Finding Text
Federal Agency: U.S. Department of Education
Federal Program Name: Education Stabilization Fund
Assistance Listing Number: 84.425
Federal Award Identification Number and Year: S45U210005
Pass-Through Agency: Maryland State Department of Education
Pass-Through Number: 211935
Award Period: 3/24/2021 - 9/30/2023
Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters
Criteria or Specific Requirement:
Compliance: The Davis-Bacon Act requires that laborers and mechanics employed by contractors and subcontractors in the performance of federally funded or assisted contracts in excess of $2,000 for construction, alteration, or repair (including painting and decorating) of public buildings or public works must be paid wages not less than those established by the Secretary of Labor. Adequate monitoring of compliance with these wage requirements is required to ensure that workers are being paid correctly as per 29 CFR 5.5 compliance provisions.
Control: Per 2 CFR section 200.303(a), a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO).
Condition:
During our testing, we noted the School Board did not have adequate internal controls designed to ensure vendors were in compliance with applicable Davis-Bacon Wage Rate requirements.
Questioned Costs:
There are no questioned costs related to this finding.
Context:
The School Board did not retain documentation supporting indication of their review of certified payroll records in accordance with monitoring compliance with the Davis-Bacon Act requirements for contracts funded by the Education Stabilization Fund. Additionally, for one out of twenty-two payroll periods tested, the School Board was not able to provide payroll documentation certified by the vendor.
Cause:
The Board's procedures and internal controls over monitoring Davis-Bacon Act compliance were not sufficiently designed or implemented to ensure that wage determinations were verified and that contractors and subcontractors were monitored for compliance.
Effect:
Failure to monitor Davis-Bacon wage requirements may result in noncompliance with federal labor standards and could potentially lead to financial penalties, reputational damage, and a loss of future federal funding.
Repeat Finding: No
Recommendation:
We recommend that the Board enhance its policies and procedures to ensure the effective monitoring of compliance with Davis-Bacon wage requirements. Procedures should include regular verification of wage determinations, monitoring of contractor and subcontractor payrolls, and documentation of compliance efforts.
Views of responsible officials:
Management acknowledges the finding and agrees with the recommendation and will implement corrective action.