Indiana Legal Services, Inc.Non-Profit

Finding 2024-001 – Timekeeping Requirements Information on the federal program: Basic Field, Migrant Farmworkers Project, COVID Response Grant (CFDA Number: 09.515030) – Legal Services Corporation Criteria: Time spent by attorneys and paralegals must be documented by time records which record the amount of time spent on each case, matter, or supporting activity (45 CFR Section 1635.3(b)). Time records must be created contemporaneously and account for time in increments not greater than one-quarter of an hour which comprise all of the efforts of the attorneys and paralegals for which compensation is paid (45 CFR Section 1635.3(b)(1)). Condition: Time recorded by attorneys and paralegals was not entered contemporaneously in accordance with LSC regulations and ILS’ time keeping policy. Questioned Cost: None. Context: A sample of 22 separate selections was made of attorney and paralegal time entries from various one-week periods during 2024. The test found of the 22 selections, there were 2 selections in which time posted by attorneys and paralegals fell outside of ILS’s contemporaneous timekeeping policy of 2 business days Effect: Noncompliance with timely time reporting requirements set forth under LSC regulations and ILS policy. We found no indications that during the test ILS participated in any actual case or matter that violated LSC restrictions or prohibitions. Cause: Attorneys and paralegals lack of timeliness of entering time into the Legal File system. Repeat Finding: No Recommendation: We recommend ILS continue to train employees on the importance of timekeeping to ensure compliance with ILS policy and LSC regulations. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.

Finding 2024-002 – Matching Requirements Information on the federal program: Special Programs For The Aging – Title III, Part B—Grants For Supportive Services and Senior Centers (ALN: 93.044) – Aging Cluster Criteria: All services, whether provided by the State Agency, an Area Agency, or other service providers (excluding any ombudsman services provided under the authority of 42 USC 3024 (d)(1)(D)) must be funded with a nonfederal match of at least 15 percent. One-third of the required 15 percent match must come from state sources (42 USC 3029 (b)(2)). This percentage must be met on a statewide basis. Funds for ombudsman services provided under the authority of 42 USC 3024 (d)(1)(B) are not required to be matched (42 USC 3024 (d)(1)(D); 45 CFR section 1321.47). Condition: ILS did not maintain a formal tracking system for matching funds related to its various aging grants. As a result, ILS determined that it was not in compliance with the 15% matching requirement as outlined in the applicable 2024 Compliance Supplement. Questioned Cost: None. Context: During our review of ILS’s 2024 summary matching contributions file, it was determined that of the 14 aging grants with activity during the year, 7 did not meet the 15% matching requirement as specified in the applicable Compliance Supplement. Effect: Noncompliance with the matching requirements could lead to a request for the return of nonmatched funds, and impact ILS eligibility for future funding. Cause: The noncompliance resulted from a lack of ongoing, year-round monitoring of matching contributions for each aging grant. Management did not have processes in place to ensure that required match amounts were tracked and met consistently throughout the grant period. Repeat Finding: No Recommendation: We recommend that ILS implement a formal system to monitor matching contributions for all aging grants on an ongoing basis. This should include the development of tracking tools and internal controls to ensure that match requirements are met consistently throughout the grant period. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.

Section III ? Federal Awards Findings and Questioned Costs Finding 2021-003 ? Timekeeping Requirements Information on the federal program: Basic Field, Migrant Farmworkers Project, COVID Response Grant (CFDA Number: 09.515030) ? Legal Services Corporation Criteria: Time spent by attorneys and paralegals must be documented by time records which record the amount of time spent on each case, matter, or supporting activity (45 CFR Section 1635.3(b)). Time records must be created contemporaneously and account for time in increments not greater than one-quarter of an hour which comprise all of the efforts of the attorneys and paralegals for which compensation is paid (45 CFR Section 1635.3(b)(1)). Condition: Time recorded by a attorneys and paralegals was not entered contemporaneously in accordance with LSC regulations and ILS? time keeping policy. Questioned Cost: None. Context: A sample of 15 separate selections was made of attorney and paralegal time entries from various one-week periods during 2021. The test found of the 15 selections, there was 1 selection that had a total of 1 daily entry in which time posted by attorneys and paralegals fell outside of ILS?s contemporaneous timekeeping policy of 2 business days. Effect: Noncompliance with timely time reporting requirements set forth under LSC regulations and ILS policy. We found no indications that during the test that ILS participated in any actual case or matter that violated LSC restrictions or prohibitions. Cause: Attorneys and paralegals lack of timeliness of entering time into the Legal File system. Repeat Finding: Yes. See Finding 2020-04. Recommendation: We recommend ILS continue to train employees on the importance of timekeeping to ensure compliance with ILS policy and LSC regulations. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.

Finding 2020-003 ? Allocation of Costs to Funding Sources Information on the federal program: Basic Field Grant (CFDA Number: 09.515030) ? Legal Services Corporation Criteria: Expenditures by a recipient are allowable under the recipient?s grant or contract only if the recipient can demonstrate that the cost was: (1) actually incurred in the performance of the grant or contract and the recipient was liable for payment; (2) reasonable and necessary for the performance of the grant or contract as approved by LSC (45 CFR ?1630.3(1-2)). Condition: LSC Basic Field matching fund transfers are utilized by ILS to transfer LSC funds to other LSC eligible activities once non-LSC funds for the activity are fully expended but do not support all expenditures of the activities. During the audit, we noted instances in which fund transfers were made and not deemed necessary. Questioned Cost: $121,336 Context: ILS utilizes LSC Basic Field matching fund transfers on an annual basis to transfer LSC funds to LSC eligible activities not fully funded by non-LSC revenue sources. During our testing of LSC Basic Field matching fund transfers, we noted four instances in which transfers, in the amounts of $122,388, $18,430, $2,733, and $1,328, were made to other funds on the general ledger which were not deemed necessary as the funds had current year revenues in excess of current year expenses resulting in a total reduction of LSC expenses of $144,879. We also noted a clerical error in supplementary schedule prepared by management to support the LSC fund transfers which resulted in a $47,533 reduction to the LSC funds transferred. We noted one instance in which additional LSC funds in the amount of $71,076 were required to be transferred to assist in covering expenses. The total impact was a $121,336 reduction to the amount of LSC Basic Field matching fund transfer reported on the Schedule of Activities ? Legal Services Corporation Grants and a reduction of LSC expenses reported on the Schedule of Expenditures of Federal Awards (SEFA). Effect: Noncompliance with cost standards and procedure requirements set forth under LSC regulations. Cause: The above condition appears to be the result of inadequate controls over the formal review and approval of LSC Basic Field matching fund transfer to other funds within the general ledger. Repeat Finding: Yes. See Finding 2019-003. Recommendation: We recommend ILS implement a formal procedure to review and approve LSC Basic Field matching fund transfers to other funds on an annual basis and that this review be formally documented. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.

Finding 2020-004 ? Timekeeping Requirements Information on the federal program: Basic Field, Migrant Farmworkers Project, COVID Response Grant (CFDA Number: 09.515030) ? Legal Services Corporation Criteria: Time spent by attorneys and paralegals must be documented by time records which record the amount of time spent on each case, matter, or supporting activity (45 CFR Section 1635.3(b)). Time records must be created contemporaneously and account for time in increments not greater than one-quarter of an hour which comprise all of the efforts of the attorneys and paralegals for which compensation is paid (45 CFR Section 1635.3(b)(1)). Condition: Time recorded by attorneys and paralegals were not entered contemporaneously in accordance with LSC regulations and ILS? time keeping policy. Questioned Cost: None. Context: A sample of 16 separate selections was made of attorney and paralegal time entries from various one-week periods during 2020. The test found of the 16 selections, there were 5 selections that had a total of 41 daily entries in which time posted by attorneys and paralegals fell outside of ILS?s contemporaneous timekeeping policy of 2 business days. Effect: Noncompliance with timely time reporting requirements set forth under LSC regulations and ILS policy. We found no indications that during the test that ILS participated in any actual case or matter that violated LSC restrictions or prohibitions. Cause: Attorneys and paralegals lack of timeliness of entering time into the Legal File system. Repeat Finding: Yes. See Finding 2019-002. Recommendation: We recommend ILS continue to train employees on the importance of timekeeping to ensure compliance with ILS policy and LSC regulations. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.

Finding 2019-001 ? Timekeeping Requirements Federal program Information: Basic Field, Migrant Farmworkers Project (CFDA Number: 09.515030) ? Legal Services Corporation Criteria: Time spent by attorneys and paralegals must be documented by time records which record the amount of time spent on each case, matter, or supporting activity (45 CFR Section 1635.3(b)). Each record of time spent must contain: a case, a unique client name or case number; for matters or supporting activities, an identification of the category of action on which the time was spent (45 CFR Section 1635.3(b)(2)). Condition: In one instance, time spent by attorneys and paralegals was not appropriately charged between case, matter, and supporting activity classifications in accordance with LSC regulations. Questioned Cost: None. Context: A sample of 11 separate selections were made of attorney and paralegal time entries from various one-week periods during 2019. The test found one instance in which an employee entered a unique case number for time recorded as a matter. Our testing noted no instances that violated LSC restrictions and prohibitions. Effect: The potential effect is noncompliance with time reporting requirements set forth under LSC regulations. Cause: Inadequate or ineffective training regarding LSC timekeeping requirements and a lack of monitoring controls over time reporting are the key causes of the errors noted. Repeat Finding: Yes. See prior year finding 2018-001. Recommendation: ILS should implement additional timekeeping training for all employees to ensure appropriate timekeeping classifications are used. Additionally, ILS should implement more stringent monitoring controls over timekeeping to ensure noncompliance is detected in a timely manner. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2019-002 ? TIMEKEEPING REQUIREMENTS Federal program Information: Basic Field, Migrant Farmworkers Project (CFDA Number: 09.515030) ? Legal Services Corporation Criteria: Time spent by attorneys and paralegals must be documented by time records which record the amount of time spent on each case, matter, or supporting activity (45 CFR Section 1635.3(b)). Time records must be created contemporaneously and account for time in increments not greater than one-quarter of an hour which comprise all of the efforts of the attorneys and paralegals for which compensation is paid (45 CFR Section 1635.3(b)(1)). Condition: The case management system was unable to generate a report to confirm if time recorded by attorneys and paralegals was entered contemporaneously in accordance with LSC regulations. Questioned Cost: None. Context: A sample of 11 separate selections was made of attorney and paralegal time entries from various one-week periods during 2019. The test found that the timekeeping system was unable to produce a report to test the timeliness of timekeeping records. Ultimately, all time was posted, however we were unable to test whether the time was entered contemporaneously. Effect: Noncompliance with time reporting requirements set forth under LSC regulations. We found no indications that, as a result of the weakness, ILS participated in an actual case or matter that violated the restrictions and prohibitions. Cause: The timekeeping system was unable to produce a report to test the timeliness of entries. Repeat Finding: Yes. See prior year finding 2018-002. Recommendation: We recommend ILS adopt system controls that tracks the timeliness of timekeeping records being entered and that its timekeeping is continuously monitored to ensure compliance with LSC regulations. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.

FINDING 2019-003 ? ALLOCATION OF COSTS TO FUNDING SOURCES Federal program Information: Basic Field Grant (CFDA Number: 09.515030) ? Legal Services Corporation Criteria: Expenditures by a recipient are allowable under the recipient?s grant or contract only if the recipient can demonstrate that the cost was: (1) actually incurred in the performance of the grant or contract and the recipient was liable for payment; (2) reasonable and necessary for the performance of the grant or contract as approved by LSC (45 CFR ?1630.3(1-2)). Condition: LSC Basic Field matching fund transfers are utilized by ILS to transfer LSC funds to other LSC eligible activities once non-LSC funds for the activity are fully expended but do not support all expenditures of the activities. During the audit, we noted instances in which fund transfers were made and not deemed necessary. Questioned Cost: $208,002 Context: ILS utilizes LSC Basic Field matching fund transfers on an annual basis to transfer LSC funds to LSC eligible activities not fully funded by non-LSC revenue sources. During our testing of LSC Basic Field matching fund transfers, we noted two instances in which transfers, in the amounts of $174,108 and $23,670, were made to other funds on the general ledger which were not deemed necessary as the funds had current year revenues in excess of current year expenses. We also noted a clerical error in supplementary schedule prepared by management to support the LSC fund transfers which resulted in a $10,224 reduction to the LSC funds transferred. The total impact was a $208,002 reduction to the amount of LSC Basic Field matching fund transfer reported on the Schedule of Activities ? Legal Services Corporation Grants and a reduction of LSC expenses reported on the Schedule of Expenditures of Federal Awards (SEFA). Effect: Noncompliance with cost standards and procedure requirements set forth under LSC regulations. Cause: The above condition appears to be the result of inadequate controls over the formal review and approval of LSC Basic Field matching fund transfer to other funds within the general ledger. Repeat Finding: No. Recommendation: We recommend ILS implement a formal procedure to review and approve LSC Basic Field matching fund transfers to other funds on an annual basis and that this review be formally documented. Views of responsible officials and planned corrective actions: Management agrees with the finding and has prepared a corrective action plan.

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