Finding Text
FINDING 2024-002 Subject: Airport Improvement Program - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Transportation Federal Programs: Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs Assistance Listings Number: 20.106 Award Numbers or Years (or Other Identifying Numbers): 3-18-0025-018-2022, 3-18-0025-019-2023, 3-18-0025-020-2024, 3-18-0025-021-2024 Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Finding: Material Weakness Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The certified payrolls were completed and submitted weekly by the contractor as required; however, there were no internal controls in place at the Town that would be effective in preventing, or detecting and correcting, noncompliance. There was no evidence to ensure all applicable payrolls were received by the Town and that, once received, certified payrolls were reviewed by the Town to ensure that the wage rate compliance requirement was met. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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 be in compliance with 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). . . ." Cause The Town did not design or implement a system of internal controls over the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Effect Without the proper implementation of an effectively designed system of internal controls, errors could occur and remain undetected. As such, the Town cannot ensure that the certified payrolls have been properly submitted and reviewed. INDIANA STATE BOARD OF ACCOUNTS 15 TOWN OF KENTLAND SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town design and implement a proper system of internal controls, including policies and procedures, to ensure that the Town is provided complete and accurate certified payrolls for the wage rate requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 16