[Federal Register Volume 81, Number 57 (Thursday, March 24, 2016)]
[Rules and Regulations]
[Pages 15646-15647]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-06451]
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LEGAL SERVICES CORPORATION
45 CFR Chapter XVI
Compliance Supplement for Audits of LSC Recipients
AGENCY: Legal Services Corporation.
ACTION: Notice of final changes to Compliance Supplement for Audits of
LSC Recipients.
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SUMMARY: The Legal Services Corporation (``LSC'') Office of Inspector
General (``OIG'') is updating its Compliance Supplement for Audits of
LSC Recipients for fiscal years ending April 30, 2016, and thereafter.
The revisions primarily affect certain regulatory requirements to be
audited pursuant to LSC regulations. In addition, the LSC OIG has
included for audit certain regulatory requirements which impact
recipient staff's involvement in the outside practice of law. Finally,
suggested audit procedures for several regulations have been updated
and revised for clarification and simplification purposes.
DATES: The Compliance Supplement for Audits of LSC Recipients will be
effective on April 25, 2016.
FOR FURTHER INFORMATION CONTACT: Anthony M. Ramirez, Director of
Planning, Policy & Reporting, Legal Services Corporation Office of
Inspector General, 3333 K Street NW., Washington, DC 20007; (202) 295-
1668 (phone), (202) 337-6616 (fax), or [email protected].
SUPPLEMENTARY INFORMATION:
I. History of This Action
The purpose of the Compliance Supplement for Audits of LSC
Recipients is to set forth the LSC regulatory requirements to be
audited by the Independent Public Accountants (``IPA'') as part of the
recipients' annual financial statement audit and to provide suggested
guidance to the IPAs in accomplishing this task. Pursuant to 45 CFR
part 1641, IPAs are subject to suspension, removal, and/or debarment
for not following OIG audit guidance as set out in the Compliance
Supplement for Audits of LSC Recipients. Since the last revision of the
LSC OIG's Compliance Supplement for Audits of LSC Recipients, LSC has
significantly revised and updated several regulations. By revising the
Compliance Supplement for Audits of LSC Recipients, the LSC OIG intends
that the Compliance Supplement accurately reflects these regulatory
revisions and updates, including the corresponding changes to suggested
audit guidance provided to the IPAs. A summary of the proposed changes
follows.
The LSC OIG has included regulatory requirements under 45 CFR part
1604 in the Compliance Supplement for Audits of LSC Recipients. The
inclusion sets forth the requirements dealing with the permissibility
of recipient staff engaged in the outside practice of law along with
suggested audit guidance for use by the IPAs.
The LSC OIG made major revisions to several regulatory summaries to
reflect LSC's revisions to its regulations. Revised summaries include
those for 45 CFR parts 1609 (fee generating cases); 1611 (eligibility);
1614 (private attorney involvement); 1626 (restrictions on legal
assistance to aliens); and to a lesser extent, 1635 (timekeeping
requirement). The summaries now follow the existing law and LSC
regulations. The suggested audit procedures for each of these sections
have been revised and updated to incorporate and take into
consideration the regulatory changes.
The LSC OIG revised the case sampling methodology by reducing
criteria utilized in the case selection process to clarify and simplify
the process.
The LSC OIG updated and revised suggested audit procedures for the
regulations. The updates and revisions are intended for clarification
and simplification purposes and to provide added emphasis on internal
controls.
II. General Discussion of Comments
The LSC OIG received ten comments during the public comment period.
Four comments were submitted by LSC funded recipients: Prairie State
Legal Services (PSLS), Colorado Legal Services (CLS), Land of Lincoln
Legal Assistance Foundation, Inc. (LOLLAF) and Legal Assistance
Foundation of Metropolitan Chicago (LAF). Three comments were submitted
by IPAs. One comment was submitted by the Lawyers Trust Fund of
Illinois (LTFI), separately joined by LAF. One comment was submitted by
the Standing Committee on Legal Aid & Indigent Defendants (SCLAID) of
the American Bar Association. One comment was submitted by the non-LSC
funded non-profit National Legal Aid and Defender Association (NLADA)
through its Civil Policy Group and its Regulations and Policy
Committee, which was also separately joined by LAF. All commenters
appeared generally supportive of the changes the LSC OIG proposed to
the Compliance Supplement for Audits of LSC Recipients.
The LSC OIG proposed making the Compliance Supplement for Audits of
LSC Recipients effective for audits of fiscal years ending on or after
December 31, 2015. Four commenters (PSLS, NLADA, CLS, LTFI) expressed
concern over retroactive application of the revised Compliance
Supplement for Audits of LSC Recipients which they believed would
result in additional audit costs, delays in submission and impact the
current audit process that may be underway. The LSC OIG will make the
Compliance Supplement for Audits of LSC Recipients effective for audits
of fiscal years ending on or after April 30, 2016.
As part of finalizing the Compliance Supplement for Audits of LSC
Recipients, typos were corrected and formatting problems were resolved
in both the regulatory summaries and in the suggested audit procedures.
One commenter (SCLAID) identified a formatting issue and typos in
separate regulatory summaries that were all corrected.
III. Section-by-Section Discussion of Comments
A. Proposed Inclusion of 45 CFR Part 1604--Outside Practice of Law
The LSC OIG proposed inclusion of 45 CFR part 1604 in the
Compliance Supplement for Audits of LSC Recipients and provided a
regulatory summary of the applicable compliance requirements.
Comment--Two commenters (NLADA, CLS) expressed concern that the
regulatory summary did not fully list all the permissible circumstances
for the outside practice of law, specifically those contained in 45 CFR
1604.4(c)(2) and (c)(3).
Response--The LSC OIG has revised the regulatory summary to include
the language contained in 45 CFR 1604.4(c)(2), (c)(3) and (c)(4).
B. Proposed Regulatory Summary for 45 CFR Part 1611--Financial
Eligibility
The LSC OIG proposed revisions to update the regulatory summary for
45 CFR part 1611 in order to follow the current LSC regulation. The LSC
OIG also proposed what it believed to be clarifying language relating
to Older Americans Act (OAA) funds.
Comment 1--Six commenters (including NLADA, PSLS, CLS, LOLLAF,
LTFI, LAF) expressed significant concern on the inclusion of the
language relating to the OAA funds,
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arguing that it changed longstanding LSC policy and would have a
detrimental impact on providing services to the elderly. NLADA stated
``This section significantly changes longstanding guidance regarding
eligibility determinations for senior citizens that would result in a
reduction of services available to individuals age 60 and over.'' This
was mirrored by several other LSC funded commenters.
Response--To avoid confusion and unintended consequences, the LSC
OIG has removed the language referring to OAA funds from this section.
Comment 2--NLADA also expressed concern relating to a suggested
audit procedure for assessing the waiver of eligibility requirements.
NLADA believed that the language needed revision ``so that an auditor
does not waste time looking for evidence of a waiver determination, but
rather reviews whether the appropriate factors allowing income
eligibility have been identified for households with income between
125% and 200% of the Federal Poverty Level.''
Response--The LSC OIG has modified the suggested audit procedure to
provide better clarity by including the following language at the end
of the suggested audit procedure: ``or the recipient determined the
client was eligible based on the factors set forth in 45 CFR
1611.5(a)(3) or (4).''
C. Regulatory Summary Adjustment for Part 1612--Restrictions on
Lobbying and Certain Other Activities
Comment--Two commenters (NLADA, CLS) expressed concern over the
regulatory summary language regarding the prohibitions contained in 45
CFR 1612.6(c), describing it as ``overly broad and/or confusing.''
NLADA stated ``The regulation does not contain a general prohibition on
providing information in connection with legislation or rulemaking.''
CLS stated ``This sentence omits key elements in the actual Regulation
that employees are only prohibited from soliciting or arranging for a
request from any official to testify or otherwise provide information
in connection with legislation or rulemaking.''
Response--The LSC OIG has revised the regulatory summary language
pertaining to 45 CFR 1612.6(c) to more accurately reflect the
prohibitions. Also, a technical correction was made to the 45 CFR
1612.3 language contained in the regulatory summary in order to include
phraseology that had been inadvertently omitted from the initial draft
publication. The language added is as follows (with emphasis placed on
the additions and corrections):
(5) the issuance, amendment or revocation of any executive order.
Recipients shall not use any funds to pay for any personal service,
advertisement, telegram, telephone communication, letter, printed or
written matter, administrative expense, or related expense, associated
with an activity prohibited in (1)--(5) detailed above (45 CFR 1612.3).
D. Proposed Regulatory Summary for Part 1614--Private Attorney
Involvement
The LSC OIG proposed revisions to update the regulatory summary for
45 CFR part 1614 in order to follow the current LSC regulation.
Comment--Two commenters (NLADA, CLS) expressed concern that the
revised regulatory summary discussing Sec. 1614.4(b)(1) omitted an
important clause. NLADA stated that ``The sentence in the Draft
Supplement currently only references including support provided by
private attorneys to the recipient'' and does not mention subrecipient,
an entire category of organizations that may receive private attorney
support.
Response--The LSC OIG has revised the regulatory summary language
as follows:
Activities undertaken by the recipient to meet the requirements
of this Part may also include, but are not limited to: (1) support
provided by private attorneys to the recipient or a subrecipient as
part of its delivery of legal assistance. . . .
E. Audit Considerations and Proposed Suggested Audit Procedures
Comment 1--Two commenters (NLADA, CLS) expressed concern over the
LSC OIG policy on high risk designation for LSC grantees, stating that
it is unwarranted, could be confusing to stakeholders and be a misnomer
to a specific auditee. NLADA recommended the elimination of this
blanket designation by the LSC OIG.
Response--The LSC OIG will retain the policy of high risk
designation at this time. If the LSC OIG accepted the requested
modification to this section, it could allow IPAs to designate LSC
grantees as low risk. Such a designation would result in audits not in
compliance with statutory requirements.
Comment 2--NLADA also expressed concern relating to the suggested
audit procedure on obtaining an understanding of internal controls in
place associated with specific regulations. NLADA recommended that the
LSC OIG include clarification that ``. . . understanding internal
controls means that the auditor has identified that there are systems
in place to assure compliance.''
Response--The LSC OIG believes that the current language is
sufficiently clear to the IPA that the internal controls relate to
compliance with the applicable LSC regulatory requirement. No
additional changes were made.
Comments provided by all three IPAs related to non-audit questions,
satisfaction with improved procedures and commentary on utilizing the
suggested audit procedures. No additional changes were made.
For the reasons stated above, the Legal Services Corporation Office
of Inspector General revises the Compliance Supplement for Audits of
LSC Recipients. The Revised Compliance Supplement for Audits of LSC
Recipients is available on the LSC OIG Web site at: https://www.oig.lsc.gov/images/pdfs/ipa_resources/April_2016_Compliance_Supplement.pdf.
Dated: March 17, 2016.
Stefanie K. Davis,
Assistant General Counsel.
[FR Doc. 2016-06451 Filed 3-23-16; 8:45 am]
BILLING CODE 7050-01-P