Controls over Grant Application Review and Award Process Need Improvement

LSC controls over reviewing and awarding grants are intended to help  ensure the fair and equitable consideration of applicants. Grant Application Evaluations and Decisions Lacked Supporting Documentation

LSC’s grant application evaluation process and basis for the resulting  decisions were not clearly documented, including key management  discussions in the evaluation-making process. Therefore, this lack of documentation of the factors considered in making  these decisions increases the risks 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. Grant Application Evaluation Process Lacked Requirements for Managerial Review

LSC has no requirement for carrying out and documenting OPP Director  managerial review and approval of competitive grant evaluations or  renewals by the OPP primary staff reviewers. These control weaknesses hinder LSC’s ability to effectively  oversee its grantees’ compliance with LSC regulations and limits its ability  to ensure grantees are visited according to their relative risk levels and  that any compliance issues are identified and resolved in a timely manner. We also noted  that LSC has an overall goal that provides for grantee site visits at least  once every 3 years; however, LSC did not have procedures detailing how  identified risks factors are to be used in a risk-based determination of  which grantees should receive site visits by either OPP or OCE personnel. For example, LSC’s plan did not include metrics to  measure performance in the following core LSC activities related to its key  grant awards or monitor grantee program performance and grantee  compliance with respect to:  identifying and targeting LSC’s own resources to address the most  pressing civil legal needs of low-income individuals in the nation, and  ensuring that grantees use the funding they receive to serve the low- income population throughout the nation. In addition, not all measures in LSC’s strategic plan were linked to specific  LSC components. Specifically, LSC did not (1) systematically assess short- and long-term  workload and staffing needs in relation to the corporation’s strategic goals  and objectives, (2) provide required performance reviews for OPP staff in  3 of the 6 years we reviewed and for OCE staff in 2 of the 6 years we  evaluated, or (3) provide formal training for current and incoming staff on  internal controls. Without the  employee performance appraisals for all of its staff, LSC has limited its  opportunities to encourage high performance, identify training needs, and  communicate with staff. Lacking effective contract approval and fund  availability controls, LSC is at increased risk of improper contract awards  and undetected budget shortfalls. Two contracts that did not follow LSC’s approval process resulted in an  unplanned budgetary adjustment for fiscal year 2009. However, several key  recommendations related to LSC’s grantee oversight responsibilities  remain to be fully implemented. A weak  control environment limits LSC’s ability to effectively manage its grant  award and grantee performance oversight responsibilities. In the near term, it will be important for LSC leadership to direct  immediate action to address the continuing weaknesses, as well as those  identified in our current review. For the long term, LSC will need to focus  on monitoring the sustained commitment to an effective overall system of  internal controls necessary to achieve a solid basis for effectively  accomplishing its core mission of enabling the grantees to provide legal  services to individuals who otherwise could not afford such services. Appendix I: Objectives, Scope, and Methodology

Our reporting objectives were to determine the extent to which the Legal  Services Corporation (LSC)    properly implemented key internal controls in awarding grants and  overseeing grantee program performance;    measured its performance in awarding grants and overseeing  grantees;  evaluated staffing needs for grant awards management and grantee  performance oversight; and  followed appropriate budget execution processes for awarding  contracts related to grants award and grantee performance and  oversight.
Why GAO Did This Study

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.

What GAO Found

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.