Finding 505510 (2024-003)

Finding: Special Tests – Wage Rate Requirements Federal Assistance Listing Number 84.425U – COVID-19 – Elementary and Secondary School Emergency Relief Fund (ESSER III) Department of Education, Passed-Through Colorado Department of Education Award Number – 4414/4431/9414; Award Year 2021 Criteria: According to 2 CFR Part 200.303 – The non-Federal entity must (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. Condition: The District did not have controls in place to identify that certified payrolls were not obtained for all subcontractors for construction projects which occurred during fiscal year 2024. Questioned Costs: None. Upon additional audit follow up requests, the contractor confirmed no work was performed during these weeks by the subcontractor. Context: We tested two construction projects out of the four construction projects which occurred during the year ended June 30, 2024. The tested population covered expenditures of $3.6 million and the total population of expenditures were approximately $6.5 million. A non-statistical sampling methodology was used to select the sample. Effect: The District did not have adequate internal controls in place over to ensure that all certified payrolls were not obtained or reviewed for both the contractor and subcontractor so laborers and mechanics employed by contractors or subcontractors may not have been paid prevailing wage rates. Cause: The assigned employee to monitor, review and obtain certified payrolls during the year from contractors and subcontractors was out of the office for a portion of the year and the District did not have any employees trained as a backup. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend the District implement additional internal controls over wage rate requirements, including cross-training employees to help ensure all certified payrolls or confirmation of no work performed are obtained timely. Views of Responsible Officials: Agree. See separate report for planned corrective actions.