Legal Services Corporation: Improvements Needed in Controls over Grant Awards and Grantee Program Effectiveness
GAO-10-540
Published: Jun 11, 2010. Publicly Released: Jul 13, 2010.
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Highlights
The Legal Services Corporation (LSC) was created as a private, nonprofit corporation to support legal assistance for low-income individuals on civil legal matters, primarily through federal grants and is primarily funded through federal appropriations. Effective internal controls over grant awards and oversight of grantees' performance are critical to LSC's mission. GAO and the LSC Inspector General have previously reported weaknesses and made recommendations. GAO's objectives for this report were to determine the extent to which LSC (1) implemented key internal controls in awarding and overseeing grantees, (2) measured its performance, (3) evaluated staffing needs, and (4) adhered to its budget execution processes. GAO analyzed key records and prior recommendations as well as interviewed LSC officials regarding LSC's internal control and performance frameworks, staffing, and contract processes.
Although LSC's controls over reviewing and awarding grants are intended to help ensure fair and equitable consideration, they need improvement. Final award and fund decisions are documented and approved; however, LSC's grant application evaluation process and associated decisions were not documented, including key management discussions in the evaluation process. This lack of documentation of factors considered in making these decisions increases the risk that grantee application evaluation and funding decisions may not consider all key relevant information and makes it difficult to describe the basis for decisions later. In addition, LSC has no requirement for carrying out and documenting managerial review and approval of competitive grant evaluations or renewals, limiting its ability to identify gaps or incompatible data in applications. Although LSC has efforts underway to ensure it visits all grantee sites at least once every 3 years, LSC did not consistently or explicitly document the application of risk criteria when selecting which grantees to visit, complete timely site visit reports, or track the recommendations from the site visits. These weaknesses hindered LSC's ability to effectively oversee grantees. LSC is not required to follow the Government Performance and Results Act but has developed a Strategic Directions document with some performance measures. However, these measures do not reflect all of LSC's core activities and are not linked to its two primary offices for awarding and overseeing grants. Therefore, LSC cannot effectively measure its performance in several key dimensions, such as identifying and targeting resources in addressing the most pressing civil legal needs of low-income individuals across the nation. LSC has not systematically assessed its long-term staffing needs to achieve strategic goals and objectives, which could help ensure it has the staff capabilities needed to meet its short- and long-term goals. LSC has not consistently provided performance reviews for all of its staff, limiting opportunities to encourage high performance, identify training needs, and communicate with staff. At times, LSC did not adhere to its budget execution process in awarding contracts supporting its key grant-making responsibilities. Because officials did not follow LSC's approval controls for two contracts and there was a breakdown in tracking funds, LSC had a budget shortfall of $70,000 in 2009. Missing or flawed internal controls limit LSC's ability to effectively manage its grant award and grantee performance oversight responsibilities. Although LSC has taken steps to address all 17 GAO recommendations identified in prior work, several have yet to be fully addressed. In the near term, it will be important for LSC leadership to address both current and continuing weaknesses. For the long term, LSC will need to focus on strengthening its overall system of internal controls in order to establish a solid basis for effectively accomplishing its core mission.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should develop and implement procedures to provide a complete record of all data used, discussions held, and decisions made on grant applications. |
In a 2010 audit of Legal Services Corporation (LSC) grant awards and grantee program effectiveness, GAO found that LSC procedures did not require, nor did the staff maintain, a comprehensive record documenting (1) the extent to which management held discussions and considered all available, relevant information in the grant funding decision-making process for each applicant and (2) that a complete record of the deliberative process (i.e., inputs, discussions, decisions made) was used by LSC in making grant application decisions. Therefore, GAO recommended that the President of LSC and the Vice President for Programs and Compliance develop and implement procedures to provide a complete record of all data used, discussions held, and decisions made on grant applications. In fiscal year 2010, LSC responded to our recommendations and modified the LSC Grants system to provide a listing of grant documents that must be reviewed, as applicable. LSC Grants system was further modified to require the Office of Program Performance management to certify that meeting(s) were held with staff reviewers to discuss data and other inputs used in the evaluation process, the reviewers' recommendations, and management's decision of a final funding recommendations. The list of grant documents reviewed combined with the manager's certification serves to document that discussions were held and available, relevant information was considered, and, therefore, provides a more complete record of the deliberative process for all grant applications. In addition, management's final decision of a funding recommendation for each grant application is also now recorded in LSC Grants system. As a result, LSC's documentation of grantee selection is more comprehensive and improves the transparency of the grantee selection process.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should develop and implement procedures to carry out and document management's review and approval of the grant evaluation and award decisions. |
In a 2010 audit of Legal Services Corporation (LSC) grant awards and grantee program effectiveness, GAO found that LSC procedures did not require, nor did the staff maintain, a comprehensive record documenting (1) the extent to which management held discussions and considered all available, relevant information in the grant funding decision-making process for each applicant and (2) that a complete record of the deliberative process (i.e., inputs, discussions, decisions made) was used by LSC in making grant application decisions. GAO recommended that LSC develop and implement procedures to carry out and document management's review and approval of the grant evaluation and award decisions. In fiscal year 2010, LSC modified the LSC Grants system to provide a listing of grant documents that must be reviewed, as applicable, and to require the Office of Program Performance management to certify that meeting(s) were held with staff reviewers to discuss data and other inputs used in the evaluation process, the reviewers' recommendations, and management's decision of a final funding recommendations. The list of grant documents reviewed, management's decision of a final funding decision and the manager's certification serves to document management's review and approval of the grant evaluation and award decision, and, therefore, provides a more complete record of the deliberative process for all grant applications. As a result, LSC's documentation of grantee selection is more comprehensive and improves the transparency of the grantee selection process.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should conduct and document a risk-based assessment of the adequacy of internal control of the grant evaluation and award and monitoring process from the point that the Request for Proposal is created through award, and grantee selection. |
In a 2010 audit of Legal Services Corporation (LSC) grant awards and grantee program effectiveness, GAO found that LSC controls over reviewing grantee applications and awarding grants were deficient in (1) documenting grant award decisions, (2) carrying out and documenting management review of grant applications, and (3) using automated grantee data available in the LSC Grants system. Therefore, GAO recommended that the President of LSC and the Vice President for Programs and Compliance conduct and document a risk-based assessment of the adequacy of internal control of the grant evaluation and award and monitoring process from the point that the Request for Proposal is created through award, and grantee selection. In fiscal year 2012, LSC responded to our recommendation and hired an outside consulting firm to analyze and assess the effectiveness of LSC's internal controls in its grant making processes from the submission of grant applications through the review, appraisal, grant selection, and award. Further, the consulting firm made additional recommendations to help LSC to more effectively meet federal standards for internal controls and achieve the objectives outlined by the LSC Fiscal Oversight Task Force and the LSC Strategic Plan. Upon completing its review in November 2012, the consulting firm credited LSC for making improvements to its grant processes based on GAO's audit report. Further, the consulting firm concluded that the LSC Grants system, and the underlying internal processes currently in use, meet the basic requirements for effective internal controls. As a result, the completion of this risk-based assessment should improve LSC's ability to maintain effective and adequate internal controls over its grant application and award process.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should conduct and document a cost benefit assessment of improving the effectiveness of application controls in LSC Grants such that the system's information capabilities could be utilized to a greater extent in the grantee application evaluation and decision-making process. |
LSC agreed with our recommendation. In regards to conducting a cost benefit assessment, in July 2011, LSC responded that it had technical expertise on its staff to make improvements in the LSC Grants application controls. Its Senior Developer/Grants Systems Project Manager, who had experience working on grants applications, worked closely with other LSC information technology staff to make improvements in the LSC Grants application controls. Among the improvements they made were to add application controls (1) to identify when Office of Program Performance staff have entered incomplete or incompatible data into LSC Grants and (2) to identify when reviewers have not completed certain mandatory data fields. Therefore, LSC met the intent of our recommendation by taking action to improve its application controls instead of merely performing a cost benefit assessment.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should develop and implement procedures to ensure that grantee site visit selection risk criteria are consistently used and to provide for summarizing results by grantee. |
LSC agreed with our recommendation. In October 2013, LSC officially adopted procedures which describe the risk-based assessment processes which OPP and OCE use to select grantees for site visits, as well as the documentation of the site selection results. For the 2013 grant selection cycle, which started in 2012, LSC put in place spreadsheets which capture the various risk factors used by OPP and OCE in their site selection process and document the results of its selection, summarized by grantee.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should establish and implement procedures to monitor Office of Compliance and Enforcement (OCE) grantee site visit report completion against the 120 day time frame provided in the OCE Procedures Manual. |
Legal Services Corporation (LSC) established and implemented procedures to monitor Office of Compliance and Enforcement (OCE) grantee site visit report completion against the 120 day time frame provided in the OCE Procedures Manual. Specifically, in 2009, LSC updated their site visit tracking report to include information on the 120 day goal. In addition, on a quarterly basis, LSC's Board of Directors is now receiving a quarterly report on the timeliness of report issuance as well as the reason for any report not meeting the 120 day time frame.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should execute a study to determine an appropriate standard timeframe for Office of Legal Affairs (OLA) opinions to be developed and issued. Develop and implement procedures to monitor completion of OLA opinions related to OCE site visits against the target time frame for issuing opinions. |
In a 2010 audit of Legal Services Corporation (LSC) grant awards and grantee program effectiveness, GAO found that LSC did not have specific procedures for overseeing Office of Compliance and Enforcement (OCE) receipt of Office of Legal Affairs (OLA) opinions on LSC Act compliance issues. LSC also did not have procedures for defining expected time frames for OCE to receive OLA opinions. Delays in legal opinions delay OCE site visit reports, because findings can not be determined until the OLA opinion(s) are received. Therefore, GAO recommended that the President of LSC and the Vice President for Programs and Compliance execute a study to determine an appropriate standard time frame for OLA opinions to be developed and issued and to develop and implement procedures to monitor completion of OLA opinions related to OCE site visits against the target time frame for issuing opinions. In August 2010, responding to our recommendation, LSC issued a memorandum setting out required procedures and time frames for opinions from LSC's OLA. The memorandum also provided specific time frames for OLA to complete opinions and provided a benchmark for when OCE should receive opinions. As a result, the new procedures will help ensure that LSC's legal opinions should be more timely and thereby enabling OCE to complete site visits and related OCE compliance reports which rely on these opinions.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should develop and implement procedures to provide a centralized tracking system for LSC's recommendations to grantees identified during grantee site visits and the status of grantees' corrective actions. |
In a 2010 audit of Legal Services Corporation (LSC) grant awards and grantee program effectiveness, GAO found that LSC did not require tracking or documenting its process for tracking and assessing actions in response to site visit recommendations and corrective actions. The absence of required documented procedures for tracking Office of Program Performance (OPP) and Office of Compliance and Enforcement (OCE) recommendations and corrective actions reduces LSC's assurance that findings from grantee site visits are monitored to ensure that recommendations and corrective actions are addressed by the grantee and so other cognizant LSC component organizations are aware of recommendations' status. Therefore, GAO recommended that the President of LSC and the Vice President for Programs and Compliance develop and implement procedures to provide a centralized tracking system for LSC's recommendations to grantees identified during grantee site visits and the status of grantees' corrective actions. In response to our recommendations, in fiscal year 2011, LSC issued procedures for tracking grantee recommendations and associated corrective actions. For grantee recommendations, the new procedures provide that the LSC Grants system is to be used as the mechanism to track recommendations and their status. For corrective actions, the new procedures provide that the LSC's OCE is to use the Required Corrective Actions Tracking Worksheet. These two methods of tracking open recommendations and corrective actions address our recommendation to develop and implement procedures for tracking LSC's recommendations to grantees and the status of corrective actions. If fully and effectively implemented, LSC's monitoring of open recommendations should be enhanced through LSC developing and implementing methods for tracking recommendations and status of corrective actions, which thereby improves LSC grantee oversight.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should develop and implement procedures to link performance measures (1) to specific offices and their core functions and activities, and (2) to LSC's strategic goals and objectives. |
LSC agreed with our recommendation. In October 2013, the LSC President implemented procedures requiring each office to submit office goals and performance measures linked to LSC's Strategic Plan. By May 2014, LSC offices completed their first quarterly status update assessing how well they had performed against their established performance measures.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should develop and implement procedures for periodically assessing performance measures to ensure they are up-to-date. |
LSC agreed with our recommendation. In October 2013, the LSC President implemented procedures, which include (1) a quarterly assessment by each office Director and the LSC President to review the office's progress in meeting its goals using the performance measures, at which time the President may revise the office's goals and performance measures in light of the circumstances, and (2) an annual review process by the LSC President of each office's goals and performance measures by December 31st of each year to ensure goals and performance measures are appropriate and up-to-date.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should develop and implement procedures to provide for assessing all LSC component staffing needs in relation to LSC's strategic and strategic human capital plans. |
LSC agreed with our recommendation. In October 2013, LSC's management approved its Strategic Human Capital Plan (the Plan) for 2013-2016, which is in line with its mission and goals as stated in LSC's overall strategic plan. As part of the Plan, LSC requires an annual "skills gap analysis" to (1) identify competency gaps among current LSC staff and (2) shape LSC's future hiring needs in areas critical to meeting LSC's strategic goals and objectives. LSC began gathering information on its needed skills from managers and staff in 2012 and plans to continue to do so as part of the annual "skills gap analysis" going forward.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should develop and implement a mechanism to ensure that all LSC staff receive annual performance assessments. |
LSC agreed with our recommendation. In March 2014, LSC began taking several measures to roll out its new performance management process, one of which included a performance assessment tracking mechanism as we had recommended.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should develop and implement a process to monitor contract approvals to ensure that all proposed contracts are properly approved before award. |
During our 2009 Legal Services Corporation (LSC) audit of controls over LSC contracts and grants, we found that LSC did not have documentation showing that the required contract approvals were obtained before contracts were awarded. To help LSC improve its internal control over contract approvals, we recommended that LSC management (1) develop and implement a process to monitor contract approvals to ensure that all proposed contracts are properly approved before award; (2) develop and implement procedures for contracts at or above established policy thresholds, to ensure the LSC president provides written approval in accordance with policy before contract award; and, (3) develop and implement procedures to ensure budget funds are available for all contract proposals before contracts are awarded. During September 2009, LSC updated Part II of its Administrative Manual to require (1) the President and Vice President, Chief Administrative Officer or the Office Directors are to authorize all procurement of goods, (2) purchases greater than $10,500 are to be approved by the President, (3) the Vice Presidents and Chief Administrative Officer are to approve purchases up to $10,500 and (4) Directors up to $3,500. Further, in September 2009, LSC implemented a new contract approval form to document the Comptroller's concurrence (that all procedural requirements to that point have been satisfied). In 2011 we reviewed documentation evidencing (1) the process whereby the LSC Comptroller communicated funding availability to the requesting organization prior to the Comptroller signing the contract and (2) a sample of contracts showed properly authorized contract approvals were obtained prior to award. Our review verified that appropriate approvals were given and documented based on threshold amounts provided in the updated Administrative Manual. With these actions, LSC has developed and implemented procedures which, if fully and effectively implemented, should better enable LSC to document that all contracts are properly authorized before award.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should develop and implement procedures for contracts at or above established policy thresholds, to ensure the LSC President provides written approval in accordance with policy before contract award. |
During our 2009 Legal Services Corporation (LSC) audit of controls over LSC contracts and grants, we found that LSC did not have documentation showing that the required contract approvals were obtained before contracts were awarded. To help LSC improve its internal control over contract approvals, we recommended that LSC management (1) develop and implement a process to monitor contract approvals to ensure that all proposed contracts are properly approved before award; (2) develop and implement procedures for contracts at or above established policy thresholds, to ensure the LSC president provides written approval in accordance with policy before contract award; and, (3) develop and implement procedures to ensure budget funds are available for all contract proposals before contracts are awarded. During September 2009, LSC updated Part II of its Administrative Manual to require (1) the President and Vice President, Chief Administrative Officer or the Office Directors are to authorize all procurement of goods, (2) purchases greater than $10,500 are to be approved by the President, (3) the Vice Presidents and Chief Administrative Officer are to approve purchases up to $10,500 and (4) Directors up to $3,500. Further, in September 2009, LSC implemented a new contract approval form to document the Comptroller's concurrence (that all procedural requirements to that point have been satisfied). In 2011 we reviewed documentation evidencing (1) the process whereby the LSC Comptroller communicated funding availability to the requesting organization prior to the Comptroller signing the contract and (2) a sample of contracts showed properly authorized contract approvals were obtained prior to award. Our review verified that appropriate approvals were given and documented based on threshold amounts provided in the updated Administrative Manual. With these actions, LSC has developed and implemented procedures which, if fully and effectively implemented, should better enable LSC to document that all contracts are properly authorized before award.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should develop and implement procedures to ensure budget funds are available for all contract proposals before contracts are awarded. |
During our 2009 Legal Services Corporation (LSC) audit of controls over LSC contracts and grants, we found that LSC did not have documentation showing that the required contract approvals were obtained before contracts were awarded. To help LSC improve its internal control over contract approvals, we recommended that LSC management (1) develop and implement a process to monitor contract approvals to ensure that all proposed contracts are properly approved before award; (2) develop and implement procedures for contracts at or above established policy thresholds, to ensure the LSC president provides written approval in accordance with policy before contract award; and, (3) develop and implement procedures to ensure budget funds are available for all contract proposals before contracts are awarded. During September 2009, LSC updated Part II of its Administrative Manual to require (1) the President and Vice President, Chief Administrative Officer or the Office Directors are to authorize all procurement of goods, (2) purchases greater than $10,500 are to be approved by the President, (3) the Vice Presidents and Chief Administrative Officer are to approve purchases up to $10,500 and (4) Directors up to $3,500. Further, in September 2009, LSC implemented a new contract approval form to document the Comptroller's concurrence (that all procedural requirements to that point have been satisfied). In 2011 we reviewed documentation evidencing (1) the process whereby the LSC Comptroller communicated funding availability to the requesting organization prior to the Comptroller signing the contract and (2) a sample of contracts showed properly authorized contract approvals were obtained prior to award. Our review verified that appropriate approvals were given and documented based on threshold amounts provided in the updated Administrative Manual. With these actions, LSC has developed and implemented procedures which, if fully and effectively implemented, should better enable LSC to document that all contracts are properly authorized before award.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should develop and implement procedures for providing and periodically updating training for LSC management and staff on applicable internal controls necessary to effectively carry out LSC's grant award and grantee performance oversight responsibilities. |
During our 2010 audit of Legal Services Corporation (LSC), we found that existing procedures were flawed in several key respects concerning staffing needs assessments, evaluating performance, and providing appropriate internal control training. Specifically, LSC did not provide formal training for current and incoming staff on internal controls necessary to effectively carry out LSC's grant award and grantee performance oversight responsibilities. GAO's Standards for Internal Controls in the Federal Government provides that all personnel are to possess and maintain a level of competence enabling them to effectively accomplish their assigned duties. As a result, we recommended that LSC's President and Vice President for Program and Compliance develop and implement procedures for providing and periodically updating training for LSC management and staff on applicable internal controls necessary to effectively carry out LSC's grant award and grantee performance oversight responsibilities. In response to our recommendation, in July 2012, LSC developed and implemented training procedures for internal controls related to grant award and grantee performance oversight activities. In addition, also in July 2012, LSC updated its accounting procedures manual to include a section on training staff on the grant process which 1) specifies that the training will be conducted annually with the staff responsible for the grant process, and 2) identifies training topics that are to be covered annually. These actions should reduce the risk of deficient internal controls over LSC's grant award and grantee performance responsibilities.
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| Legal Services Corporation | In order to improve key control processes over grant awards and monitoring of grantee program performance and grantee compliance, the President of LSC, and the Vice President for Programs and Compliance should establish a mechanism to monitor progress in taking corrective actions to address recommendations related to improving LSC grants award, evaluation, and monitoring. |
Legal Services Corporation (LSC) established a mechanism to monitor progress in taking corrective actions to address recommendations related to improving LSC grants aware, evaluation, and monitoring. Specifically, in 2010, LSC developed a document that formally tracks recommendations and LSC's action plans to address each recommendation. In addition, a designated staff person is responsible for monitoring and regularly updating the document.
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