Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-002 The District lacked adequate internal controls for ensuring compliance with federal suspension and debarment requirements.? Assistance Listing Number and Title: 84.027, Special Education ? Grants to States 84.027, COVID-19 Special Education ? Grants to States 84.173, Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 037553, 366921 Known Questioned Cost Amount: $0 Background During fiscal year 2022, the District spent $1,013,089 in federal funds from the Special Education program cluster. This program ensures students with disabilities receive free and appropriate public education with specially designed instruction that addresses their unique needs. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. Those controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever a government enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors have not been suspended, debarred or otherwise excluded. The District may accomplish this verification by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract or before charging the costs to a federal award. Description of Condition The District?s controls were ineffective for ensuring that it verified all parties receiving $25,000 or more in federal funds were not suspended or debarred. The District did not obtain a written certification, include a clause in the contract, or search for exclusion records in SAM.gov to verify that one of its two contractors subject to this requirement was not suspended or debarred. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District approved a contract, which was originally not to exceed $15,000, for providing specialized services to a student. Staff did not include a suspension and debarment clause in this contract because they anticipated it would remain under the $25,000 threshold. However, staff did not adequately monitor payments to this contractor, so they did not identify the need for a suspension and debarment check when total expenditures exceeded $25,000. Effect of Condition Without adequate internal controls, the District cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay a contractor that has been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. During fiscal year 2022, the District used $25,449 of program funds to pay this contractor for therapy and consulting services. We verified the contractor was not suspended or debarred, so we are not questioning these costs. Recommendation We recommend the District strengthen its internal controls to ensure that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging their costs to the program. District?s Response We have controls in place however this one finding was received for one purchase that exceeded the purchase order amount. We had some staff turnover in the SPED department, and we finally have permanent staffing. The business office has reiterated the requirement of suspension and debarment and determined that it will be included on any purchase made with federal dollars that is close to the $20K amount. This will ensure that any potential overage is covered and allow the new staff to get more familiar with the requirement. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-002 The District lacked adequate internal controls for ensuring compliance with federal suspension and debarment requirements.? Assistance Listing Number and Title: 84.027, Special Education ? Grants to States 84.027, COVID-19 Special Education ? Grants to States 84.173, Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 037553, 366921 Known Questioned Cost Amount: $0 Background During fiscal year 2022, the District spent $1,013,089 in federal funds from the Special Education program cluster. This program ensures students with disabilities receive free and appropriate public education with specially designed instruction that addresses their unique needs. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. Those controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever a government enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors have not been suspended, debarred or otherwise excluded. The District may accomplish this verification by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract or before charging the costs to a federal award. Description of Condition The District?s controls were ineffective for ensuring that it verified all parties receiving $25,000 or more in federal funds were not suspended or debarred. The District did not obtain a written certification, include a clause in the contract, or search for exclusion records in SAM.gov to verify that one of its two contractors subject to this requirement was not suspended or debarred. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District approved a contract, which was originally not to exceed $15,000, for providing specialized services to a student. Staff did not include a suspension and debarment clause in this contract because they anticipated it would remain under the $25,000 threshold. However, staff did not adequately monitor payments to this contractor, so they did not identify the need for a suspension and debarment check when total expenditures exceeded $25,000. Effect of Condition Without adequate internal controls, the District cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay a contractor that has been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. During fiscal year 2022, the District used $25,449 of program funds to pay this contractor for therapy and consulting services. We verified the contractor was not suspended or debarred, so we are not questioning these costs. Recommendation We recommend the District strengthen its internal controls to ensure that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging their costs to the program. District?s Response We have controls in place however this one finding was received for one purchase that exceeded the purchase order amount. We had some staff turnover in the SPED department, and we finally have permanent staffing. The business office has reiterated the requirement of suspension and debarment and determined that it will be included on any purchase made with federal dollars that is close to the $20K amount. This will ensure that any potential overage is covered and allow the new staff to get more familiar with the requirement. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-002 The District lacked adequate internal controls for ensuring compliance with federal suspension and debarment requirements.? Assistance Listing Number and Title: 84.027, Special Education ? Grants to States 84.027, COVID-19 Special Education ? Grants to States 84.173, Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 037553, 366921 Known Questioned Cost Amount: $0 Background During fiscal year 2022, the District spent $1,013,089 in federal funds from the Special Education program cluster. This program ensures students with disabilities receive free and appropriate public education with specially designed instruction that addresses their unique needs. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. Those controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever a government enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors have not been suspended, debarred or otherwise excluded. The District may accomplish this verification by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract or before charging the costs to a federal award. Description of Condition The District?s controls were ineffective for ensuring that it verified all parties receiving $25,000 or more in federal funds were not suspended or debarred. The District did not obtain a written certification, include a clause in the contract, or search for exclusion records in SAM.gov to verify that one of its two contractors subject to this requirement was not suspended or debarred. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District approved a contract, which was originally not to exceed $15,000, for providing specialized services to a student. Staff did not include a suspension and debarment clause in this contract because they anticipated it would remain under the $25,000 threshold. However, staff did not adequately monitor payments to this contractor, so they did not identify the need for a suspension and debarment check when total expenditures exceeded $25,000. Effect of Condition Without adequate internal controls, the District cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay a contractor that has been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. During fiscal year 2022, the District used $25,449 of program funds to pay this contractor for therapy and consulting services. We verified the contractor was not suspended or debarred, so we are not questioning these costs. Recommendation We recommend the District strengthen its internal controls to ensure that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging their costs to the program. District?s Response We have controls in place however this one finding was received for one purchase that exceeded the purchase order amount. We had some staff turnover in the SPED department, and we finally have permanent staffing. The business office has reiterated the requirement of suspension and debarment and determined that it will be included on any purchase made with federal dollars that is close to the $20K amount. This will ensure that any potential overage is covered and allow the new staff to get more familiar with the requirement. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-002 The District lacked adequate internal controls for ensuring compliance with federal suspension and debarment requirements.? Assistance Listing Number and Title: 84.027, Special Education ? Grants to States 84.027, COVID-19 Special Education ? Grants to States 84.173, Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 037553, 366921 Known Questioned Cost Amount: $0 Background During fiscal year 2022, the District spent $1,013,089 in federal funds from the Special Education program cluster. This program ensures students with disabilities receive free and appropriate public education with specially designed instruction that addresses their unique needs. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. Those controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever a government enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors have not been suspended, debarred or otherwise excluded. The District may accomplish this verification by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract or before charging the costs to a federal award. Description of Condition The District?s controls were ineffective for ensuring that it verified all parties receiving $25,000 or more in federal funds were not suspended or debarred. The District did not obtain a written certification, include a clause in the contract, or search for exclusion records in SAM.gov to verify that one of its two contractors subject to this requirement was not suspended or debarred. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District approved a contract, which was originally not to exceed $15,000, for providing specialized services to a student. Staff did not include a suspension and debarment clause in this contract because they anticipated it would remain under the $25,000 threshold. However, staff did not adequately monitor payments to this contractor, so they did not identify the need for a suspension and debarment check when total expenditures exceeded $25,000. Effect of Condition Without adequate internal controls, the District cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay a contractor that has been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. During fiscal year 2022, the District used $25,449 of program funds to pay this contractor for therapy and consulting services. We verified the contractor was not suspended or debarred, so we are not questioning these costs. Recommendation We recommend the District strengthen its internal controls to ensure that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging their costs to the program. District?s Response We have controls in place however this one finding was received for one purchase that exceeded the purchase order amount. We had some staff turnover in the SPED department, and we finally have permanent staffing. The business office has reiterated the requirement of suspension and debarment and determined that it will be included on any purchase made with federal dollars that is close to the $20K amount. This will ensure that any potential overage is covered and allow the new staff to get more familiar with the requirement. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425U-0712189 COVID-19, 84.425D-0120547 COVID-19, 84.425U-0138051 COVID-19, 84.425U-0137235 COVID-19, 84.425U-0140004 COVID-19, 84.425W-0459509 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,962,501 of its ESF awards. This included $2,424,159 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,526,369 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $1,974 in the American Rescue Plan Elementary and Secondary Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations require recipients to establish and maintain 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 projects 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 District must include a provision that the contractor and subcontractor 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 District 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 District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District?s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition To meet an increased technological need in response to the COVID-19 pandemic, the District hired a contractor to replace network infrastructure that provides network access and internet to all classrooms. During fiscal year 2022, the District paid $867,294 from its ESSER III award for work the contractor and its subcontractor performed on this project. The District also primarily relied on another school district to act as project manager for a heating, ventilation, and air conditioning (HVAC) system upgrade in school buildings. This capital project was part of the District?s efforts to prevent the spread of COVID-19 and enable school operations by improving air quality and circulation. During fiscal year 2022, the District paid $427,797 from its ESSER III award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: o Include a provision in the network infrastructure general contractor?s contract that the contractor and subcontractor comply with federal wage rate requirements o Collect weekly certified payroll reports from the network infrastructure contractor and its subcontractors to confirm they paid laborers proper prevailing wages o Collect weekly certified payroll reports from the HVAC system contractor and its subcontractors, or verify the project manager received these reports, to confirm they paid laborers proper prevailing wages We consider these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District relied on the contractor and subcontractors to submit weekly certified payroll to the website for the Washington State Department of Labor and Industries (L&I). Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors for both projects, the District did not retain documentation for its process. Further, staff did not know about the requirements to include the federal wage rate clause in contracts and the need to either obtain all certified payroll reports each week or verify project managers receive these reports. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting federal prevailing wage rate clauses into construction contracts, as well as implementing effective monitoring processes to ensure the District or its project managers collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response While we did confirm the worker rates, BSD was not aware that the requirement to comply with wage rates included collecting the weekly payroll. We were reviewing them weekly on the Labor and Industries website. We are now aware and will make sure this is done in the future. We currently have federal projects and are making sure we collect these pay records weekly. This will also be added to our Purchasing Quick Guide, that we give to all schools and departments. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 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).
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425U-0712189 COVID-19, 84.425D-0120547 COVID-19, 84.425U-0138051 COVID-19, 84.425U-0137235 COVID-19, 84.425U-0140004 COVID-19, 84.425W-0459509 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,962,501 of its ESF awards. This included $2,424,159 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,526,369 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $1,974 in the American Rescue Plan Elementary and Secondary Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations require recipients to establish and maintain 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 projects 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 District must include a provision that the contractor and subcontractor 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 District 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 District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District?s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition To meet an increased technological need in response to the COVID-19 pandemic, the District hired a contractor to replace network infrastructure that provides network access and internet to all classrooms. During fiscal year 2022, the District paid $867,294 from its ESSER III award for work the contractor and its subcontractor performed on this project. The District also primarily relied on another school district to act as project manager for a heating, ventilation, and air conditioning (HVAC) system upgrade in school buildings. This capital project was part of the District?s efforts to prevent the spread of COVID-19 and enable school operations by improving air quality and circulation. During fiscal year 2022, the District paid $427,797 from its ESSER III award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: o Include a provision in the network infrastructure general contractor?s contract that the contractor and subcontractor comply with federal wage rate requirements o Collect weekly certified payroll reports from the network infrastructure contractor and its subcontractors to confirm they paid laborers proper prevailing wages o Collect weekly certified payroll reports from the HVAC system contractor and its subcontractors, or verify the project manager received these reports, to confirm they paid laborers proper prevailing wages We consider these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District relied on the contractor and subcontractors to submit weekly certified payroll to the website for the Washington State Department of Labor and Industries (L&I). Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors for both projects, the District did not retain documentation for its process. Further, staff did not know about the requirements to include the federal wage rate clause in contracts and the need to either obtain all certified payroll reports each week or verify project managers receive these reports. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting federal prevailing wage rate clauses into construction contracts, as well as implementing effective monitoring processes to ensure the District or its project managers collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response While we did confirm the worker rates, BSD was not aware that the requirement to comply with wage rates included collecting the weekly payroll. We were reviewing them weekly on the Labor and Industries website. We are now aware and will make sure this is done in the future. We currently have federal projects and are making sure we collect these pay records weekly. This will also be added to our Purchasing Quick Guide, that we give to all schools and departments. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 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).
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425U-0712189 COVID-19, 84.425D-0120547 COVID-19, 84.425U-0138051 COVID-19, 84.425U-0137235 COVID-19, 84.425U-0140004 COVID-19, 84.425W-0459509 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,962,501 of its ESF awards. This included $2,424,159 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,526,369 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $1,974 in the American Rescue Plan Elementary and Secondary Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations require recipients to establish and maintain 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 projects 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 District must include a provision that the contractor and subcontractor 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 District 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 District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District?s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition To meet an increased technological need in response to the COVID-19 pandemic, the District hired a contractor to replace network infrastructure that provides network access and internet to all classrooms. During fiscal year 2022, the District paid $867,294 from its ESSER III award for work the contractor and its subcontractor performed on this project. The District also primarily relied on another school district to act as project manager for a heating, ventilation, and air conditioning (HVAC) system upgrade in school buildings. This capital project was part of the District?s efforts to prevent the spread of COVID-19 and enable school operations by improving air quality and circulation. During fiscal year 2022, the District paid $427,797 from its ESSER III award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: o Include a provision in the network infrastructure general contractor?s contract that the contractor and subcontractor comply with federal wage rate requirements o Collect weekly certified payroll reports from the network infrastructure contractor and its subcontractors to confirm they paid laborers proper prevailing wages o Collect weekly certified payroll reports from the HVAC system contractor and its subcontractors, or verify the project manager received these reports, to confirm they paid laborers proper prevailing wages We consider these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District relied on the contractor and subcontractors to submit weekly certified payroll to the website for the Washington State Department of Labor and Industries (L&I). Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors for both projects, the District did not retain documentation for its process. Further, staff did not know about the requirements to include the federal wage rate clause in contracts and the need to either obtain all certified payroll reports each week or verify project managers receive these reports. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting federal prevailing wage rate clauses into construction contracts, as well as implementing effective monitoring processes to ensure the District or its project managers collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response While we did confirm the worker rates, BSD was not aware that the requirement to comply with wage rates included collecting the weekly payroll. We were reviewing them weekly on the Labor and Industries website. We are now aware and will make sure this is done in the future. We currently have federal projects and are making sure we collect these pay records weekly. This will also be added to our Purchasing Quick Guide, that we give to all schools and departments. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 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).
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425U-0712189 COVID-19, 84.425D-0120547 COVID-19, 84.425U-0138051 COVID-19, 84.425U-0137235 COVID-19, 84.425U-0140004 COVID-19, 84.425W-0459509 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,962,501 of its ESF awards. This included $2,424,159 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,526,369 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $1,974 in the American Rescue Plan Elementary and Secondary Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations require recipients to establish and maintain 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 projects 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 District must include a provision that the contractor and subcontractor 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 District 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 District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District?s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition To meet an increased technological need in response to the COVID-19 pandemic, the District hired a contractor to replace network infrastructure that provides network access and internet to all classrooms. During fiscal year 2022, the District paid $867,294 from its ESSER III award for work the contractor and its subcontractor performed on this project. The District also primarily relied on another school district to act as project manager for a heating, ventilation, and air conditioning (HVAC) system upgrade in school buildings. This capital project was part of the District?s efforts to prevent the spread of COVID-19 and enable school operations by improving air quality and circulation. During fiscal year 2022, the District paid $427,797 from its ESSER III award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: o Include a provision in the network infrastructure general contractor?s contract that the contractor and subcontractor comply with federal wage rate requirements o Collect weekly certified payroll reports from the network infrastructure contractor and its subcontractors to confirm they paid laborers proper prevailing wages o Collect weekly certified payroll reports from the HVAC system contractor and its subcontractors, or verify the project manager received these reports, to confirm they paid laborers proper prevailing wages We consider these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District relied on the contractor and subcontractors to submit weekly certified payroll to the website for the Washington State Department of Labor and Industries (L&I). Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors for both projects, the District did not retain documentation for its process. Further, staff did not know about the requirements to include the federal wage rate clause in contracts and the need to either obtain all certified payroll reports each week or verify project managers receive these reports. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting federal prevailing wage rate clauses into construction contracts, as well as implementing effective monitoring processes to ensure the District or its project managers collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response While we did confirm the worker rates, BSD was not aware that the requirement to comply with wage rates included collecting the weekly payroll. We were reviewing them weekly on the Labor and Industries website. We are now aware and will make sure this is done in the future. We currently have federal projects and are making sure we collect these pay records weekly. This will also be added to our Purchasing Quick Guide, that we give to all schools and departments. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 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).
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425U-0712189 COVID-19, 84.425D-0120547 COVID-19, 84.425U-0138051 COVID-19, 84.425U-0137235 COVID-19, 84.425U-0140004 COVID-19, 84.425W-0459509 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,962,501 of its ESF awards. This included $2,424,159 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,526,369 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $1,974 in the American Rescue Plan Elementary and Secondary Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations require recipients to establish and maintain 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 projects 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 District must include a provision that the contractor and subcontractor 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 District 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 District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District?s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition To meet an increased technological need in response to the COVID-19 pandemic, the District hired a contractor to replace network infrastructure that provides network access and internet to all classrooms. During fiscal year 2022, the District paid $867,294 from its ESSER III award for work the contractor and its subcontractor performed on this project. The District also primarily relied on another school district to act as project manager for a heating, ventilation, and air conditioning (HVAC) system upgrade in school buildings. This capital project was part of the District?s efforts to prevent the spread of COVID-19 and enable school operations by improving air quality and circulation. During fiscal year 2022, the District paid $427,797 from its ESSER III award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: o Include a provision in the network infrastructure general contractor?s contract that the contractor and subcontractor comply with federal wage rate requirements o Collect weekly certified payroll reports from the network infrastructure contractor and its subcontractors to confirm they paid laborers proper prevailing wages o Collect weekly certified payroll reports from the HVAC system contractor and its subcontractors, or verify the project manager received these reports, to confirm they paid laborers proper prevailing wages We consider these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District relied on the contractor and subcontractors to submit weekly certified payroll to the website for the Washington State Department of Labor and Industries (L&I). Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors for both projects, the District did not retain documentation for its process. Further, staff did not know about the requirements to include the federal wage rate clause in contracts and the need to either obtain all certified payroll reports each week or verify project managers receive these reports. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting federal prevailing wage rate clauses into construction contracts, as well as implementing effective monitoring processes to ensure the District or its project managers collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response While we did confirm the worker rates, BSD was not aware that the requirement to comply with wage rates included collecting the weekly payroll. We were reviewing them weekly on the Labor and Industries website. We are now aware and will make sure this is done in the future. We currently have federal projects and are making sure we collect these pay records weekly. This will also be added to our Purchasing Quick Guide, that we give to all schools and departments. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 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).
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425U-0712189 COVID-19, 84.425D-0120547 COVID-19, 84.425U-0138051 COVID-19, 84.425U-0137235 COVID-19, 84.425U-0140004 COVID-19, 84.425W-0459509 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,962,501 of its ESF awards. This included $2,424,159 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,526,369 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $1,974 in the American Rescue Plan Elementary and Secondary Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations require recipients to establish and maintain 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 projects 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 District must include a provision that the contractor and subcontractor 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 District 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 District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District?s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition To meet an increased technological need in response to the COVID-19 pandemic, the District hired a contractor to replace network infrastructure that provides network access and internet to all classrooms. During fiscal year 2022, the District paid $867,294 from its ESSER III award for work the contractor and its subcontractor performed on this project. The District also primarily relied on another school district to act as project manager for a heating, ventilation, and air conditioning (HVAC) system upgrade in school buildings. This capital project was part of the District?s efforts to prevent the spread of COVID-19 and enable school operations by improving air quality and circulation. During fiscal year 2022, the District paid $427,797 from its ESSER III award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: o Include a provision in the network infrastructure general contractor?s contract that the contractor and subcontractor comply with federal wage rate requirements o Collect weekly certified payroll reports from the network infrastructure contractor and its subcontractors to confirm they paid laborers proper prevailing wages o Collect weekly certified payroll reports from the HVAC system contractor and its subcontractors, or verify the project manager received these reports, to confirm they paid laborers proper prevailing wages We consider these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District relied on the contractor and subcontractors to submit weekly certified payroll to the website for the Washington State Department of Labor and Industries (L&I). Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors for both projects, the District did not retain documentation for its process. Further, staff did not know about the requirements to include the federal wage rate clause in contracts and the need to either obtain all certified payroll reports each week or verify project managers receive these reports. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting federal prevailing wage rate clauses into construction contracts, as well as implementing effective monitoring processes to ensure the District or its project managers collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response While we did confirm the worker rates, BSD was not aware that the requirement to comply with wage rates included collecting the weekly payroll. We were reviewing them weekly on the Labor and Industries website. We are now aware and will make sure this is done in the future. We currently have federal projects and are making sure we collect these pay records weekly. This will also be added to our Purchasing Quick Guide, that we give to all schools and departments. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 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).
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-002 The District lacked adequate internal controls for ensuring compliance with federal suspension and debarment requirements.? Assistance Listing Number and Title: 84.027, Special Education ? Grants to States 84.027, COVID-19 Special Education ? Grants to States 84.173, Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 037553, 366921 Known Questioned Cost Amount: $0 Background During fiscal year 2022, the District spent $1,013,089 in federal funds from the Special Education program cluster. This program ensures students with disabilities receive free and appropriate public education with specially designed instruction that addresses their unique needs. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. Those controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever a government enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors have not been suspended, debarred or otherwise excluded. The District may accomplish this verification by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract or before charging the costs to a federal award. Description of Condition The District?s controls were ineffective for ensuring that it verified all parties receiving $25,000 or more in federal funds were not suspended or debarred. The District did not obtain a written certification, include a clause in the contract, or search for exclusion records in SAM.gov to verify that one of its two contractors subject to this requirement was not suspended or debarred. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District approved a contract, which was originally not to exceed $15,000, for providing specialized services to a student. Staff did not include a suspension and debarment clause in this contract because they anticipated it would remain under the $25,000 threshold. However, staff did not adequately monitor payments to this contractor, so they did not identify the need for a suspension and debarment check when total expenditures exceeded $25,000. Effect of Condition Without adequate internal controls, the District cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay a contractor that has been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. During fiscal year 2022, the District used $25,449 of program funds to pay this contractor for therapy and consulting services. We verified the contractor was not suspended or debarred, so we are not questioning these costs. Recommendation We recommend the District strengthen its internal controls to ensure that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging their costs to the program. District?s Response We have controls in place however this one finding was received for one purchase that exceeded the purchase order amount. We had some staff turnover in the SPED department, and we finally have permanent staffing. The business office has reiterated the requirement of suspension and debarment and determined that it will be included on any purchase made with federal dollars that is close to the $20K amount. This will ensure that any potential overage is covered and allow the new staff to get more familiar with the requirement. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-002 The District lacked adequate internal controls for ensuring compliance with federal suspension and debarment requirements.? Assistance Listing Number and Title: 84.027, Special Education ? Grants to States 84.027, COVID-19 Special Education ? Grants to States 84.173, Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 037553, 366921 Known Questioned Cost Amount: $0 Background During fiscal year 2022, the District spent $1,013,089 in federal funds from the Special Education program cluster. This program ensures students with disabilities receive free and appropriate public education with specially designed instruction that addresses their unique needs. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. Those controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever a government enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors have not been suspended, debarred or otherwise excluded. The District may accomplish this verification by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract or before charging the costs to a federal award. Description of Condition The District?s controls were ineffective for ensuring that it verified all parties receiving $25,000 or more in federal funds were not suspended or debarred. The District did not obtain a written certification, include a clause in the contract, or search for exclusion records in SAM.gov to verify that one of its two contractors subject to this requirement was not suspended or debarred. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District approved a contract, which was originally not to exceed $15,000, for providing specialized services to a student. Staff did not include a suspension and debarment clause in this contract because they anticipated it would remain under the $25,000 threshold. However, staff did not adequately monitor payments to this contractor, so they did not identify the need for a suspension and debarment check when total expenditures exceeded $25,000. Effect of Condition Without adequate internal controls, the District cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay a contractor that has been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. During fiscal year 2022, the District used $25,449 of program funds to pay this contractor for therapy and consulting services. We verified the contractor was not suspended or debarred, so we are not questioning these costs. Recommendation We recommend the District strengthen its internal controls to ensure that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging their costs to the program. District?s Response We have controls in place however this one finding was received for one purchase that exceeded the purchase order amount. We had some staff turnover in the SPED department, and we finally have permanent staffing. The business office has reiterated the requirement of suspension and debarment and determined that it will be included on any purchase made with federal dollars that is close to the $20K amount. This will ensure that any potential overage is covered and allow the new staff to get more familiar with the requirement. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-002 The District lacked adequate internal controls for ensuring compliance with federal suspension and debarment requirements.? Assistance Listing Number and Title: 84.027, Special Education ? Grants to States 84.027, COVID-19 Special Education ? Grants to States 84.173, Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 037553, 366921 Known Questioned Cost Amount: $0 Background During fiscal year 2022, the District spent $1,013,089 in federal funds from the Special Education program cluster. This program ensures students with disabilities receive free and appropriate public education with specially designed instruction that addresses their unique needs. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. Those controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever a government enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors have not been suspended, debarred or otherwise excluded. The District may accomplish this verification by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract or before charging the costs to a federal award. Description of Condition The District?s controls were ineffective for ensuring that it verified all parties receiving $25,000 or more in federal funds were not suspended or debarred. The District did not obtain a written certification, include a clause in the contract, or search for exclusion records in SAM.gov to verify that one of its two contractors subject to this requirement was not suspended or debarred. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District approved a contract, which was originally not to exceed $15,000, for providing specialized services to a student. Staff did not include a suspension and debarment clause in this contract because they anticipated it would remain under the $25,000 threshold. However, staff did not adequately monitor payments to this contractor, so they did not identify the need for a suspension and debarment check when total expenditures exceeded $25,000. Effect of Condition Without adequate internal controls, the District cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay a contractor that has been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. During fiscal year 2022, the District used $25,449 of program funds to pay this contractor for therapy and consulting services. We verified the contractor was not suspended or debarred, so we are not questioning these costs. Recommendation We recommend the District strengthen its internal controls to ensure that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging their costs to the program. District?s Response We have controls in place however this one finding was received for one purchase that exceeded the purchase order amount. We had some staff turnover in the SPED department, and we finally have permanent staffing. The business office has reiterated the requirement of suspension and debarment and determined that it will be included on any purchase made with federal dollars that is close to the $20K amount. This will ensure that any potential overage is covered and allow the new staff to get more familiar with the requirement. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-002 The District lacked adequate internal controls for ensuring compliance with federal suspension and debarment requirements.? Assistance Listing Number and Title: 84.027, Special Education ? Grants to States 84.027, COVID-19 Special Education ? Grants to States 84.173, Special Education ? Preschool Grants Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: 037553, 366921 Known Questioned Cost Amount: $0 Background During fiscal year 2022, the District spent $1,013,089 in federal funds from the Special Education program cluster. This program ensures students with disabilities receive free and appropriate public education with specially designed instruction that addresses their unique needs. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. Those controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever a government enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors have not been suspended, debarred or otherwise excluded. The District may accomplish this verification by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The District must perform this verification before entering into the contract or before charging the costs to a federal award. Description of Condition The District?s controls were ineffective for ensuring that it verified all parties receiving $25,000 or more in federal funds were not suspended or debarred. The District did not obtain a written certification, include a clause in the contract, or search for exclusion records in SAM.gov to verify that one of its two contractors subject to this requirement was not suspended or debarred. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District approved a contract, which was originally not to exceed $15,000, for providing specialized services to a student. Staff did not include a suspension and debarment clause in this contract because they anticipated it would remain under the $25,000 threshold. However, staff did not adequately monitor payments to this contractor, so they did not identify the need for a suspension and debarment check when total expenditures exceeded $25,000. Effect of Condition Without adequate internal controls, the District cannot ensure the contractors paid with federal funds are eligible to participate in federal programs. Any program funds the District used to pay a contractor that has been suspended or debarred would be unallowable, and the federal grantor could potentially recover them. During fiscal year 2022, the District used $25,449 of program funds to pay this contractor for therapy and consulting services. We verified the contractor was not suspended or debarred, so we are not questioning these costs. Recommendation We recommend the District strengthen its internal controls to ensure that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended or debarred before entering into contracts with them or charging their costs to the program. District?s Response We have controls in place however this one finding was received for one purchase that exceeded the purchase order amount. We had some staff turnover in the SPED department, and we finally have permanent staffing. The business office has reiterated the requirement of suspension and debarment and determined that it will be included on any purchase made with federal dollars that is close to the $20K amount. This will ensure that any potential overage is covered and allow the new staff to get more familiar with the requirement. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations, implementing Executive Orders 12549 and 12689.
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425U-0712189 COVID-19, 84.425D-0120547 COVID-19, 84.425U-0138051 COVID-19, 84.425U-0137235 COVID-19, 84.425U-0140004 COVID-19, 84.425W-0459509 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,962,501 of its ESF awards. This included $2,424,159 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,526,369 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $1,974 in the American Rescue Plan Elementary and Secondary Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations require recipients to establish and maintain 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 projects 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 District must include a provision that the contractor and subcontractor 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 District 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 District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District?s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition To meet an increased technological need in response to the COVID-19 pandemic, the District hired a contractor to replace network infrastructure that provides network access and internet to all classrooms. During fiscal year 2022, the District paid $867,294 from its ESSER III award for work the contractor and its subcontractor performed on this project. The District also primarily relied on another school district to act as project manager for a heating, ventilation, and air conditioning (HVAC) system upgrade in school buildings. This capital project was part of the District?s efforts to prevent the spread of COVID-19 and enable school operations by improving air quality and circulation. During fiscal year 2022, the District paid $427,797 from its ESSER III award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: o Include a provision in the network infrastructure general contractor?s contract that the contractor and subcontractor comply with federal wage rate requirements o Collect weekly certified payroll reports from the network infrastructure contractor and its subcontractors to confirm they paid laborers proper prevailing wages o Collect weekly certified payroll reports from the HVAC system contractor and its subcontractors, or verify the project manager received these reports, to confirm they paid laborers proper prevailing wages We consider these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District relied on the contractor and subcontractors to submit weekly certified payroll to the website for the Washington State Department of Labor and Industries (L&I). Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors for both projects, the District did not retain documentation for its process. Further, staff did not know about the requirements to include the federal wage rate clause in contracts and the need to either obtain all certified payroll reports each week or verify project managers receive these reports. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting federal prevailing wage rate clauses into construction contracts, as well as implementing effective monitoring processes to ensure the District or its project managers collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response While we did confirm the worker rates, BSD was not aware that the requirement to comply with wage rates included collecting the weekly payroll. We were reviewing them weekly on the Labor and Industries website. We are now aware and will make sure this is done in the future. We currently have federal projects and are making sure we collect these pay records weekly. This will also be added to our Purchasing Quick Guide, that we give to all schools and departments. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 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).
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425U-0712189 COVID-19, 84.425D-0120547 COVID-19, 84.425U-0138051 COVID-19, 84.425U-0137235 COVID-19, 84.425U-0140004 COVID-19, 84.425W-0459509 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,962,501 of its ESF awards. This included $2,424,159 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,526,369 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $1,974 in the American Rescue Plan Elementary and Secondary Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations require recipients to establish and maintain 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 projects 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 District must include a provision that the contractor and subcontractor 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 District 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 District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District?s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition To meet an increased technological need in response to the COVID-19 pandemic, the District hired a contractor to replace network infrastructure that provides network access and internet to all classrooms. During fiscal year 2022, the District paid $867,294 from its ESSER III award for work the contractor and its subcontractor performed on this project. The District also primarily relied on another school district to act as project manager for a heating, ventilation, and air conditioning (HVAC) system upgrade in school buildings. This capital project was part of the District?s efforts to prevent the spread of COVID-19 and enable school operations by improving air quality and circulation. During fiscal year 2022, the District paid $427,797 from its ESSER III award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: o Include a provision in the network infrastructure general contractor?s contract that the contractor and subcontractor comply with federal wage rate requirements o Collect weekly certified payroll reports from the network infrastructure contractor and its subcontractors to confirm they paid laborers proper prevailing wages o Collect weekly certified payroll reports from the HVAC system contractor and its subcontractors, or verify the project manager received these reports, to confirm they paid laborers proper prevailing wages We consider these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District relied on the contractor and subcontractors to submit weekly certified payroll to the website for the Washington State Department of Labor and Industries (L&I). Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors for both projects, the District did not retain documentation for its process. Further, staff did not know about the requirements to include the federal wage rate clause in contracts and the need to either obtain all certified payroll reports each week or verify project managers receive these reports. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting federal prevailing wage rate clauses into construction contracts, as well as implementing effective monitoring processes to ensure the District or its project managers collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response While we did confirm the worker rates, BSD was not aware that the requirement to comply with wage rates included collecting the weekly payroll. We were reviewing them weekly on the Labor and Industries website. We are now aware and will make sure this is done in the future. We currently have federal projects and are making sure we collect these pay records weekly. This will also be added to our Purchasing Quick Guide, that we give to all schools and departments. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 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).
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425U-0712189 COVID-19, 84.425D-0120547 COVID-19, 84.425U-0138051 COVID-19, 84.425U-0137235 COVID-19, 84.425U-0140004 COVID-19, 84.425W-0459509 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,962,501 of its ESF awards. This included $2,424,159 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,526,369 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $1,974 in the American Rescue Plan Elementary and Secondary Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations require recipients to establish and maintain 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 projects 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 District must include a provision that the contractor and subcontractor 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 District 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 District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District?s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition To meet an increased technological need in response to the COVID-19 pandemic, the District hired a contractor to replace network infrastructure that provides network access and internet to all classrooms. During fiscal year 2022, the District paid $867,294 from its ESSER III award for work the contractor and its subcontractor performed on this project. The District also primarily relied on another school district to act as project manager for a heating, ventilation, and air conditioning (HVAC) system upgrade in school buildings. This capital project was part of the District?s efforts to prevent the spread of COVID-19 and enable school operations by improving air quality and circulation. During fiscal year 2022, the District paid $427,797 from its ESSER III award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: o Include a provision in the network infrastructure general contractor?s contract that the contractor and subcontractor comply with federal wage rate requirements o Collect weekly certified payroll reports from the network infrastructure contractor and its subcontractors to confirm they paid laborers proper prevailing wages o Collect weekly certified payroll reports from the HVAC system contractor and its subcontractors, or verify the project manager received these reports, to confirm they paid laborers proper prevailing wages We consider these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District relied on the contractor and subcontractors to submit weekly certified payroll to the website for the Washington State Department of Labor and Industries (L&I). Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors for both projects, the District did not retain documentation for its process. Further, staff did not know about the requirements to include the federal wage rate clause in contracts and the need to either obtain all certified payroll reports each week or verify project managers receive these reports. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting federal prevailing wage rate clauses into construction contracts, as well as implementing effective monitoring processes to ensure the District or its project managers collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response While we did confirm the worker rates, BSD was not aware that the requirement to comply with wage rates included collecting the weekly payroll. We were reviewing them weekly on the Labor and Industries website. We are now aware and will make sure this is done in the future. We currently have federal projects and are making sure we collect these pay records weekly. This will also be added to our Purchasing Quick Guide, that we give to all schools and departments. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 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).
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425U-0712189 COVID-19, 84.425D-0120547 COVID-19, 84.425U-0138051 COVID-19, 84.425U-0137235 COVID-19, 84.425U-0140004 COVID-19, 84.425W-0459509 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,962,501 of its ESF awards. This included $2,424,159 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,526,369 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $1,974 in the American Rescue Plan Elementary and Secondary Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations require recipients to establish and maintain 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 projects 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 District must include a provision that the contractor and subcontractor 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 District 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 District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District?s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition To meet an increased technological need in response to the COVID-19 pandemic, the District hired a contractor to replace network infrastructure that provides network access and internet to all classrooms. During fiscal year 2022, the District paid $867,294 from its ESSER III award for work the contractor and its subcontractor performed on this project. The District also primarily relied on another school district to act as project manager for a heating, ventilation, and air conditioning (HVAC) system upgrade in school buildings. This capital project was part of the District?s efforts to prevent the spread of COVID-19 and enable school operations by improving air quality and circulation. During fiscal year 2022, the District paid $427,797 from its ESSER III award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: o Include a provision in the network infrastructure general contractor?s contract that the contractor and subcontractor comply with federal wage rate requirements o Collect weekly certified payroll reports from the network infrastructure contractor and its subcontractors to confirm they paid laborers proper prevailing wages o Collect weekly certified payroll reports from the HVAC system contractor and its subcontractors, or verify the project manager received these reports, to confirm they paid laborers proper prevailing wages We consider these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District relied on the contractor and subcontractors to submit weekly certified payroll to the website for the Washington State Department of Labor and Industries (L&I). Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors for both projects, the District did not retain documentation for its process. Further, staff did not know about the requirements to include the federal wage rate clause in contracts and the need to either obtain all certified payroll reports each week or verify project managers receive these reports. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting federal prevailing wage rate clauses into construction contracts, as well as implementing effective monitoring processes to ensure the District or its project managers collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response While we did confirm the worker rates, BSD was not aware that the requirement to comply with wage rates included collecting the weekly payroll. We were reviewing them weekly on the Labor and Industries website. We are now aware and will make sure this is done in the future. We currently have federal projects and are making sure we collect these pay records weekly. This will also be added to our Purchasing Quick Guide, that we give to all schools and departments. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 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).
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425U-0712189 COVID-19, 84.425D-0120547 COVID-19, 84.425U-0138051 COVID-19, 84.425U-0137235 COVID-19, 84.425U-0140004 COVID-19, 84.425W-0459509 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,962,501 of its ESF awards. This included $2,424,159 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,526,369 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $1,974 in the American Rescue Plan Elementary and Secondary Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations require recipients to establish and maintain 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 projects 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 District must include a provision that the contractor and subcontractor 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 District 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 District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District?s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition To meet an increased technological need in response to the COVID-19 pandemic, the District hired a contractor to replace network infrastructure that provides network access and internet to all classrooms. During fiscal year 2022, the District paid $867,294 from its ESSER III award for work the contractor and its subcontractor performed on this project. The District also primarily relied on another school district to act as project manager for a heating, ventilation, and air conditioning (HVAC) system upgrade in school buildings. This capital project was part of the District?s efforts to prevent the spread of COVID-19 and enable school operations by improving air quality and circulation. During fiscal year 2022, the District paid $427,797 from its ESSER III award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: o Include a provision in the network infrastructure general contractor?s contract that the contractor and subcontractor comply with federal wage rate requirements o Collect weekly certified payroll reports from the network infrastructure contractor and its subcontractors to confirm they paid laborers proper prevailing wages o Collect weekly certified payroll reports from the HVAC system contractor and its subcontractors, or verify the project manager received these reports, to confirm they paid laborers proper prevailing wages We consider these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District relied on the contractor and subcontractors to submit weekly certified payroll to the website for the Washington State Department of Labor and Industries (L&I). Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors for both projects, the District did not retain documentation for its process. Further, staff did not know about the requirements to include the federal wage rate clause in contracts and the need to either obtain all certified payroll reports each week or verify project managers receive these reports. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting federal prevailing wage rate clauses into construction contracts, as well as implementing effective monitoring processes to ensure the District or its project managers collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response While we did confirm the worker rates, BSD was not aware that the requirement to comply with wage rates included collecting the weekly payroll. We were reviewing them weekly on the Labor and Industries website. We are now aware and will make sure this is done in the future. We currently have federal projects and are making sure we collect these pay records weekly. This will also be added to our Purchasing Quick Guide, that we give to all schools and departments. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 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).
Bremerton School District No. 100-C September 1, 2021 through August 31, 2022 2022-001 The District did not have adequate internal controls for ensuring compliance with wage rate requirements. Assistance Listing Number and Title: 84.425, COVID-19 Education Stabilization Fund Federal Grantor Name: U.S. Department of Education Federal Award/Contract Number: N/A Pass-through Entity Name: Office of Superintendent of Public Instruction Pass-through Award/Contract Number: COVID-19, 84.425U-0712189 COVID-19, 84.425D-0120547 COVID-19, 84.425U-0138051 COVID-19, 84.425U-0137235 COVID-19, 84.425U-0140004 COVID-19, 84.425W-0459509 Known Questioned Cost Amount: $0 Background The objectives of the Education Stabilization Fund (ESF) program are to prevent, prepare for and respond to the COVID-19 pandemic. In fiscal year 2022, the District spent $4,962,501 of its ESF awards. This included $2,424,159 in the Elementary and Secondary School Emergency Relief Fund (ESSER I and II) subprogram (84.425D), $2,526,369 in the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER/ESSER III) subprogram (84.425U), and $1,974 in the American Rescue Plan Elementary and Secondary Emergency Relief ? Homeless Children and Youth (ARP ? HCY I and II) subprogram (84.425W). Federal regulations require recipients to establish and maintain 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 projects 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 District must include a provision that the contractor and subcontractor 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 District 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 District may use a contracted project manager to collect certified payroll reports from contractors and subcontractors, but ultimately, it is the District?s responsibility to comply with these requirements and maintain documentation demonstrating compliance. Description of Condition To meet an increased technological need in response to the COVID-19 pandemic, the District hired a contractor to replace network infrastructure that provides network access and internet to all classrooms. During fiscal year 2022, the District paid $867,294 from its ESSER III award for work the contractor and its subcontractor performed on this project. The District also primarily relied on another school district to act as project manager for a heating, ventilation, and air conditioning (HVAC) system upgrade in school buildings. This capital project was part of the District?s efforts to prevent the spread of COVID-19 and enable school operations by improving air quality and circulation. During fiscal year 2022, the District paid $427,797 from its ESSER III award for work the contractor and its subcontractors performed on this project. Our audit found the District did not have adequate internal controls for ensuring compliance with federal prevailing wage rate requirements. Specifically, the District did not: o Include a provision in the network infrastructure general contractor?s contract that the contractor and subcontractor comply with federal wage rate requirements o Collect weekly certified payroll reports from the network infrastructure contractor and its subcontractors to confirm they paid laborers proper prevailing wages o Collect weekly certified payroll reports from the HVAC system contractor and its subcontractors, or verify the project manager received these reports, to confirm they paid laborers proper prevailing wages We consider these deficiencies in internal controls to be a material weakness, which led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition The District relied on the contractor and subcontractors to submit weekly certified payroll to the website for the Washington State Department of Labor and Industries (L&I). Although staff said they checked that weekly certified payrolls were uploaded to the L&I system before the District paid the contractors for both projects, the District did not retain documentation for its process. Further, staff did not know about the requirements to include the federal wage rate clause in contracts and the need to either obtain all certified payroll reports each week or verify project managers receive these reports. Effect of Condition Without adequate internal controls that ensure it collects all weekly certified payroll reports, the District cannot demonstrate it complied with federal wage rate requirements. The District could also be liable for paying any additional wages if the contractors and subcontractors did not pay prevailing wage rates to laborers working on the contracts. Recommendation We recommend the District develop internal controls that ensure compliance with federal wage rate requirements. This should include inserting federal prevailing wage rate clauses into construction contracts, as well as implementing effective monitoring processes to ensure the District or its project managers collect and review all weekly certified payroll reports timely from contractors and subcontractors. District?s Response While we did confirm the worker rates, BSD was not aware that the requirement to comply with wage rates included collecting the weekly payroll. We were reviewing them weekly on the Labor and Industries website. We are now aware and will make sure this is done in the future. We currently have federal projects and are making sure we collect these pay records weekly. This will also be added to our Purchasing Quick Guide, that we give to all schools and departments. Auditor?s Remarks We appreciate the District?s commitment to resolve this finding and thank the District for its cooperation and assistance during the audit. We will review the corrective action taken during our next regular 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 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).