Finding Text
Finding Type – Noncompliance and significant weakness in internal control over compliance.
Repeat Finding – No.
Federal Program(s) – U.S. Department of Education: COVID-19 - ESSER III Formula – American Rescue Plan (ARP ESSER) ALN 84.425U; Passed through MDE; Project number 213713.
Compliance Requirement – Special Tests and Provisions – Wage Rate Requirements.
Criteria – All construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act as supplemented by Department of Labor regulations.
Condition – The Academy’s existing internal controls did not prevent or detect the noncompliance with provisions of the Davis-Bacon Act for construction contracts in excess of $2,000.
Cause / Effect – The Academy entered into a contract with a construction company for a HVAC project greater than $2,000 paid for with federal funds. The contract did not include a provision for compliance with the Davis Bacon Act. As a result, the Academy entered into a construction contract that was not in compliance with 2 CFR Part 176 Subpart C.
Questioned Costs – None.
Recommendation – The Academy should review and revise its internal controls and procedures to ensure prevention and detection of future noncompliance when entering into construction contracts that utilize federal funding of which 2 CFR Part 176 Subpart C applies.
Auditee Response – The Academy agrees with this finding. Due to an oversight, the Academy’s bid process did not include the required Davis-Bacon Act prevailing wage language. The Academy will review its bid process and related internal controls. It will incorporate appropriate language into its bidding documents to ensure all applicable provisions of the Davis-Bacon Act are met in the future.