Audit 407471

Highway Planning and Construction – AL# 20.205, Late Filling of Data Collection Form Condition The Town did not submit the data collection form for the year ended June 30, 2024 timely. For June 30, 2024 year-end audits, under the requirements in the Uniform Guidance and the Office of Management and Budget (OMB), all entities are required to submit the annual data collection form with the Federal Audit Clearinghouse the earlier of either 30 days after the issuance of the entity’s annual audit or nine months after the entity’s fiscal year-end. Criteria The Town is required to submit the annual data collection form with the Federal Audit Clearinghouse the earlier of either 30 days after the issuance of the Town’s annual audit or nine months after the Town’s fiscal year-end. Cause The data collection form was not filed timely due to the timing of the issuance of the Town’s ACFR. Effect The Town's form will be submitted to the Federal Audit Clearinghouse late, delaying completion of all annual audit requirements for the Town. Recommendation Management should take steps to ensure that the form is filed in a timely manner. Repeat Finding Similar conditions were present in the prior year. See finding 2023-003 in Summary Schedule of Prior Audit Findings. View of Responsible Officials and Planned Corrective Action Management acknowledges the findings and will continue to work to ensure the reports are filed in a timely manner.

Schedule of Expenditures of Federal Awards (Material Weakness) Condition The Schedule of Expenditures of Federal Awards (SEFA) was prepared without supervisor review, resulting in several auditor corrections. Criteria Segregation of duties and review procedures should be applied to federal award workpapers. Cause The Town has not designed effective internal controls with regard to federal awards. Effect Risk that the Town’s information in the SEFA is not accurate, complete, or appropriately presented in accordance with Uniform Guidance. Perspective Information Audit adjustments of $830,901 were necessary to correct the Schedule of Expenditures of Federal Awards. Recommendation Management should establish and implement internal controls with regard to federal awards. Repeat Finding Similar conditions were present in the prior year. See finding 2023-004 in Summary Schedule of Prior Audit Findings. View of Responsible Officials and Planned Corrective Action Management acknowledges the findings and we are working to create, develop, and implement stronger procedures and internal controls surrounding the Grant Fund and federal awards.

Highway Planning and Construction – AL # 20.205, Special Tests and Provisions – Wage Rate (Material Noncompliance) Condition The Town could not provide evidence that contractors or subcontractors performing work on two highway construction projects submitted weekly certified payroll reports as required by the Davis-Bacon Act. Criteria The Davis-Bacon Act requires that contractors and subcontractors performing work on Highway Construction projects submit weekly certified payroll reports for all laborers and mechanics. Additionally, recipients of federal awards are responsible for ensuring contractor compliance with applicable federal labor standards, including obtaining and reviewing certified payroll reports. Cause The Town has not established or implemented procedures to ensure that certified payroll reports are obtained, reviewed, and retained for federally assisted construction projects subject to Davis-Bacon requirements. Effect As a result, the Town lacks sufficient assurance that contractors and subcontractors complied with prevailing wage requirements. This increases the risk that noncompliance with federal labor standards may have occurred and gone undetected. Perspective Information Weekly certified payroll reports were missing for two of five projects. Recommendation We recommend that the Town implement procedures to ensure that weekly certified payroll reports are obtained from all applicable contractors and subcontractors. These procedures should include a documented review process to verify compliance with Davis-Bacon requirements and retention of payroll records to support ongoing monitoring of federally assisted projects. View of Responsible Officials and Planned Corrective Action Management acknowledges the recommendation. Throughout the duration of this multi-year project, staff made repeated efforts to obtain certified payroll reports from the applicable contractors and subcontractors. Despite multiple requests and follow-up attempts, we were not successful in securing the required documentation. We will evaluate and strengthen our procedures going forward to improve contractor compliance and ensure that certified payroll reports are consistently obtained, reviewed, and retained in accordance with Davis-Bacon requirements.

Highway Planning and Construction – AL # 20.205 Special Tests and Provisions – Quality Assurance (Material Noncompliance) Condition The Town was unable to provide evidence of quality assurance test results for two sampled highway construction projects. As a result, we could not verify that the required number of tests were performed in accordance with program guidelines, and we could not determine whether verification sampling activities were performed by qualified personnel independent of the contractor. Criteria The OMB Compliance Supplement for the Highway Construction program requires that the locality perform and maintain documentation of quality assurance testing for construction projects. Cause The Town does not have adequate procedures in place to ensure that required quality assurance testing is documented and retained, and that such testing is performed and verified by qualified personnel in accordance with program requirements. Effect Failure to perform or retain documentation of quality assurance testing increases the risk that construction activities do not comply with applicable specifications and federal requirements. In addition, the lack of documentation prevents the locality and oversight agencies from verifying compliance. Perspective Information Quality assurance test results were not provided for two of four projects tested. Recommendation We recommend the Town implement procedures to ensure quality assurance testing is performed at the required frequency in accordance with program guidelines, require that all quality assurance test results are retained and establish controls to verify that testing and verification sampling are performed by qualified personnel independent of the contractor. View of Responsible Officials and Planned Corrective Action Management acknowledges the recommendation. Throughout the duration of this multi-year project, staff made repeated efforts to obtain quality assurance testing documentation from the applicable contractors and subcontractors. Despite multiple requests and follow-up attempts, we were not successful in securing the required documentation. We will evaluate and strengthen our procedures going forward to improve contractor compliance and ensure that quality assurance testing records are consistently obtained, reviewed, and retained in accordance with applicable requirements.