Finding Text
Finding 2022-001 ? Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Housing and Urban Development Pass-through Agency: None Program: CDBG ? Entitlement Grants Cluster Community Development Block Grants/Entitlement Grants ? ALN 14.218 Condition: The Municipality did not have adequate internal control procedures in place to ensure that all laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds were paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (40 USC 3141-3144, 3146, and 3147). As a result, the Municipality did not properly notify 3 of the 3 contractors tested of the requirements to comply with the wage rate requirements via the including of a prevailing wage rate clause in the contract between the contractor and the Municipality and the Municipality did not obtain certified payrolls for 3 of the 3 contractors tested until the audit. Criteria: In accordance with the Wage Rate Requirements, all laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than the prevailing wages rates established by the Department of Labor (DOL) (40 USC 3141-3144, 3146, and 3147). Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with those requirements and DOL regulations. This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance. Cause: The current internal control system in place did not ensure that prevailing wage rate requirements were met on all construction projects over $2,000. Effect: Prevailing wage rate documentation was not obtained prior to being requested as part of the audit process for 3 of the 3 contractors tested. Repeat Finding: Yes. Recommendation: We recommend that the Municipality implement internal control procedures to review all contractors and ensure prevailing wage rate requirements are met. Questioned Costs: None Views of Responsible Official and Planned Corrective Action: Management agrees with the finding. See separate corrective action plan.