2 CFR ? 3474 gives regulatory effect to the Department of Education for Appendix II to 2 CFR ? 200 which states that, in addition to other provisions required by the Federal agency or non-Federal entity, all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable: (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, ?Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction?). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. The non-Federal entity must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation. The decision to award a contract or subcontract must be conditioned upon the acceptance of the wage determination. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. The contracts must also include a provision for compliance with the Copeland ?Anti-Kickback? Act (40 U.S.C. 3145), as supplemented by Department of Labor regulations (29 CFR Part 3, ?Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States?). The Act provides that each contractor or subrecipient must be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled. The non-Federal entity must report all suspected or reported violations to the Federal awarding agency. 29 CFR ? 5.5(a)(3)(ii)(A) states, in part, that a contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution shall require a clause that the contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the appropriate agency if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the agency. 29 CFR ? 5.5(a)(3)(iii) states the contractor or subcontractor shall make the records required under paragraph (a)(3)(i) of this section available for inspection, copying, or transcription by authorized representatives of the agency or the Department of Labor, and shall permit such representatives to interview employees during working hours on the job. If the contractor or subcontractor fails to submit the required records or to make them available, the Federal agency may, after written notice to the contractor, sponsor, applicant, or owner, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds. 29 CFR ? 5.6 further states, in part, Agencies which do not directly enter into such contracts shall promulgate the necessary regulations or procedures to require the recipient of the Federal assistance to insert in its contracts the provisions of ? 5.5. No payment, advance, grant, loan, or guarantee of funds shall be approved by the Federal agency unless the agency insures that the clauses required by ? 5.5 and the appropriate wage determination of the Secretary of Labor are contained in such contracts. Furthermore, no payment, advance, grant, loan, or guarantee of funds shall be approved by the Federal agency after the beginning of construction unless there is on file with the agency a certification by the contractor that the contractor and its subcontractors have complied with the provisions of ? 5.5 or unless there is on file with the agency a certification by the contractor that there is a substantial dispute with respect to the required provisions. The District contracted with Aire Serv for HVAC Boiler maintenance/repairs for $30,831 and paid for the services with Education Stabilization Fund- Elementary And Secondary School Emergency Relief (ESSER) funds. These expenditures included contractor payroll charges. The contract included requirements for prevailing wages to be paid, however due to the lack of formal controls and procedures, the District failed to obtain and review any certified payroll reports to verify prevailing wages rates were paid. This weakness resulted in a lack of compliance with the aforementioned federal codes and could result in federal funding being reduced or taken away, or other sanctions imposed by the federal grantor agency. Without evidence prevailing wages were paid, there is an increased risk that the District and its contractors and subcontractors are not in compliance with applicable federal regulations. As a result, we have qualified our opinion over this compliance requirement. The District should enhance its controls procedures to help ensure certified payroll reports are appropriately provided, reviewed, and retained from the contractor. The District should obtain the necessary information from the contractor to document compliance with the program requirements. If the contractor failed to comply, then the District has an obligation under Appendix II to 2 CFR part 200 to report all suspected or reported violations to the Federal awarding agency.