Finding 976317 (2023-001)

Federal Agency: Legal Services Corporation (LSC) Federal Program Name: LSC Assistance Listing Number: 09.331016 Federal Award Identification Number and Year: 2023 Award Period: January 1, 2023 to December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: LSC Regulation 45 C.F.R. 1630 Cost Standard and Procedures requires compliance with the provision of derivative income allocation. The Organization should have internal controls designed to ensure compliance with this provision. Condition: During our testing, we noted the Organization did not have adequate internal controls designed to ensure that derivative income was properly allocated to their Legal Services Corporation grant. Questioned costs: None Context: During our testing, it was noted, that the Organization was not allocating Social Security Income to LSC using a percentage derived from LSC expenditures over total expenditures. In the current year, it was noted, that 100% of SSI income was allocated to LSC. Cause: The Organization did not review the allocation of derivative income to LSC at year end. Effect: The auditor noted that the Organization had overallocated SSI (derivative) income to LSC by $2,171. Repeat Finding: Not a repeat finding. Recommendation: We recommend that Organization designs controls to ensure an adequate review process is in place to review compliance with LSC Regulation 45 C.F.R. 1630 Cost Standard and Procedures as it relates to the allocation of derivative income. Views of responsible officials: There is no disagreement with the audit finding.