KIRBY SCHOOL DISTRICTLocal Government

U.S. DEPARTMENT OF EDUCATION PASSED THROUGH ARKANSAS DEPARTMENT OF EDUCATION COVID-19 AMERICAN RESCUE PLAN ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF FUND - AL NUMBER 84.425U PASS-THROUGH NUMBER 5503 AUDIT PERIOD - YEAR ENDED JUNE 30, 2022 2022-002 EQUIPMENT AND REAL PROPERTY MANAGEMENT Criteria or specific requirement: The Davis- Bacon Act requires all contractors and subcontractors performing construction contracts in excess of $2,000, financed by Federal funds, to pay their laborers and mechanics not less than the prevailing wage rates as determined by the Department of Labor. Non-federal entities are to include in the applicable construction contracts a requirement that the contractor or subcontractor comply with the provisions of the Davis-Bacon Act and the Department of Labor regulations. Such requirements included the submission of weekly certified payrolls, for each week in which any contract work is performed, to the non-federal entities. Also, property records should be maintained for real property and improvements made to real property acquired with federal awards as specified in OMB 2 CFR section 200.311. Condition: The District paid a heating and air company $34,370 to install new heating and air systems in the district without obtaining a written contract that included the prevailing wage rate clause. Additionally, weekly certified payrolls were not submitted to the District. Also, the HVAC system was not recorded in the District's capital asset subsidiary records. Effect: The District did not comply with the notification requirements regarding compliance with the Davis-Bacon Act and was unable to provide copies of weekly certified payrolls for workers paid on the project. The District's capital assets subsidiary records were not accurate. Cause: Lack of internal controls and management oversight resulted in the Davis-Bacon Act provisions not being properly followed and the capital asset subsidiary records not being accurate. Context: Examination of payments made to the heating and air company and supporting documentation for the replacement of heating and air systems. Recommendation: The District should contact the Arkansas Division of Elementary and Secondary Education (DESE) for guidance regarding this matter and implement proper controls over program expenditures. Views of responsible officials: The District will ensure that all contracts are obtained and all applicable construction contracts contain the required notification regarding compliance with the Davis-Bacon Act. We will make sure to get copies of the weekly certified payrolls for applicable projects. We will be in contact with ADE for guidance and implementation of proper controls over program expenditures by June 30, 2023.