Finding 622269 (2022-001)

Material Weakness
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-09-21
Audit: 41396
Organization: Edge Learning INC (OH)
Auditor: Keith Faber

AI Summary

  • Core Issue: The Community School failed to comply with the Davis-Bacon Act by not ensuring contractors paid the required prevailing wages for a $11,057 construction project.
  • Impacted Requirements: Contracts must include provisions for prevailing wage rates and compliance reporting, which were not properly enforced.
  • Recommended Follow-Up: Implement internal control policies for contracts over $2,000 to ensure adherence to federal wage regulations and avoid potential funding penalties.

Finding Text

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. Sound accounting practices require public officials to design and operate a system of internal control that is adequate to provide reasonable assurance over the reliability of federal information provided for federal reimbursement. The Community School expended federal dollars to a vendor in the amount of $11,057 for a construction project to renovate classrooms and office space using Education Stabilization Fund - Elementary and Secondary School Emergency Relief (ESSER) funds. As a result of the lack of proper internal controls, the Community School did not pay wages in accordance with prevailing wage rates and requirements. This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract is performed, a copy of the payroll and a statement of compliance. Without proper controls over wage rate requirements, there is an increased risk that the Community School and its contractors or subcontractors are not in compliance with applicable federal regulations. Additionally, noncompliance could result in federal funding being reduced or taken away, or other sanctions imposed by the federal grantor agency. The Community School should implement internal control policies and procedures regarding construction contracts in excess of $2,000 and include provisions regarding the Davis-Bacon Act to ensure compliance with federal laws and regulations.

Categories

Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 45827 2022-001
    Material Weakness
  • 45828 2022-001
    Material Weakness
  • 622270 2022-001
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.010 Title I Grants to Local Educational Agencies $201,281
84.425 Covid-19 Education Stabilization Fund $114,788
10.555 National School Lunch Program $89,173
84.027 Special Education_grants to States $55,980
10.553 School Breakfast Program $29,441
84.367 Improving Teacher Quality State Grants $19,373
84.424 Student Support and Academic Enrichment Program $11,746
10.555 Covid-19 National School Lunch Program $8,059
84.173 Special Education_preschool Grants $1,332
10.649 Covid-19 Pandemic Ebt Administrative Costs $614
84.027 Covid-19 Special Education_grants to States $345