Finding 625091 (2022-002)

Material Weakness in Internal Control Over Compliance and Compliance Finding 2022-002: Special Test ? Wage Rate Requirement Department of Education Passed through the Virginia Department of Education Pass-through Entity Identifying Numbers: 601770, 501950, 501930, 501750 Program Name: COVID-19: Elementary and Secondary School Emergency Relief (ESSER) Fund Assistance Listing Number: 84.425D Criteria: 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 subcontract 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). Condition: The School Board did not have adequate internal controls in place to verify this compliance requirement for this particular award prior to funds being spent. Cause: School Board employees were unaware the Wage Rate Requirement was applicable for this program due to confusion on some ESSER funds being exempt from this requirement. Effect: The School Board could have contracted with a vendor that did not meet the wage rate requirement. Questioned Costs: Unknown Context: Of the total expenditures for this program $604,730, or 6.43%, was spent to a vendor for various construction related projects in which the wage rate requirement was not verified with the contractor. Recommendation: We recommend the School Board implement new procedures to ensure all compliance requirements are being followed related to their federal awards. Views of Responsible Officials: The School Board agrees with this finding.