The Learning Tree, Inc.Non-Profit

Item 2023-001 – Special Test and Provision – Wage Rate Requirement – Material Weakness in Internal Controls over Compliance/Material Noncompliance ALN and Title: 84.425C COVID-19 Education Stabilization Fund- Governor’s Emergency Education Relief (GEER) Fund II Pass-Through Entity: AL State Department of Education Contract/Grant Number- S425C210030 Award Year: 2023 Condition - The Organization did not ensure contractor contracts had required language related to Wage Rate Requirements and did not maintain weekly certified payrolls. Criteria - Per Title 2 US Code of Federal Regulations Part 200.303a, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per Title 2 US Code of Federal Regulations Appendix II to Part 200, all contracts made by the non- Federal entities under the federal award must contain provisions covering the following, (D) Davis- Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all Prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146–3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). Questioned Costs - Actual and likely questioned costs are undetermined. Effect - The Organization was not aware of the project falling under the Wage Rate Requirements and did not ensure contracts included the required language and ensure certified payrolls were obtained weekly. Originally the contract was not Federal funded, and the requirement was overlooked when the determination was made to use GEER Fund II funding for the project. Cause - The Organization could enter into a contract agreement with contractors who are not familiar with the Davis-Bacon act and not follow requirements to pay laborers a prevailing wage weekly. This could lead to disallowed costs charged to the grant and/or repayment to the Grantor agency. Auditor’s Recommendation - The auditor recommends the Organization strengthen the controls in place to provide assurance that contract agreements entered into with subcontractors contain the required clauses set by the Davis-Bacon act and projects that fall under the requirement maintain the weekly certified payrolls. Views of Responsible Officials and Planned Corrective Action - The Organization’s current Business Office management is aware of the noncompliance of the Davis-Bacon Act wage rate requirement. We understand the importance of implementing sound internal controls to ensure the Organization meets all federal and state compliance requirements. In order to prevent future noncompliance findings, the Organization will implement staff trainings to ensure full adherence to all applicable federal and state compliance requirements. In addition, the Organization will increase oversight over federal grant programs. Responsible Official – Ben Rogers, Director of Operations Timeline and Estimated Completion Date – December 31,2024