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The Establishment of Alternative Corporations by Selected Legal Services Corporation Grant Recipients

HRD-85-51 Published: Aug 22, 1985. Publicly Released: Sep 16, 1985.
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Highlights

Pursuant to a congressional request, GAO reviewed certain alternative corporations that were established by three Legal Services Corporation (LSC) grant recipients to determine: (1) how and why the alternative corporations were established; (2) whether the establishment of the corporations complied with the Legal Services Corporation Act and regulations; and (3) whether the grant recipients and alternative corporations have maintained close enough relationships to be considered single entities for purposes of compliance with the act.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Legal Services Corporation Beginning with the fiscal year ending September 30, 1985, the President, LSC, should consider the Texas Rural Legal Aid's and the Texas Rural Legal Foundation's (TRLA/TRLF) combined funds balance as a single fund balance and apply the procedures in the LSC fund balance regulation.
Closed – Implemented
LSC revised its Audit and Accounting Guide to consider the fund balance of a grant recipient and alternative corporation as a single fund balance under LSC regulations. LSC has been unsuccessful in applying the regulations to the TRLA/TRLF fund balance. GAO is closing this recommendation because there has been no indication as to when LSC will gain TRLA and TRLF compliance.
Legal Services Corporation The President, LSC, should require the South Central Connecticut Legal Services Corporation (SCC) and the New Haven Legal Assistance Association (LAA) to include in their next agreement a provision prohibiting LAA from using private funds for activities restricted by the LSC act.
Closed – Not Implemented
SCC and LAA notified LSC that they intended to merge, effective January 1, 1986, therefore, there was no longer an agreement between the two organizations.

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Topics

Federal regulationsFunds managementGovernment grantsGrant administrationLegal aidProgram managementGrant awardLitigationLegal servicesFund balance