Finding Text
Item 2023‐001 (Originally of 2022‐001) Special Tests and Provisions – Wage Rate Requirements
Education Stabilization Fund (ESF) ALN# 84.425 (Repeated)
U.S. Department of Education
Passed through the State Department of Education
Grant period – Years ended September 30, 2022 and September 30, 2023 (84.425U) (84.425D)
Criteria – Grantees should have controls in place to ensure that contractors and subcontractors are
notified of the requirement to pay prevailing wage rates to all laborers and mechanics employed on
construction contracts in excess of $2,000 financed by federal assistance funds and to submit
weekly certified payrolls for each week in which contract work is performed. 2 CFR 200.303
requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the
Federal award that provides reasonable assurance that the non‐Federal entity is managing the
Federal statutes, regulations, and the terms and conditions of the Federal award.” 2 CFR 200.326
and 29 CFR Part 5, Labor Standards Provisions Applicable to Contracts Governing Federally Financed
and Assisted Construction (DOL Regulations) require 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).
Condition – Adequate controls were not in place to ensure that contractors and subcontractors
were notified of the requirements to comply with the wage rate requirements and provided timely
certified payrolls throughout the construction projects.
Cause – A clause describing the Wage Rate Requirements was not added to the construction
contracts. There was a lack of sufficient controls over the communication of this requirement to
ensure the accuracy and completeness of the certified payrolls being provided to the Board.
Effect – Lack of notification of the wage rate requirements to the contractors and subcontractors
could lead to disallowed costs. We noted that payments to contractors did not have supporting
documentation of certified payrolls. However, our audit disclosed no instances of unallowable
costs.
Questioned Costs – $110,029.
Recommendation – We recommend the strengthening of controls to ensure the prevailing wage
rate clauses are included in the contracts and that certified payrolls are received for each week in
which construction work is performed.
Management’s Response – The Board will strengthen the controls in place to provide assurance
that proper prevailing wage rate clauses are added to construction contracts and certified payrolls
are received from each week in which construction work is performed.