Audit 6526

Criteria: The Davis-Bacon Act requires contractors and subcontractors on federal contracts to pay laborers and mechanics employed under the contract at rates not less than the prevailing wages and fringe benefits determined by the Secretary of Labor. To comply with federal regulations, it is essential for the auditee to establish internal controls ensuring accurate verification and documentation of these payments. Condition: The District did not have internal controls in place to validate and confirm that contractors working on federally funded HVAC projects with ESSER money were paying the mandated prevailing wages and fringe benefits to their employees. The absence of such controls resulted in increased risk of non-compliance. Cause: The absence of adequate controls stemmed from a lack of comprehensive policies, procedures, and training programs related to the Davis-Bacon Act. Additionally, there was a failure to assign responsibility for monitoring and ensuring compliance, leading to gaps in oversight. Effect: The District could have charged contract costs to ESSER that were not allowable. Questioned Costs: $-0- Auditors’ Recommendation: The District should implement controls that verify compliance with Davis-Bacon for all construction contracts using ESSER funds and retain supporting documentation. This should include the development of clear policies and procedures outlining the steps for verifying prevailing wage rates and fringe benefits, as well as adequate training for staff involved in contract administration. Furthermore, the District should designate responsible individuals or teams to oversee compliance monitoring and regularly audit contractor and subcontractor records to confirm adherence to federal regulations. View of Responsible Officials and Corrective Action Plan: See attachment for District’s corrective action plan.

Criteria: Federal regulations, specifically outlined in the Uniform Guidance (2 CFR 200), require grantees and subgrantees to maintain accurate and complete records that adequately identify the use of federal funds. This includes maintaining separate records for equipment purchased with federal funds to facilitate proper tracking, reporting, and compliance monitoring. Condition: The District lacks a systematic approach to differentiate equipment acquired through federal funding sources from other assets. The absence of a dedicated tracking system and failure to maintain distinct records for federally funded equipment makes it challenging to identify, monitor, and report on the utilization, maintenance, and disposal of equipment purchased with federal dollars. Cause: The absence of a comprehensive tracking system and designated procedures for segregating federally funded equipment resulted from a lack of awareness of federal requirements and internal control weaknesses within the organization's asset management practices. Effect: The inability to track equipment purchased with federal funds separately compromises the District's ability to meet federal reporting requirements and demonstrate proper stewardship of public resources. Additionally, it increases the risk of misallocation, misuse, or loss of valuable assets, leading to potential financial losses and non-compliance with federal regulations. Questioned Costs: $-0- Auditors’ Recommendation: We recommend that the District establishes an equipment tracking system that clearly distinguishes assets acquired through federal funding sources. This system should include unique identifiers for federally funded equipment, detailed records of acquisition, usage, maintenance, and disposal, and regular reconciliations to ensure accuracy. Additionally, the District should provide training to staff responsible for asset management to enhance awareness of federal regulations and internal policies related to equipment tracking. View of Responsible Officials and Corrective Action Plan: See attachment for District’s corrective action plan.

Criteria: The Davis-Bacon Act requires contractors and subcontractors on federal contracts to pay laborers and mechanics employed under the contract at rates not less than the prevailing wages and fringe benefits determined by the Secretary of Labor. To comply with federal regulations, it is essential for the auditee to establish internal controls ensuring accurate verification and documentation of these payments. Condition: The District did not have internal controls in place to validate and confirm that contractors working on federally funded HVAC projects with ESSER money were paying the mandated prevailing wages and fringe benefits to their employees. The absence of such controls resulted in increased risk of non-compliance. Cause: The absence of adequate controls stemmed from a lack of comprehensive policies, procedures, and training programs related to the Davis-Bacon Act. Additionally, there was a failure to assign responsibility for monitoring and ensuring compliance, leading to gaps in oversight. Effect: The District could have charged contract costs to ESSER that were not allowable. Questioned Costs: $-0- Auditors’ Recommendation: The District should implement controls that verify compliance with Davis-Bacon for all construction contracts using ESSER funds and retain supporting documentation. This should include the development of clear policies and procedures outlining the steps for verifying prevailing wage rates and fringe benefits, as well as adequate training for staff involved in contract administration. Furthermore, the District should designate responsible individuals or teams to oversee compliance monitoring and regularly audit contractor and subcontractor records to confirm adherence to federal regulations. View of Responsible Officials and Corrective Action Plan: See attachment for District’s corrective action plan.

Criteria: Federal regulations, specifically outlined in the Uniform Guidance (2 CFR 200), require grantees and subgrantees to maintain accurate and complete records that adequately identify the use of federal funds. This includes maintaining separate records for equipment purchased with federal funds to facilitate proper tracking, reporting, and compliance monitoring. Condition: The District lacks a systematic approach to differentiate equipment acquired through federal funding sources from other assets. The absence of a dedicated tracking system and failure to maintain distinct records for federally funded equipment makes it challenging to identify, monitor, and report on the utilization, maintenance, and disposal of equipment purchased with federal dollars. Cause: The absence of a comprehensive tracking system and designated procedures for segregating federally funded equipment resulted from a lack of awareness of federal requirements and internal control weaknesses within the organization's asset management practices. Effect: The inability to track equipment purchased with federal funds separately compromises the District's ability to meet federal reporting requirements and demonstrate proper stewardship of public resources. Additionally, it increases the risk of misallocation, misuse, or loss of valuable assets, leading to potential financial losses and non-compliance with federal regulations. Questioned Costs: $-0- Auditors’ Recommendation: We recommend that the District establishes an equipment tracking system that clearly distinguishes assets acquired through federal funding sources. This system should include unique identifiers for federally funded equipment, detailed records of acquisition, usage, maintenance, and disposal, and regular reconciliations to ensure accuracy. Additionally, the District should provide training to staff responsible for asset management to enhance awareness of federal regulations and internal policies related to equipment tracking. View of Responsible Officials and Corrective Action Plan: See attachment for District’s corrective action plan.