Finding 624933 (2022-002)

Reference Number: 2022-002 Compliance Requirement: Eligibility Type of Finding: Internal Control Internal Control Impact: Material Weakness Compliance Impact: Nonmaterial Noncompliance Repeat of Prior Year Finding: 2021-008 and 2020-006 Assistance Listing Number(s) and Title(s): 17.225 ? Unemployment Insurance Federal Awarding Agency: U. S. Department of Labor U. S Department of Homeland Security Federal Award Number: UI-37208-22-55-A-1 Pass-through Entity: None Pass-through Award Number: None Questioned Costs: $101,085.00 The Alabama Department of Labor did not have controls in place to ensure payments were not made to deceased or incarcerated claimants. Finding The Uniform Guidance, 2 CFR 200.303, requires non-Federal entities receiving Federal Awards (i.e., auditee management) to establish and maintain effective internal controls over the Federal Award that provide reasonable assurance that the non-Federal entity is managing the Federal Award in compliance with Federal statutes, regulations, and terms and conditions of the Federal Award. 20 CFR 604.3(a) requires a State to only pay an individual who is able to work and available for work for the week which Unemployment Compensation (UC) is claimed. Based on work performed on unemployment compensation payments at the Alabama Department of Labor, for the period of October 1, 2021 through September 30, 2022, we identified 243 payments, totaling $58,809.00, which were made to 22 deceased claimants. We also identified an additional 186 payments, totaling $42,276.00, which were made to 27 incarcerated claimants. The combined improper payments to deceased or incarcerated claimants total $101,085.00 for the Unemployment Insurance Program. The Alabama Department of Labor did not have internal controls in place which were adequately designed to identify deceased or incarcerated claimants in a timely manner in order to help prevent and/or detect improper payments. The lack of a well-designed system of internal controls, to identify deceased or incarcerated claimants could cause the Alabama Department of Labor to continue to pay benefits to claimants who are deceased or incarcerated. Recommendation The Alabama Department of Labor should establish and maintain effective internal controls to help ensure payments are not made to deceased or incarcerated claimants.