Finding 1088822 (2024-001)

2024-001 – Special Tests and Provisions – Wage Rate Requirements Finding Type. Material Noncompliance; Material Weakness in Internal Controls over Compliance Federal program(s) U.S. Department of Education - COVID-19 - Education Stabilization Fund (ALN 84.425D); Passed through the Michigan Department of Education; All project numbers. Criteria. The Uniform Guidance requires that all laborers and mechanics employed by contractors to work on construction contracts in excess of $2,000 financed by federal assistance funds be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL). Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with those requirements and the DOL regulations, which include a requirement to obtain weekly certified payrolls from contractors. Condition. For the amounts tested that were subject to the Wage Rate Requirements the District did not obtain the required certified payrolls during project completion and was unable to obtain them in a timely fashion upon request. Cause. The District does not have the proper internal controls in place to ensure that all contracts awarded have complied with federal requirements or that the prevailing wage was paid by all contractors. Effect. The District did not follow federal requirements to obtain the required certified payrolls from contractors. Questioned Costs. The total charges included in our testing that were not supported by allowable documentation amounted to $490,983. Recommendation. We recommend that the District reviews its procedures to ensure that certified payrolls are obtained from any contractors used (including subcontractors) whenever federal funds are used. View of Responsible Officials. District officials will ensure that construction contracts contain these requirements during the bid process and that certified payroll is obtained from the contractors in a timely fashion and retained as audit support. Responsible Official. Finance Director Estimated Completion Date. June 30, 2025