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U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 EDUCATION STABILIZATION FUND - AL NUMBERS 84.425D AND 84.425U PASS-THROUGH NUMBER 5006 AUDIT PERIOD - YEAR ENDED JUNE 30, 2022 2022-001. Equipment and Real Property Management Criteria or specific requirement: The Davis-Bacon Act requires all contractors and subcontractors performing work on construction contracts in excess of $2,000, financed by Federal funds, to pay their laborers and mechanics not less than the prevailing wage rates as determined by the Department of Labor. Non-federal entities are to include in the applicable construction contracts a requirement that the contractor or subcontractor comply with the provisions of the Davis-Bacon Act and the Department of Labor regulations. Such requirements include the submission of weekly certified payrolls, for each week in which any contract work is performed, to the non-federal entities. Condition: The District paid $870,560 for construction of a Health & Physical Education Facility without obtaining a written contract that included the prevailing wage rate clause. Additionally, weekly certified payrolls were not submitted to the District. Cause: Lack of internal controls and management oversight resulted in the Davis-Bacon Act provisions not being properly followed. Effect: The District did not comply with the notification requirements regarding compliance with the Davis-Bacon Act and was unable to provide copies of weekly certified payrolls for workers paid on the projects. Context: Examined the only construction contract paid from the Education Stabilization Fund. 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 Prescott School District will contact the Arkansas Division of Elementary and Secondary Education for guidance regarding this matter and implement proper controls over program expenditures on any further projects.