Finding Text
Finding Type – Material noncompliance and material weakness in internal control over compliance.
Repeat Finding – No.
Federal Program(s) – U.S. Department of Education: ESSER III Formula – American Rescue Plan (ARP‐ESSER) ALN 84.425U; Passed through MDE; Project number 213713.
Compliance Requirement – Special Tests and Provisions – Wage Rate Requirements.
Criteria – All construction contracts in excess of $2,000 awarded by non‐Federal entities must include a provision for compliance with the Davis‐Bacon Act as supplemented by Department of Labor regulations.
Condition – The Academy did not have controls in place to ensure construction contracts in excess of $2,000 included provisions for compliance with the Davis‐Bacon Act.
Cause / Effect – The Academy entered into a contract with a construction manager for a project funded by federal funds. The original contract and bid alternate did not include a provision for compliance with the Davis‐Bacon Act. As a result, the Academy entered into a construction contract that was not in compliance with 2 CFR Part 176 Subpart C.
Questioned Costs – Unknown. The Academy believes prevailing wages were paid; however, the Academy did not have controls in place to retain adequate documentation to determine that the compliance requirement was met.
Recommendation – The Academy should implement internal controls and procedures to ensure construction contracts entered into that utilize federal funding are reviewed for compliance with federal requirements.
Auditee Response – The Academy along with its new management company are reviewing, revising, and developing internal controls as necessary in order to comply with compliance requirements relevant to federal programs.