Finding Text
Finding Reference 2025-05 Assistance Listing Number 20.205 Highway Planning and Construction (Federal-Aid Highway Program) Name of Federal Agency Department of Transportation Compliance Requirement Special Tests and Provisions – Wage Rate Requirements Type of Finding Significant Deficiency on Internal Control and Noncompliance Condition From a sample of forty (40) payroll transactions of construction projects, the following exceptions were identified: Seven (7) instances where certified payrolls were submitted more than seven (7) days after the payroll period, indicating they were not certified on a weekly basis. Four (4) instances where no supporting documentation was provided to ensure compliance with the wage rate requirements. Two (2) instances where certified payrolls were signed by the contractor but did not include a certification date, preventing verification that certification occurred within the required seven (7)-day timeframe. A similar condition was reported in the prior year’s single audit as finding No. 2024-03. Criteria 2 CFR 200 for the Highway Planning and Construction requires recipients and subrecipients to comply with Davis- Bacon and related wage rate requirements, including: Contractors and subcontractors must submit certified payrolls on a weekly basis. Certified payrolls must be complete, accurate, and properly certified, including the date of certification. The recipient must maintain adequate supporting documentation and internal controls to ensure compliance with wage rate requirements. Cause The Authority has not established or consistently implemented effective monitoring controls over contractors responsible for submitting certified payrolls in accordance with Davis-Bacon requirements. Although contractors are responsible for preparing and submitting certified payrolls through the Authority, the Authority did not implement sufficient oversight procedures to: Ensure certified payrolls were submitted timely on a weekly basis in accordance with federal requirements; Perform and document a formal review of payroll submissions for completeness and accuracy, including verification of certification dates; and Follow up on late, incomplete, or missing payroll documentation. This condition indicates that the Authority’s control framework does not clearly define and enforce its oversight responsibility as the recipient to ensure contractor compliance with wage rate requirements. As a result, monitoring activities over contractors were not performed consistently or documented adequately. Effect The Authority was not in compliance with federal wage rate requirements which causes an increased risk that laborers and mechanics may not have been paid in accordance with applicable prevailing wage rates. Lack of documentation impairs the Authority’s ability to demonstrate compliance and increases the risk of undetected errors or noncompliance. Questioned Costs None. Recommendation We recommend the Authority: 1. Strengthen internal controls over wage rate compliance by implementing procedures to: o Ensure certified payrolls are submitted and reviewed weekly; o Verify that all payrolls include complete certification, including dates; and o Maintain adequate supporting documentation for all payroll reviews. 2. Enhance monitoring procedures over contractors and subcontractors, including: o Documented review checklists; o Timeliness tracking of payroll submissions; and o Follow-up on missing or incomplete documentation. 3. Provide training to personnel and contractors on federal wage rate requirements and documentation expectations. Views of Responsible Officials Refer to Management’s unaudited corrective action plan.