Audit 400082

Federal Agency: Legal Services Corporation Federal Program Name: Basic Field Grant Program Assistance Listing Number: 9.805240 Federal Award Identification Year: 2025 Pass-Through Agency: N/A, Direct Award Award Period: 1/1/25-12/31/25 Compliance Requirement Affected: Section 1611 Financial Eligibility Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: Each recipient is required to establish a maximum annual income level for persons to be eligible to receive legal assistance under the LSC Act, which is not to exceed one hundred and twenty-five (125%) of the amounts specified in the current official Federal Poverty Income Guidelines (www.hrsa.gov), (45 C.F.R. § 1611.3(c)(1 )). Condition: During eligibility testing, the auditors identified instances where cases reported as LSC-eligible were not adequately supported by eligibility documentation. In one instance, management indicated the case was incorrectly classified as LSC-eligible, and in another instance, required documentation supporting an asset waiver was not sufficiently maintained. As a result, eligibility determinations for the selected cases were not fully supported in accordance with LSC requirements. Context: The finding arose from a limited number of isolated eligibility documentation issues identified during testing and does not indicate a pervasive breakdown in controls. The exceptions were case-specific and limited in scope relative to the cases reviewed. Accordingly, the prevalence and potential impact of the finding are considered limited. Effect: Failure to consistently document and support eligibility determinations increases the risk that LSC-funded legal assistance may be provided or reported for clients who do not meet eligibility requirements, resulting in noncompliance with LSC regulations and OIG audit requirements. Cause: The condition appears to be caused by a breakdown in controls over case classification and eligibility documentation, including management review of cases reported as LSC-eligible and retention of required documentation supporting asset waivers. Repeat Finding: The finding is not a repeat finding. Recommendation: We recommend that management strengthen controls over eligibility determinations by ensuring that all cases classified and reported as LSC-eligible include complete and retained documentation supporting financial eligibility, including income exceptions and asset waivers. Management should also implement periodic reviews of case classifications to ensure that only eligible cases are reported as LSC-funded. Management’s Views: See separate corrective action plan.