Finding 370481 (2023-006)

Material Weakness
Requirement
N
Questioned Costs
-
Year
2023
Accepted
2024-02-26
Audit: 292036
Auditor: Crowe LLP

AI Summary

  • Core Issue: The School Corporation lacked an effective internal control system to ensure compliance with federal wage rate requirements for the Education Stabilization Fund.
  • Impacted Requirements: Noncompliance with 2 CFR section 200.303 and 29 CFR 5.5, which mandate proper wage payments and payroll reporting for federally funded projects.
  • Recommended Follow-Up: Implement a formal process to collect and review weekly payroll reports to ensure compliance with wage rate requirements.

Finding Text

Finding 2023-006 Information on the federal program: Subject: Education Stabilization Fund – Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Material Noncompliance, Modified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." 29 CFR 5.5 states in part: a.The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in §5.1, the following clauses… (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics… (3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part: In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week.. . .” Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation did not obtain the weekly payroll reports certifications from a company that performed renovations to replace fan coil units in the building. Therefore, no review was performed to ensure that pay rates complied with the federal wage rate requirements. Additionally, the School Corporation did not have a contract with the company that included clauses for the federal wage rate requirements. Identification as a repeat finding: No. Recommendation: We recommend the School Corporation implement a formal process to ensure the required weekly payroll reports certifications are collected and reviewed to ensure compliance with the wage rate requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Corrective Action Plan

Finding 2023-006 – Education Stabilization Fund – Special Tests and Provisions - Wage Rate Requirements Contact Person Responsible for Corrective Action: Kimberly Nieves Contact Phone Number: 219-508-0504 Views of Responsible Official: We concur with the finding. Description of Corrective Action Plan: As an internal control, the Director of Business Affairs and Human Resources has reviewed the Davis-Bacon Act. We will collect weekly payroll documentation for any constructions projects where Federal Grant money is used. Anticipated Completion Date: February 2024

Categories

Matching / Level of Effort / Earmarking Special Tests & Provisions Subrecipient Monitoring Material Weakness

Other Findings in this Audit

  • 370459 2023-002
    Significant Deficiency Repeat
  • 370460 2023-002
    Significant Deficiency Repeat
  • 370461 2023-002
    Significant Deficiency Repeat
  • 370462 2023-003
    Material Weakness
  • 370463 2023-003
    Material Weakness
  • 370464 2023-003
    Material Weakness
  • 370465 2023-004
    Significant Deficiency
  • 370466 2023-004
    Significant Deficiency
  • 370467 2023-004
    Significant Deficiency
  • 370468 2023-004
    Significant Deficiency
  • 370469 2023-004
    Significant Deficiency
  • 370470 2023-004
    Significant Deficiency
  • 370471 2023-004
    Significant Deficiency
  • 370472 2023-004
    Significant Deficiency
  • 370473 2023-005
    Material Weakness
  • 370474 2023-005
    Material Weakness
  • 370475 2023-005
    Material Weakness
  • 370476 2023-005
    Material Weakness
  • 370477 2023-005
    Material Weakness
  • 370478 2023-005
    Material Weakness
  • 370479 2023-005
    Material Weakness
  • 370480 2023-005
    Material Weakness
  • 370482 2023-006
    Material Weakness
  • 370483 2023-006
    Material Weakness
  • 370484 2023-006
    Material Weakness
  • 946901 2023-002
    Significant Deficiency Repeat
  • 946902 2023-002
    Significant Deficiency Repeat
  • 946903 2023-002
    Significant Deficiency Repeat
  • 946904 2023-003
    Material Weakness
  • 946905 2023-003
    Material Weakness
  • 946906 2023-003
    Material Weakness
  • 946907 2023-004
    Significant Deficiency
  • 946908 2023-004
    Significant Deficiency
  • 946909 2023-004
    Significant Deficiency
  • 946910 2023-004
    Significant Deficiency
  • 946911 2023-004
    Significant Deficiency
  • 946912 2023-004
    Significant Deficiency
  • 946913 2023-004
    Significant Deficiency
  • 946914 2023-004
    Significant Deficiency
  • 946915 2023-005
    Material Weakness
  • 946916 2023-005
    Material Weakness
  • 946917 2023-005
    Material Weakness
  • 946918 2023-005
    Material Weakness
  • 946919 2023-005
    Material Weakness
  • 946920 2023-005
    Material Weakness
  • 946921 2023-005
    Material Weakness
  • 946922 2023-005
    Material Weakness
  • 946923 2023-006
    Material Weakness
  • 946924 2023-006
    Material Weakness
  • 946925 2023-006
    Material Weakness
  • 946926 2023-006
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.425 Covid-19 - Education Stabilization Fund $644,348
84.027 Special Education_grants to States $361,604
10.553 School Breakfast Program $306,750
84.010 Title I Grants to Local Educational Agencies $217,242
10.555 National School Lunch Program $196,536
10.579 Child Nutrition Discretionary Grants Limited Availability $29,733
84.027 Covid-19 - Special Education_grants to States $16,364
93.778 Medical Assistance Program $13,950
97.036 Covid-19 - Disaster Grants - Public Assistance (presidentially Declared Disasters) $12,736
84.173 Special Education_preschool Grants $11,900
84.013 Title I State Agency Program for Neglected and Delinquent Children and Youth $5,574
84.424 Student Support and Academic Enrichment Program $5,120
84.367 Improving Teacher Quality State Grants $3,613
10.649 Pandemic Ebt Administrative Costs $628