Federal Award Findings, Questioned Costs and Corrective Action Plan

Federal Award Findings, Questioned Costs and Corrective Action Plan(Reformatted from FY 2009 Single Audit Report)Effect: Failure to operate the BAM program in accordance with the requirements can result in noncompliancewith federal regulations and failure to identify overpaid, underpaid, or erroneously denied claims. This finding is asignificant deficiency in internal control over compliance and noncompliance with the Unemployment Insuranceprograms’ special tests and provisions requirements.Cause: Due to limited staff during the period, the Benefit Accuracy Measurement Unit was unable to test theminimum number of benefit payments.Recommendation: The Benefit Accuracy Measurement Unit should test the minimum number of benefit paymentsfor each week, quarter, or year to comply with federal guidelines.Agency Response: ConcurContact person: Andrew Baldwin, Deputy UI Program Administrator, (520) 770-3769Anticipated completion date: June 30, 2010Agency Corrective Action Plan: During state fiscal year 2009, unemployment insurance claims increased by over400% and the Division of Employment and Rehabilitation Services (DERS) experienced staffing shortages andhigh staff turnover. As a result, DERS was unable to sample the required number of claims for the BenefitAccuracy Measurement (BAM) process. DERS increased staffing to address the increase in unemploymentinsurance activities and increased the BAM sample size to ensure sufficient cases are pulled each quarter. For thequarter ending March 31, 2010, DERS exceeded the federal target requirement.09-107CFDA No.: 17.225 Unemployment Insurance, #s UI-15108-06-55, UI-15785-07-55, UI-16733-08-55, and UI-18007-09-5517.225 ARRA—Unemployment Insurance, # UI-18007-09-55U.S. Department of LaborAward Period: October 1, 2005 through September 30, 2008October 1, 2006 through September 30, 2009October 1, 2007 through September 30, 2010October 1, 2008 through September 30, 2011ReportingQuestioned Cost: N/AFindingCriteria: In accordance with 29 CFR §97.20(b)(6), amounts presented on the reports should agree to the entity’sfinancial records.Condition and context: The Department of Economic Security, Division of Employment and RehabilitationServices, did not always follow its policies and procedures to ensure that information reported was supported bythe Division’s records. Specifically, the Division was unable to provide supporting documentation for variousfinancial and nonfinancial data reported on its December, 31, 2008, and June 30, 2009, ETA 581–ContributionOperations reports and its June 30, 2009, ETA-227–Overpayment Detection and Recovery Activities reports.Effect: Incorrect financial and nonfinancial data may be submitted to the federal grantor, resulting in errors inanalysis or other determinations. This finding did not result in questioned costs since these reports were not usedto request reimbursement of federal expenditures. This finding is a significant deficiency in internal control overcompliance and noncompliance with the Unemployment Insurance and ARRA—Unemployment Insuranceprograms’ reporting requirements.10