed to ensure the timely implementation of corrective action for the recommendations cited in that report. The results are as follows:

1. The Audit Report noted that a number of school employees eligible to join the retirement system had not been enrolled.

Follow-up Result:  In August 2014, these members were enrolled in the retirement system.  Communication between the school department and the Retirement Board has improved and employee documentation is being submitted to the Board in a timely manner. This finding is resolved.

2. The Audit Report noted that employees receiving travel allowances were incorrectly being subject to retirement contributions.

Follow-up Result:  The travel allowance code is no longer subject to retirement contributions being withheld. However, errors were found with respect to the refunds issued to these members, since they did not include the additional 2% deductions or payment of interest related to the correction of errors. Additional information regarding payment of interest with respect to the correction of errors can be found in PERAC Memo #32/2013. This finding is partially resolved.  

3. The Audit Report cited a finding that the 3% interest calculation for refunds was incorrect when the member transferred in from another system.

Follow-up Result:  Going forward from the date the audit report was issued, no refunds were issued to members who had transferred in from another system. Therefore, the calculation could not be tested at this time. The audit staff will periodically check with the Board Administrator and when a member who transferred in from another system is refunded, the calculation will be reviewed to make sure the correct interest is being refunded to the member.

4. The Audit Report cited a finding that the funds of two bank accounts were comingled in a single ledger account with the City Treasurer providing one bank reconciliation covering both accounts.

Follow-up Result:  We reviewed the November 2015 Trial Balance to confirm that a unique general ledger record for each bank account was established. The City Treasurer provides the Board with separate reconciliations for each account. This finding is resolved.

The Commission wishes to acknowledge the significant effort demonstrated by the staff of the Lowell Retirement Board to correct many of the issues cited in the most recent examination of the system. PERAC auditors may conduct an additional follow-up visit to ensure appropriate progress is being made in those areas that have not been corrected adequately at this time.

We anticipate your continued cooperation in resolving this important matter.



Joseph E. Connarton
Executive Director