Audit 369565

Federal Agency: Legal Service Corporation (LSC) Federal Program Name: Basic Field Grant Assistance Listing Number: 09.331 Federal Award Identification Number and Year: 09.331060-2024 Award Period: January 1, 2024 to December 31, 2024 Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or specific requirement: Reporting Requirement: LSNJ requires quarterly expense reports, which must be submitted within 30 days of the end of each quarter. LSC requires the Semi-Annual Legislative and Rule Making Activities Report to be submitted within 30 days following the end of the reporting period, as outlined in Section 1612.6 of the compliance supplement. Condition: Our testing found that the Organization lacked proper internal controls to ensure reports were submitted on time or to notify the grantor of late submissions when delays occurred. Questioned costs: None Context: During testing, we found that the Organization submitted five of eight quarterly expense reports late to LSNJ and also submitted the Semi-Annual Legislative and Rule Making Activities Report for January–June 2024 late to LSC. Cause: Throughout the year, the Organization received multiple adjustments to several original grant award amounts, often late in the reporting period. As a result, the Organization was required to reallocate costs among its grantors—a process that is both complex and time-intensive, and which affects the final expenses reported for each grant. The need for additional cost reallocations led to delays in filing reports with the grantors. Despite the late receipt of these modifications, the grantors did not amend the original report deadlines, and the Organization did not proactively notify them about the expected delays. Effect: The Organization did not comply with the reporting requirements for its federal and state major programs, as these reports were submitted after their respective deadlines. Repeat Finding: Not a repeat finding. Recommendation: It is advised that the Organization establish appropriate controls to support the timely submission of required grantor reports. If delays in report submission occur, the Organization should inform its grantors about the reasons for the delay and request an extension of the report due date. Views of Responsible Officials: The Organization ensures continuous engagement with funders through both official and informal communication channels. Some delays in report submissions were due to changes in grant terms that were outside the Organization’s control, creating challenges for meeting certain deadlines. The Organization carefully monitors all grantor reporting requirements and deadlines, which are systematically overseen by the Executive Director. Every reasonable effort is made to satisfy these obligations. In the future, if timely submission cannot be achieved, the Organization will promptly inform grantors prior to reporting deadlines to discuss and arrange an alternative submission schedule.