Audit 398795

8. Criteria or specific requirement (including statutory, regulatory, or other citation) "Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). " 9. Condition The auditee did not obtain the required certified payroll reports from contractors in accordance with the Davis‑Bacon Act and related labor standards, nor did the contractors or subcontractors submit the certified payrolls to the U.S. Department of Labor as required. 10. Questioned Costs None noted 11. Context The auditee contracted with Daikin TMI for HVAC work utilizing ESSER Funding. Due to the nature of the contract, prevailing wage requirements were applicable. 12. Effect Without certified payrolls, the entity cannot demonstrate compliance with federal prevailing wage requirements. 13. Cause The vendor East St. Louis School District 189 contracted with had turnover in the accounting department. That position was responsible for uploading certified payrolls to the IDOL as well as sending them to the client with the invoices. The vendor also went through a formal name change in June of 2025 which caused an issuance of a new FEIN and IL Tax ID. During this time, they were not recognized and unable to upload during this time. 14. Recommendation We recommend the auditee establish and enforce procedures to: 1) Obtain certified payrolls from all contractors and subcontractors subject to prevailing wage requirements and 2) Review payrolls for compliance with wage rates and maintain documentation for audit purposes. 15. Management's response See Corrective Action Plan.

8. Criteria or specific requirement (including statutory, regulatory, or other citation) Federal awards claimed on a reimbursement basis must be limited to allowable costs incurred during the period of performance. Recipients must maintain effective internal controls to ensure charges are accurate, supported, and compliant with federal requirements (2 CFR §200.303 – Internal controls; §200.302 – Financial management; §200.403 – Factors affecting allowability of costs; §200.405 – Allocable costs; §200.344 – Closeout). Under cash management principles, reimbursement must not exceed expenditures incurred. 9. Condition The District submitted an expenditure report for $19,165,569 for the quarter ending March 31, 2025, which included amounts that were properly obligated but not yet expended as of the report date. The District reported $14,638,097 in ESSER funds on the Schedule of Expenditures of Federal Awards (SEFA), resulting in an unsupported difference of $4,527,472. 10. Questioned Costs Questioned costs totaled $4,527,472. 11. Context The District claimed the remaining award amount in the March submission as the liquidation extension for the grant was no longer available. 12. Effect The submission of expenditure reports that include unexpended obligations may result in inaccurate financial reporting and misrepresentation of the District’s use of federal funds. This could impact cash management decisions and compliance monitoring by the pass-through entity. 13. Cause As the ESSER grant period approached expiration, management attempted to maximize remaining available funding by submitting reimbursement requests in advance of incurring related expenditures. The District did not have adequate controls in place to ensure that expenditures were incurred prior to requesting federal reimbursement, as required by program regulations. 14. Recommendation We recommend the District submit claims for reimbursement for expenditures that the District has incurred. 15. Management's response See Corrective Action Plan.