Finding 1224791 (2025-002)

Finding 2025-002: Community Development Block Grants/ State’s Program and Non-Entitlement Grants in Hawaii Assistance Listing No. 14.228 U.S. Department of Housing and Urban Development Compliance Requirement: Special Tests and Provisions Grant No.: Not applicable Type of finding: Internal Control (material weakness) and Compliance (material noncompliance) Criteria: Contract provisions and Davis-Bacon labor standards under 29 CFR Part 5 require the contractor performing covered work to submit weekly certified payrolls and signed statements of compliance for each week in which contract work is performed. Condition: The City did not obtain the required weekly certified payrolls from the contractor for work subject to Davis-Bacon wage rate requirements. Cause: The City does not have a complete system of internal controls to ensure that contractors subject to DavisBacon wage rate requirements submit weekly certified payrolls for each week that contract work was performed. Questioned Costs: None Effect: The City is not in compliance with the provisions of 29 CFR Part 5 wage rate requirements. Without the required certified payrolls, the City cannot demonstrate that wage classifications, wage rates, and fringe benefits were reviewed for compliance prior to payment. Recommendation: The City should establish and implement formal policies and procedures requiring weekly certified payrolls be obtained and reviewed against the applicable Davis-Bacon wage requirement before contractor payment. The review should be documented and include evidence of comparison of labor classifications, wage rates, fringe benefits, and reviewer approval. Grantee’s Response: See corrective action plan