The Legal Services Corporation (LSC) was created as a private nonprofit to support legal assistance for low-income people to resolve their civil legal matters and relies heavily on federal appropriations. In 2006, LSC distributed most of its $327 million in grants to support such assistance. Effective internal controls over grants and oversight of grantees are critical to LSC's mission. GAO was asked to determine whether LSC's internal controls over grants management and oversight processes provide reasonable assurance that grant funds are used for their intended purposes. GAO analyzed key records and interviewed agency officials to obtain an understanding of LSC's internal control framework, including the monitoring and oversight of grantees, and performed limited reviews of internal controls and compliance at 14 grantees.

The Legal Services Corporation (LSC) is a private, nonprofit, federally funded corporation that helps provide legal assistance to low-income people in civil (i.e., noncriminal) matters. The primary responsibility of the LSC is to manage and oversee the congressionally appropriated federal funds that it distributes in the form of grants to local legal services providers, which in turn give legal assistance to low-income clients in all 50 states, the District of Columbia, the U.S. territories of Guam and the Virgin Islands, the Commonwealth of Puerto Rico, and Micronesia (which includes the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, and Palau). The authorization of appropriations for the LSC expired at the end of FY1980. Since then the LSC has operated under annual appropriations laws. Moreover, since FY1996 all of the LSC appropriations laws have included language that restricts the activities of LSC grantees. Pursuant to P.L. 113-164 (the Continuing Appropriations Resolution, 2015), the LSC was funded for FY2015 at the FY2014 rate of $365.0 million through December 11, 2014, or enactment of applicable appropriations legislation. Pursuant to P.L. 113-235 (the Consolidated and Further Continuing Appropriations Act, 2015), the LSC is funded for FY2015 at $375.0 million. For FY2016, the Obama Administration requested $452.0 million for the LSC. The Administration's FY2016 budget request included $416.4 million for basic field programs and required independent audits, $19.5 million for management and grants oversight, $5.0 million for client self-help and information technology, $5.1 million for the Office of the Inspector General, $1.0 million for loan repayment assistance, and $5.0 million for a pro bono innovation fund. Under the LSC's competitive process, legal services providers in every jurisdiction bid to become the LSC grantee for a designated service area in a state. During 2013, the LSC funded 134 local programs/grantees in 799 offices employing 4,193 attorneys. Local programs establish their own priorities and financial eligibility criteria subject to the LSC limits that stipulate that clients served may not have household income that exceeds 125% of the federal poverty guidelines, with limited exceptions for some household incomes of up to 200% of those guidelines. In 2013, 71% of LSC clients were females and 29% were males. The majority of LSC clients (83%) were between the ages of 18 and 59, 15% were age 60 or older, and 2% were under the age of 18. In 2013, 46% of LSC clients were non-Hispanic white, 28% were non-Hispanic black, almost 9% were of other races, and 17% were Hispanic. In 2013, LSC grantees closed 758,689 cases involving issues primarily related to families (divorce, child support, etc.), housing, income maintenance, consumer finance, and health.