Finding 1080209 (2024-002)

Finding 2024-002 – Material Weakness & Material Noncompliance – Special Tests and Provisions related to the Education Stabilization Fund, Assistance Listing Number 84.425U, Award Number 213713/2122 Management is responsible for complying with the specific compliance requirements set forth by the Uniform Guidance, the U.S. Department of Education, and the School District’s pass-through entity Michigan Department of Education (MDE), as it relates to federally funded grants. Condition: As a result of our audit procedures, we identified that there was no prevailing wage clause in the construction contracts that the School District charged to the Education Stabilization Fund grant. Cause and Effect: The School District entered into two construction contracts with contract values of $778,000 and $378,000, respectively. These contracts include both labor and materials in the cost. There was no prevailing wage clause within either contract, and the contractors have indicated that prevailing wage rates were not paid. The effect is noncompliance related to special tests and provisions because prevailing wages were not paid. Questioned Costs: Questioned costs cannot be calculated because the distribution within the contracts for labor and materials, as well as the pay rates for the contractors' employees, are unknown. Recommendation: We recommend the School District expand its internal control over grant compliance, particularly in regard to reviewing construction contracts being charged to grants. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan.