Finding 538002 (2024-001)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2024
Accepted
2025-03-27

AI Summary

  • Core Issue: Construction projects funded by federal money did not comply with the Davis-Bacon Act requirements.
  • Impacted Requirements: Contractors must pay prevailing wages, submit weekly certified payrolls, and post wage determinations at job sites.
  • Recommended Follow-Up: Implement internal controls to ensure compliance with the Davis-Bacon Act, including monitoring payroll reports and posting necessary information at work sites.

Finding Text

Material Weaknesses: 2024-001 Federal Agency: U.S. Department of Education Pass Thru Entity: Oklahoma State Department of Education Program: COVID-19 ARP ESSER III Assistance Listing: 84.425U Grant Period: Year Ending June 30, 2024 Condition: Construction projects paid with federal monies did not meet the compliance requirements of the Davis-Bacon Act. Criteria: The Davis-Bacon Act requires that nonfederal entities shall meet certain requirements for the construction, alteration or repair of public buildings or public works in excess of $2,000.00. Any contract entered into must include the locally prevailing wage to be paid to workers including fringe benefits. The contractor is obliged to pay at least the prevailing wage listed in the contract. Contractors are required to pay covered workers weekly and submit weekly certified payrolls to the contracting entity. They are also required to post the applicable Davis-Bacon wage determination along with the Davis-Bacon poster at the job site. Cause: The District did not follow the requirements of the Davis-Bacon Act when expending federal monies. Effect: The District could be liable for paying any additional wages if the contractor did not pay prevailing wage rates to laborers working on the project, or the expenditures could be disallowed for the expenditures that were subject to the Davis-Bacon Act. Recommendation: We recommend the District develop internal controls to meet the requirements of the Davis-Bacon Act that ensure any time federal awards are used on construction that compliance with contracts, including inserting the prevailing wage clauses and ensuring that federal wage rates and fringes are met by an effective monitoring process which includes collecting and reviewing weekly certified payroll reports from the contractor or subcontractor. Also, ensuring that all items are posted at the work site to ensure compliance. District’s Response: The District has developed internal controls to ensure that in the future if federal awards are expended on construction that all requirements of the Davis-Bacon Act will be met. Questioned Costs: $ 0

Corrective Action Plan

Davis-Bacon Act Procedures: The Davis-Bacon Act requires contractors and subcontractors working on federally funded or assisted construction projects to pay their laborers and mechanics prevailing wages and benefits, as determined by the Department of Labor. For school districts involved in such projects, ensuring compliance with the Davis-Bacon Act involves several key procedures: 1. Project Planning and Contracting: Prevailing Wage Determination: Obtain the prevailing wage rates from the Department of Labor for the locality where the project is to be performed. Contract Clauses: Include Davis-Bacon Act clauses in all construction contracts and subcontracts. This should specify the obligation to pay prevailing wages, submit certified payrolls, and allow for site inspections. 2. Pre-Construction Conference: Training and Guidance: Conduct pre-construction meetings with contractors and subcontractors to explain Davis-Bacon Act requirements, including prevailing wage rates, payroll reporting, and compliance procedures. 3. Wage Decision Posting: On-Site Posting: Ensure that the applicable wage determination and the Department of Labor's "Employee Rights Under the Davis-Bacon Act" poster are posted at the job site in a conspicuous place accessible to all workers. 4. Certified Payrolls: Submission Requirements: Require contractors and subcontractors to submit weekly certified payrolls using Form WH-347 or an equivalent form. The payroll must include details on hours worked, wage rates, fringe benefits, and deductions. 5. Review and Verification: Payroll Review: Regularly review submitted certified payrolls to verify compliance with wage determinations. Cross-check the reported wage rates and classifications with the prevailing wage rates. Worker Interviews: Conduct periodic on-site interviews with workers to verify that they are receiving the appropriate wages and benefits as reported on the certified payrolls. 6. Enforcement Actions: Non-Compliance Follow-Up: If discrepancies or non-compliance are identified, promptly address these issues with the contractor. Require corrective actions and ensure that any underpayments are rectified. Withholding Payments: Withhold contract payments as necessary to ensure compliance or to cover any underpayments until the contractor corrects the violations. 7. Documentation and Recordkeeping: Maintan Records: Keep detailed records of all wage determinations, certified payrolls, enforcement actions, and communications related to compliance with the Davis-Bacon Act. Retain these records for at least three years after project completion. 8. Audit and Oversight: Internal Audits: Conduct internal audits and oversight activities to ensure ongoing compliance. This may involve random checks and reviews by the district's compliance officers or external auditors. 9. Reporting to Funding Agencies: Regular Reports: Submit required reports to the relevant federal or state agencies overseeing the project, demonstrating compliance with the Davis-Bacon Act requirements. Cordell Public Schools has implemented the above procedures in January 2024, we can ensure compliance with the Davis-Bacon Act, thereby protecting workers' rights and avoiding potential legal and financial penalties. The carryover from a fiscal year project will be reevaluated. The project still fell under our corrective action plan but was not a new project that was in line with the actions listed above. We closed out the fiscal year, opened the new year to continue the project, therefore we still were not in compliance with the Davis-Bacon Act or our procedures. However, all future projects have been in compliance. In the next overlapping project, we will consult our auditors and find the best way to leave open funds to finish the project, but not start over in a new fiscal year.

Categories

Subrecipient Monitoring Material Weakness Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 1114444 2024-001
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
84.010 Title I Grants to Local Educational Agencies $186,354
84.425 Education Stabilization Fund $158,434
84.027 Special Education Grants to States $133,904
10.553 School Breakfast Program $76,821
84.367 Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants) $26,104
10.555 National School Lunch Program $22,597
84.358 Rural Education $19,933
84.173 Special Education Preschool Grants $2,241
10.649 Pandemic Ebt Administrative Costs $1,242