Audit 399572

Finding 2025-004 – Case Requirements (Significant Deficiency and Non-compliance) Information on the Federal Program: Legal Services Corporation (LSC) Basic Field Grant, Disaster Project Grant, Disaster Grant Incurred Cost, and Technology Innovation Grant - FAL # 9.601037 Criteria: Title 45 CFR §1611.9 requires recipients to maintain a written retainer agreement for clients receiving extended legal services, along with a statement identifying the legal problem(s) for which representation is provided. Condition/Context: During our testing of regulations, we examined 71 case files. In one of the 71 files tested, the client file did not include a retainer agreement and client statement of fact as required for extended services by 45 CFR §1611.9. In addition, one case was closed under Code A and one was closed under Code B. Codes A and B represent limited counsel and advice. These cases should have been coded with extended service codes. Cause: Required documentation was not obtained and retained in the client file at the time extended legal services were performed. Effect: The Organization did not accurately report case data and outcomes. Questioned Costs: None reported Recommendation: We recommend the Organization strengthen its policies and procedures to ensure that legal problem codes are correct and required documents are obtained and retained in all client files for extended legal services. Views of Responsible Officials: Management agrees with this finding. See Management’s View and Corrective Action Plan included at the end of the report.

Finding 2025-005 – Private Attorney Involvement (Significant Deficiency and Non-compliance) Information on the Federal Program: Legal Services Corporation (LSC) Basic Field Grant, Disaster Project Grant, Disaster Grant Incurred Cost, and Technology Innovation Grant - FAL # 9.601037 Criteria: Title 45 CFR §1614 requires a recipient to devote an amount of LSC funding equal to at least 12.5% of their annualized LSC basic field award to promoting the involvement of private attorneys, law students, law graduates, or other professionals to provide legal information and legal assistance to eligible clients. Condition/Context: During our testing of PAI expenditures, calculated the required amount of expenditures that should be allocated to private attorney involvement and noted that LSA did not meet the minimum requirement. LSA applied for and received a waiver from LSC, but LSA did not add the correct prior year carryforward amount to the calculation. Cause: LSA failed to add the correct prior year carryforward amount to the PAI calculation. Effect: The Organization did request an adequate waiver amount. Questioned Costs: None reported Recommendation: We recommend the Organization increase efforts to meet the 1614 minimum such as expanding PAI training and education as well as community outreach programs. LSA could also re-evaluate existing activities to determine if activities already being performed could qualify as PAI activities. Views of Responsible Officials: Management agrees with this finding. See Management’s View and Corrective Action Plan included at the end of the report.

Finding 2025-006 – Cash Disbursement Internal Controls (Significant Deficiency) Information on the Federal Program: Legal Services Corporation (LSC) Basic Field Grant, Disaster Project Grant, Disaster Grant Incurred Cost, and Technology Innovation Grant - FAL # 9.601037 Criteria: 45 CFR § 1630 requires recipients to establish and maintain internal controls to ensure that costs charged to LSC grants are allowable and that restricted activities are not supported with LSC funds. Effective internal controls include timely supervisory approval of nonpayroll disbursements and employee certification of time records to demonstrate allowability and proper allocation of costs. LSA policies require nonpayroll invoices to be approved prior to payment and payroll to be approved by department heads and certified by employees. Condition/Context: During testing of internal controls related to compliance with 45 CFR § 1630, the auditors noted the following exceptions - For nonpayroll disbursements, 3 of 40 transactions tested were approved after the related purchase had occurred. For payroll, 1 of 40 employees tested did not sign and certify their timesheet for the pay period selected, despite organizational policies requiring employee certification. Cause: Purchase requests were not consistently submitted and approved in advance of the purchase date, and the time sheet was not properly certified, indicating a breakdown in adherence to established policies. Effect: Although the transactions were ultimately approved and the costs were otherwise allowable and properly charged to the program, failure to obtain timely approval increases the risk that purchases may be made without appropriate prior authorization. Questioned Costs: None reported Recommendation: We recommend management reinforce disbursement procedures to ensure purchase requests are submitted and approved in accordance with the established policy requiring approval prior to the date of purchase, thereby strengthening internal controls over disbursements. Views of Responsible Officials: Management agrees with this finding. See Management’s View and Corrective Action Plan included at the end of the report.