Notice2021-27178
Financial Guide for Grantees
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 15, 2021
Issuing agencies
Legal Services Corporation
Abstract
The Legal Services Corporation ("LSC") is updating its Financial Guide ("Guide") for grantees. LSC previously sought comment on the revised Guide and is now seeking additional comments on discrete changes to the Guide.
Full Text
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<title>Federal Register, Volume 86 Issue 238 (Wednesday, December 15, 2021)</title>
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[Federal Register Volume 86, Number 238 (Wednesday, December 15, 2021)]
[Notices]
[Pages 71288-71290]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-27178]
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LEGAL SERVICES CORPORATION
Financial Guide for Grantees
AGENCY: Legal Services Corporation.
ACTION: Request for comments.
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SUMMARY: The Legal Services Corporation (``LSC'') is updating its
Financial Guide (``Guide'') for grantees. LSC previously sought comment
on the revised Guide and is now seeking additional comments on discrete
changes to the Guide.
DATES: All comments and recommendations must be received on or before
the close of business on January 31, 2022.
ADDRESSES: You may submit comments by any of the following methods.
Instructions: Electronic submissions are preferred via email with
attachments in Acrobat PDF format. LSC may not consider written
comments sent via any other method or received after the end of the
comment period.
Email: <a href="/cdn-cgi/l/email-protection#06606f686768656f676a61736f6263466a756528616970"><span class="__cf_email__" data-cfemail="55333c3b343b363c343932203c3130153926367b323a23">[email protected]</span></a>. Please include ``Financial Guide
Comment'' in the subject line of the message.
Fax, U.S. Mail, Hand Delivery, or Courier: Please call 202-295-1563
for instructions if you need to send materials by one of these methods.
FOR FURTHER INFORMATION CONTACT: Stefanie K. Davis, Senior Assistant
General Counsel, (202) 295-1563, or <a href="/cdn-cgi/l/email-protection#fc8f989d8a958fbc908f9fd29b938a"><span class="__cf_email__" data-cfemail="36455257405f45765a455518515940">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: The Legal Services Corporation (LSC) has
conducted a comprehensive review of the Accounting Guide for LSC
Recipients, 2010 Edition. Based on input from LSC grantees and LSC's
fiscal compliance analysts, LSC believes that the format of the
Accounting Guide no longer best serves grantees or LSC. LSC has
restructured the document and renamed it the Financial Guide. The new
draft Financial Guide removes outdated or inapplicable materials,
improves materials directly related to LSC-specific issues, and adds
clarity about both required and recommended financial practices. The
draft Financial Guide also addresses areas that were previously
identified as problematic or complex, such as cost allocation, and
assists grantees in the financial management of LSC grants. Overall,
the draft Financial Guide conforms to existing LSC and grantee
practices and requirements. Additionally, in some places, the draft
Financial Guide sets out requirements that previously have not been
published for comment.
LSC originally sought comment on the comprehensive revisions to the
Financial Guide via a notice published in the Federal Register on July
7, 2020. 85 FR 40688 (July 7, 2020). LSC received 38 unique comments on
the draft Financial Guide from five grantees and the National Legal Aid
and Defender Association on behalf of itself and its LSC grantee
members. Generally, the commenters suggested clarifications and
requested that LSC make many of the proposed requirements into
recommendations to accommodate the diversity of grantee sizes, fiscal
sophistication, and resources.
[[Page 71289]]
LSC conducted a thorough review of the entire draft and all
comments. In most cases, LSC agreed with the comments and changed 17
proposed requirements into recommendations. Additionally, LSC removed
five requirements related to audits and accounting. These changes align
with the new scope of the Financial Guide to focus on providing
guidance related to LSC rules and regulations--including those
pertaining to internal controls--and not technical audit and
accounting-specific requirements. LSC also added clear definitions that
``must'' and ``shall'' state requirements, but ``should'' states a
strong recommendation. For all required items, grantees can opt to use
different methods of reaching the goal, subject to LSC's determination
that the alternatives are sufficient.
OCE also identified several current requirements that had not
appeared in the prior version of the Financial Guide that was published
for comment. These are requirements that LSC has been applying through
required corrective actions and most, perhaps all, grantees have
already implemented. OCE also added some requirements and
recommendations related to ``high-risk'' areas, such as cost allocation
and employee expense reimbursements.
LSC has published the revised draft Financial Guide for comment on
the Matters for Comment page at <a href="http://www.lsc.gov">www.lsc.gov</a>. LSC is seeking comment
only on the areas identified below as new requirements or substantive
revisions to the version of the Financial Guide for which LSC sought
comment in 2020.
Newly Identified Requirements
Section 1.3--Recipient Responsibility
This new section contains general statements moved from other
sections that grantees must keep their financial policies and
procedures up to date with accounting standards and changes to LSC
requirements (such as regulations, the Audit Guide, etc.). This new
section also contains a statement that ``Any policies and procedures
implementing the requirements of this Guide must be written and
approved by the recipient's governing body.'' LSC already requires
grantees to obtain governing body approval of their policies and
procedures through policy reviews during competitive assessments and
required corrective actions after a fiscal review. The following
sections are all affected by this requirement:
Section 2.1.1.a--Accounting System Capabilities
Section 2.2.2--Payroll
Section 2.2.3--Reconciliations
Section 2.3.1--Document Integrity
Section 2.5.3--Electronic Data Processing and Cybersecurity (Board
approval of policy is new)
Section 3.1.4--Derivative Income
Section 3.2.1--Bank Accounts
Section 3.2.2--Cash Receipts
Section 3.2.3--Investments (if applicable)
Section 3.2.4--Cash Disbursements
Section 3.2.6--Client Trust Accounts
Section 3.4--PAI. This section now clearly states that the financial
accounting of the 12.5% expenditure for the PAI requirement must be in
policies and procedures that are written and board approved, the same
as other financial policies and procedures.
Section 3.5.1--Procurement and Contracting (Board approval of policy is
new)
Section 3.6--Property and equipment
Section 3.7--Cost Principles (Board approval of policy is new)
Section 3.8--Subgrants. The grantee's policies and procedures regarding
the financial accounting for subgrants must be written and board
approved. For subrecipients, it now states that ``Recipients must
ensure that subrecipients have written policies and procedures
consistent with applicable LSC requirements, including this Guide.''
Part 1627 provides flexibility for subrecipients' financial accounting
to reflect the amount of the subgrant and capacity of the subrecipient.
The relationship between the recipient and subrecipient will determine
the proper method of financial reporting following generally accepted
accounting principles. 45 CFR 1627.4(f)(1)(i).
Section 2.1.1--General Accounting System Requirements
This section now provides more specifics about the general
accounting system requirements. Most, if not all, grantees already meet
these requirements, which are items that LSC already requires grantees
to adopt in required corrective actions after a fiscal review.
2.2.2--Time and Attendance (Payroll)
This section now provides more specific requirements for formal
payroll policies and procedures including time and attendance records,
use of a payroll register, and review of payroll before processing and
payment.
3.2.1--Bank Accounts
This section now explicitly requires documentation and tracking of
all bank accounts opened and closed (e.g., purpose, authorized
signatory, custodian, opening date, and closing date) within the last
three years.
3.2.1.b--Electronic Banking
This section now requires recipients to conduct a risk assessment
of electronic banking policies and procedures, with Board oversight, to
identify areas requiring additional safeguards.
3.2.4.a--Employee Expense Reimbursements
This new section requires grantees to have written and well-defined
expense reimbursement policies and procedures. It also provides a
number of recommendations for those policies.
3.2.5--Petty Cash
This section now explicitly requires a monthly reconciliation of
all petty cash funds and identification of all required supporting
documentation. Also, the section now requires that policies describe
all allowable uses of petty cash.
3.6.3--Disposal of Property and Equipment
This new section references the Part 1631 requirements for disposal
of real and personal property. It also requires that the grantee's
policies include ``disposal procedures, controls, and documentation
requirements.''
New Recommendations
Section 2.3.2--Document Destruction
This section ``strongly encourages recipients to develop and
implement a policy (in accordance with their record retention policy)
to address the proper destruction of documents and data.''
Section 3.2.4--Cash Disbursements
This section now states that ``Recipients may consider additional
control measures related to higher risk disbursements (e.g., require a
second check signer for amounts over a certain threshold).''
Significant Clarifications
LSC reorganized several sections to group items together more
logically, provide clearer explanations, and better identify areas of
risk. The following sections had notable updates.
2.1.1.a--Accounting System Capabilities
This section now provides a detailed bullet list of basic
capabilities of an adequate accounting system involving collecting,
allocating, tracking, documenting, and reporting financial information.
[[Page 71290]]
3.7.1--Cost Allocation
This section now provides a detailed bullet list of basic
requirements for cost allocation policies to better illustrate the cost
allocation requirements proposed in the published draft Financial
Guide.
2.5.3--Security for Data and Records Including Electronic Data
Processing and Cybersecurity
This section combines information from scattered sections in the
previous draft to more clearly require grantees to ``have written
security policies and procedures for physical and digital assets
including all financial data and records in any form (e.g., electronic
data processing (EDP) and cybersecurity policies and procedures).''
Furthermore, LSC recommends in this section that ``These policies and
practices should be part of an overall data and records security policy
and an annual overall risk-assessment process.'' Finally, LSC provides
in this section a bullet list of issues that these policies must
address, including a risk assessment at least annually and resolution
of risk findings or conclusions.
Dated: December 10, 2021.
Stefanie Davis,
Senior Assistant General Counsel.
[FR Doc. 2021-27178 Filed 12-14-21; 8:45 am]
BILLING CODE 7050-01-P
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