Finding 1057327 (2023-004)

2023-004 Special Tests and Provisions – Review of Prevailing Wage Reports Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Transportation Program: 20.205 Highway Planning and Construction Award Number and Year: 00002; 2023 Pass-Through Agency: Minnesota Department of Transportation Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Davis-Bacon Act (23 U.S.C. § 113) and 29 CFR part 5 requires that contractors and subcontractors performing work on federal contracts in excess of $2,000 pay their laborers and mechanics not less than the prevailing wage rates and fringe benefits listed in the contract’s wage determination class. Each covered contractor and subcontractor must, on a weekly basis, provide a copy of the payroll reports including the information listed under the records and certified payrolls section of 29 CFR part 5. Condition: The County is not obtaining assurance that the requirements of the Davis-Bacon Act are being performed for one of two federal projects selected for testing. Questioned Costs: None. Context: The project is a joint project with the Minnesota Department of Transportation (MnDOT). The County informed us MnDOT accepted responsibility for ensuring compliance with federal prevailing wage rate standards. Currently, there is no formal agreement in place between MnDOT and Anoka County that establishes or supports who is responsible for the requirements of the program. In addition, the County is not obtaining evidence or performing a review of the prevailing wage rate work performed by MnDOT to ensure compliance with the standards. Effect: Not reviewing payroll reports submitted by contractors or subcontractors or performing other procedures to verify compliance increases the risk that inappropriate wage rates are paid. Cause: The County believes that MnDOT is obtaining and reviewing certified payroll information from contractors. Recommendation: We recommend the County begin performing a review of the prevailing wage rate requirements or obtain evidence of the work performed by MnDOT. View of Responsible Official: Concur