Finding Text
2023-008 – Special Tests and Revisions – Internal Control and Compliance over Wage Rate Requirements Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernadino Community Development and Housing Federal Award Identification Number: ADEL-20-1-03K/0222, ADEL-21-1-03K/0235, and ADEL-22-1-03K/0175 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to 2 CFR 200.334 Record Retention Requirements, the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. Further, in accordance with the 2 CFR 200.303 Internal Controls, the recipient and subrecipient must also establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Programs subject to wage-rate rules (e.g., Davis-Bacon Act or program-specific requirements) must maintain weekly certified payrolls and supporting documentation for all working weeks to demonstrate compliance with prevailing wage requirements. Condition: For the fiscal year ended June 30, 2023, the City was unable to provide a complete listing of construction working weeks. The City provided only ten (10) documents supporting wage-rate compliance testing, representing ten (10) working weeks. However, during the audit, we noted that the reimbursement requests submitted by the City covered the period of July 1, 2022 through April 30, 2023, indicating that the documentation provided did not represent the full population of construction activity for the fiscal year. As a result, the auditor was unable to obtain sufficient documentation to determine whether wage-rate requirements were met for all applicable working weeks. Cause: The City did not have adequate internal controls to ensure that documentation for all construction working weeks was tracked, retained, and made available for audit. Effect or Potential Effect: Due to the insufficient documentation provided, the auditor could not determine whether the City complied with wage rate requirements for the fiscal year. Hence, resulted in non-compliance with wage rate documentation requirements, and internal control deficiency related to retention requirements and compliance monitoring. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend the City enhance its internal control by implementing policies and procedures to track wage rate requirements compliance, and ensure that all certified payrolls and supporting wage-rate documentation are retained. Views of Responsible Officials: Management concurs with the finding.