Finding Text
Legal Services Corporation
FFAL #09‐742018 Legal Services Corporation – Basic Field – Basic
FFAL #09‐742018 Legal Services Corporation – Basic Field – Native American
Special Tests and Provisions – Bonding Requirements for Recipients
Significant Deficiency in Internal Control over Compliance and Noncompliance
Criteria: 45 CFR 1629 requires the auditee be bonded or have similar insurance coverage to indemnify recipients against losses resulting from fraudulent or dishonest acts committed by one or more employees, officers, directors, agents, volunteers, and third‐party contractors who handle LSC funds. The auditee must carry coverage at a minimum level of at least ten percent of its annualized funding level for the previous fiscal year.
Condition: The Organization’s fidelity bond coverage for 2024 does not meet the minimum level of at least ten percent of its annualized funding level for the previous fiscal year. Minimum coverage required during 2024 is calculated to be $206,414. The Organization’s fidelity bond coverage during 2024 is $200,000.
Cause: There was a lapse in oversight of the internal control process ensuring the fidelity bond coverage meets the minimum level required based upon the annualized funding level for the previous fiscal year.
Effect: Lack of compliance with minimum fidelity bond coverage could result in the Organization not being properly insured in the event of losses resulting from fraudulent or dishonest acts.
Questioned Costs: None reported.
Context/Sampling: No sampling was performed.
Repeat Finding from Prior Year: No
Recommendation: We recommend management review and increase their fidelity bond coverage to ensure compliance with the federal requirements.
Views of Responsible Officials: Management is in agreement.