Finding 541029 (2024-002)

Criteria: 2 CFR 200 §200.303 Internal Controls requires that the grant recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These controls should align with the 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). All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wages) by the Department of Labor. Condition: Based on our testing of the wage requirements for the ESSER program, we identified that the District did not comply with the wage rate requirements for the HVAC project in a timely manner. Cause: The District did not have proper internal controls established over wage rate compliance requirements in order to identify noncompliance in a timely manner. Effect: The lack of internal controls indicates that the District may have incurred potential noncompliance and questioned costs related to the federal awards. However, based on our testing, the District complied with the wage rate requirements but the internal controls over related compliance did not operate effectively. Repeat Finding: No. Recommendation: We recommend that the District establish internal controls over special compliance requirements and perform them in a timely manner, such as wage rage requirements, to avoid potential questioned costs and noncompliance.