Audit 409471

Criteria: Legal Services Corporation (LSC) grant recipients are required to establish and maintain adequate accounting systems and financial records to accurately account for all funds (both LSC and non-LSC funds). LSC requires recipients and subrecipients to (1) responsibly manage all funds pursuant to the cost standards and procedures of 45 C.F.R. Part 1630 and other LSC regulations at 45 C.F.R. Parts 1600-1644; and (2) record transactions in accounting records and, where required, prepare annual financial statements in accordance with GAAP. Recipients are also required to adhere to requirements of the LSC Financial Guide (effective January 1, 2023) including Section 2 "Accounting Systems and Governance" and Section 3 "Managing LSC Grants." Condition/Context: The Organization's written policies and procedures did not meet the requirements outlined by the LSC Financial Guideline and other LSC regulations. Cause: The Organization did not align its policies and procedures with the recently issued LSC Financial Guide. The updated Guide required operational changes that had not yet been implemented. Effect: Lack of proscribed procedures and controls could result in the Organization administering the LSC Grant out of compliance with the Guide. Questioned Costs: N/A Recommendation: It is recommended that the Organization revise their written policies and operational procedures to align with the regulatory guidance. Views of Responsible Officials: Management agrees with the auditor’s findings and has completed the revision of the Organization’s accounting manual to align with the regulatory requirements. The former Director of Finance, Vannam Khen, worked directly with the Organization’s assigned Fiscal Compliance Analyst from Legal Services Corporation (LSC) to ensure policies and procedures are aligned with LSC’s Financial Guide.

Criteria: Legal Services Corporation (LSC) grant recipients are required to compile with the written statement of fact requirements of 45 C.F.R. § 1636.2 (a). (1) Identify each plaintiff it represents by name in any complaint it files, or in a separate notice provided to the defendant against whom the complaint is filed where disclosure in the complaint would be contrary to law or court rules or practice, and identify each plaintiff it represents to prospective defendants in pre-litigation settlement negotiations, unless a court of competent jurisdiction has entered an order protecting the client from such disclosure based on a finding, after notice and an opportunity for a hearing on the matter, of probable, serious harm to the plaintiff if the disclosure is not prevented; and (2) Prepare a dated written statement signed by each plaintiff it represents, enumerating the particular facts supporting the complaint, insofar as they are known to the plaintiff when the statement is signed. Condition/Context: The Organization was unable to provide a copy of the written statement of fact for one case of 60 cases included in the sample. The sample was not a statistically valid sample. Cause: The Organization did not properly retain the client's written statement of fact due to a onetime failure in document preservation. Effect: LSC funds could be utilized for unallowable activities. Questioned Costs: N/A Recommendation: It is recommended that the Organization ensure proper written statement of fact agreements to align with the regulatory guidance. Views of Responsible Officials: Management agrees with the auditor’s findings. The Director of Litigation, Lisa Hollingsworth, will meet with the Regional Leaders and ensure that they remind their staff about the necessity of obtaining a written statement of facts from clients in each relevant case.