Kentucky audit shows unemployment employees accessed own claims

Kentucky Office of Unemployment Insurance
Kentucky Office of Unemployment Insurance
Updated: Apr. 22, 2021 at 6:30 PM EDT
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LOUISVILLE, Ky. (WAVE) - Kentucky Auditor Mike Harmon has reported potential criminal activity in the state’s unemployment office to Attorney General Daniel Cameron after discovering at least 10 unemployment employees filed for benefits despite having full-time jobs, and accessed their own accounts, possibly making changes to their claims.

The findings are part of the second volume of the Statewide Single Audit of Kentucky (SSWAK), which is performed every year.

The second volume of the audit contains many repeat findings from the first volume, including the 400,000 emails sent to Kentucky’s Office of Unemployment Insurance that were unopened and ignored and the state’s auto-pay system, which automatically sent out benefits to claimants before verifying their identity, or if they were unemployed.

“I’m sure the attempt was to try to get claims out as quickly as possible, but that led to more problems, and it left it more vulnerable to fraud,” Harmon said.

In addition, the first volume of the audit revealed 37 state employees filed for jobless benefits for “loss of a part-time job” despite being full-time employees of the commonwealth.

The second volume went further into the detail about these employees:

“Additional reviews by auditors found that at least 10 employees of OUI, who had the ability to make changes in the system, had accessed their own UI claims within the system,” a press release sent by Harmon’s office said. “The employees accessed their claims despite receiving training that instructed them not to do so. Employees having the ability to access and make changes to their own accounts is a significant internal control risk, and OUI did not follow its own policies to take preventive steps to ensure employees made no changes to their own accounts.”

Furthermore, Harmon’s audit discovered Kentucky suspended a federal program in which states are required by law to collect unemployment compensation debts which remain uncollected a year after the debt is due through the U.S. Bureau of Fiscal Service’s Treasury Offset Program, or TOP.

“Without obtaining permission from the U.S. Department of Labor, OUI suspended TOP collections on April 6, 2020, and had not resumed as of February 17, 2021,” the release said. “In May 2020, the Commonwealth received word from the U.S. Department of Labor that TOP collections could not be suspended. Again, in February 2021, a follow-up email from the U.S. Department of Labor reiterated that states are not to suspend participation in TOP,” the release continued.

It is unclear how much Kentucky would have recovered if it had not suspended its participation in TOP. In federal fiscal year 2020, TOP recovered $226.9 million for states that participated in the unemployment insurance program nationwide.

To read the full audit, click here.

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