Finding Text
2024-001 FOLLOW UP ON THE LEGAL SERVICES CORPORATION OFFICE OF THE INSPECTOR GENERAL - AUDIT OF SELECTED INTERNAL CONTROLS
Federal Agency: Legal Services Corporation
Federal Program Information & Assistance Listing Number: 09.703068
Award Period: 1/1/2024 to 12/31/2024
Type of Findings: Significant Deficiency, Material Non-compliance
Compliance Areas: Allowable Cost and Cost Principles
Questioned Costs: None
Condition
The Legal Services Corporation Office of Inspector General issued a final report (OIG Report) on December 2, 2024 for its testing of internal control and operational activities and noted inadequate policies, practices, and oversight over ten of eleven areas (formalize internal controls in writing for fixed assets, cost allocation, credit cards, contracting, derivative income, general ledger and financial control, disbursements, budgeting and management reporting, payroll, and client trust funds for the period of January 1, 2022 through April 30, 2023.
Given the timing of the December 2, 2024 OIG Report, certain conditions existed during the annual audit of the year-ended December 31, 2024.
As of April 30, 2025, management has updated most of the policies noted in the OIG report; however, the policies mentioned in the OIG report have not been reviewed or adopted by the Board.
Criteria
45 CFR Subtitle B - Subtitle B-Regulations Relating to Public Welfare, Chapter XVI - CHAPTER XVI- LEGAL SERVICES CORPORATION, § 1600.1 - § 1600.1 as further clarified in the LSC Financial Guide.
Effect
DNA is not in compliance with Legal Services Corporation federal statutes as further clarified in the LSC Financial Guide.
Cause
Primarily due to turnover and short staffing in the accounting transaction cycle. Additionally, with the last update of the accounting policies in November 2019, many of the policies have not since been updated as they do not conform to the LSC's current compliance requirements.