CITY OF FOSSTONLocal Government

Federal Program Economic Adjustment Assistance Program (AL 11.307) U.S Department of Commerce Special Tests Criteria 29 CFR section 5.5 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). Condition Payrolls were not submitted weekly and one payroll was not properly signed. Questioned Costs None Context A sample of 16 certified payroll were selected for testing. We noted 5 of the 16 payrolls were submitted 6-8 weeks after the work was performed. We also noted 1 of the 16 payrolls tested was not certified by the contractor. Cause Management oversight. Effect The City was not in compliance with federal wage requirements. Repeat Finding Yes. Prior audit finding 2024-004 Recommendation The City should implement procedures to ensure certified payrolls are received weekly from all contractors or subcontractors for each week in which work was performed. Views of Responsible Officials and Planned Corrective Actions The City agrees with the recommendation and will review its policies and procedures.

Federal Program Economic Adjustment Assistance Program (AL 11.307) U.S. Department of Commerce Reporting Criteria Reporting requirements require the City to submit the SF-425 report no later than 30 days following the end of the semi-annual period. Condition The City submitted one semi-annual SF-425 report two weeks after the deadline. Questioned Costs None Context The City did not file the report timely. Cause Management oversight. Effect The City was not in compliance with the reporting requirements of the grant. Repeat Finding No Recommendation The City should implement procedures to ensure all reporting deadlines are met. Views of Responsible Officials and Planned Corrective Actions The City agrees with the recommendation and will review its policies and procedures.

Federal Program Economic Adjustment Assistance Program (AL 11.307) U.S Department of Commerce Special Tests Criteria 29 CFR section 5.5 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). Condition Contracts did not include Davis Bacon wage rate clauses in the contract and one payroll submitted was not properly signed. Questioned Costs None Context A sample of eight weeks during the construction period was selected for testing and all certified payrolls for these eight weeks were requested. The City’s engineer, who monitors the certified payrolls process, did not have signed payrolls for one subcontractor during the eight week period. The engineer was able to provide all the other certified payrolls requested. Cause Management oversight. Effect Employees of the subcontractors might not have received proper wages. Repeat Finding Yes. Prior audit finding 2023-004. Recommendation The City should implement procedures to ensure certified payrolls are received weekly from all contractors or subcontractors for each week in which work was performed. Views of Responsible Officials and Planned Corrective Actions The City agrees with the recommendation and will review its policies and procedures.

2023-003 FINDING Federal Program Airport Improvement Program (AL 20.106) U.S Department of Transportation Federal Award No: 3-27-0032-015-2022, 3-27-0032-16-23, 3-27-0032-17-23 Federal Award Year: 2023, 2024 Passed Through Minnesota Department of Transportation Special Tests Criteria Per the Policies and Procedures Concerning the Generation and Use of Airport Revenue (64 FR 7696) issued by the Federal Aviation Administration, all airport revenues need to be accounted for and properly documented. Condition The City did not have agreements in place for two hangar rentals for the year under audit and did not have sufficient supporting documentation for an aviation fuel sale transaction. Questioned Costs None Context The City did not have support for airport revenue. Cause Management oversight. Effect Airport revenues may not be reported accurately. Repeat Finding No Recommendation The City should implement procedures to ensure active agreements are in place for all airport revenues and all supporting documentation is maintained to account for airport revenues. Views of Responsible Officials and Planned Corrective Actions The City agrees with the recommendation and will review its policies and procedures.

Federal Program Airport Improvement Program (AL 20.106) U.S Department of Transportation Federal Award No: 3-27-0032-015-2022, 3-27-0032-16-23, 3-27-0032-17-23 Federal Award Year: 2023, 2024 Passed Through Minnesota Department of Transportation Special Tests Criteria 29 CFR section 5.5 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). Condition For two subcontractors, the required certified payrolls were not submitted to the City or the City’s Engineer for the project. Questioned Costs None Context A sample of five weeks during the construction period was selected for testing and all certified payrolls for these five weeks were requested. The City’s engineer, who monitors the certified payrolls process, did not have the certified payrolls for two subcontractors who performed work during this five-week period. The engineer was able to provide all the other certified payrolls requested. Cause Management oversight. Effect Employees of the subcontractors might not have received proper wages. Repeat Finding No Recommendation The City should implement procedures to ensure certified payrolls are received weekly from all contractors or subcontractors for each week in which work was performed. Views of Responsible Officials and Planned Corrective Actions The City agrees with the recommendation and will review its policies and procedures.