Finding 398753 (2023-001)

Significant Deficiency
Requirement
P
Questioned Costs
-
Year
2023
Accepted
2024-05-29

AI Summary

  • Core Issue: The Justice Center of Southeast Massachusetts (JCSM) is involved in restricted activities, leading to non-compliance with LSC's program integrity requirements.
  • Impacted Requirements: Internal controls must ensure physical and financial separation from entities engaging in restricted activities, as outlined in 45 C.F.R. 1610.8.
  • Recommended Follow-Up: Management should review and enhance accounting processes to ensure compliance with LSC requirements and is currently developing a corrective action plan with LSC.

Finding Text

Separation of the Justice Center Criteria: Entities that receive funding from Legal Services Corporation (LSC) must employ detailed internal controls to ensure compliance with 45 C.F.R. 1610.8, Program Integrity, of Appendix A: Compliance Supplement for Audits of LSC Recipients from Legal Services Corporation Audit Guide for Recipients and Auditors dated October 2023. Specifically, the Organization must ensure objective integrity and independence from any organization that engages in restricted activities and includes operating in a manner that provides sufficient physical and financial separation from the entity. These requirements are to be followed under the activities allowed or unallowed compliance requirements of the Uniform Guidance. Condition: An affiliate of South Coastal Counties Legal Services, Inc. (SCCLS), the Justice Center of Southeast Massachusetts, LLC (JCSM), engages in restricted activity. During 2023, the Organization underwent a Program Integrity and Cost Standards Review from LSC, and they deemed the current arrangement of accounting for JCSM insufficient. Cause: SCCLS monitored the detailed activity of JCSM to properly track all restricted activities in the general ledger, however the physical and financial separation was not deemed appropriate based on the most recent review, which is open to interpretation. The requirements identify the sufficiency of separation will be determined on a case-by-case basis and will be based on the totality of the facts. Some facts and circumstances changed during the year, which overall changed the sufficiency of compliance. Effect: Non-compliance with program integrity requirements for the LSC grant award. Recommendation: We recommend management examine their internal processes and policies on how activities for both entities are separately accounted for to ensure proper separation consistent with LSC requirements. We understand management is currently reviewing various corrective action plans with LSC to ensure compliance with these requirements. Management Response: SCCLS is preparing a corrective action plan with LSC and is in the process of working with LSC to ensure that compliance with the corrective action plan will result in adequate separation between entities under Title 45 of the Code of Federal Regulations.

Corrective Action Plan

April 29, 2024 Cognizant or Oversight Agency for Audit South Coastal Counties Legal Services, Inc. and Affiliate respectfully submits the following corrective action plan for the year ended December 31, 2023. Name and address of independent public accounting firm: AAFCPAs, Inc. 50 Washington Street Westborough, MA 01581 Audit period: January 1, 2023 - December 31, 2023 The findings from the April 23, 2024 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers assigned in the schedule. FINDING - FINANCIAL STATEMENT AUDIT FINDING SIGNIFICANT DEFICIENCY 2023-001 Separation of the Justice Center Recommendation: We recommend management examine their internal processes and policies on how activities for both entities, South Coastal Counties Legal Services, Inc. and the Justice Center of Southeast Massachusetts, LLC are separately accounted for to ensure proper separation consistent with Legal Services Corporation requirements. Action Taken: SCCLS is preparing a detailed corrective action plan with LSC and is in the process of working with LSC to ensure that compliance with the corrective action plan will result in adequate separation between entities under Title 45 of the Code of Federal Regulations. The first draft of the detailed corrective action plan has been submitted to LSC. SIGNIFICANT DEFICIENCY LEGAL SERVICES CORPORATION 2023-001 Separation of the Justice Center The significant deficiency relates to Federal funds received from Legal Services Corporation (LSC), Basic Field Grant, grant recipient #122087, under assistance listing number 09.122087. Recommendation: We recommend management examine their internal processes and policies on how activities for both entities, South Coastal Counties Legal Services, Inc. and the Justice Center of Southeast Massachusetts, LLC are separately accounted for to ensure proper separation consistent with Legal Services Corporation requirements. Action Taken: SCCLS is preparing a detailed corrective action plan with LSC and is in the process of working with LSC to ensure that compliance with the corrective action plan will result in adequate separation between entities under Title 45 of the Code of Federal Regulations. The first draft of the detailed corrective action plan has been submitted to LSC. If Legal Services Corporation has questions regarding this plan, please call Christpoher Oldi, Executive Director at (774) 488-5950. Christopher Oldi Executive Director

Categories

Internal Control / Segregation of Duties

Other Findings in this Audit

  • 975195 2023-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
09.122 Legal Services Corporation: Basic Field Grant $1.37M
94.006 Americorps State and National 94.006 $622,230
21.023 Covid-19 Emergency Rental Assistance Program $475,377
16.575 Crime Victim Assistance $440,126
14.537 Eviction Protection Grant Program $165,415
93.044 Special Programs for the Aging, Title Iii, Part B, Grants for Supportive Services and Senior Centers $73,409
14.218 Community Development Block Grants/entitlement Grants $11,138