Finding 980019 (2023-002)

Finding: 2023-002 ALN and Title: 09.829050 – Legal Services Program Cluster Name: N/A Federal Agency: Office of Inspector General – Legal Services Corporation Passthrough Entity: N/A Type of Finding: Significant Deficiency Compliance Requirement: N. Special Tests and Provisions – Compliance Supplement for Audits of LSC Recipients Part 1631 Purchasing and Property Management and the LSC Financial Guide (effective January 1, 2023). Criteria: The Compliance Supplement for Audits of LSC Recipients Part 1631 Purchasing and the LSC Financial Guide states, “Recipients are required to conduct a physical count of assets listed in the property subsidiary ledger at least once every two (2) years. Recipients must document the inventory process and investigate and reconcile any differences… Recipients must inventory information technology equipment that contains sensitive information, regardless of the equipment’s value.” Condition: During testing procedures over Part 1631, it was noted that the Organization had not performed a physical count of assets since 2021. Cause: The Organization has had significant changes in upper management, including accounting personnel, during the past two years. The Organization did not have adequate internal controls to ensure that through transitions, a physical count of assets listed in the property subsidiary ledger was completed once every two years. Effect: Items were included on the property subsidiary ledger (fixed asset schedule) that were related to a building that was sold during the fiscal year and should have been removed. Questioned costs: N/A Context: The Organization did not have proper controls in place to track asset purchases and disposals during the fiscal year. Recommendation: It is recommended that the Organization implement adequate controls to ensure a physical count of assets is performed at least once every two years. This physical count should be reconciled to the property subsidiary ledger. The Organization should also inventory technology equipment that contains sensitive information (e.g. any computer or device with confidential client information), regardless of the equipment’s value. Views of Responsible Officials: Management agrees with this recommendation. See auditee prepared corrective action plan for details.