FLORIDA RURAL LEGAL SERVICES, INC.Non-Profit

Finding 2022-005 ? Allowable Costs (Material Weakness and Non-compliance) Information on the Federal Program: Legal Services Corporation Basic Field Grant Criteria: 45 CFR 1630 requires that costs are incurred, reasonable and necessary, allocable to the grant, adequately documented, and consistent with accounting policies and procedures. Condition/Context: During our LSC testing, we selected 50 disbursements for testing. Of those 50, 25 were for payroll and 25 were non-payroll disbursements. Of 25 payroll, 2 employees did not have an approved pay rate. Of the 25 non-payroll disbursements, 1 did not have proper supporting documentation such as an invoice, 13 were not properly approved for payment and 14 did not have adequate support to determine the amount allocated to the grant. Cause: Employee time and expenses allocated to the LSC grant were not properly supported and approved. Effect: FRLS is not in compliance with allowable cost documentation requirements. Questioned Costs: None reported. Recommendation: We recommend FRLS strengthen its policies and procedures surrounding the process of calculating assistance payments to ensure accurate amounts are disbursed and FRLS is in compliance with all required documentation and disclosure requirements. Views of Responsible Officials: See Management?s View and Corrective Action Plan included at the end of the report.

Finding 2022-006 ? Case Requirements (Significant Deficiency and Non-compliance) Information on the Federal Program: Legal Services Corporation Basic Field Grant Criteria: 45 CFR Section 1611, 1626 and 1636 requires additional documentation such as a US citizen statement and statement of fact that a recipient must execute a retainer agreement for each client that receives extended services. Condition/Context: During our testing, we examined 71 case files. Of those 71, 36 required proof of citizenship, statement of fact and a signed retainer based on the level of service provided. Of those 36, 5 cases did not have the required forms in the file. Cause: The assigned attorney did not obtain the required documentation for the file. Effect: FRLS is not in compliance with case documentation requirements. Questioned Costs: None reported. Recommendation: We recommend FRLS strengthen its policies and procedures surrounding the process of opening and closing case files to ensure compliance with all required documentation and disclosure requirements. Views of Responsible Officials: See Management?s View and Corrective Action Plan included at the end of the report.

Finding 2022-007 ? Special Test and Provisions ? Private Attorney Involvement PAI (Significant Deficiency and Non-compliance) Information on the Federal Program: Legal Services Corporation Basic Field Grant Criteria: 45 CFR 1614 requires recipient of LSC funding to use at least 12.5% of their annual basic field grant to promote the involvement of private attorneys to eligible clients. Activities undertaken to meet this requirement include direct delivery of legal assistance to eligible programs. FRLS has elected to meet this requirement with a significant amount of pro bono work. Condition/Context: During our testing, we selected 20 cases that were tracked for PAI compliance. Of the 20 cases, 2 were not LSC-eligible type cases. In addition, FRLS records the donated services based on hours and billable rate provided by the outside attorney. We noted that the value of these donated services was not properly calculated. Cause: FRLS valued the services for some cases at a discounted rate rather than the fair market value of the services provided. Two cases were not types of cases allowable under LSC guidelines. Effect: FRLS is not in compliance with PAI compliance requirements. Questioned Costs: None reported. Recommendation: We recommend FRLS strengthen its policies and procedures surrounding monitoring of PAI compliance to ensure pro bono hours are properly recorded and only allowable cases are accepted. We also recommend the addition of a reduced fee program to facilitate outside involvement. Views of Responsible Officials: See Management?s View and Corrective Action Plan included at the end of the report.

Finding 2022-008 ? Special Test and Provisions ? Priorities in Use of Resources (Non-compliance) Information on the Federal Program: Legal Services Corporation Basic Field Grant Criteria: 45 CFR 1620 requires recipient of LSC funding to adopt a written statement of priorities that determines the cases and matters that can be undertaken. All staff who handle cases or matters, or make decisions about case acceptance must sign an agreement acknowledging they have read and understand the priorities and read and understand a emergency situation, and will not undertake any case or matter that is not a priority or emergency. Condition/Context: During our testing, we selected 25 payroll allocations charged to the LSC grant. Of those 25 employees tested, 4 did not have the required signed priority statement on file. Cause: FRLS did not obtain or retain the required priority statements for employees involved with cases or other matters. Effect: FRLS is not in compliance with priorities in use of resources compliance requirements. Questioned Costs: None reported. Recommendation: We recommend FRLS strengthen its policies and procedures surrounding employee onboarding to ensure the required statement is signed when a new employee is hired. In addition, the policy should include periodic review of employee files to ensure all required documentation is present and up to date. Views of Responsible Officials: See Management?s View and Corrective Action Plan included at the end of the report.

2021-001 ? Outside Practice of Law Criteria: 45 CFR 1604 prohibits full-time attorneys of recipients from engaging in outside practice of law unless the director of the recipient or the director?s designee determines that representation in such case or matter is consistent with the attorney?s responsibilities to the recipient?s clients and certain other criteria are met. Condition: During interviews with the Organization?s employees, it was disclosed that there was an instance of prohibited outside practice of law that occurred in 2021. This instance was discovered by the Organization?s staff in early 2022 and the attorney who engaged in the outside practice of law was terminated at that time. Cause: The attorney who engaged in the outside practice of law did not disclose the practice to the Organization and the Organization?s staff did not immediately discover it. Effect: While this outside practice of law was occurring, the Organization was not in compliance with 45 CFR 1604. Questioned Costs: None reported. Recommendation: We recommend the Organization reiterate the regulations regarding outside practice of law to all employees. Views of Responsible Officials: The views of responsible officials are described in the accompanying corrective action plan. The corrective action plan was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

2021-002 ? Review of Timesheets Criteria: 2 CFR 200.303(a) and 45 CFR 1635 establishes that recipients must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. One of the Organization?s internal controls for ensuring such compliance is that each employee?s supervisor reviews and approves all time and attendance reports. Condition: During our audit we noted six timesheets out of a sample of 40 that did not have documentation of review by the employees? supervisors. Cause: There was a lapse in the internal control process to ensure documentation of timely and proper review of time sheets. Effect: Lack of timesheet review by a supervisor who is familiar with a given employee?s responsibilities could result in charges to federal awards that are in excess of what was actually earned, or incorrect allocations of expenditures to various awards. Questioned Costs: None reported. Recommendation: We recommend the Organization review payroll policies and procedures with applicable employees to ensure compliance with documented procedures. Views of Responsible Officials: The views of responsible officials are described in the accompanying corrective action plan. The corrective action plan was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.

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