Finding Text
AL 84.425D – American Rescue Plan – Elementary and Secondary School Emergency Relief, Award
Number 5891
Criteria: Requirements per part 4 section 20.001 of the Uniform Guidance state that 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 wage rates) by the Department of Labor (DOL).
Condition: Management had not established an adequate system of internal control over compliance with the
Special Tests and Provisions related to Wage Rate Requirements under the Elementary and Secondary School
Emergency Relief Fund.
Cause: Management did not have adequate internal controls in place to identify and comply with Wage Rate
Requirements established under part 4 section 84.425 of the Uniform Guidance.
Effect or Potential Effect: Without appropriate internal controls over compliance, non-compliance could occur
which the entity may not identify. Laborers and mechanics employed by contractors and subcontractors may
not have been paid in accordance with local prevailing wage rates. We were not able to determine if the entity
was in compliance with this compliance requirement as appropriate documentation was not requested from the
applicable contractor.
Questioned Costs: N/A
Repeat Finding?: No
Recommendation: Management should implement internal controls over Wage Rate Requirements to ensure
compliance with applicable Federal statutes, regulations, and terms and conditions of the awards received.
Responsible Official’s Response: In this particular finding, the decision was made to undertake a project using organizational reserves.
Subsequent to the project taking place additional review indicated it would qualify as permissible under the
American Rescue Plan and Federal Funding could potentially cover the project costs. The contract for the work,
however, was not further reviewed at the time. After subsequent review, it appears that the contract may not
meet the standards for Federal Funding, Management, therefore, has removed the Federal funding revenue from
it’s financial statements and has not requested funding for this project under the American Rescue Plan.
As a regular course of business, the organization does require any contracts subject to Federal funding
requirements meet Federal Funding requirements, including those requirements associated with prevailing
wages. Going forward, a comprehensive contract review will be performed for any project retroactively
deemed a potentially permissible use of Federal funds
Auditor’s Evaluation of the Responsible Official’s Response:
Management’s response is appropriate to address the finding. If properly implemented, management’s response
would include procedures to prevent reoccurrence in the future.