Finding Text
2023-003 – Special Tests and Provisions – Wage Rate Requirements
Finding Type. Material Noncompliance; Material Weakness in Internal Controls over Compliance.
Federal program(s)
U.S. Department of Education -
COVID-19 - Education Stabilization Fund (ALN 84.425D, 84.42C, and 84.425U); Passed through the Michigan Department of Education; All project numbers.
Criteria. The Uniform Guidance requires that all laborers and mechanics employed by contractors to work on construction contracts in excess of $2,000 financed by federal assistance funds be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL). Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with those requirements and the DOL regulations, which include a requirement to obtain weekly certified payrolls from contractors.
Condition. The contracts tested that were subject to the Wage Rate Requirements did not include the required provision, and the District did not obtain the required certified payrolls.
Cause. The District does not have the proper internal controls in place to ensure that all contracts awarded have complied with federal requirements or that the prevailing wage was paid by all contractors.
Effect. The District did not follow federal requirements to include the prevailing wage rate provision in its contract or obtain the required certified payrolls.
Questioned Costs. The total charges included in our testing that were not supported by allowable documentation amounted to $162,171.
Recommendation. We recommend that the District reviews its policies to ensure that applicable prevailing wage requirements are included in construction contracts whenever federal funds are used and certified payrolls are obtained.
View of Responsible Officials. District officials will ensure that construction contracts contain these requirements during the bid process.
Responsible Official. Chief Financial Officer
Estimated Completion Date. June 30, 2024