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HRD-85-51 1 (1985-08-22)

handle is hein.gao/gaobabfgw0001 and id is 1 raw text is: RESTRICTED - no.. 't ''S its!de the *enerml Accounting Offire ':% 'f specific approval by the Oflic2 . b 35 /22 RP2- BY THE US GENERAL ACCOUNTING OFF CE Report To The Honorable Orrin G. Hatch And The Honorable Jeremiah Denton United States Senate The Establishment Of Alternative Corporations By Selected Legal Services Corporation Grant Recipients GAO reviewed corporations established by three Legal Services Corporation (LSC) grant recipients allegedly to avoid grant restrictions. In reviewing these alternative corporations, GAO found that: --The LSC Act and regulations do not prohibit LSC grant recipients from establishing alternative cor- porations provided that funds transferred to the alternative corporations are used in accordance with the LSC Act and regulations. --In Texas and Connecticut the establishment of the alternative corporations GAO reviewed has enabled the grant recipients to circumvent restrictions in the LSC Act and regulations. --The LSC grant recipient and alternative corporation in Maine have operated independently since 1981 and complied with the LSC Act and regulations. GAO recommends that LSC apply restrictions in the LSC Act and regulations to the grant reci pients and alternative corporations in Texas and Connecticut as though they were single entities because, since early 1982, they have maintained such close relationships and such an identity of interests that, in GAO's view, they are not separate entities for purposes of compliance with the LSC Act. D S tt~ L0 's5Q? 90o 127882 GAO/HRD-85-51 AUGUST 22, 1985

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