School District of Marathon CityLocal Government

Finding 2024-003: Material Weakness – Controls and Compliance over Special Tests and Provisions Program: COVID-19 Education Stabilization Fund Assistance Listing Number: 84.425U Pass-Through Agency: Wisconsin Department of Public Instruction 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 3141–3144, 3146, and 3147). 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/Context: Certified payrolls were not obtained or reviewed by the District. Program expenditures for fiscal 2024 included one construction contract. Cause: The District was not aware of this specific requirement. Effect: Federal funds may be paid to a contractor or subcontractor that pays wages less than the prevailing wage rates. Questioned Costs: None noted. Recommendation: We recommend that the District implement a process to obtain certified payrolls when using federal funds on construction contracts. Once the certified payrolls are obtained, the District should review them as outlined by the applicable federal regulations and retain documentation of their conclusion. Views of responsible officials: The District will implement a process to obtain, review and retain certified payrolls if ever using federal funds on future construction contracts in excess of $2,000. The District has since received and reviewed the certified payrolls and determined the contractor is in compliance.

Criteria: 2 CFR Section 320.318(i) requires the District to maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. CFR Section 200.214 requires nonfederal entities to follow suspension and debarment regulations outlined in 2 CFR part 180. When a nonfederal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition/Context: The District is part of a consortium composed of multiple school districts that designated one member district to handle procurement, suspension and debarment for all consortium members' food service programs. District policy requires District approval of the contracts after consortium finishes the proposal process and selects the prime vendors for the year. Cause: The District was not aware until mid-year that they needed to document controls ensuring District policy was followed and that it needed to maintain documentation regarding compliance when the consortium handled the process. Effect: Procurement contracts may not be in compliance with the Uniform Guidance. District could contract with a vendor that has been suspended or debarred from receiving federal funds. Recommendation: We recommend that the District review its Uniform Guidance policies with all staff to ensure procurement requirements are understood and implement controls to ensure compliance. We also recommend the District review and update policies and procedures over review of certain transactions to ensure that all federal grants with covered transactions have vendors reviewed for suspension and debarment status.

Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555 Federal Award Identification Number and Year: N/A Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Entity Identifying Numbers: 2022-373304-DPI-SB-546, 2022-373304-DPI-NSL-547 Award Period: July 1, 2021 ? June 30, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 2 CFR Section 320.318(i) requires the District to maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. CFR Section 200.214 requires non-federal entities to follow suspension and debarment regulations outlined in 2 CFR part 180. When a nonfederal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition: The District is part of a consortium composed of multiple school districts that designated one member district to handle procurement, suspension and debarment for all consortium members? food service programs. District policy requires District approval of the contracts after consortium finishes the proposal process and selects the prime vendors for the year. Questioned costs: None Context: While there is a consortium lead who is responsible for procurement compliance, the District did not verify this was properly completed, maintain procurement documentation for its files, and obtain District Administrator and Board approval of contracts as required by District policy. This was not done for both procurement transactions in our sample. District also did not obtain documentation from the consortium lead regarding suspension and debarment status for the prime vendors used prior to approving contracts for the school year. This was not done for the one vendor in our sample. Cause: The District was not aware they needed to document controls ensuring District policy was followed and that it needed to maintain documentation regarding compliance when the consortium handled the process. Effect: Procurement contracts may not be in compliance with the Uniform Guidance. District could contract with a vendor that has been suspended or debarred from receiving federal funds. Repeat Finding: No Recommendation: We recommend that the District review its Uniform Guidance policies with all staff to ensure procurement requirements are understood and implement controls to ensure compliance. We also recommend the District review and update policies and procedures over review of certain transactions to ensure that all federal grants with covered transactions have vendors reviewed for suspension and debarment status. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555 Federal Award Identification Number and Year: N/A Pass-Through Agency: Wisconsin Department of Public Instruction Pass-Through Entity Identifying Numbers: 2022-373304-DPI-SB-546, 2022-373304-DPI-NSL-547 Award Period: July 1, 2021 ? June 30, 2022 Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: Segregation of duties is an internal control intended to prevent or decrease the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all parts of the grant reporting process. Condition: The Food Service Director is responsible for preparing and submitting claims related to the Child Nutrition Cluster. There is no review or verification by someone other than the preparer that the appropriate steps are being followed or completed. Accordingly, this does not allow for a proper segregation of duties for internal control purposes. Questioned costs: None Context: While performing audit procedures, it was noted that the District did not have a review or approval of food service reimbursement requests submitted to DPI by someone other than the preparer. Cause: The lack of segregation of duties is due to the limited number of employees and the size of the District?s operations. Effect: Errors or intentional fraud could occur and not be detected timely by other employees in the normal course of their responsibilities as a result of the lack of segregation of duties. The District would be under or overpaid for meals due to overclaiming number of meals served. Repeat Finding: No Recommendation: We recommend the District implement a review procedure over reimbursement requests where someone other than the preparer reviews the claim to ensure counts agree back to supporting documentation prior to the reimbursement request being filed with the granting agency. Views of responsible officials: There is no disagreement with the audit finding.