Rule2023-10574
Issuance of Updated Audit Guide for Recipients and Auditors and Appendices for Audits of Legal Services Corporation Recipients
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
May 19, 2023
Effective
October 1, 2023
Issuing agencies
Legal Services Corporation
Abstract
The Legal Services Corporation (LSC) Office of Inspector General (OIG) updated its Audit Guide for Recipients and Auditors, (LSC OIG Audit Guide), the Compliance Supplement (Appendix A), and Appendices B-E. The Audit Guide must be used for audits for fiscal years ending September 30, 2023, and thereafter. The LSC OIG Audit Guide was published in December 1996 and is outdated. Aside from one Audit Bulletin issued in 1997, it has not been updated since. Appendix A, Compliance Supplement for Audits of LSC Recipients was updated in April 2016. The LSC OIG Audit Guide and appendices required revisions to incorporate changes to LSC regulations, auditing standards, and other guidelines that have changed. The changes are to enhance clarity in guidance and suggested audit procedures.
Full Text
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<title>Federal Register, Volume 88 Issue 97 (Friday, May 19, 2023)</title>
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[Federal Register Volume 88, Number 97 (Friday, May 19, 2023)]
[Rules and Regulations]
[Pages 32140-32141]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-10574]
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LEGAL SERVICES CORPORATION
45 CFR Chapter XVI
Issuance of Updated Audit Guide for Recipients and Auditors and
Appendices for Audits of Legal Services Corporation Recipients
AGENCY: Legal Services Corporation, Office of Inspector General.
ACTION: Notice of issuance of final audit guide and appendices.
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SUMMARY: The Legal Services Corporation (LSC) Office of Inspector
General (OIG) updated its Audit Guide for Recipients and Auditors, (LSC
OIG Audit Guide), the Compliance Supplement (Appendix A), and
Appendices B-E. The Audit Guide must be used for audits for fiscal
years ending September 30, 2023, and thereafter. The LSC OIG Audit
Guide was published in December 1996 and is outdated. Aside from one
Audit Bulletin issued in 1997, it has not been updated since. Appendix
A, Compliance Supplement for Audits of LSC Recipients was updated in
April 2016. The LSC OIG Audit Guide and appendices required revisions
to incorporate changes to LSC regulations, auditing standards, and
other guidelines that have changed. The changes are to enhance clarity
in guidance and suggested audit procedures.
DATES: The LSC OIG Audit Guide will be effective on October 1, 2023,
for audits of LSC grantee fiscal years ending on or after September 30,
2023.
FOR FURTHER INFORMATION CONTACT: Grace Nyakoe, Audit Director, Legal
Services Corporation Office of Inspector General, 3333 K Street NW,
Washington, DC 20007, (202) 295-1662, or <a href="/cdn-cgi/l/email-protection#3a5d54435b51555f7a55535d14065b1a52485f5c07" http: lsc.gov">lsc.gov</a>">gnyakoe@oig.<a href="http://lsc.gov">lsc.gov</a></a>.
SUPPLEMENTARY INFORMATION:
I. History of This Action
Updating the LSC OIG Audit Guide and appendices is essential in
fulfilling the OIG's responsibility for oversight. The LSC OIG Audit
Guide and appendices provide a uniform approach for audits of LSC
recipients and describe recipients' responsibilities with respect to
such audits. Audits of recipients are to be performed in accordance
with this LSC OIG Audit Guide and Compliance Supplement (Appendix A),
among other criteria. The LSC OIG Audit Guide and the Compliance
Supplement give auditors guidance in planning and performing audits to
accomplish audit objectives.
Significant changes include eliminating the requirement to classify
LSC recipients as High-Risk; adding a requirement to consider all LSC
funds as major programs regardless of spending threshold; and revising
suggested audit procedures for changes to 45 CFR 1635--Timekeeping
Requirement. The appendix designations have changed because we
eliminated the appendices addressing a Sample Audit Agreement and Guide
for Procurement of Audit Services. Information on these topics is
readily available from other sources.
II. General Discussion of Comments
The LSC OIG received three comments during the public comment
period. All comments were on the Compliance Supplement. The commenters
were McBride, Lock & Associates, LLC, the LSC OIG Quality Control
Review contractor; Eide Bailly, an LSC recipient Independent Public
Accountant; and the National Legal Aid & Defender Association (NLADA),
a non-LSC funded non-profit, in cooperation with experienced Chief
Financial Officers of legal aid organizations and the NLADA Regulations
Committee. One NLADA comment strongly supported the proposed change to
the Overview section stating that LSC recipients do not have to be
classified as high risk. All comments generally support the LSC OIG
changes.
We also received comments for changes to accounting guidance. OIG
does not issue accounting guidance and forwarded these comments to LSC.
NLADA strongly supported the LSC OIG's decision to no longer require
that LSC recipients be classified as High Risk. The NLADA also
commented that it generally does not favor blanket requirements but
does not oppose the LSC OIG requirement that all LSC funds be
classified as major programs. LSC recipients must have an annual audit
and classifying the funds as a major program does not add a burden to
LSC recipients. One comment was to correct a typographical error which
was corrected. The remaining comments will be discussed in Section III,
Detailed Discussion of Comments.
[[Page 32141]]
III. Detailed Discussion of Comments--Compliance Supplement Part D
Fund Balances
Comment--The commenter, McBride Lock & Associates, stated that Part
1628 refers to an analysis of fund balance to determine whether a
waiver is required to carryover LSC funds. The commenter further noted
that this has been confusing for IPAs since LSC issued Program Letter
20-4, Revenue Recognition Guidance. The commentor stated that the
regulatory reference uses the term fund balance, and this section
should include a definition of fund balance for purposes of calculating
the carryover amount.
Response--The LSC OIG agreed with this suggestion and updated the
second paragraph on page 58. This section now includes the LSC
Financial Guide's, section 3.3 definition of fund balance.
Fund Balances, Compliance Requirements Section, Third Paragraph
Comment--The commentor, Eide Bailly, suggested that the following
compliance requirement be revised to include relevant regulatory
language. ``Recipients may request a waiver to retain a fund balance in
excess of 10% of LSC support pursuant to 45 CFR 1628.3. Absent a
waiver, recipients must repay a fund balance in excess of 10% of LSC
support. If a waiver of the 10% ceiling is granted, the recipient must
repay any fund balance in excess of the amount permitted to be
retained. (45 CFR 1628.3)
The commentor suggested the text read, ``Recipients may request a
waiver to retain a fund balance in excess of 10% of LSC support
pursuant to 45 CFR 1638.3. Absent a waiver, recipients must repay a
fund balance in excess of 10% of LSC support. If a waiver of the 10%
ceiling is granted, the recipient may retain up to the amount permitted
in the waiver but must repay any fund balance in excess of the amount
permitted to be retained. (45 CFR 1628.3).
Response--The LSC OIG agreed with the suggested change and updated
Appendix A, Compliance Supplement.
Timekeeping, 2. Audit Procedures--Internal Control b
Comment--The commentor, McBride Lock & Associates suggested
changing the language in the Part 1635--Timekeeping Requirement section
from, ``. . . how the recipient has revised its timekeeping policies to
comply . . .'' to ``. . . how the recipient has established its
timekeeping policies to comply . . .''
Response--The LSC OIG agreed with the comment and made this change.
Timekeeping, Section 2b, Audit Procedures--Internal Control and Section
3, Audit Procedures--Substantive
Comment--NLADA suggested two clarifications in the Part 1635--
Timekeeping Requirement section. The comment was to add a reference to
the LSC Financial Guide in Section 2b noting that the LSC Financial
Guide lists timekeeping requirements. NLADA also suggested that LSC OIG
clarify the ``minimum sample size of 20 timesheets'' in 3. Audit
Procedures--Substantive. The suggested clarification is to be clear
that one timesheet means a timesheet of one pay period for one
employee.
Response--The LSC OIG agreed with these suggestions and added a
reference to the LSC Financial Guide and added language to clarify the
sample size.
For the reasons stated above, the Legal Services Corporation Office
of Inspector General revises the LSC OIG Audit Guide for Recipients and
Auditors. The revised LSC OIG Audit Guide for Recipients and Auditors
and its appendices are available on the LSC OIG website at: Audit
Guidance (<a href="http://lsc.gov">lsc.gov</a>).
The Audit Guide and appendices contain references to other
documents, such as LSC program letters and forms. We plan to update
these references as they are modified.
(Authority: 42 U.S.C. 2996g(e).)
Dated: May 12, 2023.
Stefanie Davis,
Senior Associate General Counsel for Regulations.
[FR Doc. 2023-10574 Filed 5-18-23; 8:45 am]
BILLING CODE 7050-01-P
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