The LSC Act (Appendix 1) requires the Corporation to provide the President and Congress with an annual report on legal services provided. The Act also requires prospective clients to be financially eligible to receive legal assistance (e.g., must be within established poverty guidelines). Local programs must determine eligibility before applicants can be properly accepted into the program and their legal issues counted as cases in annual reports to the Corporation.
The IG Act (Appendix 2) requires inspectors general to keep the Congress "fully and currently informed" of "significant problems, abuses, and deficiencies" resulting from OIG activities, through "semiannual reports and otherwise". The IG Act also requires immediate reports for serious or flagrant problems. In addition to audits, "OIG activities" typically include such functions as investigations, inspections, program assessments, and other special reviews and studies. Any "significant problem, abuse, and deficiency" disclosed during while performing audit or non-audit OIG activities are within the purview of the reporting requirements of the IG Act. When performing audits, the IG Act requires OIG's to use the Comptroller General's government auditing standards. The IG Act does not require OIG's to use these standards when performing other non-audit activities.
Government auditing standards (Appendix 3) provide specific protocols for the performance of audits and issuance of draft and final audit reports. When audit work identifies important matters requiring the prompt attention of management and legislators, the standards allow the OIG to temporarily bypass the often time-consuming protocols typically associated with processing and issuing final reports on the results of audit. They can do so through the issuance of issue interim oral or written reports. Interim briefings and reports on important issues and commonplace in the IG community, particularly when facts are indisputable (as was the case with many of the facts emanating from audits and examinations of local legal services programs by the Corporation OIG). The IG community typically refers to them as "quick reaction" reports.
The Corporation's case reporting standards (handbook and grant activity instructions) and grant agreements require local programs to submit annual case reports, in specified format and content, to the Corporation. The Corporation uses this information to prepare the annual caseload report and to justify and support funding requests to the Congress. The standards are based on relevant sections of the LSC Act, Corporation regulations, and Corporation policies and procedures. In general, they require local programs to determine if applicants are eligible to receive legal assistance (e.g., must be poor and in most instances an U.S. citizen) before "opening" cases for prospective applicants and their legal issues legitimately reported to the Corporation as opened or closed cases. The Corporation did not authorize local programs, for the 1997 program; to report cases "exclusively" financed with non-Corporation funds. It did require local programs to report cases "primarily" financed with non-Corporation funds.
The Corporation revised and reissued the handbook on November 24, 1998. The supplanted version of the handbook was dated July 1993. The stated purpose of the revised handbook is to "gather quantifiable information on cases for use in annual funding requests." Each year, the Corporation issues a new set of grant activity reporting instructions to local programs which complement the reporting requirements of the handbook. For 1999, the Corporation reversed a longstanding policy and required local programs to report cases exclusively financed with non-Corporation funds (over the objections of the House Majority Leader). Local programs must also establish legitimate attorney/client relationships and provide legal services to the clients before establishing and reporting cases to the Corporation.
Corporation headquarters did not have written standards and necessary quality control procedures to ensure the annual report to Congress was accurate.
Index of the LSC Case Over-Counting Scandal
Legal Services Accountability Project Page