Finding 401245 (2023-001)

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 AMERICAN RESCUE PLAN - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425U PASS-THROUGH NUMBER 1402 AUDIT PERIOD - YEAR ENDED JUNE 30, 2023 2023-001 Equipment and Real Property / Special Test and Provisions Criteria or specific requirement: 29 CFR 5.5 (Wage Rate Requirements) requires all contractors and subcontractors performing construction contracts in excess of $2,000, financed by federal assistance funds, to pay laborers and mechanics employed by the contractor or subcontractor not less than the prevailing wage rates as determined by the Department of Labor for the locality of the project. Non-federal entities shall include in the applicable construction contracts a provision that the contractor or subcontractor comply with those requirements. Such requirements include the submission of weekly certified payrolls for each week in which any contract work is performed, to the non-federal entities. Also, property records should be maintained for real property and improvements made to real property acquired with federal awards as specified in OMB 2 CFR section 200.311. Condition: The District paid $339,299 for the installation of flooring from the Education Stabilization Fund without obtaining a written contract that included the prevailing wage rate provision, and weekly certified payrolls were not submitted to the District. Additionally, the flooring project was not recorded in the District's capital asset subsidiary ledger. Cause: Lack of internal controls and management oversight. Effect or potential effect: The District did not comply with Wage Rate Requirements. The District's capital assets subsidiary records were not accurate. Context: An examination of the only capital improvement disbursement (totaling $339,229) paid from the Education Stabilization Fund. Identification as a repeat finding: No Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education (DESE) for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: The district will develop a check list to be used when projects are approved. The checklist will include making sure contracts are obtained when the project is being paid from a federal fund. In addition, it will note that weekly certified payrolls are to be submitted. Additional training will be provided to our Facilities Director on the Davis-Bacon Act. The district will adjust the current procedure for identifying expenditures which need to be included on capital asset inventory.