Finding Text
Finding Type: Significant deficiency in internal controls over major programs and noncompliance with laws and regulations. Program Impacted: Education Stabilization Fund; ARP ESSER III (84.425U) Condition: All required payrolls were not submitted by contractors or subcontractors for work performed by laborers on projects funded, in part, by the Education Stabilization Fund grant. Criteria: All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000, financed by federal assistance funds, must be paid wages no less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (40 USC 3141-3144, 3146, and 3147). The reporting for this includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which work is performed, a copy of the payroll and statement of compliance (certified payrolls) (2 CFR Part 176, Subpart C; and 2 CFR section 200.326). Cause: The District did not maintain effective internal controls over the review of certified payrolls to ensure that prevailing wages were paid to mechanics and other laborers working on the contract. Effect: The District is unable to verify compliance with prevailing wage rate requirements for projects funded under the grant. Context: We evaluated 3 vendors as part of our review of wage rate requirements and noted the following: *For 1 of the 3 vendors reviewed, certified payrolls were not submitted to the District. Questioned Costs: $0, program funding associated with construction was used for supplies and materials only. Such costs were budgeted for, and approved by, the grantor agency. Recommendation: The District should implement internal controls that include review of certified payrolls for all construction projects funded by federal grant dollars. District’s Response: The District agrees with the finding and will develop internal control procedures necessary to correct the condition.