2022-001 The Port did not have adequate internal controls for ensuring
compliance with federal wage rate requirements.
Assistance Listing Number and Title: 20.106, Airport Improvement
Program, COVID-19 Airports
Programs, and Infrastructure
Investment and Jobs Act Programs
Federal Grantor Name: Federal Aviation Administration
Federal Award/Contract Number: 3-53-0027-020-2021;
3-53-0027-025-2022
Pass-through Entity Name: N/A
Pass-through Award/Contract
Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The Federal Aviation Administration offers grant funding through the Airport
Improvement Program for the purposes of planning, constructing, improving, or
repairing public-use airport facilities. In fiscal year 2022, the Port spent $884,703
in program funds for various improvements and repairs to its runways and other
facilities.
Federal regulations require recipients of federal grant funds to establish and follow
internal controls that ensure compliance with program requirements. These controls
include understanding grant requirements and monitoring the effectiveness of
established controls.
Under federal wage rate requirements, also known as the Davis-Bacon Act,
contractors and subcontractors that work on construction contracts financed with
more than $2,000 of federal money must pay laborers and mechanics wage rates
that the U.S. Department of Labor considers being similar to what local workers
have been paid for similar projects.
For construction contracts subject to these wage rate requirements, the Port must
include a provision that the contractors and subcontractors comply with those
requirements and the Department of Labor’s regulations. This includes a
requirement for the contractor and its subcontractor to submit to the Port weekly,
for each week in which any contract work is performed, certified payroll reports.
These reports must include a copy of the payroll and a signed statement of
compliance. The Port may use a contracted project manager or engineer to collect
certified payroll reports from contractors and subcontractors, but the Port remains
responsible for complying with these requirements and maintaining documentation
demonstrating compliance.
Description of Condition
During fiscal year 2022, the Port spent $682,427 to pay a contractor and its
subcontractors for various improvements and repairs to its runaway and other
facilities. The Port contracted with an engineer to supervise the project, which
included collecting weekly certified payroll reports from the contractor and
subcontractors. Our audit found the Port did not have adequate internal controls to
collect, or ensure its contracted engineer collected, weekly certified payroll reports
from the contractor and its subcontractors to confirm they paid laborers proper
prevailing wages.
While the contracted engineer had a process for collecting the weekly certified
payroll reports, it was ineffective for verifying that all reports were collected and
reviewed before requesting the Port to pay the contractor.
We consider this deficiency in internal controls to be a material weakness, which
led to material noncompliance.
Cause of Condition
Port staff relied on the contracted engineer for the timely collection of certified
payroll reports. Port employees said they did not know they needed to monitor
throughout the audit period to ensure the contracted project engineer collected all
weekly certified payroll reports timely or before paying the contractor.
Additionally, the Port experienced turnover in the position responsible for
monitoring the engineer.
Effect of Condition
In 2022, the Port was required to collect a total of 12 weekly certified payroll reports
for this project. However, seven were either not collected timely or the Port and
engineer could not demonstrate when they were collected.
Without adequate internal controls that ensure it collects all weekly certified payroll
reports timely, the Port cannot demonstrate it complied with federal wage rate
requirements. The Port could also be liable for paying any additional wages if the
contractor and subcontractors did not pay prevailing wage rates to laborers working
on the contracts.
Recommendation
We recommend the Port develop internal controls to ensure compliance with
federal wage rate requirements. This should include implementing effective
monitoring processes to collect and review all weekly certified payroll reports
timely from contractors and subcontractors.
Port’s Response
The Port welcomes this report as it will take the lessons learned from this finding
to strengthen its compliance procedures and shore up internal controls. Updated
policies and procedures are being implemented to ensure a high degree of
monitoring and recordkeeping that will develop the safety net necessary to prevent
a re-occurrence. The Port takes a lot of pride in the quality of its staff, the high
level of its achievements, and its record of compliance in the many years of
operation. Rest assured; the Port will not allow an incident like this to ever occur
again.
Auditor’s Remarks
We appreciate the Port’s commitment to resolving the issue noted, and will follow
up during the next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), section 516, Audit findings, establishes reporting
requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.
Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages,
and Section 3.4 – Submission of weekly statements and the preservation and
inspection of weekly payroll records, establishes requirements for contractor or
subcontractor submission of weekly certified payroll reports.
Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the
requirements for the contracting officer to insert in full in any contract in excess of
$2,000 which is entered into for the actual construction, alteration and/or repair,
including painting and decorating, of a public building or public work, or building
or work financed in whole or in part with federal funds the clauses listed, which
includes but is not limited to the minimum wages to be paid and payrolls and basic
records to be maintained (submission of weekly certified payrolls).
2022-001 The Port did not have adequate internal controls for ensuring
compliance with federal wage rate requirements.
Assistance Listing Number and Title: 20.106, Airport Improvement
Program, COVID-19 Airports
Programs, and Infrastructure
Investment and Jobs Act Programs
Federal Grantor Name: Federal Aviation Administration
Federal Award/Contract Number: 3-53-0027-020-2021;
3-53-0027-025-2022
Pass-through Entity Name: N/A
Pass-through Award/Contract
Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The Federal Aviation Administration offers grant funding through the Airport
Improvement Program for the purposes of planning, constructing, improving, or
repairing public-use airport facilities. In fiscal year 2022, the Port spent $884,703
in program funds for various improvements and repairs to its runways and other
facilities.
Federal regulations require recipients of federal grant funds to establish and follow
internal controls that ensure compliance with program requirements. These controls
include understanding grant requirements and monitoring the effectiveness of
established controls.
Under federal wage rate requirements, also known as the Davis-Bacon Act,
contractors and subcontractors that work on construction contracts financed with
more than $2,000 of federal money must pay laborers and mechanics wage rates
that the U.S. Department of Labor considers being similar to what local workers
have been paid for similar projects.
For construction contracts subject to these wage rate requirements, the Port must
include a provision that the contractors and subcontractors comply with those
requirements and the Department of Labor’s regulations. This includes a
requirement for the contractor and its subcontractor to submit to the Port weekly,
for each week in which any contract work is performed, certified payroll reports.
These reports must include a copy of the payroll and a signed statement of
compliance. The Port may use a contracted project manager or engineer to collect
certified payroll reports from contractors and subcontractors, but the Port remains
responsible for complying with these requirements and maintaining documentation
demonstrating compliance.
Description of Condition
During fiscal year 2022, the Port spent $682,427 to pay a contractor and its
subcontractors for various improvements and repairs to its runaway and other
facilities. The Port contracted with an engineer to supervise the project, which
included collecting weekly certified payroll reports from the contractor and
subcontractors. Our audit found the Port did not have adequate internal controls to
collect, or ensure its contracted engineer collected, weekly certified payroll reports
from the contractor and its subcontractors to confirm they paid laborers proper
prevailing wages.
While the contracted engineer had a process for collecting the weekly certified
payroll reports, it was ineffective for verifying that all reports were collected and
reviewed before requesting the Port to pay the contractor.
We consider this deficiency in internal controls to be a material weakness, which
led to material noncompliance.
Cause of Condition
Port staff relied on the contracted engineer for the timely collection of certified
payroll reports. Port employees said they did not know they needed to monitor
throughout the audit period to ensure the contracted project engineer collected all
weekly certified payroll reports timely or before paying the contractor.
Additionally, the Port experienced turnover in the position responsible for
monitoring the engineer.
Effect of Condition
In 2022, the Port was required to collect a total of 12 weekly certified payroll reports
for this project. However, seven were either not collected timely or the Port and
engineer could not demonstrate when they were collected.
Without adequate internal controls that ensure it collects all weekly certified payroll
reports timely, the Port cannot demonstrate it complied with federal wage rate
requirements. The Port could also be liable for paying any additional wages if the
contractor and subcontractors did not pay prevailing wage rates to laborers working
on the contracts.
Recommendation
We recommend the Port develop internal controls to ensure compliance with
federal wage rate requirements. This should include implementing effective
monitoring processes to collect and review all weekly certified payroll reports
timely from contractors and subcontractors.
Port’s Response
The Port welcomes this report as it will take the lessons learned from this finding
to strengthen its compliance procedures and shore up internal controls. Updated
policies and procedures are being implemented to ensure a high degree of
monitoring and recordkeeping that will develop the safety net necessary to prevent
a re-occurrence. The Port takes a lot of pride in the quality of its staff, the high
level of its achievements, and its record of compliance in the many years of
operation. Rest assured; the Port will not allow an incident like this to ever occur
again.
Auditor’s Remarks
We appreciate the Port’s commitment to resolving the issue noted, and will follow
up during the next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), section 516, Audit findings, establishes reporting
requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.
Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages,
and Section 3.4 – Submission of weekly statements and the preservation and
inspection of weekly payroll records, establishes requirements for contractor or
subcontractor submission of weekly certified payroll reports.
Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the
requirements for the contracting officer to insert in full in any contract in excess of
$2,000 which is entered into for the actual construction, alteration and/or repair,
including painting and decorating, of a public building or public work, or building
or work financed in whole or in part with federal funds the clauses listed, which
includes but is not limited to the minimum wages to be paid and payrolls and basic
records to be maintained (submission of weekly certified payrolls).
2022-001 The Port did not have adequate internal controls for ensuring
compliance with federal wage rate requirements.
Assistance Listing Number and Title: 20.106, Airport Improvement
Program, COVID-19 Airports
Programs, and Infrastructure
Investment and Jobs Act Programs
Federal Grantor Name: Federal Aviation Administration
Federal Award/Contract Number: 3-53-0027-020-2021;
3-53-0027-025-2022
Pass-through Entity Name: N/A
Pass-through Award/Contract
Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The Federal Aviation Administration offers grant funding through the Airport
Improvement Program for the purposes of planning, constructing, improving, or
repairing public-use airport facilities. In fiscal year 2022, the Port spent $884,703
in program funds for various improvements and repairs to its runways and other
facilities.
Federal regulations require recipients of federal grant funds to establish and follow
internal controls that ensure compliance with program requirements. These controls
include understanding grant requirements and monitoring the effectiveness of
established controls.
Under federal wage rate requirements, also known as the Davis-Bacon Act,
contractors and subcontractors that work on construction contracts financed with
more than $2,000 of federal money must pay laborers and mechanics wage rates
that the U.S. Department of Labor considers being similar to what local workers
have been paid for similar projects.
For construction contracts subject to these wage rate requirements, the Port must
include a provision that the contractors and subcontractors comply with those
requirements and the Department of Labor’s regulations. This includes a
requirement for the contractor and its subcontractor to submit to the Port weekly,
for each week in which any contract work is performed, certified payroll reports.
These reports must include a copy of the payroll and a signed statement of
compliance. The Port may use a contracted project manager or engineer to collect
certified payroll reports from contractors and subcontractors, but the Port remains
responsible for complying with these requirements and maintaining documentation
demonstrating compliance.
Description of Condition
During fiscal year 2022, the Port spent $682,427 to pay a contractor and its
subcontractors for various improvements and repairs to its runaway and other
facilities. The Port contracted with an engineer to supervise the project, which
included collecting weekly certified payroll reports from the contractor and
subcontractors. Our audit found the Port did not have adequate internal controls to
collect, or ensure its contracted engineer collected, weekly certified payroll reports
from the contractor and its subcontractors to confirm they paid laborers proper
prevailing wages.
While the contracted engineer had a process for collecting the weekly certified
payroll reports, it was ineffective for verifying that all reports were collected and
reviewed before requesting the Port to pay the contractor.
We consider this deficiency in internal controls to be a material weakness, which
led to material noncompliance.
Cause of Condition
Port staff relied on the contracted engineer for the timely collection of certified
payroll reports. Port employees said they did not know they needed to monitor
throughout the audit period to ensure the contracted project engineer collected all
weekly certified payroll reports timely or before paying the contractor.
Additionally, the Port experienced turnover in the position responsible for
monitoring the engineer.
Effect of Condition
In 2022, the Port was required to collect a total of 12 weekly certified payroll reports
for this project. However, seven were either not collected timely or the Port and
engineer could not demonstrate when they were collected.
Without adequate internal controls that ensure it collects all weekly certified payroll
reports timely, the Port cannot demonstrate it complied with federal wage rate
requirements. The Port could also be liable for paying any additional wages if the
contractor and subcontractors did not pay prevailing wage rates to laborers working
on the contracts.
Recommendation
We recommend the Port develop internal controls to ensure compliance with
federal wage rate requirements. This should include implementing effective
monitoring processes to collect and review all weekly certified payroll reports
timely from contractors and subcontractors.
Port’s Response
The Port welcomes this report as it will take the lessons learned from this finding
to strengthen its compliance procedures and shore up internal controls. Updated
policies and procedures are being implemented to ensure a high degree of
monitoring and recordkeeping that will develop the safety net necessary to prevent
a re-occurrence. The Port takes a lot of pride in the quality of its staff, the high
level of its achievements, and its record of compliance in the many years of
operation. Rest assured; the Port will not allow an incident like this to ever occur
again.
Auditor’s Remarks
We appreciate the Port’s commitment to resolving the issue noted, and will follow
up during the next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), section 516, Audit findings, establishes reporting
requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.
Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages,
and Section 3.4 – Submission of weekly statements and the preservation and
inspection of weekly payroll records, establishes requirements for contractor or
subcontractor submission of weekly certified payroll reports.
Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the
requirements for the contracting officer to insert in full in any contract in excess of
$2,000 which is entered into for the actual construction, alteration and/or repair,
including painting and decorating, of a public building or public work, or building
or work financed in whole or in part with federal funds the clauses listed, which
includes but is not limited to the minimum wages to be paid and payrolls and basic
records to be maintained (submission of weekly certified payrolls).
2022-001 The Port did not have adequate internal controls for ensuring
compliance with federal wage rate requirements.
Assistance Listing Number and Title: 20.106, Airport Improvement
Program, COVID-19 Airports
Programs, and Infrastructure
Investment and Jobs Act Programs
Federal Grantor Name: Federal Aviation Administration
Federal Award/Contract Number: 3-53-0027-020-2021;
3-53-0027-025-2022
Pass-through Entity Name: N/A
Pass-through Award/Contract
Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The Federal Aviation Administration offers grant funding through the Airport
Improvement Program for the purposes of planning, constructing, improving, or
repairing public-use airport facilities. In fiscal year 2022, the Port spent $884,703
in program funds for various improvements and repairs to its runways and other
facilities.
Federal regulations require recipients of federal grant funds to establish and follow
internal controls that ensure compliance with program requirements. These controls
include understanding grant requirements and monitoring the effectiveness of
established controls.
Under federal wage rate requirements, also known as the Davis-Bacon Act,
contractors and subcontractors that work on construction contracts financed with
more than $2,000 of federal money must pay laborers and mechanics wage rates
that the U.S. Department of Labor considers being similar to what local workers
have been paid for similar projects.
For construction contracts subject to these wage rate requirements, the Port must
include a provision that the contractors and subcontractors comply with those
requirements and the Department of Labor’s regulations. This includes a
requirement for the contractor and its subcontractor to submit to the Port weekly,
for each week in which any contract work is performed, certified payroll reports.
These reports must include a copy of the payroll and a signed statement of
compliance. The Port may use a contracted project manager or engineer to collect
certified payroll reports from contractors and subcontractors, but the Port remains
responsible for complying with these requirements and maintaining documentation
demonstrating compliance.
Description of Condition
During fiscal year 2022, the Port spent $682,427 to pay a contractor and its
subcontractors for various improvements and repairs to its runaway and other
facilities. The Port contracted with an engineer to supervise the project, which
included collecting weekly certified payroll reports from the contractor and
subcontractors. Our audit found the Port did not have adequate internal controls to
collect, or ensure its contracted engineer collected, weekly certified payroll reports
from the contractor and its subcontractors to confirm they paid laborers proper
prevailing wages.
While the contracted engineer had a process for collecting the weekly certified
payroll reports, it was ineffective for verifying that all reports were collected and
reviewed before requesting the Port to pay the contractor.
We consider this deficiency in internal controls to be a material weakness, which
led to material noncompliance.
Cause of Condition
Port staff relied on the contracted engineer for the timely collection of certified
payroll reports. Port employees said they did not know they needed to monitor
throughout the audit period to ensure the contracted project engineer collected all
weekly certified payroll reports timely or before paying the contractor.
Additionally, the Port experienced turnover in the position responsible for
monitoring the engineer.
Effect of Condition
In 2022, the Port was required to collect a total of 12 weekly certified payroll reports
for this project. However, seven were either not collected timely or the Port and
engineer could not demonstrate when they were collected.
Without adequate internal controls that ensure it collects all weekly certified payroll
reports timely, the Port cannot demonstrate it complied with federal wage rate
requirements. The Port could also be liable for paying any additional wages if the
contractor and subcontractors did not pay prevailing wage rates to laborers working
on the contracts.
Recommendation
We recommend the Port develop internal controls to ensure compliance with
federal wage rate requirements. This should include implementing effective
monitoring processes to collect and review all weekly certified payroll reports
timely from contractors and subcontractors.
Port’s Response
The Port welcomes this report as it will take the lessons learned from this finding
to strengthen its compliance procedures and shore up internal controls. Updated
policies and procedures are being implemented to ensure a high degree of
monitoring and recordkeeping that will develop the safety net necessary to prevent
a re-occurrence. The Port takes a lot of pride in the quality of its staff, the high
level of its achievements, and its record of compliance in the many years of
operation. Rest assured; the Port will not allow an incident like this to ever occur
again.
Auditor’s Remarks
We appreciate the Port’s commitment to resolving the issue noted, and will follow
up during the next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), section 516, Audit findings, establishes reporting
requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.
Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages,
and Section 3.4 – Submission of weekly statements and the preservation and
inspection of weekly payroll records, establishes requirements for contractor or
subcontractor submission of weekly certified payroll reports.
Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the
requirements for the contracting officer to insert in full in any contract in excess of
$2,000 which is entered into for the actual construction, alteration and/or repair,
including painting and decorating, of a public building or public work, or building
or work financed in whole or in part with federal funds the clauses listed, which
includes but is not limited to the minimum wages to be paid and payrolls and basic
records to be maintained (submission of weekly certified payrolls).
2022-001 The Port did not have adequate internal controls for ensuring
compliance with federal wage rate requirements.
Assistance Listing Number and Title: 20.106, Airport Improvement
Program, COVID-19 Airports
Programs, and Infrastructure
Investment and Jobs Act Programs
Federal Grantor Name: Federal Aviation Administration
Federal Award/Contract Number: 3-53-0027-020-2021;
3-53-0027-025-2022
Pass-through Entity Name: N/A
Pass-through Award/Contract
Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The Federal Aviation Administration offers grant funding through the Airport
Improvement Program for the purposes of planning, constructing, improving, or
repairing public-use airport facilities. In fiscal year 2022, the Port spent $884,703
in program funds for various improvements and repairs to its runways and other
facilities.
Federal regulations require recipients of federal grant funds to establish and follow
internal controls that ensure compliance with program requirements. These controls
include understanding grant requirements and monitoring the effectiveness of
established controls.
Under federal wage rate requirements, also known as the Davis-Bacon Act,
contractors and subcontractors that work on construction contracts financed with
more than $2,000 of federal money must pay laborers and mechanics wage rates
that the U.S. Department of Labor considers being similar to what local workers
have been paid for similar projects.
For construction contracts subject to these wage rate requirements, the Port must
include a provision that the contractors and subcontractors comply with those
requirements and the Department of Labor’s regulations. This includes a
requirement for the contractor and its subcontractor to submit to the Port weekly,
for each week in which any contract work is performed, certified payroll reports.
These reports must include a copy of the payroll and a signed statement of
compliance. The Port may use a contracted project manager or engineer to collect
certified payroll reports from contractors and subcontractors, but the Port remains
responsible for complying with these requirements and maintaining documentation
demonstrating compliance.
Description of Condition
During fiscal year 2022, the Port spent $682,427 to pay a contractor and its
subcontractors for various improvements and repairs to its runaway and other
facilities. The Port contracted with an engineer to supervise the project, which
included collecting weekly certified payroll reports from the contractor and
subcontractors. Our audit found the Port did not have adequate internal controls to
collect, or ensure its contracted engineer collected, weekly certified payroll reports
from the contractor and its subcontractors to confirm they paid laborers proper
prevailing wages.
While the contracted engineer had a process for collecting the weekly certified
payroll reports, it was ineffective for verifying that all reports were collected and
reviewed before requesting the Port to pay the contractor.
We consider this deficiency in internal controls to be a material weakness, which
led to material noncompliance.
Cause of Condition
Port staff relied on the contracted engineer for the timely collection of certified
payroll reports. Port employees said they did not know they needed to monitor
throughout the audit period to ensure the contracted project engineer collected all
weekly certified payroll reports timely or before paying the contractor.
Additionally, the Port experienced turnover in the position responsible for
monitoring the engineer.
Effect of Condition
In 2022, the Port was required to collect a total of 12 weekly certified payroll reports
for this project. However, seven were either not collected timely or the Port and
engineer could not demonstrate when they were collected.
Without adequate internal controls that ensure it collects all weekly certified payroll
reports timely, the Port cannot demonstrate it complied with federal wage rate
requirements. The Port could also be liable for paying any additional wages if the
contractor and subcontractors did not pay prevailing wage rates to laborers working
on the contracts.
Recommendation
We recommend the Port develop internal controls to ensure compliance with
federal wage rate requirements. This should include implementing effective
monitoring processes to collect and review all weekly certified payroll reports
timely from contractors and subcontractors.
Port’s Response
The Port welcomes this report as it will take the lessons learned from this finding
to strengthen its compliance procedures and shore up internal controls. Updated
policies and procedures are being implemented to ensure a high degree of
monitoring and recordkeeping that will develop the safety net necessary to prevent
a re-occurrence. The Port takes a lot of pride in the quality of its staff, the high
level of its achievements, and its record of compliance in the many years of
operation. Rest assured; the Port will not allow an incident like this to ever occur
again.
Auditor’s Remarks
We appreciate the Port’s commitment to resolving the issue noted, and will follow
up during the next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), section 516, Audit findings, establishes reporting
requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.
Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages,
and Section 3.4 – Submission of weekly statements and the preservation and
inspection of weekly payroll records, establishes requirements for contractor or
subcontractor submission of weekly certified payroll reports.
Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the
requirements for the contracting officer to insert in full in any contract in excess of
$2,000 which is entered into for the actual construction, alteration and/or repair,
including painting and decorating, of a public building or public work, or building
or work financed in whole or in part with federal funds the clauses listed, which
includes but is not limited to the minimum wages to be paid and payrolls and basic
records to be maintained (submission of weekly certified payrolls).
2022-001 The Port did not have adequate internal controls for ensuring
compliance with federal wage rate requirements.
Assistance Listing Number and Title: 20.106, Airport Improvement
Program, COVID-19 Airports
Programs, and Infrastructure
Investment and Jobs Act Programs
Federal Grantor Name: Federal Aviation Administration
Federal Award/Contract Number: 3-53-0027-020-2021;
3-53-0027-025-2022
Pass-through Entity Name: N/A
Pass-through Award/Contract
Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The Federal Aviation Administration offers grant funding through the Airport
Improvement Program for the purposes of planning, constructing, improving, or
repairing public-use airport facilities. In fiscal year 2022, the Port spent $884,703
in program funds for various improvements and repairs to its runways and other
facilities.
Federal regulations require recipients of federal grant funds to establish and follow
internal controls that ensure compliance with program requirements. These controls
include understanding grant requirements and monitoring the effectiveness of
established controls.
Under federal wage rate requirements, also known as the Davis-Bacon Act,
contractors and subcontractors that work on construction contracts financed with
more than $2,000 of federal money must pay laborers and mechanics wage rates
that the U.S. Department of Labor considers being similar to what local workers
have been paid for similar projects.
For construction contracts subject to these wage rate requirements, the Port must
include a provision that the contractors and subcontractors comply with those
requirements and the Department of Labor’s regulations. This includes a
requirement for the contractor and its subcontractor to submit to the Port weekly,
for each week in which any contract work is performed, certified payroll reports.
These reports must include a copy of the payroll and a signed statement of
compliance. The Port may use a contracted project manager or engineer to collect
certified payroll reports from contractors and subcontractors, but the Port remains
responsible for complying with these requirements and maintaining documentation
demonstrating compliance.
Description of Condition
During fiscal year 2022, the Port spent $682,427 to pay a contractor and its
subcontractors for various improvements and repairs to its runaway and other
facilities. The Port contracted with an engineer to supervise the project, which
included collecting weekly certified payroll reports from the contractor and
subcontractors. Our audit found the Port did not have adequate internal controls to
collect, or ensure its contracted engineer collected, weekly certified payroll reports
from the contractor and its subcontractors to confirm they paid laborers proper
prevailing wages.
While the contracted engineer had a process for collecting the weekly certified
payroll reports, it was ineffective for verifying that all reports were collected and
reviewed before requesting the Port to pay the contractor.
We consider this deficiency in internal controls to be a material weakness, which
led to material noncompliance.
Cause of Condition
Port staff relied on the contracted engineer for the timely collection of certified
payroll reports. Port employees said they did not know they needed to monitor
throughout the audit period to ensure the contracted project engineer collected all
weekly certified payroll reports timely or before paying the contractor.
Additionally, the Port experienced turnover in the position responsible for
monitoring the engineer.
Effect of Condition
In 2022, the Port was required to collect a total of 12 weekly certified payroll reports
for this project. However, seven were either not collected timely or the Port and
engineer could not demonstrate when they were collected.
Without adequate internal controls that ensure it collects all weekly certified payroll
reports timely, the Port cannot demonstrate it complied with federal wage rate
requirements. The Port could also be liable for paying any additional wages if the
contractor and subcontractors did not pay prevailing wage rates to laborers working
on the contracts.
Recommendation
We recommend the Port develop internal controls to ensure compliance with
federal wage rate requirements. This should include implementing effective
monitoring processes to collect and review all weekly certified payroll reports
timely from contractors and subcontractors.
Port’s Response
The Port welcomes this report as it will take the lessons learned from this finding
to strengthen its compliance procedures and shore up internal controls. Updated
policies and procedures are being implemented to ensure a high degree of
monitoring and recordkeeping that will develop the safety net necessary to prevent
a re-occurrence. The Port takes a lot of pride in the quality of its staff, the high
level of its achievements, and its record of compliance in the many years of
operation. Rest assured; the Port will not allow an incident like this to ever occur
again.
Auditor’s Remarks
We appreciate the Port’s commitment to resolving the issue noted, and will follow
up during the next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), section 516, Audit findings, establishes reporting
requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.
Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages,
and Section 3.4 – Submission of weekly statements and the preservation and
inspection of weekly payroll records, establishes requirements for contractor or
subcontractor submission of weekly certified payroll reports.
Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the
requirements for the contracting officer to insert in full in any contract in excess of
$2,000 which is entered into for the actual construction, alteration and/or repair,
including painting and decorating, of a public building or public work, or building
or work financed in whole or in part with federal funds the clauses listed, which
includes but is not limited to the minimum wages to be paid and payrolls and basic
records to be maintained (submission of weekly certified payrolls).
2022-001 The Port did not have adequate internal controls for ensuring
compliance with federal wage rate requirements.
Assistance Listing Number and Title: 20.106, Airport Improvement
Program, COVID-19 Airports
Programs, and Infrastructure
Investment and Jobs Act Programs
Federal Grantor Name: Federal Aviation Administration
Federal Award/Contract Number: 3-53-0027-020-2021;
3-53-0027-025-2022
Pass-through Entity Name: N/A
Pass-through Award/Contract
Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The Federal Aviation Administration offers grant funding through the Airport
Improvement Program for the purposes of planning, constructing, improving, or
repairing public-use airport facilities. In fiscal year 2022, the Port spent $884,703
in program funds for various improvements and repairs to its runways and other
facilities.
Federal regulations require recipients of federal grant funds to establish and follow
internal controls that ensure compliance with program requirements. These controls
include understanding grant requirements and monitoring the effectiveness of
established controls.
Under federal wage rate requirements, also known as the Davis-Bacon Act,
contractors and subcontractors that work on construction contracts financed with
more than $2,000 of federal money must pay laborers and mechanics wage rates
that the U.S. Department of Labor considers being similar to what local workers
have been paid for similar projects.
For construction contracts subject to these wage rate requirements, the Port must
include a provision that the contractors and subcontractors comply with those
requirements and the Department of Labor’s regulations. This includes a
requirement for the contractor and its subcontractor to submit to the Port weekly,
for each week in which any contract work is performed, certified payroll reports.
These reports must include a copy of the payroll and a signed statement of
compliance. The Port may use a contracted project manager or engineer to collect
certified payroll reports from contractors and subcontractors, but the Port remains
responsible for complying with these requirements and maintaining documentation
demonstrating compliance.
Description of Condition
During fiscal year 2022, the Port spent $682,427 to pay a contractor and its
subcontractors for various improvements and repairs to its runaway and other
facilities. The Port contracted with an engineer to supervise the project, which
included collecting weekly certified payroll reports from the contractor and
subcontractors. Our audit found the Port did not have adequate internal controls to
collect, or ensure its contracted engineer collected, weekly certified payroll reports
from the contractor and its subcontractors to confirm they paid laborers proper
prevailing wages.
While the contracted engineer had a process for collecting the weekly certified
payroll reports, it was ineffective for verifying that all reports were collected and
reviewed before requesting the Port to pay the contractor.
We consider this deficiency in internal controls to be a material weakness, which
led to material noncompliance.
Cause of Condition
Port staff relied on the contracted engineer for the timely collection of certified
payroll reports. Port employees said they did not know they needed to monitor
throughout the audit period to ensure the contracted project engineer collected all
weekly certified payroll reports timely or before paying the contractor.
Additionally, the Port experienced turnover in the position responsible for
monitoring the engineer.
Effect of Condition
In 2022, the Port was required to collect a total of 12 weekly certified payroll reports
for this project. However, seven were either not collected timely or the Port and
engineer could not demonstrate when they were collected.
Without adequate internal controls that ensure it collects all weekly certified payroll
reports timely, the Port cannot demonstrate it complied with federal wage rate
requirements. The Port could also be liable for paying any additional wages if the
contractor and subcontractors did not pay prevailing wage rates to laborers working
on the contracts.
Recommendation
We recommend the Port develop internal controls to ensure compliance with
federal wage rate requirements. This should include implementing effective
monitoring processes to collect and review all weekly certified payroll reports
timely from contractors and subcontractors.
Port’s Response
The Port welcomes this report as it will take the lessons learned from this finding
to strengthen its compliance procedures and shore up internal controls. Updated
policies and procedures are being implemented to ensure a high degree of
monitoring and recordkeeping that will develop the safety net necessary to prevent
a re-occurrence. The Port takes a lot of pride in the quality of its staff, the high
level of its achievements, and its record of compliance in the many years of
operation. Rest assured; the Port will not allow an incident like this to ever occur
again.
Auditor’s Remarks
We appreciate the Port’s commitment to resolving the issue noted, and will follow
up during the next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), section 516, Audit findings, establishes reporting
requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.
Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages,
and Section 3.4 – Submission of weekly statements and the preservation and
inspection of weekly payroll records, establishes requirements for contractor or
subcontractor submission of weekly certified payroll reports.
Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the
requirements for the contracting officer to insert in full in any contract in excess of
$2,000 which is entered into for the actual construction, alteration and/or repair,
including painting and decorating, of a public building or public work, or building
or work financed in whole or in part with federal funds the clauses listed, which
includes but is not limited to the minimum wages to be paid and payrolls and basic
records to be maintained (submission of weekly certified payrolls).
2022-001 The Port did not have adequate internal controls for ensuring
compliance with federal wage rate requirements.
Assistance Listing Number and Title: 20.106, Airport Improvement
Program, COVID-19 Airports
Programs, and Infrastructure
Investment and Jobs Act Programs
Federal Grantor Name: Federal Aviation Administration
Federal Award/Contract Number: 3-53-0027-020-2021;
3-53-0027-025-2022
Pass-through Entity Name: N/A
Pass-through Award/Contract
Number: N/A
Known Questioned Cost Amount: $0
Prior Year Audit Finding: N/A
Background
The Federal Aviation Administration offers grant funding through the Airport
Improvement Program for the purposes of planning, constructing, improving, or
repairing public-use airport facilities. In fiscal year 2022, the Port spent $884,703
in program funds for various improvements and repairs to its runways and other
facilities.
Federal regulations require recipients of federal grant funds to establish and follow
internal controls that ensure compliance with program requirements. These controls
include understanding grant requirements and monitoring the effectiveness of
established controls.
Under federal wage rate requirements, also known as the Davis-Bacon Act,
contractors and subcontractors that work on construction contracts financed with
more than $2,000 of federal money must pay laborers and mechanics wage rates
that the U.S. Department of Labor considers being similar to what local workers
have been paid for similar projects.
For construction contracts subject to these wage rate requirements, the Port must
include a provision that the contractors and subcontractors comply with those
requirements and the Department of Labor’s regulations. This includes a
requirement for the contractor and its subcontractor to submit to the Port weekly,
for each week in which any contract work is performed, certified payroll reports.
These reports must include a copy of the payroll and a signed statement of
compliance. The Port may use a contracted project manager or engineer to collect
certified payroll reports from contractors and subcontractors, but the Port remains
responsible for complying with these requirements and maintaining documentation
demonstrating compliance.
Description of Condition
During fiscal year 2022, the Port spent $682,427 to pay a contractor and its
subcontractors for various improvements and repairs to its runaway and other
facilities. The Port contracted with an engineer to supervise the project, which
included collecting weekly certified payroll reports from the contractor and
subcontractors. Our audit found the Port did not have adequate internal controls to
collect, or ensure its contracted engineer collected, weekly certified payroll reports
from the contractor and its subcontractors to confirm they paid laborers proper
prevailing wages.
While the contracted engineer had a process for collecting the weekly certified
payroll reports, it was ineffective for verifying that all reports were collected and
reviewed before requesting the Port to pay the contractor.
We consider this deficiency in internal controls to be a material weakness, which
led to material noncompliance.
Cause of Condition
Port staff relied on the contracted engineer for the timely collection of certified
payroll reports. Port employees said they did not know they needed to monitor
throughout the audit period to ensure the contracted project engineer collected all
weekly certified payroll reports timely or before paying the contractor.
Additionally, the Port experienced turnover in the position responsible for
monitoring the engineer.
Effect of Condition
In 2022, the Port was required to collect a total of 12 weekly certified payroll reports
for this project. However, seven were either not collected timely or the Port and
engineer could not demonstrate when they were collected.
Without adequate internal controls that ensure it collects all weekly certified payroll
reports timely, the Port cannot demonstrate it complied with federal wage rate
requirements. The Port could also be liable for paying any additional wages if the
contractor and subcontractors did not pay prevailing wage rates to laborers working
on the contracts.
Recommendation
We recommend the Port develop internal controls to ensure compliance with
federal wage rate requirements. This should include implementing effective
monitoring processes to collect and review all weekly certified payroll reports
timely from contractors and subcontractors.
Port’s Response
The Port welcomes this report as it will take the lessons learned from this finding
to strengthen its compliance procedures and shore up internal controls. Updated
policies and procedures are being implemented to ensure a high degree of
monitoring and recordkeeping that will develop the safety net necessary to prevent
a re-occurrence. The Port takes a lot of pride in the quality of its staff, the high
level of its achievements, and its record of compliance in the many years of
operation. Rest assured; the Port will not allow an incident like this to ever occur
again.
Auditor’s Remarks
We appreciate the Port’s commitment to resolving the issue noted, and will follow
up during the next audit.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance), section 516, Audit findings, establishes reporting
requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes
the requirements for auditees to maintain internal controls over federal programs
and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant
deficiencies and material weaknesses in its Codification of Statements on Auditing
Standards, section 935, Compliance Audits, paragraph 11.
Title 29 CFR, Section 3.3 – Weekly statement with respect to payment of wages,
and Section 3.4 – Submission of weekly statements and the preservation and
inspection of weekly payroll records, establishes requirements for contractor or
subcontractor submission of weekly certified payroll reports.
Title 29 CFR, Section 5.5 – Contract provisions and related matters establishes the
requirements for the contracting officer to insert in full in any contract in excess of
$2,000 which is entered into for the actual construction, alteration and/or repair,
including painting and decorating, of a public building or public work, or building
or work financed in whole or in part with federal funds the clauses listed, which
includes but is not limited to the minimum wages to be paid and payrolls and basic
records to be maintained (submission of weekly certified payrolls).