Audit 48894

Reference No. 2022-002 Condition: The City did not obtain the required certified payrolls for contractor or subcontractor work performed during the fiscal year ended September 30, 2022. The contractor submitted payroll and timesheets, but they were not certified payroll reports. In addition, the City did not have internal controls in place to identify that these certified payrolls were not being obtained. Criteria: 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). Non-Federal 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. This includes a requirement for the contractor or subcontractor to submit to the Non-Federal 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). In addition, according to 2 CFR Part 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Reference No. 2022-002 - continued Questioned Costs: Unknown Context: The City did not obain any certified payrolls for contractor or subcontractor work performed from the construction contractor for the project for this program. This contractor accounted for 61% of the construction expenditures during the fiscal year 2022. Effect: Certified payrolls were not obtained or reviewed for the project so laborers and mechanics employed by the contractor or subcontractor may not have been paid prevailing wage rates. Cause: The City did not ensure that all required certified payrolls were being obtained. There was no one person or group assigned to monitor, review and obtain certified payrolls during the year from the contractor and subcontractor. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that the City design and implement internal controls to ensure compliance with the program's wage rates requirements. These controls should include monitoring construction contracts, tracking weekly certified payrolls or no work performed and reviewing to ensure that the payrolls are properly certified for all contractor and subcontractor work performed. Views of Responsible Officials: See Corrective Action Plan.

Reference No. 2022-002 Condition: The City did not obtain the required certified payrolls for contractor or subcontractor work performed during the fiscal year ended September 30, 2022. The contractor submitted payroll and timesheets, but they were not certified payroll reports. In addition, the City did not have internal controls in place to identify that these certified payrolls were not being obtained. Criteria: 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). Non-Federal 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. This includes a requirement for the contractor or subcontractor to submit to the Non-Federal 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). In addition, according to 2 CFR Part 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Reference No. 2022-002 - continued Questioned Costs: Unknown Context: The City did not obain any certified payrolls for contractor or subcontractor work performed from the construction contractor for the project for this program. This contractor accounted for 61% of the construction expenditures during the fiscal year 2022. Effect: Certified payrolls were not obtained or reviewed for the project so laborers and mechanics employed by the contractor or subcontractor may not have been paid prevailing wage rates. Cause: The City did not ensure that all required certified payrolls were being obtained. There was no one person or group assigned to monitor, review and obtain certified payrolls during the year from the contractor and subcontractor. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend that the City design and implement internal controls to ensure compliance with the program's wage rates requirements. These controls should include monitoring construction contracts, tracking weekly certified payrolls or no work performed and reviewing to ensure that the payrolls are properly certified for all contractor and subcontractor work performed. Views of Responsible Officials: See Corrective Action Plan.