HomeMy WebLinkAboutIowa Legal Aid 2021 Audit Report
Iowa Legal Aid
Independent Auditor’s Reports and
Consolidated Financial Statements
December 31, 2021
Iowa Legal Aid
December 31, 2021
Contents
Independent Auditor’s Report ............................................................................................... 1
Financial Statements
Consolidated Statement of Financial Position .................................................................................... 4
Consolidated Statement of Activities ................................................................................................. 5
Consolidated Statement of Functional Expenses ................................................................................ 6
Consolidated Statement of Cash Flows .............................................................................................. 7
Notes to Consolidated Financial Statements ...................................................................................... 8
Supplementary Information
Schedule of Support, Revenue, and Expenses for LSC Funds ......................................................... 28
Schedule of Expenses Compared to Budget-AmeriCorps Grant Agreement .................................. 30
Schedule of Expenditures of Federal Awards .................................................................................. 30
Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards –
Independent Auditor’s Report ......................................................................................... 31
Report on Compliance for Each Major Federal Program and Report on
Internal Control Over Compliance – Independent Auditor’s Report ............................ 33
Schedule of Expenditures of Federal Awards ................................................................... 36
Schedule of Findings and Questioned Costs .................................................................... 38
Summary Schedule of Prior Audit Findings ...................................................................... 41
Independent Auditor’s Report
Board of Directors
Iowa Legal Aid
Des Moines, Iowa
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Iowa Legal Aid, which comprise the
consolidated statement of financial position as of December 31, 2021, and the related consolidated
statements of activities, functional expenses, and cash flows for the year then ended, and the related notes
to the consolidated financial statements.
In our opinion, the accompanying consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Iowa Legal Aid, as of December 31, 2021, and the
changes in its net assets and its cash flows for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America (GAAS) and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Our responsibilities under those
standards are further described in the “Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements” section of our report. We are required to be independent of Iowa Legal Aid, and to
meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our
audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Emphasis of Matter
Beginning net assets, before they were restated for the matter discussed in Note 16, were audited by other
auditors, and their report thereon, dated April 16, 2021, expressed an unmodified opinion. Our opinion is
not modified with respect to this mater.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in the United States of America
and for the design, implementation, and maintenance of internal control relevant to the preparation and
fair presentation of consolidated financial statements that are free from material misstatement, whether
due to fraud or error.
Board of Directors
Iowa Legal Aid
Page 2
In preparing the consolidated financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about Iowa Legal Aid’s
ability to continue as a going concern for one year after the date that the consolidated financial statements
are available to be issued.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government
Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in the
aggregate, they would influence the judgment made by a reasonable user based on the consolidated
financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, and design and perform audit procedures responsive to those risks.
Such procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of Iowa Legal Aid’s internal control. Accordingly, no such opinion
is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
consolidated financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about Iowa Legal Aid’s ability to continue as a going concern for a
reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.
Board of Directors
Iowa Legal Aid
Page 3
Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements
as a whole. The accompanying supplementary information which comprises the schedule of support,
revenue, and expenses for LSC funds; schedule of expenses compared to budget-AmeriCorps grant
agreement; and schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements
for Federal Awards, is presented for purposes of additional analysis and is not a required part of the
consolidated financial statements. Such information is the responsibility of management and was derived
from and relates directly to the underlying accounting and other records used to prepare the consolidated
financial statements. The information has been subjected to the auditing procedures applied in the audit
of the consolidated financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare the
consolidated financial statements or to the consolidated financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the accompanying supplementary information is fairly stated in all material
respects in relation to the consolidated financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 26, 2022,
on our consideration of Iowa Legal Aid’s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts and grant agreements, and other
matters. The purpose of that report is solely to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
effectiveness of Iowa Legal Aid’s internal control over financial reporting or on compliance. That report
is an integral part of an audit performed in accordance with Government Auditing Standards in
considering Iowa Legal Aid’s internal control over financial reporting and compliance.
West Des Moines, Iowa
April 26, 2022
Iowa Legal Aid
Consolidated Statement of Financial Position
December 31, 2021
See Notes to Consolidated Financial Statements 4
Assets
2021
Cash and cash equivalents 4,005,010$
Investments 6,205,904
Client trust funds 192,673
Grants and contributions receivable 3,840,093
Prepaid expenses 28,796
Property and equipment, net of accumulated depreciation 302,169
Total assets 14,574,645$
Liabilities and Net Assets
LIABILITIES
Accounts payable 82,929$
Accrued employee vacation 636,617
Deferred revenue 292,892
Client trust deposits 192,673
Capital lease payable 97,272
Total liabilities 1,302,383
NET ASSETS
Without donor restrictions 7,624,476
With donor restrictions 5,647,786
Total net assets 13,272,262
Total liabilities and net assets 14,574,645$
Iowa Legal Aid
Consolidated Statement of Activities
Year Ended December 31, 2021
See Notes to Consolidated Financial Statements 5
Without Legal Other Total With
Donor Services Donor Donor
Restrictions Corporation Restricted Restriction 2021
PUBLIC SUPPORT AND REVENUE
Public Support
Annual Campaign 739,359$ -$ 1,500$ 1,500$ 740,859$
Legal Services Corporation - 4,287,420 - 4,287,420 4,287,420
Government agencies 733,241 - 4,316,665 4,316,665 5,049,906
Area Agencies on Aging 323,499 - - - 323,499
IOLTA - - 132,259 132,259 132,259
United Way 198,190 - 643,942 643,942 842,132
Other contributions 310,262 - 1,792,736 1,792,736 2,102,998
Donated support - 1,046,800 - 1,046,800 1,046,800
Total public support 2,304,551 5,334,220 6,887,102 12,221,322 14,525,873
Other revenue
Investment return (95,015) 50,976 48,956 99,932 4,917
Fee awards 250 - - - 250
Miscellaneous 8,417 5,723 - 5,723 14,140
Total other revenue (86,348) 56,699 48,956 105,655 19,307
Net assets released from restrictions 10,978,665 (5,390,919) (5,587,746) (10,978,665) -
Total public support and revenue 13,196,868 - 1,348,312 1,348,312 14,545,180
EXPENSES
Program services 11,187,004 - - - 11,187,004
Supporting services 1,608,710 - - - 1,608,710
Total expenses 12,795,714 - - - 12,795,714
CHANGE IN NET ASSETS 401,154 - 1,348,312 1,348,312 1,749,466
Net Assets , Beginning of Year as Restated 7,223,322 - 4,299,474 4,299,474 11,522,796
Net Assets, End of Year 7,624,476$ -$ 5,647,786$ 5,647,786$ 13,272,262$
With Donor Restrictions
Iowa Legal Aid
Consolidated Statement of Functional Expenses
Year Ended December 31, 2021
See Notes to Consolidated Financial Statements 6
Total
Program Management Supporting Total
Services and General Fundraising Services 2021
PERSONNEL EXPENSES
Lawyers 4,277,388$ 437,051$ 151,095$ 588,146$ 4,865,534$
Paralegals 721,197 73,960 25,476 99,436 820,633
Other salaries 1,247,938 127,511 44,082 171,593 1,419,531
Employee benefits 2,479,002 253,297 87,568 340,865 2,819,867
Total personnel expenses 8,725,525 891,819 308,221 1,200,040 9,925,565
NONPERSONNEL EXPENSES
Office and occupancy 858,017 92,732 27,646 120,378 978,395
Contract services 198,229 26,059 7,002 33,061 231,290
Supplies and travel 144,735 29,887 4,949 34,836 179,571
Library 90,650 - - - 90,650
Insurance 52,375 5,352 1,850 7,202 59,577
Audit fees - 33,550 - 33,550 33,550
Training and related 41,602 309 107 416 42,018
Dues and fees 15,472 3,009 547 3,556 19,028
Litigation 27,085 - - - 27,085
Other 7,917 739 280 1,019 8,936
Fundraising - - 33,659 33,659 33,659
Donated support 920,263 94,030 32,507 126,537 1,046,800
Total nonpersonnel expenses 2,356,345 285,667 108,547 394,214 2,750,559
Depreciation 105,134 10,742 3,714 14,456 119,590
Total expenses 11,187,004$ 1,188,228$ 420,482$ 1,608,710$ 12,795,714$
Supporting Services
Iowa Legal Aid
Consolidated Statement of Cash Flows
Year Ended December 31, 2021
See Notes to Consolidated Financial Statements 7
2021
Operating Activities
Change in net assets 1,749,466$
Adjustments to reconcile change in net assets to net cash
flows from operating activities
Depreciation 119,590
Realized and unrealized losses on investments 68,185
Reinvested dividends (91,016)
Contributions restricted for endowments (18,200)
Changes in
Grants and contributions receivable (595,239)
Prepaid expenses 33,440
Accounts payable 19,747
Accrued expenses (42,104)
Deferred revenue (658,095)
Net cash flows provided by operating activities 585,774
Investing Activities
Purchase of investments (993,717)
Maturities of investments 1,298,803
Purchase of property and equipment (188,190)
Net cash flows provided by investing activities 116,896
Financing Activities
Proceeds from contributions with perpetual restrictions 18,200
Principal payments on capital lease obligations (92,768)
Net cash flows used in financing activities (74,568)
Net Increase in Cash and Cash Equivalents 628,102
Cash and Cash Equivalents, Beginning of Year 3,376,908
Cash and Cash Equivalents, End of Year 4,005,010$
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
8
Note 1: Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Iowa Legal Aid (the Organization) is a nonprofit corporation organized for the purpose of
providing legal assistance in non-criminal proceedings or matters to persons financially unable to
afford legal assistance in the State of Iowa. Iowa Legal Aid is principally funded through grants
from the Legal Services Corporation (LSC), a nonprofit corporation established by Congress to
administer a nationwide legal assistance program, and through funding from the State of Iowa.
Principles of Consolidation
The Iowa Legal Aid Foundation, a nonprofit organization, was formed with funding from donors.
The Foundation’s purpose is to support the Organization and is wholly controlled by the
Organization. The activities of the Foundation have been consolidated with the activities of the
Organization. All material related party balances and transactions have been eliminated in
consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues, expenses,
gains, losses and other changes in net assets during the reporting period. Actual results could differ
from those estimates.
Cash Equivalents
The Organization considers all liquid investments with original maturities of three months or less
to be cash equivalents. Uninvested cash and cash equivalents included in investment accounts,
including endowment accounts and assets limited as to use, are not considered to be cash and cash
equivalents. At December 31, 2021, cash equivalents consisted primarily of money market
accounts.
At December 31, 2021, the Organization’s cash accounts exceeded federally insured limits by
approximately $3,568,000.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
9
Client Escrow Funds
The Organization receives monies from clients for payment of certain court costs and litigation
expenses. An attempt to return unexpected receipts in connect with representation to the client is
made at the conclusion of the case. Unexpected funds that belong to a client who cannot be located
are treated as donations to the Organization in accordance with the retainer agreement between the
client and the program. Client funds are segregated from program funds and accordingly, at
December 31, 2021, the Organization recorded a corresponding liability in the amount of the client
escrow fund assets.
Grants and Contributions Receivable
Grants and contributions receivable are stated at net realizable value. An allowance for doubtful
accounts is provided based upon management’s judgement, including such factors as prior history
and nature of the contribution. The Organization considers all balances as of December 31, 2021
to be fully collectible and, therefore, no allowance for doubtful accounts has been recorded.
Investments
The Organization measures securities, other than investments that qualify for the equity method of
accounting, at fair value. Investments in beneficial interests in net assets of Foundations are
recorded at net asset value (NAV), as a practical expedient, to determine fair value of the
investments.
Net Investment Return
Investment return includes dividend, interest and other investment income; realized and unrealized
gains and losses on investments carried at fair value; and realized gains and losses on other
investments, less external and direct internal investment expenses. Gains and losses on the sale of
securities are recorded on the trade date and are determined using the specific identification
method.
Investment return that is initially restricted by donor stipulation and for which the restriction will
be satisfied in the same year is included in net assets without donor restrictions. Other investment
return is reflected in the statements of activities with or without donor restrictions based upon the
existence and nature of any donor or legally imposed restrictions.
The Organization maintains pooled investment accounts for its endowments. Investment income
and realized and unrealized gains and losses from securities in the pooled investment accounts are
allocated monthly to the individual endowments based on the relationship of the fair value of the
interest of each endowment to the total fair value of the pooled investments accounts, as adjusted
for additions to or deductions from those accounts.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
10
Property and Equipment
Property and equipment acquisitions over $500 are stated at cost, less accumulated depreciation
and amortization. Depreciation and amortization is charged to expense on the straight-line basis
over the estimated useful life of each asset. Assets under capital lease obligations and leasehold
improvements are amortized over the shorter of the lease term or respective estimated useful lives.
Estimated useful lives of 5-10 years have been assigned to furniture, fixtures and equipment.
Property and equipment acquired with LSC funds are considered to be owned by the Organization
while used in the program or in future authorized programs. However, LSC has a reversionary
interest in these assets with the right to determine the use of any proceeds from the sale of assets
purchased with its funds.
Long-Lived Asset Impairment
The Organization evaluates the recoverability of the carrying value of long-lived assets whenever
events or circumstances indicate the carrying amount may not be recoverable. If a long-lived asset
is tested for recoverability and the undiscounted estimated future cash flows expected to result
from the use and eventual disposition of the asset are less than the carrying amount of the asset, the
asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the
carrying amount of a long-lived asset exceeds its fair value.
No asset impairment was recognized during the year ended December 31, 2021.
Deferred Revenue
Deferred revenue consists of grant proceeds received from conditional contributions for which the
Organization has not overcome all material barriers in order to be entitled to funding.
Net Assets
Net assets, revenues, gains and losses are classified based on the existence or absence of
restrictions.
Net assets without donor restrictions are available for use in general operations and not subject to
donor or grantor restrictions. The governing board has designated, from net assets without donor
or grantor restrictions, net assets for an operating reserve and board-designated endowment.
Net assets with donor restrictions are subject to donor or grantor restrictions. Some restrictions are
temporary in nature, such as those that will be met by the passage of time or other events specified
by the donor. Other restrictions are perpetual in nature, where the donor stipulates that resources
be maintained in perpetuity.
Property and equipment purchased with LSC funding are classified as net assets with donor
restrictions, which are released from restriction as the related depreciation on such property and
equipment is recognized.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
11
At its discretion, LSC may request reimbursement of expenses or the return of unexpended funds
as a result of noncompliance by the Organization with the terms of the grant. In addition, if the
Organization terminates its LSC grant activities, all unexpended funds are to be returned to LSC.
The Organization recognizes interest on lawyer trust account (IOLTA) grant funds in the period
received. Funds remaining unexpended at the end of an accounting period are recorded as net
assets with donor restrictions until funds are expended in accordance with specific terms of the
grant.
Contributions
Contributions are provided to the Organization either with or without restrictions placed on the gift
by the donor. Revenues and net assets are separately reported to reflect the nature of those gifts –
with or without donor restrictions. The value recorded for each contribution is recognized as
follows:
Nature of the Gift Value Recognized
Conditional gifts, with or without restriction
Gifts that depend on the Organization
overcoming a donor imposed barrier to
be entitled to the funds
Not recognized until the gift becomes
unconditional, i.e. the donor imposed barrier
is met
Unconditional gifts, with or without restriction
Received at date of gift – cash and
other assets
Fair value
Received at date of gift – property,
equipment and long-lived assets
Estimated fair value
Expected to be collected within one
year
Net realizable value
Collected in future years Initially reported at fair value determined
using the discounted present value of
estimated future cash flows technique
In addition to the amount initially recognized, revenue for unconditional gifts to be collected in
future years is also recognized each year as the present-value discount is amortized using the level-
yield method.
When a donor stipulated time restriction ends or purpose restriction is accomplished, net assets
with donor restrictions are reclassified to net assets without donor restrictions and reported in the
statements of activities as net assets released from restrictions. Absent explicit donor stipulations
for the period of time that long-lived assets must be held, expirations of restrictions for gifts of
land, buildings, equipment and other long-lived assets are reported when those assets are placed in
service.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
12
Gifts and investment income that are originally restricted by the donor and for which the restriction
is met in the same time period the gift is received are recorded as revenue with donor restrictions
and then released from restriction.
Conditional contributions and investment income having donor stipulations which are satisfied in
the period the gift is received and the investment income is earned are recorded as revenue with
donor restrictions and then released from restriction.
Government Grants
Support funded by grants is recognized as the Organization meets the conditions prescribed by the
grant agreement, performs the contracted services or incurs outlays eligible for reimbursement
under the grant agreements. Grant activities and outlays are subject to audit and acceptance by the
granting agency and, as a result of such audit, adjustments could be required.
The Organization recognizes grant funds from Legal Services Corporation (LSC) as restricted
support when all material conditions have been met. Funds remaining unexpended at the end of an
accounting period are recorded as deferred revenue. In accordance with normal LSC policies, the
Organization 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 noncompliance by the
Organization with the terms of the grant. In addition, if the Organization terminates its LSC grant
activities, all unexpended funds are to be returned to LSC.
Income Taxes
The Organization is exempt from income taxes under Section 501 of the Internal Revenue Code
and a similar provision of state law. However, the Organization is subject to federal income tax on
any unrelated business taxable income.
The Organization files tax returns in the U.S. federal jurisdiction.
Functional Allocation of Expenses
The costs of supporting the various programs and other activities have been summarized on a
functional basis in the statements of activities. The statements of functional expenses present the
natural classification detail of expenses by function. Certain costs have been allocated among the
program, management and general and fundraising categories based on the time and effort analysis
and other methods.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
13
In some cases, common expenses are incurred which support the work performed under more than
one grant. Such expenses are allocated between LSC funding and other grant funds as agreed by
these funding sources or, in the absence of an agreement, on the basis of allocations which are
deemed appropriate by the Organization’s management. Activities financed in party by LSC funds
are carried out in a manner consistent with the LSC Act, regulations and appropriations riders, as
amended. Activities financed by non-LSC sources of funding are carried out in accordance with
the restrictions and requirements imposed by LSC regulations on the recipient’s other sources of
funding. Non-LSC funding sources are notified by the Organization’s management prior to the
granting of funds that no funding received will be used in a manner contrary to the LSC Act,
regulations and appropriations rides, as amended.
Note 2: Grants and Contributions Receivable
Grants and contributions receivable consisted of the following at December 31, 2021:
Appropriations from State of Iowa 1,314,601$
IOLTA (Interest on Lawyes Trsut Account) grants 66,630
United Way agency allocations 240,591
Legal Services Coporation 166,500
Billings on conditional grant awards 376,898
Other unconditional awards 1,674,873
3,840,093$
All balances are anticipated to be collected in the following year. The Organization has not
recorded an allowance for uncollectible grants and contributions receivable as it believes all
amounts will be collected.
Note 3: Interest in Assets at Community Foundations
Pooled investments are included under investments in statement of financial position and consist of
assets held at the Quad Cities Community Foundation and the Cedar Rapids Community
Foundation (the Community Foundation) under designated agency agreements. Pooled
investments are carried at fair value, with gains and losses resulting from market fluctuations
recognized in the period in which the fluctuations occur. Investment return is reported as an
increase or decrease in net assets without donor restrictions unless the use of the assets is restricted
by the donor and the restrictions have not been met in the reporting period in which the investment
return was recognized.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
14
The Organization holds a share of the pooled funds and not direct ownership of the underlying
investment. The funds are subject to policies and governing documents of the Community
Foundation, including control over investment and asset management. Distributions from the fund
are paid to the Organization according to the Community Foundation’s distribution policy. The
Community Foundation maintains variance power over these assets. Variance power assures the
donor that if the charitable purpose of the contribution becomes impractical, impossible or
inconsistent with the charitable needs of the community served the distributions will be directed to
similar purposes in the community. Despite the variance power, the Organization believes the
Community Foundation will continue to make annual distributions to the Organization.
The fair value of the retained beneficial interest included in the statements of financial position was
$941,895 at December 31, 2021.
Note 4: Property and Equipment
Property and equipment at December 31, 2021 consists of:
Non-LSC LSC Total
Furniture and equipment 768,454$ 34,311$ 802,765$
Leasehold improvements 251,394 - 251,394
1,019,848 34,311 1,054,159
Less accumulated depreciation (742,683) (9,307) (751,990)
Net property and equipment 277,165$ 25,004$ 302,169$
Note 5: Deferred Revenue
The Organization has received the funds from various grants in which the Organization has not yet
overcome all material barriers in order to be entitled to the funding. The Organization anticipates
achieving these barriers in the upcoming fiscal year.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
15
Deferred revenue at December 31, 2021 consists of the following:
LSC Farm Worker Program 210,022$
LSC Disaster Supplemental Grant 38,664
LSC Disater Project 34,420
LSC TIG 9,786
Total 292,892$
Note 6: Paycheck Protection Program Loan
The Organization received a PPP loan established by the CARES Act and has elected to account
for the funding as a conditional contribution by applying ASC Topic 958-605, Revenue
Recognition.
Revenue is recognized when conditions are met, which include meeting FTE and salary reduction
requirements and incurring eligible expenditures. PPP loans are subject to audit and acceptance by
the U.S. Department of Treasury, Small Business Administration, or lender; as a result of such
audit, adjustments could be required to the recognition of revenue.
The Organization concluded it had substantially met all requirements for forgiveness as of
December 31, 2020 and, accordingly, recognized the award in the amount of $1,412,400 as public
support from government agencies in the 2020 statement of activities. The Organization received
formal forgiveness of the loan in 2021.
Note 7: Operating Leases
The Organization leases office space at its various office locations. The leases expire at various
dates between 2022 and 2027. All leases may be canceled if all or part of LSC funding is
eliminated, with periods ranging from 30 to 90 days.
Future minimum lease payments at December 31, 2021, were:
2022 403,194$
2023 256,278
2024 225,171
2025 196,143
2026 139,744
Thereafter 546,175
1,766,705$
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
16
Note 8: Capital Leases
The Organization leases telecommunications equipment under a capital lease agreement which
expires in December 2022. The Organization retains ownership of the equipment at the end of the
lease term. The assets and liabilities under the capital lease are recorded at the present value of the
minimum lease payments. The leased assets are reported with property and equipment and are
amortized over their estimated useful lives. Amortization of the assets under the capital lease is
included in depreciation expense. Total assets under lease were $278,479 as of December 31,
2021.
Minimum future lease payments under the capital lease as of December 31, 2021 are as follows:
Total Less Portion Principal
Required Representing Portion of
Payments Interest Payments
2022 99,790$ 2,518$ 97,272$
Total 99,790$ 2,518$ 97,272$
Note 9: Employee Benefits
Employees are credited with vacation from the first day of employment. Employees with less than
five years with the Organization accrue 20 days per year; employees with five to ten years with the
Organization accrue 24 days per year; and, employees with over ten years with the Organization
accrue vacation leave at 30 days per year. The maximum number of vacation hours that can be
accumulated and carried over into a new fiscal year per employee is 337.5 hours. The liability
shown is the accumulation of vacation pay through December 31, 2021 of $636,617.
The Organization has a 401(k) retirement plan for all eligible employees. All employees are
eligible for the plan, except for leased employees and all non-salaried clerical employees and law
clerks, following minimum service of six months. The employer contribution is 4.0%, with an
additional match of up to 3.0% for employees making contributions to the retirement plan. The
total net employer contributions to the retirement plan, including the employer match for the year
ended December 31, 2021, was $431,349.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
17
Note 10: Contributed Nonfinancial Assets
Donated Support
Contributions of services are recognized as revenue at their estimated fair value only when the
services received create or enhance nonfinancial assets or require specialized skills possessed by
the individuals providing the service and the service would typically need to be purchased if not
donated.
The value of donated services is derived by the number of hours a private attorney or an in-house
volunteer works on a case or activity multiplied by a predetermined hourly rate. The
predetermined hourly rate of $243 for volunteer attorneys was determined by market data and
industry standards. The value of donated services recognized in the statement of activities was
$1,046,800 during 2021.
Other Contributed Items
Donations of property and equipment are recorded as support at their estimated fair value. Such
donations are reported as unrestricted support unless the donor has restricted the donated asset to a
specific purpose. Assets donated with explicit restrictions regarding their use are reported as
restricted support. Absent donor stipulations regarding how long those donated assets must be
maintained, the Organization reports expirations of donor restrictions when the donated assets are
placed in service as instructed by the donor. The Organization reclassifies net assets with donor
restrictions to net assets without donor restrictions at that time.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
18
Note 11: Net Assets
Net Assets With Donor Restrictions
Net assets with donor restrictions at December 31 are restricted for the following purposes or
periods:
Subject to expenditure for specified purpose
IOLTA - BOA 9,383$
Parent representation 105,000
Public school legal clinics 30,000
Technology 20,000
Community stabilization 55,000
Housing 90,000
Disaster 7,764
Eviction diversion project 595,833
912,980
Subject to the passage of time
Promises to give that are not restricted by donors but
which are unavailable for expenditure until due 3,840,093
Other 125,092
3,965,185
Not subject to spending policy or appropriation
Beneficial interest in assets held by the:
Cedar Rapids Community Foundation 289,481
Quad Cities Community Foundation 480,140
769,621
5,647,786$
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
19
Net Assets Without Donor Restrictions
Net assets without donor restrictions at December 31 have been designated for the following
purposes:
Net Assts Without Donor Restrictions
Undesignated 7,389,310$
Designated by the Board for Endowment 30,269
Invested in property and equipment, net of related debt 204,897
Net assets without donor restrictions 7,624,476$
Net Assets Released from Restrictions
Net assets were released from donor restrictions by incurring expenses satisfying the restricted
purposes or by occurrence of other events specified by donors.
Expiration of time restriction 4,400,880$
Satisfaction of purpose restrictions
Legal Services Corporation 5,390,919
IOLTA 406,902
COVID-19 51,106
Community stabilization 20,000
Expungement 4,577
Health and law 2,612
Hotline for older Iowans 10,000
Housing 579,582
Parent representation 26,753
Public school legal clinics 81,138
Technology 4,196
10,978,665$
Note 12: Endowment Funds
The Organization’s governing body is subject to the Uniform Prudent Management of Institutional
Funds Act (UPMIFA). As a result, the Organization classifies amounts in its donor-restricted
endowment funds as net assets with donor restrictions because those net assets are time restricted
until the governing body appropriates such amounts for expenditures. Most of those net assets also
are subject to purpose restrictions that must be met before being reclassified as net assets without
donor restrictions.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
20
Additionally, in accordance with UPMIFA, the Organization considers the following factors in
making a determination to appropriate or accumulate donor-restricted endowment funds:
1. Duration and preservation of the fund
2. Purposes of the Organization and the fund
3. General economic conditions
4. Possible effect of inflation and deflation
5. Expected total return from investment income and appreciation or depreciation of
investments
6. Other resources of the Organization
7. Investment policies of the Organization
The Organization’s endowment consists of approximately 4 individual funds established for a
variety of purposes. The endowment includes both donor-restricted endowment funds and funds
designated by the governing body to function as endowments (board-designated endowment
funds). As required by accounting principles generally accepted in the United States of America
(GAAP), net assets associated with endowment funds, including board-designated endowment
funds, are classified and reported based on the existence or absence of donor-imposed restrictions.
The composition of net assets by type of endowment fund at December 31, 2021, was:
Without With
Donor Donor
Restrictions Restrictions Total
Board-designated endowment funds 30,269$ -$ 30,269$
Donor-restricted endowment funds - 769,621 769,621
Total endowment funds 30,269$ 769,621$ 799,890$
The change in endowment funds for the year ended December 31, 2021 is as follows:
Without With
Donor Donor
Restrictions Restrictions Total
Endowment net assets, beginning of year 26,936$ 721,993$ 748,929$
Investment return, net 3,333 64,342 67,675
Contributions - 18,200 18,200
Appropriation of endowment assets for expenditures - (34,914) (34,914)
Endowment net assets, end of year 30,269$ 769,621$ 799,890$
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
21
Investment and Spending Policies
The Organization has adopted investment and spending policies for endowment assets that attempt
to provide a predictable stream of funding to programs and other items supported by its endowment
while seeking to maintain the purchasing power of the endowment. Endowment assets include
those assets of donor-restricted endowment funds the Organization must hold in perpetuity or for
donor-specified periods, as well as those of board-designated endowment funds. Under the
Organization’s policies, endowment assets are invested in a manner that is intended to produce
results that produce maximum long-term investment returns. Actual returns and risk in any given
year may vary.
To satisfy its long-term rate of return objectives, the Organization relies on a total return strategy in
which investment returns are achieved through both current yield (investment income such as
dividends and interest) and capital appreciation (both realized and unrealized). The Organization
targets a diversified asset allocation that places a greater emphasis on equity-based investments to
achieve its long-term return objectives within prudent risk constraints.
The Organization has a spending policy of appropriating for expenditure each year 4.5 percent of
its endowment fund’s average fair value over the prior 20 quarters through the year end preceding
the year in which expenditure is planned. In establishing this policy, the Organization considered
the long-term expected return on its endowment. Accordingly, over the long term, the
Organization expects the current spending policy to allow its endowment to grow at an average of
7.0 percent annually. This is consistent with the Organization’s objective to maintain the
purchasing power of endowment assets held in perpetuity or for a specified term, as well as to
provide additional real growth through new gifts and investment return.
Underwater Endowments
The governing body of the Organization has interpreted UPMIFA as not requiring the maintenance
of purchasing power of the original gift amount contributed to an endowment fund, unless a donor
stipulates the contrary. As a result of this interpretation, when reviewing its donor-restricted
endowment funds, the Organization considers a fund to be underwater if the fair value of the fund
is less than the sum of
a) the original value of initial and subsequent gift amounts donated to the fund and
b) any accumulations to the fund that are required to be maintained in perpetuity in
accordance with the direction of the applicable donor gift instrument.
The Organization has interpreted UPMIFA to permit spending from underwater funds in
accordance with the prudent measures required under the law.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
22
Note 13: Liquidity and Availability
Financial assets available for general expenditure, that is, without donor or other restrictions
limiting their use, within one year of December 31, 2021, comprise the following:
Cash and cash equivalents 4,005,010$
Investments 6,205,904
Grants and contributions receivable 3,840,093
14,051,007
Less financial assets of Iowa Legal Aid Foundation (1,409,169)
12,641,838$
The Organization structures its financial assets to be available as its general expenditures,
liabilities, and other obligations come due. The Organization invests cash in excess of daily
requirements in various short-term investments.
Iowa Legal Aid Foundation has a separate board that controls availability of funds to the
Organization. The Organization may make grant requests to the Foundation for access to these
funds.
Note 14: Disclosures About Fair Value of Assets and Liabilities
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. Fair value measurements
must maximize the use of observable inputs and minimize the use of unobservable inputs. The
hierarchy comprises three levels of inputs that may be used to measure fair value:
Level 1 Quoted prices in active markets for identical assets or liabilities
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets
or liabilities, quoted prices in markets that are not active, or other inputs that are
observable or can be corroborated by observable market data for substantially the
full term of the assets or liabilities
Level 3 Unobservable inputs supported by little or no market activity and that are significant
to the fair value of the assets or liabilities
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
23
Recurring Measurements
The following table presents the fair value measurements of assets and liabilities recognized in the
accompanying statements of financial position measured at fair value on a recurring basis and the
level within the fair value hierarchy in which the fair value measurements fall at December 31,
2021:
Quoted
Prices in
Active
Markets for
Identical
Assets
Significant
Other
Observable
Inputs
Significant
Unobservable
Inputs
Investments
Measured
(Level 1) (Level 2) (Level 3) at NAV (A)
December 31, 2021
U.S. Treasury Bills 5,129,051$ 5,129,051$ -$ -$ -$
Money market funds 134,958 134,958 - - -
5,264,009 5,264,009 - - -
Interest in assets at Greater
Cedar Rapids Community Foundation 461,755 - - - 461,755
Interest in assets at Quad
Cities Community Foundation 480,140 - - - 480,140
Total Investments 6,205,904$ 5,264,009$ -$ -$ 941,895$
Fair Value Measurements Using
Total Fair
Value
(A) Certain investments that are measured at fair value using the net asset value per share (or its
equivalent) practical expedient have not been classified in the fair value hierarchy. The fair
value amounts included above are intended to permit reconciliation of the fair value
hierarchy to the amounts presented in the statements of financial position.
Following is a description of the valuation methodologies and inputs used for assets and liabilities
measured at fair value on a recurring basis and recognized in the accompanying statements of
financial position, as well as the general classification of such assets and liabilities pursuant to the
valuation hierarchy. There have been no significant changes in the valuation techniques during the
year ended December 31, 2021. For assets classified within Level 3 of the fair value hierarchy, the
process used to develop the reported fair value is described below.
Investments
Where quoted market prices are available in an active market, securities are classified within
Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are
estimated by using quoted prices of securities with similar characteristics or independent asset
pricing services and pricing models, the inputs of which are market-based or independently sourced
market parameters, including, but not limited to, yield curves, interest rates, volatilities,
prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in
Level 2 of the valuation hierarchy. In certain cases where Level 1 or Level 2 inputs are not
available, securities are classified within Level 3 of the hierarchy.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
24
Note 15: Significant Estimates and Concentrations
Accounting principles generally accepted in the United States of America require disclosure of
certain significant estimates and current vulnerabilities due to certain concentrations. Those
matters include the following:
Contributions
Approximately 30% of the Organization’s public support for the year ended December 31, 2021
came from LSC. LSC provided the Organization funding of $4,287,420 for the year ended
December 31, 2021. LSC funds are restricted to be used only for purposes authorized under the
Legal Services Corporation Act, regulations and appropriations riders, as amended, including those
contained in Section 509 of 110 Stat. 1321 (1996).
Approximately 18% of the Organization’s public support for the year ended December 31, 2021
was from an appropriation from the State of Iowa’s General Assembly. The 2021 session of the
Iowa General Assembly awarded Iowa Legal Aid $2,629,202. Funds are paid to Iowa Legal Aid
quarterly and may be subject to de-appropriation. $1,314,601 of this award is included in grants
and contributions receivable at December 31, 2021.
General Litigation
The Organization is subject to claims and lawsuits that arose primarily in the ordinary course of its
activities. It is the opinion of management the disposition or ultimate resolution of such claims and
lawsuits will not have a material adverse effect on the financial position, change in net assets and
cash flows of the Organization. Events could occur that would change this estimate materially in
the near term.
Investments
The Organization invests in various investment securities. Investment securities are exposed to
various risks such as interest rate, market and credit risks. Due to the level of risk associated with
certain investment securities, it is at least reasonably possible that changes in the values of
investment securities will occur in the near term and that such changes could materially affect the
amounts reported in the accompanying statements of financial position.
Note 16: Restatement of Beginning Balances
Effective January 1, 2021, the Organization changed the reporting for Iowa Legal Aid Foundation,
a financially interrelated organization to consolidate their activities. Previously, the Organization
had reported such interest as an investment in the Iowa Legal Aid Foundation with changes in the
Organization’s interest recorded through the statement of activities.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
25
The effects of the changes were as follows:
Without With
Donor Donor
Restrictions Restrictions Total
Beginning net assets at
January 1, 2021, as previously reported 6,524,777$ 4,998,019$ 11,522,796$
Increase (decrease) beginning net
assets as of January 1, 2021 698,545 (698,545) -
Beginning net assets at
January 1, 2021, as restated 7,223,322$ 4,299,474$ 11,522,796$
The effect on net assets without donor restrictions was an increase of $698,545 and the effect on
net assets with donor restrictions was a decrease of the same amount. There was no effect on the
change in net assets.
Note 17: Subsequent Events
Subsequent events have been evaluated through April 26, 2022, which is the date the financial
statements were available to be issued.
Subsequent to year end the Organization signed a 10 year, approximately $2,700,000, lease for a
new office space in Des Moines, Iowa. The anticipated move in date is late 2022.
Iowa Legal Aid
Notes to Consolidated Financial Statements
December 31, 2021
26
Note 18: Future Change in Accounting Principle
Accounting for Leases
The Financial Accounting Standards Board amended its standard related to the accounting for
leases. Under the new standard, lessees will now be required to recognize substantially all leases
on the statements of financial position as both a right-of-use asset and a liability. The standard has
two types of leases for statements of activities recognition purposes: operating leases and finance
leases. Operating leases will result in the recognition of a single lease expense on a straight-line
basis over the lease term similar to the treatment for operating leases under existing standards.
Finance leases will result in an accelerated expense similar to the accounting for capital leases
under existing standards. The determination of lease classification as operating or finance will be
done in a manner similar to existing standards. The new standard also contains amended guidance
regarding the identification of embedded leases in service contracts and the identification of lease
and nonlease components in an arrangement. The new standard is effective for annual periods
beginning after December 15, 2021, and any interim periods within annual reporting periods that
begin after December 15, 2022. The Organization is evaluating the effect the standard will have on
the financial statements; however, the standard is expected to have a material effect on the financial
statements due to the recognition of additional assets and liabilities for operating leases.
Supplementary Information
Iowa Legal Aid
Schedule of Support, Revenue, and Expenses for LSC Funds
Year Ended December 31, 2021
28
Basic Field
Grant
Private
Attorney
Involvement
Farm Worker
Project
COVID-19
Response
Grant -
Agricultural
Worker
SUPPORT AND REVENUE
Contributions 2,676,263$ 325,216$ 567,170$ 32,545$
Donated support - 1,046,800 - -
Miscellaneous revenue 5,723 - - -
Interest income 50,976 - - -
Total support and revenue 2,732,962 1,372,016 567,170 32,545
PERSONNEL EXPENSES
Lawyers 1,169,704 73,991 238,137 2,435
Paralegals 177,420 69,666 43 706
Other salaries 314,710 32,626 145,989 588
Employee benefits 666,086 82,060 128,499 1,583
Total personnel expenses 2,327,920 258,343 512,668 5,312
OTHER EXPENSES
Office and occupancy 232,052 39,454 32,384 2,791
Contract services 47,192 7,112 7,755 11
Supplies and travel 33,582 7,740 4,749 24,465
Library 23,271 2,787 483 -
Insurance 14,996 1,525 1,415 -
Audit fees 8,313 1,032 1,125 -
Training and related 6,465 2,833 1,373 -
Dues and fees 802 97 - -
Litigation 6,693 906 906 -
Other expenses 1,833 (291) 302 (33)
Donated support - 1,046,800 - -
Total other expenses 375,199 1,109,995 50,492 27,234
Capital expenditures - - - -
Depreciation 29,833 3,677 4,010 -
Total Expenses 2,732,952$ 1,372,015$ 567,170$ 32,546$
Iowa Legal Aid
Schedule of Support, Revenue, and Expenses for LSC Funds (continued)
Year Ended December 31, 2021
29
Pro Bono
Innovations
Disaster
Supplemental
Grant
Disaster
Project
Disaster Relief
Emergency
Grant
Technology
Improvement
Grant Total
59,208$ 554,851$ 19,437$ 49,782$ 2,948$ 4,287,420$
- - - - - 1,046,800
- - - - - 5,723
- - - - - 50,976
59,208 554,851 19,437 49,782 2,948 5,390,919
33,450 100,271 13,371 16,391 1,567 1,649,317
2,352 66,393 - 15,712 - 332,292
- 59,869 - - 281 554,063
12,714 79,287 6,043 11,236 600 988,108
48,516 305,820 19,414 43,339 2,448 3,523,780
5,971 21,459 - 5,491 320 339,922
1,449 37,950 - - 61 101,530
888 800 - - 37 72,261
90 - - - 4 26,635
386 - - - 17 18,339
210 - - - 9 10,689
1,149 11,516 - 895 11 24,242
260 55 - - - 1,214
169 - - - 7 8,681
118 - 23 70 2 2,024
- - - - - 1,046,800
10,690 71,780 23 6,456 468 1,652,337
- 177,250 - - - 177,250
- - - - 32 37,552
59,206$ 554,850$ 19,437$ 49,795$ 2,948$ 5,390,919$
Iowa Legal Aid
Schedule of Expenses Compared to Budget - AmeriCorps Grant Agreement
For the Year Ended December 31, 2021
30
Cost Category
Approved
Budget
Actual
9/1/2021 to
12/31/2021
Program Operating Costs 136,707$ 23,023$
Member Costs 224,590 62,616
Administrative Costs 8,994 2,560
Total 370,291$ 88,199$
Federal Share of Cost 180,892$ 51,487$
Grantee's Share of Cost 189,399 36,712
Total 370,291$ 88,199$
Contract # 21-AC-08
9/1/2021 through 12/31/2021
Cost Category
Approved
Budget
Actual
9/1/2020 to
12/31/2020
Actual
1/1/2021 to
12/31/2021 Total
Program Operating Costs 134,579$ 31,894$ 55,863$ 87,757$
Member Costs 199,797 67,313 114,063 181,376
Administrative Costs 8,426 2,135 6,291 8,426
Total 342,802$ 101,342$ 176,217$ 277,559$
Federal Share of Cost 168,618$ 69,748$ 98,870$ 168,618$
Grantee's Share of Cost 174,184 31,594 77,347 108,941
Total 342,802$ 101,342$ 176,217$ 277,559$
Contract # 20-AC-08
9/1/2020 through 12/31/2021
Report on Internal Control over Financial Reporting and
on Compliance and Other Matters Based on an Audit
of Financial Statements Performed in Accordance with
Government Auditing Standards
Independent Auditor’s Report
Board of Directors
Iowa Legal Aid
Des Moines, Iowa
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the consolidated financial statements of Iowa
Legal Aid, which comprise the Organization’s consolidated statement of financial position as of
December 31, 2021, and the related statements of activities, functional expenses and cash flows for the
year then ended and the related notes to the consolidated financial statements, and have issued our report
thereon dated April 26, 2022, which contained an emphasis of matters paragraph regarding an error
correction.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the consolidated financial statements, we considered the
Organization’s internal control over financial reporting (internal control) as a basis for designing audit
procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the
consolidated financial statements, but not for the purpose of expressing an opinion on the effectiveness of
the Organization’s internal control. Accordingly, we do not express an opinion on the effectiveness of the
Organization’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the entity’s consolidated financial statements will not be prevented, or detected and
corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in
internal control that is less severe than a material weakness, yet important enough to merit attention by
those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies, and therefore, material weaknesses or significant deficiencies may
exist that were not identified. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. We identified certain
deficiencies in internal control, described in the accompanying schedule of findings and questioned costs
as item 2021-001, that we consider to be a significant deficiency.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Organization’s consolidated financial
statements are free from material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a
direct and material effect on the consolidated financial statements. 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 or other matters that
are required to be reported under Government Auditing Standards.
Iowa Legal Aid’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the Organization’s
response to the findings identified in our audit and described in the accompanying schedule of findings
and questioned costs. The Organization’s response was not subjected to the other auditing procedures
applied in the audit of the consolidated financial statements, and accordingly, we express no opinion on
the response.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity’s internal control and compliance.
Accordingly, this communication is not suitable for any other purpose.
West Des Moines, Iowa
April 26, 2022
Report on Compliance for the Major Federal Program and Report
on Internal Control over Compliance
Independent Auditor’s Report
Board of Directors
Iowa Legal Aid
Des Moines, Iowa
Report on Compliance for the Major Federal Program
Opinion on the Major Federal Program
We have audited Iowa Legal Aid’s compliance with the types of compliance requirements identified as
subject to audit in the OMB Compliance Supplement that could have a direct and material effect on Iowa
Legal Aid’s major federal program for the year ended December 31, 2021. Iowa Legal Aid’s major
federal program is identified in the summary of auditor’s results section of the accompanying schedule of
findings and questioned costs.
In our opinion, Iowa Legal Aid complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on its major federal program
for the year ended December 31, 2021.
Basis for Opinion on the Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America (GAAS); the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States (Government Auditing
Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in
the “Auditor’s Responsibilities for the Audit of Compliance” section of our report.
We are required to be independent of Iowa Legal Aid and to meet our other ethical responsibilities, in
accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each
major federal program. Our audit does not provide a legal determination of Iowa Legal Aid’s compliance
with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design,
implementation, and maintenance of effective internal control over compliance with the requirements of
laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to Iowa Legal
Aid’s federal programs.
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the
compliance requirements referred to above occurred, whether due to fraud or error, and express an
opinion on Iowa Legal Aid’s compliance based on our audit. Reasonable assurance is a high level of
assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in
accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect
material noncompliance when it exists. The risk of not detecting material noncompliance resulting from
fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance
requirements referred to above is considered material, if there is a substantial likelihood that, individually
or in the aggregate, it would influence the judgment made by a reasonable user of the report on
compliance about Iowa Legal Aid’s compliance with the requirements of the major federal program as a
whole.
In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform
Guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material noncompliance, whether due to fraud or error, and design
and perform audit procedures responsive to those risks. Such procedures include examining, on a
test basis, evidence regarding Iowa Legal Aid’s compliance with the compliance requirements
referred to above and performing such other procedures as we considered necessary in the
circumstances.
Obtain an understanding of Iowa Legal Aid’s internal control over compliance relevant to the
audit in order to design audit procedures that are appropriate in the circumstances and to test and
report on internal control over compliance in accordance with the Uniform Guidance, but not for
the purpose of expressing an opinion on the effectiveness of Iowa Legal Aid’s internal control
over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal
control over compliance that we identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a
federal program on a timely basis. A material weakness in internal control over compliance is a
deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a
reasonable possibility that material noncompliance with a type of compliance requirement of a federal
program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in
internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance with a type of compliance requirement of a federal program that is less severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those charged
with governance.
Our consideration of internal control over compliance was for the limited purpose described in the
“Auditor’s Responsibilities for the Audit of Compliance” section above and was not designed to identify
all deficiencies in internal control over compliance that might be material weaknesses or significant
deficiencies in internal control over compliance. Given these limitations, during our audit we did not
identify any deficiencies in internal control over compliance that we consider to be material weaknesses,
as defined above. However, material weaknesses or significant deficiencies in internal control over
compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of the
Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
West Des Moines, Iowa
April 26, 2022
Iowa Legal Aid
Schedule of Expenditures of Federal Awards
Year Ended December 31, 2021
36
Federal
Assistance Pass-Through Entity
Listing or Other Federal
Federal Grantor/Program or Cluster Title Number Pass-Through Grantor Identifying Number Expenditures
Legal Services Corporation
Legal Assistance 09.516006 516006 3,013,824$
Migrant Project 09.516006 516006 567,170
COVID-19 Response Grant - Agricultural Worker 09.516006 516006 32,545
Midwest Disaster Coordination Project 09.516006 516006 19,437
Disaster Supplemental Appropriation Grant 09.516006 516006 554,851
Pro Bono Innovations 09.516006 516006 59,208
Technology Innovation Grant 09.516006 516006 2,948
Disaster Relief Emergency Grant (Derecho) 09.516006 516006 49,782
Total Legal Services Corporation 4,299,765
U.S. Department of Justice
Legal Assistance for Victims 16.524 2015-WL-AX-0036 165,336
Crime Victim Assistance 16.575 Iowa Department of Justice 2019-V2-GX-0058 150,847
Crime Victim Assistance 16.575 Iowa Department of Justice 2020-V2-GX-0032 50,817
Justice Systems Responses to Families 16.021 Siouxland Human Investment Partnership 2017-FJ-AX-0010 15,821
Total U.S. Department of Justice 382,821
Internal Revenue Service
Low Income Taxpayer Clinics 21.008 20-LITC0373-02-00 (416)
Low Income Taxpayer Clinics 21.008 21-LITC0373-03-00 60,167
Total Internal Revenue Service 59,751
U.S. Department of Health & Human Services
Aging Cluster
Special Programs for the Aging, Title III, Part B,
Grants for Supportive Services and Senior Centers 93.044 Area Agencies on Aging Various 319,619
Total for Aging Cluster CFDA 93.044 319,619
477 Cluster
Temporary Assistance for Needy Families 93.558 Iowa Department of Human Services DCAT5-19-003 68,751
Total for 477 Cluster CFDA 93.558 68,751
Total U.S. Department of Health & Human Services 388,370
Corporation for National and Community Service
AmeriCorps 94.006 Iowa Commission on Volunteer Services 19-AC-08 23
AmeriCorps 94.006 Iowa Commission on Volunteer Services 20-AC-08 101,005
AmeriCorps 94.006 Iowa Commission on Volunteer Services 21-EV-01 2,880
AmeriCorps 94.006 Iowa Commission on Volunteer Services 21-AC-08 51,487
Total Corporation for National and Community Service 155,395
U.S. Department of Housing and Urban Development
Emergency Solutions Grant 14.231 Iowa Finance Authority ESG -777054-21 81,278
COVID-19 Emergency Solutions Grant 14.231 Iowa Finance Authority ESG-CV-77054-20 199,711
Emergency Solutions Grant 14.231 Iowa Finance Authority 21-ILA 01 468,082
COVID-19 Education and Outreach Initiatives 14.416 FEO2100214 20,000
Education and Outreach Initiatives 14.416 FEIO20025 77,847
U.S. Department of Housing and Urban Development 846,918
U.S. Department of Veteran Affairs
Supportive Services to Veterans Families Program 64.033 Primary Health Care 13-IA-103 26,681
Supportive Services to Veterans Families Program 64.033 Hawkeye Community Action Agency 15-IA-192 9,125
Supportive Services to Veterans Families Program 64.033 Family Alliance for Veterans 14-IA-191 264
Total U.S. Department of Veteran Affairs 36,070
Total Federal Awards 6,169,090$
Iowa Legal Aid
Schedule of Expenditures of Federal Awards
Year Ended December 31, 2021
37
Notes to Schedule
1. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal
award activity of Iowa Legal Aid (the Organization) under programs of the federal government for
the year ended June 30, 2021. The information in this Schedule is presented in accordance with the
requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Because the Schedule presents only a selected portion of the operations of the Organization, it is not
intended to and does not present the financial position, changes in net position or cash flows of the
Organization.
2. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such
expenditures are recognized following the cost principles contained in the Uniform Guidance, or
other applicable regulatory guidance, wherein certain types of expenditures are not allowable or are
limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or
credits made in the normal course of business to amounts reported as expenditures in prior years. The
Organization has elected not to use the 10 percent de minimis indirect cost rate allowed under the
Uniform Guidance.
3. The Organization did not pass through any federal awards to subrecipients during the year ended
December 31, 2021.
Iowa Legal Aid
Schedule of Findings and Questioned Costs
Year Ended December 31, 2021
38
Section I - Summary of Auditor’s Results
Financial Statements
1. Type of report the auditor issued on whether the financial statements audited were prepared in
accordance with GAAP:
Unmodified Qualified Adverse Disclaimer
2. Internal control over financial reporting:
Material weakness(es) identified? Yes No
Significant deficiency(ies) identified? Yes None reported
Noncompliance material to the financial statements noted?
Yes
No
Federal Awards
3. Internal control over major federal awards programs:
Material weakness(es) identified? Yes No
Significant deficiency(ies) identified? Yes None reported
4. Type of auditor’s report issued on compliance for major federal awards program(s) were:
Unmodified Qualified Adverse Disclaimer
5. Any audit findings required to be reported in accordance with 2
CFR 200.516(a)?
Yes
No
Iowa Legal Aid
Schedule of Findings and Questioned Costs (Continued)
Year Ended December 31, 2021
39
6. Identification of major federal programs:
Name of Federal Program or Cluster
Assistance
Listing
Number
Legal Services Corporation 09.516006
7. Dollar threshold used to distinguish between Type A and Type B programs: $750,000.
8. Auditee qualified as a low-risk auditee? Yes No
Iowa Legal Aid
Schedule of Findings and Questioned Costs (Continued)
Year Ended December 31, 2021
40
Section II - Financial Statement Findings
Reference
Number Finding
2021-001 Significant Deficiency
Finding: The Organization was incorrectly reporting a financially interrelated organization as an
investment in net assets when it should have been consolidated as part of the Organization's financial
statements.
Criteria or specific requirement: Per FASB ASC 958-810-25, a nonprofit with a controlling financial
interest in another nonprofit through direct or indirect ownership of a majority voting interest or sole
corporate membership in that other nonprofit shall consolidate that other nonprofit, unless control does not
rest with the majority owner or sole corporate member (for example, if the subsidiary is in legal
reorganization or bankruptcy), in which case consolidation is prohibited, as discussed in paragraph 810-10-
15-10.
Condition: The Organization improperly identified Iowa Legal Aid Foundation as a related, but not
financially interrelated entity, when in fact, Iowa Legal Aid Foundation is a financially interrelated
organization that meets the criteria for consolidation.
Effect: The Organization was incorrectly reporting a Iowa Legal Aid Foundation as an investment in net
assets when it should have been consolidated as part of the Organization's financial statements.
Cause: While the Organization appoints the entire board for the Foundation, there is only one position
that overlaps between the two boards. As such, it created the impression that control did not exist.
Recommendation: The Organization should review any related entities and work through a detailed
analysis in accordance with the guidance to verify proper treatment and inclusion in the Organization's
financials.
Views of Responsible Officials: The Organization agrees with the finding and has consolidated Iowa
Legal Aid Foundation as part of it's financial statements.
Section III - Federal Award Findings and Questioned Costs
Reference
Number Finding
There were no findings to report.
Iowa Legal Aid
Summary of Prior Year Findings
Year Ended December 31, 2021
41
Reference
Number Finding Status
2021-001 Finding: Revenue Recognition
Prior Year Recommendation: Revenue
recognition determinations should be made by
the finance department, in coordination with
program and development staff, upon receipt of
a grant award.
Implemented