Audit 388041

Criteria or specific requirement: Per Part 4 of the Office of Management and Budget (OMB) Compliance Supplement, recipients of federal funds under the Highway Planning and Construction Program must ensure that all laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC 3141–3144, 3146, and 3147. Condition: The County of Lassen did not retain supporting documentation demonstrating that it verified compliance with the wage rate requirements during the fiscal year ended June 30, 2023. Questioned costs: None Context: For the three projects selected, the County was unable to provide documentation showing that the wage rate requirements were followed. Cause: The County did not have adequate procedures in place to ensure that wage rate compliance documentation was collected and retained for federally funded construction projects. Effect: Without proper documentation, the County cannot demonstrate compliance with federal wage rate requirements, increasing the risk of noncompliance and potential disallowance of related costs. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the County of Lassen implement procedures to ensure that all required wage rate documentation is obtained and retained for all applicable federally funded projects. This includes certified payrolls and evidence of wage rate verification. Views of responsible officials: There is no disagreement with the audit finding

Criteria or specific requirement: Per the U.S. Department of the Treasury’s CSLFRF Compliance and Reporting Guidance, recipients are required to accurately report cumulative expenditures in the SLFRF Project and Expenditure (P&E) Report. Condition: The County of Lassen reported cumulative CSLFRF expenditures of $5.9 million in its SLFRF Compliance P&E Report for the period ended March 2023. However, only $4.9 million had actually been expended as of June 30, 2023. Questioned costs: None Context: The County reported $2,760,000 in expenditures related to the program on its Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2022, and $2,178,448 for the year ended June 30, 2023, for a total of $4,938,448 in cumulative expenditures. The P&E report submitted for the period ended March 2023 indicated that $5,938,447. Cause: The County had transferred funds of $1 million related to a project from the Coronavirus Relief Fund to the General Fund, but as of June 30, 2023, no funds had been spent related to the project. Effect: Cumulative expenditures in the County's P&E report for the period ended March 2023, were overstated by $1 million. Incorrect federal reporting may impact program oversight and compliance assessments. Repeat Finding: This is not a repeat finding. Recommendation: The County should implement enhanced review procedures to ensure accurate and timely reporting of CSLFRF expenditures. This includes reconciling reported amounts with actual expenditures recorded in the financial system prior to submission. Views of responsible officials: There is no disagreement with the audit finding.

Criteria or specific requirement: Per Part 4 of the Office of Management and Budget (OMB) Compliance Supplement, recipients of federal funds under the Highway Planning and Construction Program must implement and document a Quality Assurance Program (QAP) to ensure that materials and workmanship conform to approved plans and specifications. Condition: The County of Lassen did not retain supporting documentation demonstrating that its Quality Assurance Program was followed during the fiscal year ended June 30, 2023. Questioned costs: None Context: For the three projects selected, the County was unable to provide documentation showing that the QAP was followed. Cause: The County lacked adequate procedures to ensure that documentation related to quality assurance activities was consistently maintained. Effect: Without proper documentation, the County cannot demonstrate compliance with federal requirements, which may impact the allowability of costs charged to the program and the integrity of federally funded construction projects. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the County of Lassen strengthen its internal controls to ensure that all required documentation supporting the implementation of its Quality Assurance Program is retained and readily available for audit purposes. Views of responsible officials: There is no disagreement with the audit finding.

Criteria or specific requirement: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Before entering into a covered transaction the entity must verify that the contractor is not suspended, debarred, or otherwise excluded from participating in the transaction. Condition: Through our testing we noted that the County could not provide supporting documentation showing that suspension and debarment checks were performed for two vendors. Questioned costs: None Context: Documentation showing suspension and debarment procedures were performed for two of the two vendors selected prior to entering into the transaction was not provided by the County. Cause: The County did not follow controls in place for ensuring that vendors are not suspended or debarred. Effect: Without checking debarment before engaging services, the County could have entered into an agreement with a vendor that was debarred from receiving federal funding. Repeat Finding: This is not a repeat finding. Recommendation: CLA recommends the County implement procedures to ensure that federal guidance is followed relating to suspension and debarment and provide training on these procedures. Views of responsible officials: There is no disagreement with the audit finding