Audit 49041

Condition and criteria: There were contracting issues with some of the contractors performing barracks improvements and none of the contracts were performed under prevailing wage provisions, as required. The costs appear to be allowable costs and activities, but approximately $118k should have been performed under prevailing wage standards, which is material to the program. Cause: There were contracting issues with the contractors, and it appears the City was not effectively monitoring this requirement. Context and Effect: The costs appear to be allowable costs and activities, but approximately $118k should have been performed under prevailing wage standards, which is material to the program. Auditor?s recommendation: We recommend that additional reviews and procedures be put in place to ensure that all contracts with prevailing wage requirements are performed accordingly. Management?s response: Economic Development & Airport Director has clearly instructed new Airport Manager on City?s purchasing procedures and stressed the importance of abiding by them.

Condition and criteria: The airport is allowed to submit payroll costs for reimbursement as part of the CARES Act program. There has not been a secondary review process on this portion of the expenses claimed and there were errors found in the amounts claimed for January, February and April claims. The overall amount claimed was less than the amount that was available and the funding level had been reached by year end. Cause: The Airport was attempting to maintain the privacy of employee payroll records and excluded these costs from the normal review process. Context and Effect: The overall amount claimed was less than the amount that was available and the funding level had been reached by year end. Auditor?s recommendation: This is an ongoing finding and we continue to recommend a secondary review and double checks of amounts claimed in the future. Management?s response: Economic Development & Airport Director believes that the double checking (of the calculations) was clearly instructed to previous airport manager, however, the step was apparently not followed last year. It is unlikely that any additional payroll will be reimbursed through CARES Act, but the new Airport Manager has been clearly instructed that all calculations must be doubled checked before submission. Note: This was a somewhat insignificant amount of money related to a part-time worker?s pay. It was also a minor under-collection (less than the City could have collected), which should have been double-checked, but may have possibly been intentional. Staff is unaware of any amount of payroll for which it was required to ask for reimbursement on, so this finding seems subjective and immaterial.

Condition and criteria: The Airport claimed costs under the CARES Act that were originally determined to be deferred maintenance and not requiring an addendum for a development agreement. However, the taxi lanes and portions of the terminal rehabilitation projects are now required to go through a development addendum, which the FAA had not approved at the time of the audit. Cause: Guidance related to CARES Act dollars has changed several times since inception of the program. Context and Effect: Costs of $32,091 were disallowed by the FAA and adjustments were required to correct revenue reported on the SEFA since the addendum and $9.6 million grants were not yet approved. Auditor?s recommendation: We recommend that additional procedures and reviews be put in place to monitor projects that may require development addendums and that the addendums be obtained prior to performing the project. Management?s response: Economic Development & Airport Director believes very strongly that there is no way that Airport Staff could have foreseen the FAA procedural change as it relates to addendums being required for CARES Act projects. Staff understands the seriousness of the cash flow challenges this FAA procedural change created for the City, but still does not see any way it could have been avoided. If anything, someone on the FAA?s side made a serious mistake in telling Airport Staff that our projects did not require addendum agreements.

Condition and criteria: There were contracting issues with some of the contractors performing barracks improvements and none of the contracts were performed under prevailing wage provisions, as required. The costs appear to be allowable costs and activities, but approximately $118k should have been performed under prevailing wage standards, which is material to the program. Cause: There were contracting issues with the contractors, and it appears the City was not effectively monitoring this requirement. Context and Effect: The costs appear to be allowable costs and activities, but approximately $118k should have been performed under prevailing wage standards, which is material to the program. Auditor?s recommendation: We recommend that additional reviews and procedures be put in place to ensure that all contracts with prevailing wage requirements are performed accordingly. Management?s response: Economic Development & Airport Director has clearly instructed new Airport Manager on City?s purchasing procedures and stressed the importance of abiding by them.

Condition and criteria: The airport is allowed to submit payroll costs for reimbursement as part of the CARES Act program. There has not been a secondary review process on this portion of the expenses claimed and there were errors found in the amounts claimed for January, February and April claims. The overall amount claimed was less than the amount that was available and the funding level had been reached by year end. Cause: The Airport was attempting to maintain the privacy of employee payroll records and excluded these costs from the normal review process. Context and Effect: The overall amount claimed was less than the amount that was available and the funding level had been reached by year end. Auditor?s recommendation: This is an ongoing finding and we continue to recommend a secondary review and double checks of amounts claimed in the future. Management?s response: Economic Development & Airport Director believes that the double checking (of the calculations) was clearly instructed to previous airport manager, however, the step was apparently not followed last year. It is unlikely that any additional payroll will be reimbursed through CARES Act, but the new Airport Manager has been clearly instructed that all calculations must be doubled checked before submission. Note: This was a somewhat insignificant amount of money related to a part-time worker?s pay. It was also a minor under-collection (less than the City could have collected), which should have been double-checked, but may have possibly been intentional. Staff is unaware of any amount of payroll for which it was required to ask for reimbursement on, so this finding seems subjective and immaterial.

Condition and criteria: The Airport claimed costs under the CARES Act that were originally determined to be deferred maintenance and not requiring an addendum for a development agreement. However, the taxi lanes and portions of the terminal rehabilitation projects are now required to go through a development addendum, which the FAA had not approved at the time of the audit. Cause: Guidance related to CARES Act dollars has changed several times since inception of the program. Context and Effect: Costs of $32,091 were disallowed by the FAA and adjustments were required to correct revenue reported on the SEFA since the addendum and $9.6 million grants were not yet approved. Auditor?s recommendation: We recommend that additional procedures and reviews be put in place to monitor projects that may require development addendums and that the addendums be obtained prior to performing the project. Management?s response: Economic Development & Airport Director believes very strongly that there is no way that Airport Staff could have foreseen the FAA procedural change as it relates to addendums being required for CARES Act projects. Staff understands the seriousness of the cash flow challenges this FAA procedural change created for the City, but still does not see any way it could have been avoided. If anything, someone on the FAA?s side made a serious mistake in telling Airport Staff that our projects did not require addendum agreements.