LEGAL SERVICES OF NORTH DAKOTANon-Profit

Criteria LSC funds may not be used to pay membership fees or dues to any private or nonprofit organization, whether on behalf of the recipient or an individual. A recipient may use LSC funds to pay membership fees or dues mandated by a governmental organization to engage in a profession. Payment of other membership fees or dues may be paid with non-LSC funds. Condition During testing of membership fees and dues it was noted there were expenses coded to LSC funding that were not allowable. Cause Management Oversight Effect The Organization did not comply with cost standards and procedures. Context We reviewed all membership fees and dues expenditures made with LSC funds noting unallowable membership dues. Recommendation We recommend the Organization implement policies and procedures to ensure expenses are being coded to the proper funds. Repeat Finding This is not a repeat finding Response Legal Services of North Dakota will evaluate their internal controls to ensure future membership fees or dues are paid with non-LSC funds and record necessary adjustments if needed. On a monthly basis, the financial statements will be balanced, and any necessary correcting journal entries will be made in a timely manner.

Criteria Requirement of LSC Approval for Purchase of Personal Property over $25,000 – A recipient using more than $25,000 of LSC funds to purchase or lease personal property or contract for services must request and receive LSC’s prior approval. Condition One asset was purchased using more than $25,000 of LSC funds for which the Organization did not receive prior LSC approval. Cause Management Oversight Effect The Organization did not comply with purchasing and property management requirements. Context The organization had three property additions in 2023. The supporting documentation for all three additions was reviewed. We then reviewed to see which funding source these additions were allocated to, noting one addition in excess of $25,000 expended with LSC funds. Recommendation We recommend the Organization implement policies and procedures to ensure prior approval is received on personal property purchased charges to LSC funds greater than $25,000. Repeat Finding This is not a repeat finding Response Legal Services of North Dakota will evaluate their internal controls to ensure they request and receive LSC’s approval prior to the purchase of any future property additions in excess of $25,000 that will be allocated to LSC funds.

Criteria The Organization is required to monitor and ensure that LSC cases assisted that are over the 125% of Poverty Income Guidelines meet the requirements of an allowable service in accordance with 45 CFR 1611.3. Condition In our testing of 25 of the total 40 cases that exceeded 125% of the Poverty Income Guidelines, there were 7 cases where the documentation maintained by the Organization didn?t support the over-income documented for the case. These cases were eligible under LSC guidelines, but included in the system as over-income cases. Cause The case documentation was not being properly recomputed and updated after receiving more information. Questioned Cost None Effect The Organization was not properly monitoring and documenting cases in excess of the 125% Poverty Income Guidelines. Recommendation We recommend that the Organization properly monitor and document to ensure cases in excess of the 125% of Poverty Income Guidelines meet the requirements. Views of Responsible Officials Legal Services of North Dakota IT/Compliance personnel has built a new reporting mechanism in their case management system to record income and asset information from the latest information input into the application for any given application or client file. This new mechanism differs from prior years as it no longer requires the case worker to push a button to recompute the new poverty percentage after changing income or asset eligibility due to new information obtained at any time. The old report relied on a stock report built into the case management system upon purchase. Indication of Repeat Finding This finding is new for fiscal year 2020.

Criteria The Organization is required to monitor and ensure that LSC cases assisted that are over the 125% of Poverty Income Guidelines meet the requirements of an allowable service in accordance with 45 CFR 1611.3. Condition In our testing of 25 of the total 40 cases that exceeded 125% of the Poverty Income Guidelines, 3 cases were not eligible under LSC guidelines. These case errors resulted because the case worker inadvertently used the LSC code in the software. Cause Selection of the incorrect grant code. Questioned Cost None Effect The Organization was not properly monitoring and documenting cases in excess of the 125% Poverty Income Guidelines. Recommendation We recommend that the Organization properly monitor to ensure that the correct grant is selected so the expenses get coded to properly meet the specific grant requirements. Views of Responsible Officials Legal Services of North Dakota IT/Compliance personnel has added to their error checking mechanisms, automatic error checking for those types of cases found non-compliant in this year?s audit. In the past these were looked at by staff on a case by case basis. Human error contributed to the errors in this type of case. To eliminate change of human error, automatic checks by programming to the case management system was done and will check for these types of error each time a person logs into the system. It will then alert the user to their error and instruct them to review and fix the error if need be. Indication of Repeat Finding This finding is new for fiscal year 2020.

Criteria The Organization is required to devote 12.5% of their LSC base field award to private attorney involvement (PAI) in accordance with 45 CFR 1614. Condition The Organization failed to devote 12.5% of their LSC basic field award to private attorney involvement for the year ended December 31, 2020. Cause In reviewing the calculation for PAI involvement, it was noted that there were errors when charging PAI hours which resulted in an unsupported amount reported for PAI related expenses. Organization appears to have failed to properly devote 12.5% of their LSC base field award to private attorney involvement for the year ended December 31, 2020 as well as maintaining the required records to support the allocation. Questioned Cost None Effect The Organization violated 45 CFR 1614. Recommendation We recommend that the Organization implements procedures to ensure at least 12.5% of the LSC base field funding is devoted to private attorney involvement each year in accordance with 45 CFR 1614. Views of Responsible Officials Legal Services of North Dakota Human Resource personnel will be error checking the bi-weekly case management payroll reports and the accounting system distribution reports to avoid errors before posting payroll. We will also be running payroll reports from the case management system on a quarterly basis to compare with the bi-weekly reports to monitor any possible changes to case management system. By implementing these steps quarterly, we will be able to closer monitor any changes in data to avoid any errors of time being recorded to PAI that is unsupported by the case management system data. Indication of Repeat Finding This finding is new for fiscal year 2020.

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