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Home My WebLink AboutFinancial Statements Years Ending December 31,1998 and 1997 Augusta Richmond GA DOCUMENT NAME: ,:-, (v 1\ (\l C. i A L ~\ '" 'l E '" E "', S '( l:::~ ~ [;. "'I) I Nir D 6C G/V> 13 o';R. ~ I. 1 q q<! ~rJ'\) ,QG7 DOCUMENT TYPE: I2.e::FOR.TS YEAR: \ qq t BOX NUMBER: 'ry FILE NUMBER: I L(?. "3 ) NUMBER OF PAGES: 3q I I I i I I I ; i i I I I I I I I I , , I . j I i I I I I , I I I 'I I i I ! ~!. . . . ' , , ' : j , ' . . : . I . . I , . . , , V~ I ; II i ~ i __-L __ [ 1 ~ j i 'i I, i! : I I' :,:', : 1 i ~ i; :!;: . : j : " :: i: : i i ! II f:~~~r :I~~fY' I' 1 caRTIFIEOlpUBLIC !ACCOU~TA~TS I . I' Ii' ., ' I I I Iii i I I I , ! ; : ~ i I I I I I I I I I I I I I I I I I I I GEORGIA LEGAL SERVICES PROGRAMS, INC. Financial Statements For The Years Ended December 31, 1998 and 1997 Together with Independent Auditors' Report I I I I I I I I I I I I I I I I I I I GEORGIA LEGAL SERVICES PROGRAMS, INC. For the Years Ended December 31, 1998 and 1997 Table of Contents Basic Financial Statements Independent Auditors' Report Statements of Financial Position Statement of Activities Statement of Functional Expenses Statements of Cash Flows Notes to the Financial Statements Supplemental Schedule Schedule of Support, Revenue, Expenses Changes in Net Assets - LSC Grants OMB Circular A-133 Disclosures Schedule of Findings and Questioned Costs Schedule of Federal Expenditures Independent Auditors' Report on Compliance and Internal Control Structure in Accordance with Government Auditing Standards Independent Auditors' Report on Compliance With Requirements Applicable to Major Programs and Internal Control in Accordance with OMB Circular A-133 Financial Statement Findings Federal Award Findings and Questioned Costs Page 1 3 5 7 8 10 17 18 19 20 22 24 25 I I I I I I I I I I I I I I I I I I I BASIC FINANCIAL STATEMENTS I II BANKS, FINLEY, I JYl!!~c~oST2;s I I I I I I I I I I I I I I I I I To the Board of Directors Georgia Legal Services Programs, Inc. Atlanta, Georgia: INDEPENDENT AUDITORS' REPORT We have audited the accompanying statements of financial position of Georgia Legal Services Programs, Inc. (GLSP) as of December 31, 1998 and 1997 and the related statements of cash flows for the years then ended and the statements of activities and functional expenses for the year ended December 31, 1998. These financial statements are the responsibility ofGLSP's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the provisions of the Office of Management and Budget (OMB) Circular A-l33, "Audits oflnstitutions of Higher Education and Other Nonprofit Institutions". Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinIOn. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Georgia Legal Services Programs, Inc. as of December 3 I, 1998 and 1997 and the changes in its net assets and its cash flows for the years then ended in conformity with generally accepted accounting principles. The statement of activities includes certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such ; information should be read in conjunction with GLSP's financial statements for the year ended i December 31, 1997, from which the summarized information was derived. : I In accordance with Government Auditing Standards, we have also issued a report dated March 23, i I 1999 on our consideration of Georgia Legal Services Program's internal control structure and a report ; dated March 23, 1999 on its compliance with laws and regulations. I 3504 East Main Street . College Pork. Georgia 30337 . (404) 763-1002 III I I I I I I I I I I I I I I I I I I To the Board of Directors Georgia Legal Services Programs, Inc. Our audit was conducted for the purpose of forming an opinion on the basic financial statements of Georgia Legal Services Programs, Inc. taken as a whole. The accompanying supplemental schedule and the Schedule of Federal Awards for the year ended December 31, 1998 are presented for purposes of additional analysis and are not a required part of the basic financial statements. The information in the schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly presented in all material respects in relation to the basic financial statements taken as a whole. ~,~~' ~-oc~ t.J;. March 23, 1999 U 2 1998 1997 I I I I I I I I I I I I I I I I I I I GEORGIA LEGAL SERVICES PROGRAMS, INC. Statements of Financial Position December 31,1998 and 1997 ASSETS Current Assets: Cash and cash equivalents (Note 2) Receivables Grants Employees Other Investments (Note 10) Prepaid rent Other prepaid expenses Total Current Assets Property and Equipment, Net (Note 3): Furnitures, fixtures and equipment 304,649 286,496 Law Library 30.776 3 1.3 15 Total Property and Equipment 335.425 317 .8 II Other Assets: Investments 256,316 248,981 Client escrow funds 875 Michael Krzys Memorial Fund 27,029 25,545 Deposits 55.415 55,722 Total Other Assets 339,635 330,248 TOTAL ASSETS $3 962 097 $3 897 769 The accompanying notes are an integral part of the financial statements. 3 I I I I I I I I I I I I I I I I I I I LIABILITIES AND NET ASSETS 1998 1997 Current Liabilities: Accounts payable-trade $ 57,714 $ 31,797 Accrued payroll and vacation 454,390 330,763 Accrued expenses 90,408 98,209 Refundable Advances (Note 10) 1.083.325 Total Current Liabilities 602.512 1.544,094 Other Liabilities: Michael Krzys Memorial Fund Client trust deposits 27,029 875 25,545 Total Other Liabilities 27,904 25.545 Total Liabilities 630A16 1.569.639 Net Assets (Note 7): Unrestricted: Other Programs Investment in Plant (306,910) 176,868 335.425 317,811 28.515 494,679 3.303.166 1.833.451 3.331.681 2.328.1 13 $3 962 097 $3 897 769 Temporarily Restricted Total Net Assets TOTAL LIABILITIES AND NET ASSETS 4 GEORGIA LEGAL SERVICES PROGRAMS, INC. Statement of Activities For the Year Ended December 31, 1998 (With Swnmarized Financial Infonnation F or the Year Ended December 31, 1997) 1998 Unrestricted Plant I I I I I I I I I I I I I I I I I I I Other Programs Support and Revenue: Support LSC grant revenue Other grant revenue Contributions $ 76,283 435.984 Total Support 512.268 Revenue Investment Income Fees Unrealized gain (loss) 13,569 Total Revenue 13.569 Net assets released from restrictions: Satisfaction of program restrictions 8.079.437 Total Support, Revenues & Reclasses 8.605.273 Expenses: Program Services LSC Programs Other Special Programs Other Programs Acquisition of Property 6,198,119 1,719,529 248,948 161.789 Total Program Expenses 8.328.385 Support Services: Management and General Expenses Fund Raising Expenses Depreciation Acquisition of Property 639,789 118,686 2.191 Total Support Services 760.666 Total Expenses 9.089.051 Changes in Net Assets (Note 8) (483,778) Net Assets, Beginning of Year (Note 7) 176.868 NET ASSETS, END OF YEAR $(306 910) The accompanying notes are an integral part of the fmancial statements. 5 $ (161.789) (161.789) 146,366 (2.191) 144.175 (17.614) 17,613 317.811 $335 425 - - - - - - - - GEORGIA LEGAL SERVICES PROGRAMS, INC. Statement of Functional Expenses For the Year Ended December 31, 1998 - - - - - - - - - - II II rt Services Su Management & General Other fIograms Other Special fr.ograms Services Pro ms I.QIAL Fund Raising I.QIAL I.uI.al reI Migrant Bask Salaries and wages: Lawyers Non-Iav:yers 105,223 320,853 $ 66,674 s 105,223 254,179 $ 2,529,981 2,148,935 $ ,890 104 $ 585,548 520,808 $ $ ,942,543 . ,628,023 $ 166,302 303,492 $ 61,815 .07,258 169,073 $ ,714,426 . ,217,273 426,076 22.137 2,774 30,471 24,022 71,272 19,595 206 21 551 11,438 11.471 10,087 8,386 19,968 66,674 6,227 766 1,251 4,336 8,046 104 279 624 657 1,520 8.202 359,402 05,910 2,774 29,705 22.771 66,936 1,549 102 21 272 10,814 11,471 9,430 6,866 11,766 4,678,916 ,405,676 52,088 32,644 309,014 588,961 209,915 27,663 34,128 157,158 182,602 31,032 72,891 59,575 324,333 1,994 512 ,393 58 92 3,322 100 2,144 06,356 280,703 5,684 02,401 96,872 36,995 224 6,716 15,324 32,273 2,752 9,031 8,445 5,753 ,I 3,570,566 1,124,461 52,088 26,960 205,220 492,031 172,828 27,439 24,090 141,734 150,329 28,280 61,716 51,130 69,247 469,794 18,805 52,088 37 21,631 52,777 21,567 ],426 843 5,980 11,561 666 2,752 1,668 2,841 44,085 1,497 ]6,490 44,880 8,444 1,705 613 12,973 12,347 1,610 1,690 5,864 1,879 2,93] ,699 96],57 25,426 167,099 394,374 142,817 24,308 22,634 ]22,781 126,421 26,004 57,274 43,598 64,527 Employee benefits Legal consultants Other consultants and contract services Travel S pace costs Consumable supplies Equipment rental Litigation costs Library maintenance Telephone Insurance Dues and fees Equipment repairs Other costs 239.333 758,475 8,686 639,789 8,166,596 248,948 ,719,529 9 6,198, 764,436 323,150 5,110,533 2,191 760,666 $ $ 118,686 2,191 980 64 $ 161,789 8,328,385 $ 248,948 s 84,874 $ ] .804,403 76,915 6,275,034 s 3,011 767.447 $ 4,319 $ 327,469 69,585 8 80 $ Acquisition of property Total expenses statements. an inteb'11ll part of the financial 7 The accompanying notes are I I I I I I I I I I I I I I I I I I I GEORGIA LEGAL SERVICES PROGRAMS, INe. Statements of Cash Flows For the Years Ended December 31, 1998 and 1997 1998 Cash Flows from Operating Activities: Cash received from grantors Interest and dividends received Other operating receipts Cash paid to suppliers and employees $8,833,880 13,569 16,426 (8.762.715) Net Cash Provided (Used) by Operating Activities 101.160 Cash Flows from Investing Activities: Purchase of property Net change in investments (163,980) (7.395) Net Cash Provided (Used) by Investing Activities (171.375) Cash Flow from Financing Activities: Increase in Refundable Advances Net Cash Provided by Financing Activities Net Decrease in Cash and Cash Equivalents (70,215) Cash and Cash Equivalents, Beginning of Year 1.196.771 CASH AND CASH EQUIVALENTS, END OF YEAR $1 126556 8 1997 $6,480,218 113,276 1,270,245 (8.248.260) (384.521) (130,393) (66.251 )" (196.644) 54.136 54.136 (527,029) 1.723.800 $1 196771 I I I I I I I I I I I I I I I I I I I GEORGIA LEGAL SERVICES PROGRAMS, INe. Statements of Cash Flows, Continued For the Years Ended December 31, 1998 and 1997 Reconciliation of Change in Net Assets to Net Cash Provided by Operating Activities: Change in Net Assets $1.003.551 $ (235.247) Adjustments to reconcile Change in Net in Net Assets to net Cash Provided by Operating Activities: Total Adjustments 146,366 106,981 1,070 14,274 1,548 (1,225,388) 8,155 20,307 (76,984) (2,052) (20,419) 25,917 (30,153) 115,826 (132,469) 2.359 (7.003) (902.391) (149.274) Depreciation and amortization (Gain) loss on disposal of property (Increase) decrease in other receivable (Increase) decrease in grants receivable (Increase) decrease in prepaid expenses (Increase) decrease in other assets Increase (decrease) in accounts payable Increase ( decrease) in accrued liabilities Increase (decrease) in other liabilities Net Cash Provided (Used) by Operating Activities $ 10 1.160 $ (384 521) The accompanying notes are an integral part of the financial statements. 9 I I I I I I I I I I I I I I I I I I I GEORGIA LEGAL SERVICES PROGRAMS, INe. Notes to the Financial Statements For the Years Ended December 31, 1998 and 1997 Note 1 - Summary of Significant Accounting Policies Background Georgia Legal Services Programs, Inc. (GLSP) was organized as a nonprofit corporation for the purpose of providing legal assistance, in non-criminal proceedings or matters, to persons financially unable to afford legal assistance in Georgia, excluding the metropolitan Atlanta area. GLSP is principally funded through grants from Legal Services Corporation (LSC), a nonprofit corporation organized by the United States Congress to administer a nationwide legal assistance program. Cash and Cash Equivalents GLSP considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash is held in demand accounts at banks and balances at year end and during the year have exceeded federally insured amounts during the year. Property and Equipment Property and equipment acquired with LSC funds are considered to be owned by the program while used in the program or in future authorized programs. Property and equipment was also purchased with funds received from: U.S. Department of Health, and Human Services (Dlll-IS) through the Georgia Department of Human Resources (DHR) U.S. Department of Housing and Urban Development U.S. Department of Justice The funding sources have a reversionary interest in the property as well as the right to determine the use of any proceeds from the sale or donation of assets purchased with their respective funds. The program currently follows the practice of capitalizing all expenditures for property and equipment I in excess of $500 for software and equipment and $250 for furniture and equipment. Any items i previously recorded on the books not meeting the above definition were fully depreciated during the current year. Depreciation on all property and equipment is computed on a straight-line basis over the estimated service lives of the assets (one to five years). 10 I I I I I I I I I I I I I I I I I I I Notes to the Financial Statements, Continued Note 1 - Summary of Significant Accounting Polices, continued Law Library The program capitalizes the costs of library reference books and multiple volume sets of law books. The salvage value of the law library has been estimated at approximately one-tenth of the original cost. Depreciation is computed on the straight-line basis over the estimated service life, which management believes approximates five years. Financial Statement Presentation GLSP utilizes Statement of Financial Accounting Standards (SF AS) No. 117, "Financial Statements of Not- for-Profit Organizations" to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. In addition, GLSP is required to present a statement of cash flows. As permitted by the statement, GLSP has discontinued its use of fund accounting for reporting purposes and has, accordingly, reclassified its financial statements to present the three classes of net assets required. Contributions In accordance with SF AS No. 116, "Accounting for Contributions Received and Contributions Made", contributions received by GLSP are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. The definition of contributions under SF AS No. 116 applies to grant funds received from LSC as well as other federal grant awards. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Income Taxes GLSP is exempt from Federal income taxes under Section 50l(c)(3) of the Internal Revenue Code.! It is also exempt from Georgia income taxes. Therefore, no provision has been made for Federal and; Georgia income taxes. In addition, GLSP has been determined by the Internal Revenue Service not: to be a "private foundation" within the meaning of Section 509 (a) of the Code. I 11 I I I I I I I I I I I I I I I I I I I Notes to the Financial Statements, Continued Note 1 - Summary of Significant Accounting Polices, continued Grant and Contract Support GLSP recognizes grant support from LSC ratably over the grant period. Support remaining unexpended at the end ofan accounting period are recorded as a change in net assets. Subject to the provisions ofLSC Fund Balance Regulations, GLSP may use unspent funds in future periods as long as expenses incurred are in compliance with the specified terms of the LSC grant, as defined. LSC may, at its discretion, request reimbursement for expenses or return of funds, or both, as a result of non-compliance by GLSP with the terms of the LSC grant. In addition, if GLSP terminates its LSC legal assistance activities, all unexpended funds are to be returned to LSC. LSC funds received in advance of the grant period are recorded as increases in temporarily restricted net assets. Other miscellaneous grant revenues are recognized as earned. Any revenues received above expenses are recorded as increases in temporarily restricted net assets. Reclassifications Certain amounts have been reclassified in the 1997 financial statements to conform to the 1998 presentation. Note 2 - Concentration of Credit Risk The Company maintains cash and certificates of deposit balances in one financial institution located in Atlanta, Georgia. The balances are insured by the Federal Deposit Insurance Corporation up to $100,000. At December 31, 1998, the Company's uninsured balances were $482,655. 12 I I I I I I I I I I I I I I I I I I I Notes to the Financial Statements, Continued Note 3 - Property and Equipment A summary of property and equipment for the years ended December 31, 1998 and 1997 follows: Description 1998 1997 $ 1,098,310 $1,468,751 318.755 363.223 1,417,065 1,831,974 (1.081.640) (1.514.163) $ 335.425 $ 317.811 Furniture & Fixtures Law Library Less: Accumulated Depreciation Net Property and Equipment Note 4 - Private Attorney Involvement GLSP utilizes the judicare and pro bono methods to meet the Private Attorney Involvement (also referred to as Private Bar Involvement or PBI) provisions of its LSC grant. This provision requires GLSP to expend approximately 12.5 percent of its annualized LSC Basic field grant to involve private attorneys in the delivery oflegal services. As of December 31, 1998 and 1997, GLSP has spent $767,447 and $895,992, respectively (14.6% and 14.6% of its annualized grants) on Private Attorney Involvement. Note 5 - Self Insured Medical Plan On December 1, 1989, GLSP established a self insured medical plan. GLSP pays the claims of the plan up to a deductible amount. After the deductible is satisfied, the excess liability is covered by an insurance company. The deductible limit for GLSP is $20,000 for each eligible employee. Claims in 1998 and 1997 amounted to $839,866 and $688,401, respectively. Under the definitions of the plan, when the plan terminates, the GLSP will be responsible for 90 days of unsubmitted claims. Note 6 - Tax Deferred Annuity Plan i I Effective January 1, 1991, GLSP adopted a retirement plan which covers all eligible employees except i those covered by a collective bargaining agreement. The retirement plan is an employer contributory : 13 I I I I I I I I. I. I I I. I I I I I I I Notes to the Financial Statements, Continued Note 6 - Tax Deferred Annuity Plan, continued tax deferred annuity plan under provisions ofIRC 403(b). Annual employer contributions are made at the discretion ofGLSP. As of October 1, 1998 GLSP started making bi-weekly contributions based on a seniority system. During 1998 and 1997, GLSP elected to contribute $1,500 per employee, respectively. Effective October 1, 1998, GLSP adopted a retirement plan which covers all eligible employees covered by a collective bargaining agreement. The retirement plan is an employer contributory tax deferred annuity plan under provisions ofIRC 403(b). Bi-weekly contributions are made based on a seniority system. Total contribution expense amounted to $101,537 and $82,500 for 1998 and 1997, respectively. Note 7 - Restatement orNet Assets During 1996, GLSP adopted SF AS No. 116. As part of the transition, receivables were recorded for amounts outstanding on fiscal year grant awards. The receivable amount recorded for the U.S. Department of Health and Human Services, Title III - Older Americans Act was overstated by $322,609. Beginning net assets as of January 1, 1998 have been restated to correct for the overstatement of receivables. Additionally, in prior years, contributions received from the Georgia Bar Foundation in support of the GLSP programs have been recorded entirely as LSC temporarily restricted support. While a portion of the funds are used to directly support LSC program, the funds are also used in support of non-LSC funded programs. Net assets balances relating to Georgia Bar Foundation funds should have been reported as non-LSC temporarily restricted support. Therefore, beginning net assets as ofJanuary 1, 1998, have been restated to reflect the reclassification of the beginning balance between LSC and non-LSC net assets. LSC Non-LSC Net assets, originally reported as of January 1, 1998 $2,099,525 $ 56,535 - Correction of overstated receivable balance (322,609) - Reclassification (1.807.864) 1.807.864 Net assets, restated as of January 1, 1998 $ 291.661 $1.541.790 14 I I I I I I I I I I I I I I I I I I I Notes to the Financial Statements, Continued Note 8 - Summarized 1997 Financial Inrormation The statement of activities includes certain prior-year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with GLSP's financial statements for the year ended December 31, 1997, from which the summarized information was derived. The changes in net asset by asset class at December 31, 1997 were as follows: Unrestricted: Programs Plant Temporarily Restricted $(1,912,982) 22,342 1.655.393 $ (235.247) Note 9 - Lease Commitments GLSP is obligated under operating leases for central and branch office space as follows: Year Ended December 31. 1999 2000 2001 2002 After 2002 $ 575,528 455,668 351,236 236,689 249.889 $1.869.010 Most of the leases contain renewal options for varying periods from one to five years. Total rental expenses for the years ended December 31, 1998 and 1997 were $590,360 and $548,431, respectively. 15 I I I I I I I I I I I I I I I I I I I Notes to the Financial Statements, Continued Note 10 - Related Party During 1996, the GLSP Board of Directors voted to establish the Georgia Legal Services Foundation, Inc. (the "Foundation"). The purpose of the Foundation is to conduct and support activities for the benefit of or to carry out the purposes of Georgia Legal Services Programs, Inc. The Foundation has been capitalized with $1,000,000 received by court order as part of remainder funds from an antitrust litigation concluded in the U. S. District Court of the Northern District of Georgia. As part of the court order, GLSP was directed to establish an endowment. The Directors of GLSP concluded that it would be consistent with the court order to establish the Foundation for the endowed funds. The Foundation is organized exclusively for charitable and educational purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code of 1986. It is managed by a Board of Directors of not more than 11 persons, 7 of which are nominated by GLSP's Board of Directors and the remaining 4 are elected by the Directors of the Foundation. During 1997, funds received for the Foundation were reported as refundable advances since the award of these funds are conditioned on the establishment of a separate endowment. During 1998, as anticipated, these funds were transferred to the Foundation. 16 I I I I I I I I I I I I I I I I I I I SUPPLEMENTAL SCHEDULE I I I GEORGIA LEGAL SERVICES PROGRAMS, INC. Schedule of Support, Revenue, Expenses and Changes in Net Assets - Legal Services Corporation Grants For the Year Ended December 31, 1998 I I fiaill; Support and Revenue I LSC grant revenue Contributions Other Revenue $ 4,494,590 $ 608,567 94,774 5,197,931 1,714,426 1,217,273 2,931,699 961,571 25,426 167,099 394,374 142,817 24,308 22,634 122,781 126,421 26,004 57,274 43,598 64,527 5, 110,533 69,585 5,180,118 17,813 1,975,864 (1,807,864) 168,000 $ 185,813 $ I Total Support and Revenue I Salaries and wages: Lawyers Non-lawyers I Employee benefits Legal consultants Other consultants and contract services Travel Space costs Consumable supplies Equipment rental Litigation costs Library maintenance Telephone Insurance Dues and fees Equipment repairs Other costs I I I I Depreciation Acquisition of property I Total expenses Change in Net Assets I Net Assets, Beginning of Year, As Originally Reported Reclass of Contributions I Net Assets, Beginning of Y car, As Restated NET ASSETS, END OF YEAR I I I 126,108 3,011 76,915 (76,915) 767,447 6,275,034 49,193 5,184 (49,193) i 2,099,525 292,970 I ( 1,807,864) I _ I 291,661 i - I i $ 296,845 $ 243,777 Migrant f.Bl 314,840 $ 767,447 $ 314,840 767,447 61,815 166,302 107,258 303,492 169,073 --.i69,794 44,085 118,805 52,088 1,497 37 16,490 21,631 44,880 52,777 8,444 21,567 1,705 1,426 613 843 12,973 5,980 12,347 11,561 1,610 666 1,690 2,752 5,864 1,668 1,879 2,841 323,150 764,436 4,319 327,469 ( 12,629) 123,661 123,661 111,032 $ 17 Iuta.l 5,576,877 $ 608,567 94,774 6,280,218 1,942,543 1,628,023 3,570,566 1,124,461 52,088 26,960 205,220 492,031 172,828 27,439 24,090 141,734 150,329 28,280 61,716 51,130 69,247 6,198,119 Plant Eu.n.d I I I I I I I I I I I I I I I I I I I OMB CIRCULAR A-I33 DISCLOSURES I I I I I I I I I I I I I I I I I I I GEORGIA LEGAL SERVICES PROGRAMS, me. Schedule of Findings and Questioned Costs Year Ended December 31, 1998 Section I - Summary or Auditor's Results Financial Statements We issued an unqualified opinion on the financial statements of the Georgia Legal Services Programs, Inc. as of and for the year ended December 31, 1998. We noted no matters involving the internal control over financial reporting and its operations that we consider to be material weaknesses. We noted no reportable conditions considered to be material weaknesses. We did not note any noncompliance material to the financial statements. Federal Awards We issued an unqualified opinion on the compliance for major programs for the Georgia Legal Services Programs, Inc. as of and for the year ended December 31, 1998. We noted no matters involving the internal control over major programs that we consider to be material weaknesses or reportable conditions not considered to be material weaknesses. However, we noted an audit finding that is required to be reported in accordance with Circular A- 133, Section .510a which is described in Section III - Federal Award Findings and Questioned Costs section as item 98-1. Identification of Major Programs CFDA/Grant Number Federal GrantorlProgram Title/ Pass-through Grantor 611020 Legal Services Corporation 93.633 U.S. Department of Health and Human Services Title ill Older Americans Act (pass- Through the Georgia Department of Human Resources) We used a threshold of $300,000 to distinguish between Type A and Type B programs. Georgia Legal Services Programs, Inc. is a low-risk auditee. 18 I I I I I I I I I I I I I I I I I I I GEORGIA LEGAL SERVICES PROGRAMS, INe. Schedule of Federal Expenditures For the Year Ended December 31, 1998 Federal Grantor/ CFDAI Program Title! Grant Pass- Through Program Pass-Through Grantor Number Grant Number Expenditures Legal Services Corporation 611020 $5.576.877 U.S. Department of Health and Human Services Pass- Through Georgia Department of Human Resources: Title m - Older Americans Act 93.633 FY98 331,517 93.633 FY99 412.913 744.430 U.S. Department of Housing and Urban Development Pass- Through Georgia Department of Community Affairs: Housing Opportunities for People with AIDS 14.241 51.670 U.S. Department of Justice Pass- Through Criminal Justice Coordinating Council: Violence Against Women Act Grant 16.588 108,736 Victims of Crime Act Grant 16.582 26.031 134.767 TOTAL FEDERAL EXPENDITURES $6507744 19 I II BANKS, FINLEY, I ~!!!2c~oSQ; I I I I I I I I I I I I I I I I I To the Board of Directors Georgia Legal Services Programs, Inc.: INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND INTERNAL CONTROL We have audited the financial statements of Georgia Legal Services Programs, Inc. (GLSP) as of and for the year ended December 31, 1998, and have issued our report thereon dated March 23, 1999. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Govemment Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether GLSP's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered GLSP's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course ofperforrning their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. 20 3504 East Main Street . College Park. Georgia 30337 . (404) 763-1002 III I I I I I I I I I I I I I I I I I I To the Board of Directors of Georgia Legal Services Programs, Inc.: Page Two This report is intended for the information of the Board of Directors and management of Georgia Legal Services Programs, Inc. and federal awarding agencies. However, this report is a matter of public record and its distribution is not limited. ~l~~' L0U.A.1:L? U. March 23,1999. U 21 III BANKS, FlNLEY, I !~!r~c~oST9;s I I I I I I I I I I I I I I I I I To the Board of Directors of Georgia Legal Services Programs, Inc.: INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Compliance We have audited the compliance of Georgia Legal Services Programs, Inc. (GLSP) with the types of compliance requirements described in the Us. Office of MWlagement and Budget (OMB) Circular A-i33 Compliance Supplement that are applicable to each of its major federal programs for the year ended December 31, 1998. GLSP's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility ofGLSP's management. Our responsibility is to express an opinion on GLSP's compliance based on our audit. We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations". Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about GLSP's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not. provide a legal determination on GLSP's compliance with those requirements. In our opinion, GLSP complied, in all material respects, with the requirements referred to above that are applicable to its major federal programs for the year ended December 31, 1998. However, the results of our auditing procedures disclosed instances of noncompliance with those requirements that ' are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as item 98-1. 22 3504 East Main Street . College Pork. Georgia 30337 . (404) 763-1002 III I I I I I I I I I I I I I I I I I I To the Board of Directors Georgia Legal Services Programs, Inc. Page Two Internal Control Over Compliance The management of the GLSP is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the GLSP's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-I3 3. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended for the information of the Board of Directors and management of Georgia Legal Services Programs, Inc. and federal awarding agencies. However, this report is a matter of public record and its distribution is not limited. ~'~~I u)tU-bL- 4 UJ. March 23, 1999. 23 I I I I I I I 'I I I I I I I I I I I I GEORGIA LEGAL SERVICES PROGRAMS, INC. Financial Statement Findings Year Ended December 31, 1998 Section II No matters were reported. 24 I I I I I I I I I I I I I I I I I I I GEORGIA LEGAL SERVICES PROGRAMS, INC. Federal Award Findings and Questioned Costs Year Ended December 31, 1998 Section ill Finding 98-1 Grant information: Federal Grantor Program Title: Legal Services Corporation Grant Number: 611020 In connection with our testing of eligibility under 45 cFR 1611 and a review of a sample of cases, we noted some cases which were identified as over-income in the computer database. Further review of case files revealed that the cases were in actuality within income guidelines. The initial income determination of a case is often made by administrative personnel. The attorney who makes the final eligibility determination, based on follow-up information when further information is gathered, does not amend the initial eligibility determination input by administrative personnel. There is no reconciliation of case file documentation to case database information to facilitate the prevention of such an error. Failure to properly document income eligibility could result in the handling of cases based on the incorrect assessment of their eligibility and documentation supporting that decision. LSC regulation (45 cFR 1611) requires income eligibility be properly documented including factual documentation for determination to serve over income clients. We recommend that there be a periodic review of cases by designated personnel to ensure the case database information is consistent with the attorney approved case-intake sheet to ensure proper record keeping and documentation. Management Response No case was found where services were provided to a client who was not eligible to be served. GLSP policies provide for determination of eligibility by attorneys and paralegals, subject to management review, and for continued assessment of financial eligibility to detect changes in the client's income or assets that may make him/her ineligible. GLSP policies require that legal workers I take professionally responsible actions to terminate representation of a client who becomes financially ineligible. At recent managers meeting, GLSP management staff reviewed the new CSR Handbook (1999 Edition) and the importance of accurate and thorough documentation. 25 I I I I I I. I I I I I I I I I I I I I With GLSP's new Case Management System, Kemp Case Works, legal workers will have direct access to the database and will be able to update client information as changes occur. The new software is designed to automatically calculate client eligibility and will designate cases over 125% for management. The new client database will be more accurate and we will be able to generate accurate reports capturing LSC-eligible clients, regardless of the funding source actually used to serve the client. We will take steps to train staff who will be entering client information of the importance of being accurate and current. 26 I I I I I I I I I I I I I I I I I I I GEORGIA LEGAL SERVICES PROGRAMS, INe. Status of Prior Year Comments Year Ended December 31, 1998 Finding 97-1 Grant information: Federal Grantor Program Title Legal Services Corporation Grant Number: 611020 During our review of fixed assets additions, we noted GLSP, Inc. purchased a copier costing more than $10,000 without prior approval from the Legal Services Corporation (LSC). This occurred because GLSP, Inc. did not consider the total cost of the copier. The bid price was $9,995 and the applicable sale tax was $599.70 which bought the total purchase price to $10,594.70. The purchase is inconsistent with section 1630 ofLSC regulations which states in part "unless prior approval has been obtained from the Corporation, no LSC funds may be used for: (1) payment of more than $10,000 to purchase, or any payments to lease equipment...ifthe single item or combined purchase price or value of the items purchased or leased is in excess of $10,000... " We recommend that GLSP, Inc. notify LSC to inform them of the unauthorized purchase. Management Response Management concurred with our recommendation. On April 3, 1998, management notified LSC in writing requesting retroactive approval of the purchase of the copier. LSC approved the acquisition up to $10,000 and advised that the excess must be paid from non-LSC funds. The LSC program was reimbursed during 1998 for the cost of the equipment in excess of the approved amount. 27 PHYLLlS J. HOLMEN EXECUTIVE DIRECTOR GEORGIA LEGAL SERVICES PROGRAM CENTRAL OFFICE 1100 SPRING STREET, SUITE 200-A ATLANTA, GEORGIA 30309-2848 (404) 206-5175 FAX (404) 206-5346 HN0476@handsnet.org NANCY R. LINDBLOOM RACHAELG.HENDERSON TORIN D. TOGUT VICKY O. KIMBRELL ROMERO LE6N SUSAN REIF SPECIALIST ATIORNEYS May 25, 1999 BOARD OF DIRECI'ORS HAROLD T. DANIEL. JR. PRESIDENT ROY W. COPELAND VICE PRESIDENT MARY LA FAVOR VICE PRESIDENT DELIA T. CROUCH TREASURER IMOGENE WALKER SECRETARY ANNIE ERVIN AT LARGE FRANK STRICKLAND AT LARGE LISA J. KRISHER DIRECTOR OF LITIGATION MICHAEL MONAHAN DIRECTOR OF PRO BONO PROJECT LINDA S. LOWE NON-ATIORNEY HEALTH POLICY SPECIALIST NON-ATIORNEY MANAGEMENT STAFF ROBERT O. DAVIS ASSOCIATE DIRECTOR JACK M. WEBB DIRECTOR OF FINAN(,E MARCELO A. ESTRADA. JR. STAFF A TIORNEY - MIGRANT PROJECT Ms. Lena J. Bonner Clerk of Commission - Council Augusta - Richmond County One 10th Street, Suite 430 Augusta, Georgia 30901 Dear Ms. Bonner: The audited financial statements for Georgia Legal Services Program, Inc. (GLSP) for the period January 1, 1998 - December 31, 1998 have been completed. The audit format for 1998 conforms with the OMB Circular A-133 and F ASB 116 and 117 for the year just ended. Your organizations copies of these reports, fidelity bond and liability insurance are attached. If you have any questions, please feel to contact me. Sincerely, ~ /'i~!:f Director of Finance JMW /dgl GEORGIA LEGAL SERVICES PROGRAMS, INC. Offices in Albany, Atlanta, Augusta, Brunswick, Columbus, Dalton, Gainesville, Macon, Savannah, Valdosta, Waycross, and Tifton (Migrant Fannworkers Division) AN AFFIRMATIVE ACTIONIEQUAL OPPORTUNITY EMPLOYER M1F/HN ~1.. ( r McG~ SEIBELS &: WILLIAMS OF GEORGIA, INC. . _ INSURANCE BROKERS ~ 1.............. EMwn PIedmont Center, Suite 110O. Atl~. o.cwala 30301 r-aijtl DATE Renew8 I Po II cy 12/11/98 1 CONFIRMATION TO: ,. Georgia Legal Services Program 1100 Spring Street, NW 1 Suite 200-A . Atlanta, GA 30309-2848 1 .,. ... · 'ID" · o 6000 022091 'ST. PAUL I NSUR N:: :~. .1 100 CRESCENT CENTRE PARKWAY SUITE 1000 TUCKER, GEORGIA 30084-7016., rl ] FT POLICY !lUMSEI + Commercial Crime Coverage ] pther named Insureds Georgia Legal Georgia Legal Services Program Retirement Plan Services Medical & Health Programs Coverages/Exclusions Employee Dishonesty Deductible Crime Coverage Type ERISA Compo Welfare/Pensn l ~ ~cheduled Employee Info. Employee: Specified Oir. or Trustees on Committees as Emp J J 800,000 250 Blanket - l ] 1 ~ VERY TRULY YOURS. Jay / / DATE ] As instructed we have ordered insur.,ce described above. Policy(ies) or endorsement(s) will be delivered to you as soon as Possib;e after isslWlce. This order shall remain in force unless due notice of termination is given by the company or prior issuance of policy or endorsement Thank. you for this opportunity to be of service. . ] - [ J 216 CRUMBLEY, FRAN MCIORO , J.-. - McGRIFF, SEffiELS & WILLIAMS OF GEORGIA, INC. IIIJII INSURANCE BROKERS ] !Cleven Piedmont Center. Suite 500. Atl.~. aeo...1e 303011 Page 1 DATE Renewa I Po I icy 12/28/98 ] ] ] ] ] ] Coverages/Exclusions ]:" Fiduciary Liabi I ity Georgia Amendatory Defense Costs within Limits J. Punitive or Exemplary Damage Named Employee Benefit Plan J ] J ] CONFIRMATION TO: Georgia Legal Services 1100 Spring Street, NW Suite 200-A Atlanta, GA 30309-2848 Program 1 .,. '" · ,"'". I TRAVELERS INSUR N::O::::::yI022398 . P.O. BOX 4416 ATLANTA, GA. 30302" EFFECTIVE DATE EXPIJlATlDIl DATE POLICY IlUl.lBER COl.lPANY Fiduciary Liabi Ilty Liabi I ity form- Claims Made Other named insureds Georgia Legal Services Program Retirement Plan GLSP-403B GLSP- Fringe Benefit Plan Georgia Legal Services Program Medical and Health Programs 500,000 J VERY TRULY YOURS. JSY / / DATE J As instructed we have ordered insurance described above. Policy(jesl or endorsement{sl will be delivered to you as soon as possible after issuance. This order shall remain in force unless due notice of termination is given by the company or prior issuance of policy or endorsement Thank you for this opportunity to be of service. ~I 216 CRUMBLEY, FRAN MelORO -. N en co N o rl o rl o o qt LO ffi rl N N o o ~ rl iC - - ~ ~'.- == ;;;;;;;;;;;;;;; - - - ;;;;;;;;;;;;;;; ;;;;;;;-. - = - ;;;;;;;;;;;;;;; - - - ;;;;;;;;;;;;;;; = - ;;;;;;;;;;;;;;; ~ - - ;;;;;;;;;;;;;;; - - - ;;;;;;;;;;;;;;; - = - - - - = - - ;;;;;;;;;;;;;;; - ;;;;;;;;;;;;;;; SPECTRUM POLICY DECLARATIONS (Continued) POLICY NUMBER: 21 SBK GM3540 BUSINESS LIABILITY LIABILITY AND MEDICAL EXPENSES MEDICAL EXPENSES - ANY ONE PERSON PERSONAL AND ADVERTISING INJURY FIRE LEGAL LIABILITY - FIRE, LIGHTNING, OR EXPLOSION AGGREGATE LIMITS PRODUCTS-COMPLETED OPERATIONS GENERAL AGGREGATE BOSXNESS LIABILITY OPTIONAL COVERAGES BIRED/NON-OWNED AUTO LIABILITY FORM: SS 04 38 BMPLOYBB BENEJ'ITS LIABILITY COVERAGE: FORM SS 04 13 CLAIMS-MADE RETROACTIVE DA'l'B: 01/01/98 BACH CLAIM AGGRBGA'l'B Form SS 00 0211 93 T Printed in U.S.A. (NS) Process Date: 01/09/98 LIMITS OF INSURANCE $1,000,000 $ 10,000 $1,000,000 . $ 300,000 $2,000,000 $2,000,000 $1,000,000 $1,.0 0 0 , 000 $2,000,000 Page027 (CONTINUED ON NEXT PAGE) Policy Expiration Date: 01/01/99 SPECTRUM POLICY DECLARATIONS (Continued) POLICY NUMBER: 21 SBK GM3540 / Fonn Numbers of Fonns and Endorsements that apply: SS 00 01 04 93 SS 00 05 06 96 SS 00 07 06 96 SS 00 08 06 96 SS 01 04 12 95 SS 04 08 06 96 SS 04 13 03 92 SS 04 38 06 96 SS 04 41 09 93 SS 04 42 09 93 SS 04 46 09 93 SS 04 47 09 93 SS 04 48 09 93 SS 04 54 06 96 IH 10 01 09 86 SS 05 13 03 92 SS 05 40 06 96 SS 83 13 01 97 G-3185-0 IH 12 00 11 85 60 DAY NOTICE OF CANCELLATION Fonn SS 00 0211 93 T Printed in U.S.A. (NS) Process Date: 01/09/98 Page 028 Policy Expiration Date: 01/ 01/99 12/07/98 '5'202 452 9879 09:31 .. NL4DA SERVICE CO QUOTATION Named IOSUNd: Georgia Legal Services Program, Inc. Atlanta. GA Policy Number: NLA800412-02 I4J002 --------------------------.----------------------------------- Policy Period: 12:01 a.m. January I, 1999 to 12:01 a.m. January 1,2000 UMlTS Lawyers Professional Liability: $1,000,000 each claim and $1,000,000 in the aggregate Retroactive Date: Full Prior Acts Dlm1JCTIBLES $1,000 Annual Aggregate (Dc~s not apply to Defense Costs) Management Liability Errors &: Omissions Endorsement: $1,000,000 each claim and $1,000 Annual Aggregate $1,000,000 in the aggregate (Do~s not apply to Defense Costs) Retroactive Date: Full Prior Acts Employment Practices Coverage Endorsement: $100,000 each claim and $300,000 in the aggregate Retroactive Date: Full Prior Acts Punitive Damages EndofSeme11l: $50,000 each claim and $50,000 in the aggregate Retruactive Date; Full Prior Acts Criminal D~rellse Endorsemem; OUlSiIle PractIce of Law Endorsement: $1,000,000 each claim and $1,000,000 ill the aggregate Retroactive Date: Full Prior Acts Primary Pro Bono Endorsement: Additionallnsured(s): Insurer: Continental Insurance Company CondiJionslComments: None 64 .$1,000 Annual Aggregate (Does not apply to Defense Costs) $l,COO Annual Aggregate (Does noL apply to Defense Costs) $1,GOO Annual Aggregate (Does not apply to Defense Costs) Total Premium: PREMruM 516,128.00 $6,451.00 $5,645.00 $g06.00 No Coverage $1,613.00 No Coverage No Coverage $30,643.00