Audit 397618

Criteria: Pursuant to 2 CFR 200.326 and Appendix II to 2 CFR Part 200, non-federal entities must include all applicable federal requirements in contracts financed with federal awards, including prevailing wage (Davis-Bacon Act) labor standards when applicable. In addition, Davis-Bacon Act requirements require contractors to submit weekly certified payrolls and statements of compliance, and require the nonfederal entity to monitor and review such payrolls to ensure compliance with prevailing wage requirements. Condition: It was noted that the non-federal entity expended approximately $392,000 representing 100 percent of program expenditures, under a single construction contract subject to prevailing wage requirements. However: 1. The executed construction contract did not include the required prevailing wage (Davis-Bacon) clauses. 2. The contractor did not submit weekly certified payroll reports and statements of compliance to the non-federal entity. Instead, payroll documentation was maintained by the contractor and made available upon request. The entity did not routinely obtain or document review of certified payrolls during the project period. Questioned Costs: None noted. Context: Prevailing wage requirements were not met due to inadequate review of the construction contract and oversight of the construction company. Effect: The entity did not have a process to ensure and enforce compliance with prevailing wage requirements and the construction contract did not include the required prevailing wage clauses. Cause: Management did not have adequate internal controls in place to ensure that required federal labor standard provisions were incorporated into construction contracts and did not establish or enforce procedures requiring the routine submission and documented review of certified payrolls from contractors. Repeat Finding: Not applicable. Recommendation: We recommend that management implement controls to ensure that all construction contracts subject to prevailing wage requirements include the required federal labor standard provisions prior to execution. In addition, management should establish and enforce procedures requiring contractors to submit weekly certified payrolls and should document management’s review of such payrolls to ensure ongoing compliance with prevailing wage requirements. Views of Responsible Officials: Management agrees with the finding and has set up a corrective action plan. Refer to Corrective Action Plan. 2024-003 – Significant Deficiency in Internal Control over Compliance and Other Matters – Special Tests & Provisions Federal Agency: Department of Housing and Urban Development Grant Name: Home Investment Partnerships Program Grant Number: GOL-24-JHF-1 Refer to finding 2024-002. Questioned Costs: None noted. Repeat Finding: Not applicable. Views of Responsible Officials: Management agrees with the finding and has set up a corrective action plan. Refer to Corrective Action Plan.