Kentucky’s Workplace of Unemployment Insurance coverage is unable to precisely decide the quantity of claims nonetheless excellent for the 2020 fiscal 12 months, state auditor mentioned.
FRANKFORT, Ky. — In March, the primary case of COVID-19 was confirmed in Kentucky. The commonwealth shut down eating places and companies together with barbers, hair and nail salons. Cancelations in journey, tournaments, and concert events impacted hospitality jobs throughout Kentucky.
With no job or earnings, tens of hundreds of Kentuckians utilized for unemployment advantages. The pandemic uncovered a significant subject reported on by WHAS11–Kentucky’s system was not prepared to deal with the huge quantity of individuals making use of for unemployed assist on the similar time. By the tip of March, the backlog had skyrocketed.
State officers needed to arrange on-line programs solely to keep away from in-person unfold of COVID-19, which added to the frustration of unemployed staff.
The CARES Act was lastly handed in April however Kentucky’s system and state officials were already overwhelmed. In July, Kentucky contracted with accounting agency Ernst & Young to assist clear the backlog. The contract has been prolonged twice for a complete of $17 million. The third extension goes to the tip of the 12 months.
We discovered in July, the state had fired the head of Kentucky’s unemployment in Could. Muncie McNamara was solely on the job for 5 months. McNamara said at listening to referred to as by legislators that he was fired “with out trigger.”
Tuesday, December 22, the Kentucky Finance and Administration Cupboard launched a abstract of its accomplished annual audit of the Commonwealth of Kentucky’s Complete Annual Monetary Report (CAFR). Auditor Mike Harmon additionally issued a certified opinion on the Unemployment Insurance coverage (UI) Fund. In response to Harmon, there’s an unknown quantity owed to those that filed for unemployment advantages throughout Fiscal 12 months 2020, which ended June 30.
“We’ve seen quite a few tales about our pals and neighbors who’ve been displaced from their jobs and filed for unemployment advantages to assist them and their households make ends meet,” mentioned Auditor Harmon. “What our workplace discovered throughout our CAFR audit is that the Workplace of Unemployment Insurance coverage is unable to precisely decide the quantity of claims nonetheless excellent for the fiscal 12 months that ended on June 30, and a big backlog of claims stay unresolved.”
The report is required beneath KRS 48.800(3). The legislation requires an entire report of the monetary transactions of the previous 12 months and of the monetary situation of the Commonwealth of Kentucky as of the tip of the fiscal 12 months. The position of the Workplace of the Auditor of Public Accounts is to specific an opinion as as to if these monetary statements are free of fabric misstatements based mostly on our audit, based on the auditor’s workplace.
Some key takeaways from Harmon’s opinion letter to the Finance and Administration Cupboard Secretary:
- Kentucky’s unemployment workplace had poor inside controls over profit funds which elevated danger of fraud
- Key inside controls eradicated that will have helped cut back danger of improper funds; consequently, some claimants might have acquired advantages with out verification of eligibility
- No dependable information supplied on the variety of unemployment claims nonetheless owed
- Administration hasn’t supplied an estimate of the monetary influence of backlog claims
“The Kentucky Workplace of Unemployment Insurance coverage had poor inside controls over profit funds which elevated the chance of fraud and undetected materials misstatements. Through the fourth quarter of fiscal 12 months 2020, the Workplace of Unemployment Insurance coverage, in an effort to expedite unemployment profit funds, eradicated key inside controls that have been in place to cut back the chance of improper funds.
In consequence, funds have been paid to claimants with out verification of eligibility. A major backlog of unprocessed claims existed at year-end and as of the date of our audit report. Administration was unable to supply an inexpensive or dependable estimate of the monetary assertion influence of this backlog of claims.
Due to this, we have been unable to acquire enough applicable audit proof to conclude that the accounts payable stability within the unemployment compensation fund was free of fabric misstatement.”
“Along with persevering with the uncertainty for hundreds of Kentuckians ready for unemployment claims to be processed, the shortcoming to supply dependable information on the quantity of claims nonetheless owed provides to the problem that faces the Basic Meeting as legislators return in January to craft a brand new finances,” mentioned Auditor Harmon. “It’s crucial for UI officers to handle the issues that led to this subject, in order that dependable information may be supplied for the present fiscal 12 months and going ahead.”
The Workplace of the Auditor of Public Accounts will launch extra element on the particular points auditors discovered throughout the UI system once we subject the primary quantity of the Statewide Single Audit of Kentucky (SSWAK) within the coming months.
Assessment the full statewide financial report here.