Zapata County Independent School District

Section III- Federal Award Findings and Questioned Costs 2023-001 Wage Rate Requirements (Significant Deficiency in Internal Controls over Compliance, Noncompliance, and Questioned Costs greater than $25k) Funding Agency: United State Department of Education Federal Award Agreement Number: N/A Award Year: 2023 Title: Education Stabilization Fund, ESSER II Assistance Listing Number: 84.425D Pass-through Agency: Texas Education Agency Pass-through Identification Number: 20521001253901 Questioned Costs: $428,498 Condition: The District did not obtain weekly certified payrolls for laborers and mechanics employed by contractors to work on construction contracts in excess of $2,000 financed by federal assistance funds. The computed likely questioned costs were determined per review of invoices and inquiries with contractor. One invoice identified labor costs of $50,880. A second invoice of $1,258,528 did not have labor costs broken out. Per further inquiries with contractor, 30% of that invoices was estimated to represent labor cost ($377,618). Out of the total program expenditures, these were the only two invoices that were subject to this compliance requirement. Criteria: The Compliance Supplement for this program includes N. Special Tests and Provisions: 1. Wage Rate Requirements. Per 2 CFR Part 176, Subpart C, non‐Federal entities are required to obtain from contractors a copy of payroll and a statement of compliance (certified payrolls) for each week in which any contract work is performed. Cause: The contractor did not submit weekly certified payroll to the District when construction work was performed. Effect: The District could be using federal funding for construction work where wages to laborers and mechanics may be less than those established for the locality of the project (prevailing wage rates) by the Department of Labor. Auditors’ Recommendation: The Auditor recommends that the District obtain certified payroll on a weekly basis from contractor while construction is occurring and maintain records to show the District reviewed prior to payment to contractor for invoices. Management Response: Management agrees with the finding. See corrective action plan on page 139.