Finding Text
FINDING NUMBER: 2025-002 Criteria or specific requirement: Management is responsible for ensuring compliance with wage rate requirements for contractors and subcontractors. Condition: During the audit, the City did not verify that the contractor or subcontractor submitted the required certified payrolls for work performed under the federally assisted construction contract. As a result, the City did not maintain or review sufficient documentation to demonstrate compliance with wage rate requirements for all applicable weeks during the audit period. Context: Certified payrolls were not obtained and reviewed to ensure compliance with wage rate requirements for all contractors and subcontractors. Effect: The City could not demonstrate compliance with wage rate requirements, increasing the risk that prevailing wage violations could occur and not be detected. Cause: Controls were not in place or were not operating effectively, to ensure required certified payrolls were obtained, reviewed, and retained. Recommendation: We recommend the City implement procedures to ensure compliance with wage rate requirements for all applicable federally assisted construction contracts. At a minimum, the City should: 1.) Require the contractor or subcontractor to submit certified payrolls for each week in which covered work is performed, 2.) Designate responsible personnel to verify receipt of certified payrolls before processing or approving related payment requests, 3.) Document the review performed, including evidence that weekly certified payrolls were received and examined for completeness, 4.) Retain certified payroll documentation and related review evidence in the grant or contract file, and 5.) Establish a monitoring control to confirm that all applicable weeks and all contractors/subcontractors are covered. Management’s response: The City recognizes the need to improve internal controls related to grant disbursements for labor provided by our contractors. The project this past year included participation from multiple federal funding agencies and payments by the City as well as direct payments to contractors by the funding agencies. We have already added additional procedures and checkpoints to provide for adequate documentation related to certified payrolls. In addition, the City is planning to procure a grant tracking system to automate tracking the details for every project.