LegalAid Society of Northeastern New York, Inc.Non-Profit

Management intends to have its 2024 audit performed in a timely manner to allow sufficient time to file its 2024 data collection form prior to the due date.

2022-002

Management intends to have its 2023 audit performed in a timely manner to allow sufficient time to file its 2023 data collection form prior to the due date.

2021-001

Re: Legal Aid Society of Northeastern New York, Inc. Single Audit Corrective Action Plan For the Fiscal Year Ended December 31, 2021 TIN: 14-1338448 Name of audit firm: EFPR Group, CPAs, PLLC Below please find our corrective action plans for Legal Aid Society of Northeastern New York?s Single Audit for the fiscal year ended December 31, 2021. AUDIT FINDINGS Internal Control Finding Reference Number: (2021-001) Material Weakness Description of Finding: LASNNY is responsible for establishing and maintaining internal controls for the organization's compliance with laws and regulations related to its federal programs. The Data Collection Form for the year ended December 31, 2021, was not filed with the Federal Audit Clearinghouse within nine months after year-end. Statement of Concurrence or Nonconcurrence: Management Concurs. Management has implemented a number of revised internal controls to ensure compliance going forward. Management has submitted a request for an extension for the 2022 audit.

Re: Legal Aid Society of Northeastern New York, Inc. Single Audit Corrective Action Plan For the Fiscal Year Ended December 31, 2021 TIN: 14-1338448 Name of audit firm: EFPR Group, CPAs, PLLC Below please find our corrective action plans for Legal Aid Society of Northeastern New York?s Single Audit for the fiscal year ended December 31, 2021. AUDIT FINDINGS Compliance Finding Reference Number: (2021-002) Description of Finding: Recipients may request a waiver to retain a fund balance of their LSC support for special circumstances. LASNNY did not submit a waiver requesting to retain a fund balance. Statement of Concurrence or Nonconcurrence: Management Concurs. Management has implemented a number of revised internal controls to ensure compliance going forward. LASNNY is working with LSC to remit funds in excess of 10% for the years 2014- 2020. Corrective Action Plan: Following an investigation by LSC regarding our 2020 audit, LASNNY was directed, under Special Grant Conditions, to collect information necessary to perform a root cause analysis to identify any items to be addressed such as poor procedure controls, ineffective resources in the fiscal department, inadequate training, and a lack of awareness and knowledge of compliance requirements under federal and state law. To achieve this directive, LASNNY contracted with Grossman St. Amour, CPA PLLC in April 2022 to conduct a Consulting Assessment and report (herein called the ?report?). A summary of those findings and recommendations are below, along with the corrections implemented by LASNNY: ? The report recommended a succession plan be developed and implemented for roles critical to the achievement of both financial reporting and operation objectives. o LASNNY contracted a consultant, Steven Eppler-Epstein, to develop a succession plan in 2022. The plan was approved by the Board of Directors. Each of the Executive Management Team members drafted a succession plan, all accounts have multiple secure IT management controls. o LASNNY continues the work to implement the succession plan. The new Director of Human Resources is a member of SHRM and has experience developing effective succession plans. The HR department will also be implementing a mentorship program, drafted by a Managing Attorney, to help develop internal candidates for leadership positions. o The consultant assisted with the search, evaluation, hiring, onboarding, transition and executive coaching for the new Executive Director. ? The report found a significant shortage in fiscal resources to administer and oversee financial operations going forward. The department was found to be operating with insufficient resources. o LASNNY hired a recruitment firm to conduct a search for a new Director of Finance in 2022. LASNNY hired a new director, they resigned in May 2023. LASNNY has secured a new recruitment firm to assist with a new search. We expect to hire a new Director by June 15, 2023. o LASNNY has hired a new consultant firm, Your Part Time Controller (YPTC). YPTC will assist with the vetting and interviewing of candidates for Director of Finance and Accounting. ? The report recommended restructuring to optimize responsibilities related to administering LASNNY?s financial operations with respect to budgeting, accounting, financial reporting, establishing of adequate internal controls and compliance with applicable LSC regulations. While the report did acknowledge that there are controls in place over the day-to-day fiscal procedures, the majority of the controls remain with the Director of Finance. o YPTC will assist with restructuring and optimizing the responsibilities of the department. o YPTC will assist with improving the system of transferring time from LegalServer to the payroll system, ISolve. o LASNNY has drafted a new organizational structure chart through strategic planning processes. The draft is working through an internal workgroup process before presentation to the Board in June. The new organizational chart expands the finance department from a total of two staff to four staff, and adds a department for Operations, with additional staff support for Information Technology within the organization, specifically for managing LegalServer, as well as a grants administrator. ? The report identified the lack of a permanent full-time Human Resources Director or Payroll Manager as a further strain for the finance department. o LASNNY has hired a full-time Director of Human Resources, with over ten years' experience in Human Resources. LASNNY has added two titles to that department so the unit will have three full-time staff, instead of one. The Human Resources department will continue to manage payroll and benefits, in collaboration with the fiscal department. ? The report identified the current reconciliation systems in the finance department comprised of complex spreadsheet processes as both time-consuming and prone to human error. o The contract with YPTC includes developing an automated system to reduce the reliance on these spreadsheets. The updated Cost Allocation Policy and Cost Center configuration implemented in FundEZ, as a result of the report?s finding, may also improve the reconciliation system. ? The report specifically recommended properly staffing the finance department with requisite expertise so that the director can streamline fiscal operations. The report found that expense vouchers are not prepared and submitted on a timely basis. o LASNNY has added two additional titles to the finance department team to add to the capacity of the department, expanding the department from two to four staff. LASNNY has a temporary accountant working in the department while we recruit and interview candidates. YPTC will also be providing staffing support to ensure timely vouchering and billing. ? The report recommended upgrading the Fund EZ accounting software for greater functionality and to take advantage of Fund EZ?s cost centers/fund accounts configuration. This would allow the different funding sources to be properly classified and tracked by funding source and set up a multi-segment chart of accounts to allow budgeting by program, and track variances. The goal would be for full Fund EZ implementation, in-house training, and chart of accounts configuration, customized financial reporting and cost centers set up by funding source. The report recommended LASNNY hire an IT consultant to ensure successful implementation. o LASNNY did hire a Fund EZ specialist, Braver Associates, LLC, to set up cost centers in FundEZ for grant compliance. We began using the new configuration in 2022. o LASNNY is further upgrading its FundEZ software to PRO. YPTC will assist with implementation and processes, and staff will attend training sessions with FundEZ to ensure full functionality. ? Revise and implement a new Cost Allocation Policy o A new Cost Allocation Policy, approved by LSC and our Board, properly revised the determination of allowable costs and associated criteria for allowability. The criteria expanded to include an analysis of reasonable costs, allocable costs, direct and indirect costs. o YPTC will assist LASNNY with developing an organization budget, dynamic cash flow analysis tool, and other accounting tools to help manage its grants and budgets and improve its ability to generate accurate reports. Further, LASNNY has received a Letter of Disposition regarding unspent LSC grant funds from 2014-2020. LSC identified $1,561,847 in restricted LSC funds that had been inappropriately allocated to the unrestricted account. LSC is going to impose new mid-year Special Grant Conditions on LASNNY's 2023 basic field grant award to recoup $1,561,847. Those conditions have not yet been established, however, LSC has already accepted our new Cost Allocation Policy and lifted our previous Special Grant Conditions from 2022 after labeling them successfully completed. The findings are summarized below: ? LASNNY violated 45 C.F.R. Part 1628 by retaining and reallocating restricted LSC excess funding from 2014 through 2020, except for 2016. LASNNY failed to seek a fund balance waiver to allow it to carryover these LSC funds. ? LASNNY violated 45 C.F.R. Part 1610 by failing to keep LSC funds separate from other funding sources, thereby causing LSC funds to be indistinguishable from other grant funds. ? LASNNY violated the LSC Accounting Guide by failing to classify LSC grant funds appropriately in financial statements. LASNNY has remediated each of these violations by establishing a new Cost Allocation Policy, implementing the Fund EZ system to better track grants and expenditures, and expanding the number of staff in the finance department.

Re: Legal Aid Society of Northeastern New York, Inc. Single Audit Corrective Action Plan For the Fiscal Year Ended December 31, 2021 TIN: 14-1338448 Name of audit firm: EFPR Group, CPAs, PLLC Below please find our corrective action plans for Legal Aid Society of Northeastern New York?s Single Audit for the fiscal year ended December 31, 2021. AUDIT FINDINGS Compliance Finding Reference number: (2021-003) LSC recipients shall not intermingle LSC funds with other funders? funds. LASNNY is required to account for funds received from a source other than LSC as separate and distinct receipts and disbursements. From 2014-2020, LASNNY utilized a cost-allocation methodology that led to non-compliant reallocations of restricted LSC funds to an unrestricted net asset account. The finding resulted from an outdated Cost Allocation Policy the produced a lack of compliance with LSC compliance requirements. Statement of Concurrence or Nonconcurrence: Management Concurs. Management has implemented a number of revised internal controls to ensure compliance going forward. LASNNY is working with LSC to remit $1,561,847 in funding improperly allocated to non-LSC activities. Corrective Action Plan: Following an investigation by LSC regarding our 2020 audit, LASNNY was directed, under Special Grant Conditions, to collect information necessary to perform a root cause analysis to identify any items to be addressed such as poor procedure controls, ineffective resources in the fiscal department, inadequate training, and a lack of awareness and knowledge of compliance requirements under federal and state law. To achieve this directive, LASNNY contracted with Grossman St. Amour, CPA PLLC in April 2022 to conduct a Consulting Assessment and report (herein called the ?report?). A summary of those findings and recommendations are below, along with the corrections implemented by LASNNY: ? The report recommended a succession plan be developed and implemented for roles critical to the achievement of both financial reporting and operation objectives. o LASNNY contracted a consultant, Steven Eppler-Epstein, to develop a succession plan in 2022. The plan was approved by the Board of Directors. Each of the Executive Management Team members drafted a succession plan, all accounts have multiple secure IT management controls. o LASNNY continues the work to implement the succession plan. The new Director of Human Resources is a member of SHRM and has experience developing effective succession plans. The HR department will also be implementing a mentorship program, drafted by a Managing Attorney, to help develop internal candidates for leadership positions. o The consultant assisted with the search, evaluation, hiring, onboarding, transition and executive coaching for the new Executive Director. ? The report found a significant shortage in fiscal resources to administer and oversee financial operations going forward. The department was found to be operating with insufficient resources. o LASNNY hired a recruitment firm to conduct a search for a new Director of Finance in 2022. LASNNY hired a new director, they resigned in May 2023. LASNNY has secured a new recruitment firm to assist with a new search. We expect to hire a new Director by June 15, 2023. o LASNNY has hired a new consultant firm, Your Part Time Controller (YPTC). YPTC will assist with the vetting and interviewing of candidates for Director of Finance and Accounting. ? The report recommended restructuring to optimize responsibilities related to administering LASNNY?s financial operations with respect to budgeting, accounting, financial reporting, establishing of adequate internal controls and compliance with applicable LSC regulations. While the report did acknowledge that there are controls in place over the day-to-day fiscal procedures, the majority of the controls remain with the Director of Finance. o YPTC will assist with restructuring and optimizing the responsibilities of the department. o YPTC will assist with improving the system of transferring time from LegalServer to the payroll system, ISolve. o LASNNY has drafted a new organizational structure chart through strategic planning processes. The draft is working through an internal workgroup process before presentation to the Board in June. The new organizational chart expands the finance department from a total of two staff to four staff, and adds a department for Operations, with additional staff support for Information Technology within the organization, specifically for managing LegalServer, as well as a grants administrator. ? The report identified the lack of a permanent full-time Human Resources Director or Payroll Manager as a further strain for the finance department. o LASNNY has hired a full-time Director of Human Resources, with over ten years' experience in Human Resources. LASNNY has added two titles to that department so the unit will have three full-time staff, instead of one. The Human Resources department will continue to manage payroll and benefits, in collaboration with the fiscal department. ? The report identified the current reconciliation systems in the finance department comprised of complex spreadsheet processes as both time-consuming and prone to human error. o The contract with YPTC includes developing an automated system to reduce the reliance on these spreadsheets. The updated Cost Allocation Policy and Cost Center configuration implemented in FundEZ, as a result of the report?s finding, may also improve the reconciliation system. ? The report specifically recommended properly staffing the finance department with requisite expertise so that the director can streamline fiscal operations. The report found that expense vouchers are not prepared and submitted on a timely basis. o LASNNY has added two additional titles to the finance department team to add to the capacity of the department, expanding the department from two to four staff. LASNNY has a temporary accountant working in the department while we recruit and interview candidates. YPTC will also be providing staffing support to ensure timely vouchering and billing. ? The report recommended upgrading the Fund EZ accounting software for greater functionality and to take advantage of Fund EZ?s cost centers/fund accounts configuration. This would allow the different funding sources to be properly classified and tracked by funding source and set up a multi-segment chart of accounts to allow budgeting by program, and track variances. The goal would be for full Fund EZ implementation, in-house training, and chart of accounts configuration, customized financial reporting and cost centers set up by funding source. The report recommended LASNNY hire an IT consultant to ensure successful implementation. o LASNNY did hire a Fund EZ specialist, Braver Associates, LLC, to set up cost centers in FundEZ for grant compliance. We began using the new configuration in 2022. o LASNNY is further upgrading its FundEZ software to PRO. YPTC will assist with implementation and processes, and staff will attend training sessions with FundEZ to ensure full functionality. ? Revise and implement a new Cost Allocation Policy o A new Cost Allocation Policy, approved by LSC and our Board, properly revised the determination of allowable costs and associated criteria for allowability. The criteria expanded to include an analysis of reasonable costs, allocable costs, direct and indirect costs. o YPTC will assist LASNNY with developing an organization budget, dynamic cash flow analysis tool, and other accounting tools to help manage its grants and budgets and improve its ability to generate accurate reports. Further, LASNNY has received a Letter of Disposition regarding unspent LSC grant funds from 2014-2020. LSC identified $1,561,847 in restricted LSC funds that had been inappropriately allocated to the unrestricted account. LSC is going to impose new mid-year Special Grant Conditions on LASNNY's 2023 basic field grant award to recoup $1,561,847. Those conditions have not yet been established, however, LSC has already accepted our new Cost Allocation Policy and lifted our previous Special Grant Conditions from 2022 after labeling them successfully completed. The findings are summarized below: ? LASNNY violated 45 C.F.R. Part 1628 by retaining and reallocating restricted LSC excess funding from 2014 through 2020, except for 2016. LASNNY failed to seek a fund balance waiver to allow it to carryover these LSC funds. ? LASNNY violated 45 C.F.R. Part 1610 by failing to keep LSC funds separate from other funding sources, thereby causing LSC funds to be indistinguishable from other grant funds. ? LASNNY violated the LSC Accounting Guide by failing to classify LSC grant funds appropriately in financial statements. LASNNY has remediated each of these violations by establishing a new Cost Allocation Policy, implementing the Fund EZ system to better track grants and expenditures, and expanding the number of staff in the finance department.