Finding 1081388 (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 Criteria: 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 a construction contract and paid a total of $443,281 related to the contract. The amount paid includes both labor and materials in the amount of $212,410 and $230,871, respectively. There was no prevailing wage clause within the 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 determined because we do not know the related prevailing wage rates applicable to this type of work. The maximum questioned costs are $212,410 as that is the installation cost (labor charges). Recommendation: We recommend the School District take a team approach with finance and operations to expand its control over grant compliance, particularly in regard to reviewing construction contracts that are charged to grants to ensure all applicable compliance requirements are included. Views of Responsible Officials: Management agrees with the finding. Corrective Action Plan: See attached corrective action plan.