Finding Reference 2024-03
Assistance Listing Number 20.205 Highway Planning and Construction (Federal-Aid Highway Program)
Name of Federal Agency Department of Transportation
Compliance Requirement Special Tests and Provisions – Wage Rate Requirements
Type of Finding: Significant Deficiency on Internal Control and Noncompliance
Condition:
From a sample of twenty-five payroll periods of construction projects examined, we noticed the following:
1) For one construction project, the contractor's payroll for the week of July 3, 2023, through July 9, 2023, was
certified on July 27, 2023, exceeding the weekly certification requirement outlined in the Uniform Guidance.
2) For one construction project, the subcontractor's payroll for the week of July 3, 2023, through July 9, 2023,
was certified on August 4, 2023, exceeding the weekly certification requirement outlined in the Uniform
Guidance.
3) For one construction project, the contractor’s payroll for the week of November 13, 2023, through November
19, 2023, was certified on November 27, 2023, exceeding the weekly certification requirement outlined in
the Uniform Guidance.
4) For one construction project, the contractor’s payroll for the week of June 24, 2024, through June 30, 2024,
was certified on July 17, 2024, exceeding the weekly certification requirement outlined in the Uniform
Guidance.
This is a repeat finding from prior year 2023. Although this finding was originally not reported in the 2023 Single
Audit Report, during the current audit, we became aware that this issue also involved 2023. Therefore, the 2023 Single
Audit Report is in the process of being reissued. In the reissued 2023 Single Audit Report, the finding will be identified
as No. 2023-05.
Criteria:
In accordance with the 2024 Compliance Supplement:
Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still
may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those
requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing
Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to
submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll
and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section
36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and
2 CFR section 200.326).
Cause:
The delays in the certification of payroll weeks are due to several factors, including:
Inefficient payroll processing procedures within the contractor or subcontractor's system.
Lack of oversight and monitoring by the Authority to ensure timely certification of payrolls.
Miscommunication between the contractor, subcontractor, and the Authority regarding certification
deadlines.
Effect:
The failure to certify payrolls on a weekly basis as required by federal regulations can lead to noncompliance with
federal regulations, specifically the Davis-Bacon Act and related Department of Labor (DOL) regulations and
increased risk of wage underpayments or miscalculations, which may result in financial liabilities for the entity.
Questioned Costs:
None
Recommendation:
To address the identified issues, the following corrective actions are recommended:
Implement a Payroll Monitoring System: Establish automated tracking mechanisms to ensure payrolls are
certified and submitted within the required weekly timeframe.
Enhance Oversight and Compliance Reviews: Designate a compliance officer or team responsible for
verifying that certified payrolls are submitted on time. Perform regular internal audits to identify and correct
compliance issues promptly.
Provide Training for Contractors and Subcontractors: Conduct mandatory training sessions on Davis-
Bacon Act requirements and payroll certification processes. Ensure all responsible staff understand the
federal regulations governing wage rate compliance.
Improve Communication Between Stakeholders: Establish clear communication channels between
contractors, subcontractors, and the Authority. Require periodic status updates to ensure timely payroll
submission.
Views of Responsible Officials
Refer to Management’s unaudited corrective action plan.