CITY OF RICHARDSON

Finding 2025-001: Special Tests – Wage Rate Requirements – Significant Deficiency Program: Highway Planning and Construction Assistance Listing No.: 20.205 Federal Agency: U.S. Department of Transportation Pass-through entity: Texas Department of Transportation Award No.: CSJ0918-24-268 Award Year: Fiscal year 2024-2025 Category of Finding: Special Tests – Wage Rate Requirements Criteria: 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) (40 USC 3141–3147). 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 (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: In two out of seven selections tested for required certified payrolls for contractor or subcontractor work performed during the fiscal year ended September 30, 2025, the certified payrolls were not obtained by the City until subsequent to audit fieldwork. In addition, the City did not have internal controls in place to identify that these certified payrolls were not being obtained. Cause: Policies and procedures were not in place to ensure that certified payrolls are obtained from contractors during the year. Effect: Certified payrolls were not obtained or reviewed in a timely manner for the project so laborers and mechanics employed by contractors or subcontractors may not have been paid prevailing wage rates. Questioned Costs: None. Context: There were two contracts included for projects under this program. Certified payrolls were not obtained from one of the contractors until subsequent to audit fieldwork. Identification of a repeat finding: Not a repeat finding. Recommendation: The City should design and implement internal controls to ensure compliance with the program’s wage rates requirements. These controls should include monitoring construction contracts, tracking weekly certified payrolls or notification of no work performed and reviewing to ensure that the payrolls are properly certified for all contractor and subcontractor work performed. Management Response: See Corrective Action Plan.