Finding Text
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.