Finding Text
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 84.425D AND 84.425U
PASS-THROUGH NUMBER 5703
AUDIT PERIOD - YEAR ENDED JUNE 30, 2023
2023-002.Equipment and Real Property Management / Special Tests 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. 2 CFR 200.311 requires property records be maintained for real property and improvements made to real property acquired with federal awards. Additionally, 2 CFR 200.326 and Ark. Code Ann. § 18-44-503 require a non-federal entity to obtain a performance bond for the public construction contract.
Condition: The District paid $1,322,196 for a capital improvement flooring project from the Education Stabilization Fund without obtaining a performance bond and without obtaining a written contract that included the prevailing wage rate provision, and weekly certified payrolls were not submitted to the District. Additionally, the District did not record in the capital assets subsidiary records capital improvements for a HVAC system or flooring project totaling $154,377 and $1,322,196, respectively, and for equipment totaling $12,138.
Cause: Lack of internal controls and management oversight.
Effect or potential effect: The District did not comply with Wage Rate Requirements or Bonding Requirements. The District's capital assets subsidiary records were not accurate.
Questioned costs:Context: A population of 20 payments for capital improvements and equipment totaling $1,525,445. All were examined.
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 Department of Elementary and Secondary Education will be contacted regarding this matter. The district did not receive guidance from the Department about this issue other than stating that Davis-Bacon wage rules apply. Those materials will be recorded as capital assets and our new capital assets clerk will be trained on the definition and record keeping of such items. This likely occurred simply from the fact that yearly past practice for the district has been to enter the asset as one item in the asset system. Construction in progress has been used as a reconciliation item in fixed assets. There must have been some misunderstanding on this matter because the district does have a statement of coverage for the company that did this work and will provide it. However, if the format is wrong, the district will, in the future, insist that the proper format be used.