Performance Audit Report: DOL Complied with PIIA for FY 2020 but UI Improper Payment Data Did Not Represent Total Program Expenses (DOL OIG, 2021)

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REPORT TO THE OFFICE OF THE 
CHIEF FINANCIAL OFFICER                 
DATE ISSUED: AUGUST 6, 2021
REPORT NUMBER: 22-21-007-13-001
KPMG LLP’s report included herein was prepared under contract 
with the U.S. Department of Labor, Office of Inspector General, and 
by acceptance, it becomes a report of the Office of Inspector 
General.                                                                                      
   
_____________________________ 
  Assistant Inspector General for Audit 
U.S. Department of Labor 
 
THE U.S. DEPARTMENT OF LABOR 
COMPLIED WITH THE PAYMENT 
INTEGRITY INFORMATION ACT FOR  
FY 2020, BUT REPORTED 
UNEMPLOYMENT INSURANCE 
INFORMATION DID NOT REPRESENT 
TOTAL PROGRAM YEAR EXPENSES 

U.S. Department of Labor – Office of Inspector General  
TABLE OF CONTENTS 
 
 
 
-i-  
 
INSPECTOR GENERAL’S REPORT .................................................................... 1 
PERFORMANCE AUDIT REPORT ...................................................................... 4 
Background ................................................................................................ 9 
Objectives, Scope and Methodology ........................................................ 12 
Results and Conclusions .......................................................................... 13 
Findings and Recommendations .............................................................. 15 
Recommendation ..................................................................................... 17 
Prior Year Recommendation .................................................................... 17 
Additional Improvement Observation ....................................................... 17 
APPENDIX: AGENCY’S RESPONSE TO THE REPORT ................................... 19 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

U.S. Department of Labor 
Office of Inspector General 
 
 
 
Washington, D.C. 20210 
INSPECTOR GENERAL’S REPORT 
DOL FY 2020 REPORTING OVER IMPROPER PAYMENTS 
 
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REPORT NO. 22-21-007-13-001 
 GENERAL’S REPORT 
Mr. Kevin Brown 
Acting Chief Financial Officer 
U.S. Department of Labor 
200 Constitution Ave, NW 
Washington, DC 20210 
 
 
The United States Department of Labor (DOL) Office of Inspector General (OIG) 
contracted with the independent certified public accounting firm of KPMG LLP 
(KPMG) to conduct a performance audit related to DOL’s compliance with the 
Payment Integrity Information Act of 2019 (PIIA) for Fiscal Year (FY) 2020, which 
was the year ended September 30, 2020.  
 
The objective of KPMG’s performance audit was to evaluate DOL’s compliance 
with the requirements of PIIA as defined in Title 31 of the United States Code 
(U.S.C), section 3351.2. This included determining whether DOL:  
 
(1) Published improper payments information with the annual financial 
statement of DOL for the most recent fiscal year, and posted on the 
website of DOL that statement and any accompanying materials required 
under guidance of the Office of Management and Budget; 
 
(2) Conducted a program-specific risk assessment for each program or 
activity that conforms with the requirements of section 3352(a) (if 
required); 
 
(3) Published improper payment estimates for all programs and activities 
identified under section 3352(a) in the accompanying materials to the 
annual financial statement (if required); 
 
(4) Published programmatic corrective action plans prepared under section 
3352(d) that DOL may have in the accompanying materials to the annual 
financial statement; 
 
(5) Published improper payments reduction targets established under section 
3352(d) that DOL may have in the accompanying materials to the financial 

U.S. Department of Labor – Office of Inspector General 
DOL FY 2020 REPORTING OVER IMPROPER PAYMENTS 
 
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statement for each program or activity assessed to be at risk, and has 
demonstrated improvements and developed a plan to meet the reduction 
targets; and 
 
(6) Reported an improper payment rate of less than 10 percent for each 
program and activity for which an estimate was published under section 
3352(c). 
 
KPMG concluded DOL met all the requirements for compliance with PIIA. 
However, as KPMG noted in its report, DOL permitted state workforce agencies 
to suspend their improper payment sampling efforts for the final quarter of the 
Unemployment Insurance (UI) program year to reduce the burden on program 
resources responsible for processing UI benefit claims and implementing new 
COVID-19 pandemic related programs. In response to this change, DOL 
received direction from the Office of Management and Budget (OMB) to utilize 
the results from the first three quarters of the program year for its improper 
payment reporting in FY 2020.  
 
The OMB-approved decision to suspend fourth quarter program year testing 
permitted approximately $64.31 billion, or 74 percent of the total $86.91 billion 
program year expenses reported by DOL, to go untested for improper payments.  
 
Moreover, three new programs2 that provided federally funded unemployment 
benefits authorized by the Coronavirus Aid, Relief, and Economic Security Act of 
2020 (the CARES act) were excluded3 from the UI program improper payment 
information as they were not in existence for more than 12 months as of the 
reporting period. Therefore, improper payment information for these UI programs 
was not required to be published. These three programs in total comprised 
approximately $195.0 billion4, or 69 percent of the total $281.8 billion 
unemployment expenses reported by DOL for program year 2020. As such, 
DOL’s improper payment information is reflective of only $22.61 billion, or 8 
percent of total unemployment expenses reported by DOL for program year 
2020.  
 
 
1 Source: ETA data downloads; ETA 5159 reports for the period July 1, 2019 through June 30, 
2020; data as of July 12, 2021; https://oui.doleta.gov/unemploy/DataDownloads.asp  
2 Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation, 
and Federal Pandemic Unemployment Compensation. 
3 Subsequent to DOL’s improper payment reporting, GAO reported in COVID-19: Urgent Actions 
Needed to Better Ensure an Effective Federal Response, GAO-21-191, November 30, 2020, that 
COVID-19 relief laws did not require agencies to deem programs receiving relief funds that 
expended more than a threshold amount as susceptible to significant improper payments and 
suggested Congress to do so in any future legislation. 
4 Source: ETA data downloads; ETA 2112 reports for the period July 1, 2019 through June 30, 
2020; data as of May 24, 2021; https://oui.doleta.gov/unemploy/DataDownloads.asp 

U.S. Department of Labor – Office of Inspector General 
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Although DOL’s reported UI improper payment rate of 9.17 percent is compliant 
with PIIA, it is not representative of the total unemployment expenses for 
program year 2020. The OIG’s initial pandemic audit and investigative work 
indicate UI program improper payments, including fraudulent payments, is likely 
higher than 10 percent. 
 
We appreciate the cooperation and courtesies the Office of the Chief Financial 
Officer, Employment and Training Administration, and Office of Workers’ 
Compensation Programs extended KPMG and the OIG during this audit.  
 
 
 
 
Carolyn R. Hantz 
Assistant Inspector General for Audit 
 

U.S. Department of Labor – Office of Inspector General 
DOL FY 2020 REPORTING OVER IMPROPER PAYMENTS 
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PERFORMANCE AUDIT REPORT 

U.S. Department of Labor – Office of Inspector General 
DOL FY 2020 REPORTING OVER IMPROPER PAYMENTS 
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NO. 22-21-007-13-001 
Secretary and Acting Inspector General 
U.S. Department of Labor 
This report presents the results of our work conducted to address the performance audit 
objective related to the United States Department of Labor’s (DOL) compliance with the 
requirements contained in the Payment Integrity Information Act of 2019 (PIIA). Our work 
was primarily performed during the period of September 25, 2020, through May 3, 2021, and 
our scope period was for the fiscal year ended September 30, 2020. 
We conducted this performance audit in accordance with Government Auditing Standards 
issued by the Comptroller General of the United States, and the American Institute of 
Certified Public Accountants’ Standards for Consulting Services. Government Auditing 
Standards require that we plan and perform the audit to obtain sufficient, appropriate 
evidence to provide a reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objective. 
The objective of our audit was to evaluate DOL’s compliance with the requirements of PIIA 
as defined in Title 31 of the United States Code (U.S.C), section 3351.2. This included 
determining whether DOL: 
(1) Published improper payments information with the annual financial statement of DOL
for the most recent fiscal year, and posted on the website of DOL that statement and
any accompanying materials required under guidance of the Office of Management
and Budget (OMB);
(2) Conducted a program-specific risk assessment for each program or activity that
conforms with the requirements of section 3352(a) (if required);
(3) Published improper payment estimates for all programs and activities identified under
section 3352(a) in the accompanying materials to the annual financial statement (if
required);
(4) Published programmatic corrective action plans prepared under section 3352(d) that
DOL may have in the accompanying materials to the annual financial statement;
(5) Published improper payments reduction targets established under section 3352(d)
that DOL may have in the accompanying materials to the financial statement for each
program or activity assessed to be at risk, and has demonstrated improvements and
developed a plan to meet the reduction targets; and
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(6) Reported an improper payment rate of less than 10 percent for each program and
activity for which an estimate was published under section 3352(c).
Based on the performance audit procedures conducted and the results obtained, we have 
met our audit objective. Specifically, we evaluated DOL’s compliance with PIIA and 
determined the following: 
Criteria Met? 
Requirements 
Unemployment 
Insurance 
Federal 
Employees’ 
Compensation 
Act 
National 
Disaster 
Workforce 
Grants 
Published improper payments information 
with the annual financial statement of 
DOL for the most recent fiscal year, and 
posted on the website of DOL that 
statement and any accompanying 
materials required under guidance of 
OMB 
YES 
YES 
YES 
Conducted a program-specific risk 
assessment for each program or activity 
that conforms with the requirements of 
section 3352(a) (if required) 
YES 
YES 
YES 
Published improper payment estimates 
for all programs and activities identified 
under section 3352(a) in the 
accompanying materials to the annual 
financial statement (if required) 
YES 
YES 
YES 
Published programmatic corrective action 
plans prepared under section 3352(d) that 
DOL may have in the accompanying 
materials to the annual financial 
statement 
YES 
YES 
N/A 
Published improper payments reduction 
targets established under section 3352(d) 
that DOL may have in the accompanying 
materials to the financial statement for 
each program or activity assessed to be 
at risk, and has demonstrated 
improvements and developed a plan to 
meet the reduction targets 
YES(1) 
YES 
YES(2) 

U.S. Department of Labor – Office of Inspector General 
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Criteria Met? 
Requirements 
Unemployment 
Insurance 
Federal 
Employees’ 
Compensation 
Act 
National 
Disaster 
Workforce 
Grants 
Reported an improper payment rate of 
less than 10 percent for each program 
and activity for which an estimate was 
published under section 3352(c) 
YES(3) 
YES 
YES 
(1) The demonstrated improvement for the UI program was based on information from the BAM
State Data provided by management to support the 9.17 percent IP rate. We did note certain
cases in the BAM State Data for which there were no investigations of work search activities;
however, the applicable BAM investigators ultimately determined the related payments were
proper for other reasons.
(2) The NDWG program was not identified as susceptible to improper payments in prior years;
therefore, a reduction target was not applicable for FY 2020. DOL did publish a FY 2021
reduction target on https://paymentaccuracy.gov through the annual OMB payment integrity data
call.
(3) The UI improper payment rate was based on data for only the first three quarters of the
program year.
We did note that DOL permitted state workforce agencies to suspend their improper 
payment sampling efforts for the final quarter of the Unemployment Insurance (UI) program 
year (i.e., April 1, 2020 through June 30, 2020) to reduce the burden on program resources 
responsible for processing the significant increase in UI benefit claims due to the COVID-19 
pandemic, and implementing new COVID-19 pandemic related programs. As a result, DOL’s 
estimate for the UI improper payment rate was based on data from only the first three 
quarters of the program year rather than the entire program year, which was subsequently 
approved by OMB.  
In addition, DOL identified three new programs that provided federally funded unemployment 
benefits that were authorized by the Coronavirus Aid, Relief, and Economic Security Act of 
2020. The three UI programs identified were the Pandemic Unemployment Assistance 
(PUA), Pandemic Emergency Unemployment Compensation (PEUC), and Federal 
Pandemic Unemployment Compensation (FPUC). No improper payment information was 
required to be published for these programs, nor were they reported as part of the UI 
program improper payment information for FY 2020, as they were not in existence for more 
than 12 months as of the reporting period. These three programs in total comprised 
approximately $195.0 billion of the total $281.8 billion (69 percent) in unemployment 
expenses reported by DOL for program year 2020. 

U.S. Department of Labor – Office of Inspector General 
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This performance audit did not constitute an audit of financial statements or an attestation 
level report as defined under Government Auditing Standards or AICPA professional 
standards. KPMG cautions that projecting the results of our evaluation to future periods is 
subject to the risks that controls may become inadequate because of changes in conditions 
or because compliance with controls may deteriorate. This report is intended solely for the 
use of the DOL Secretary and Inspector General, Comptroller General of the United States, 
OMB, and relevant congressional committees; and is not intended to be and should not be 
relied upon by anyone other than these specified parties. 
August 6, 2021 

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BACKGROUND 
The Payment Integrity Information Act (PIIA) of 2019 requires federal agencies to 
identify programs susceptible to significant improper payments, estimate the 
improper payments for those programs, and report on actions to reduce the 
improper payments in those programs. The Act repealed several previous 
improper payment statutes, including the Improper Payments Information Act of 
2002, as amended by the Improper Payments Elimination and Recovery Act of 
2010; and the Improper Payment Elimination and Recovery Improvement Act of 
2012. The Office of Management and Budget (OMB) is required to prescribe 
guidance on implementation of the requirements under PIIA. OMB Circular No. 
A-123 Appendix C, Requirements for Payment Integrity Improvement, dated
June 26, 2018, was the applicable OMB guidance in effect for FY 2020.
The United States Department of Labor (DOL) has an established agency-wide 
risk assessment process to assess its programs for susceptibility to significant 
improper payments. Each year, DOL assesses one third of all its programs to 
ensure each program is assessed at least once every three years. DOL’s policies 
define significant improper payments as gross annual payments exceeding: (1) 
both 1.5 percent and $10 million of all program payments; or (2) $100 million 
regardless of percentage of program payments, which complies with the relevant 
OMB guidance. Based on its risk assessment process, DOL identified two 
programs that were susceptible to significant improper payments in FY 2020. The 
two programs identified were the Unemployment Insurance (UI) Program and the 
Federal Employees’ Compensation Act (FECA) Program. Additionally, DOL was 
required to report improper payment information for one additional program due 
to a statutory requirement in the program’s enabling legislation.  
We did note that several new programs that provided federally funded 
unemployment benefits were identified by DOL in FY 2020 as a result of specific 
provisions within the Coronavirus Aid, Relief, and Economic Security Act of 2020 
(the CARES Act), which was enacted in March 2020. The CARES Act was 
enacted in response to the economic fallout due to the COVID-19 pandemic. The 
most significant new programs included the Pandemic Unemployment 
Assistance (PUA), Pandemic Emergency Unemployment Compensation (PEUC), 
and Federal Pandemic Unemployment Compensation (FPUC). These three 
programs in total comprised approximately $195.0 billion of the total $281.8 
billion (69 percent) in unemployment expenses reported by DOL for program 
year 2020.  
DOL identified and reported these programs in its FY 2020 annual program 
inventory as required by OMB guidance. However, DOL did not conduct a risk 
assessment for the programs as the OMB guidance only required one to be 
completed after the program was in existence for at least 12 months. 

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Consequently, no improper payment information was required to be published for 
these programs, nor were they reported as part of the UI program improper 
payment information for FY 2020. 
 
The three programs for which improper payment information was reported in 
FY 2020 are described further below. 
 
UI Program 
 
The UI program provides partial wage replacement for eligible unemployed 
workers who become unemployed through no fault of their own and meet certain 
other eligibility requirements. The state workforce agencies (SWA) for each U.S. 
state, the District of Columbia, and certain U.S. territories administer their own UI 
program under guidelines established by federal statute. The UI program year 
runs from July 1 through June 30. For the 2020 program year, the UI program 
reported total outlays of $86.9 billion and estimated improper payments of $8.0 
billion. 
 
The improper payments estimate was developed from the UI program’s Benefit 
Accuracy Measurement (BAM) program. The BAM program is a payment 
integrity assessment survey in which SWAs perform quarterly audits on a sample 
of benefit payments for every program year. Each SWA is expected to review a 
sample of 360-480 claims every year, resulting in approximately 24,000 audited 
claims for the annual survey. The SWAs report their survey results in the BAM 
database, and this data is then analyzed to determine the national improper 
payment rate and related causes for the program year. The results of the 
analysis are then applied to total outlays and reported as required. 
 
Beginning in March 2020, the UI program experienced a significant increase in 
claims activity because of increasing unemployment resulting from the COVID-19 
pandemic. Initial UI claims (seasonally adjusted) averaged approximately 
217,000 per week during the 15 months prior to the pandemic; however, initial UI 
claims increased to an average of 2.9 million per week from mid-March 2020 
through June 30, 2020. To process the high volume of claims, certain SWAs 
redirected BAM personnel from sample testing to claims processing. SWA 
resource constraints were also further compounded by COVID-19 remote work 
requirements. SWAs began to notify DOL of these resource constraints in March 
2020, and in response, DOL permitted SWAs to suspend sampling in the BAM 
program for the fourth quarter of the program year (i.e., April 1, 2020 through 
June 30, 2020). As a result, the sampled claims analyzed for program year 2020 
improper payment reporting consisted only of claims for the 9-month period 
ended March 31, 2020. The sample sizes ranged from 58 to 569 claims for 
states, resulting in approximately 17,200 claims for the program year 2020 
analysis.  
 

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DOL management subsequently met with OMB in October 2020 to obtain 
guidance on how to estimate the improper rate for the program year given that 
DOL only had data for the first three quarters. Based on that discussion and 
other correspondence between OMB and DOL, OMB approved DOL to utilize the 
available data from the first three quarters to calculate its improper payment rate 
for the full program year. We noted that the PIIA states that “the head of the 
relevant executive agency shall – (A) produce a statistically valid estimate, or an 
estimate that is otherwise appropriate using a methodology approved by the 
Director of the Office of Management and Budget.” We did note that 
approximately $64.3 billion, or 74 percent of the total program year expenses 
reported, occurred during the fourth quarter of the program year. 
FECA Program 
The FECA program provides workers compensation coverage (i.e., wage-loss 
compensation and payment for medical treatment) to federal and postal workers 
for employment-related injuries and occupational diseases. DOL’s Division of 
Federal Employees’ Compensation manages the FECA program. For the 2020 
program year, the FECA program reported total outlays of $3.0 billion and 
estimated improper payments of $69.2 million. 
The improper payment estimate was developed from a random sample of 
approximately 500 medical and 500 compensation payments from the FECA 
program. The payments were assessed against the program’s criteria, and the 
supporting documentation maintained in the electronic case management 
system. Results from the sample were then extrapolated over the entire 
population to determine the improper payment rate. 
National Disaster Workforce Grants (NDWG) 
The NDWG are discretionary grants to states to respond to large, unexpected 
layoff events caused by national disasters. States typically pass the funding to 
sub-recipients who then hire dislocated or long-term unemployed workers to 
perform disaster cleanup activities. The Bipartisan Budget Act of 2018 (P.L. 115-
123) that provides for this funding states that all programs and activities
expending more than $10 million in any one fiscal year of funds appropriated for
disaster relief shall be deemed susceptible to significant improper payments for
purposes of improper payment reporting. In FY 2020, DOL reported
approximately $15.4 million in outlays for the NDWG, and no improper payments.
To meet the statutory requirement to report improper payment information for this 
program, DOL utilized a census approach for NDWG. The census measurement 
plan analyzed all Single Audit findings that are associated with the recipients and 
sub-recipients receiving NDWG. An estimated improper payment rate was then 

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extrapolated from the questioned costs in the identified findings. No questioned 
costs were identified in the FY 2020 analysis.  
OBJECTIVES, SCOPE AND METHODOLOGY 
The objective of our audit was to evaluate DOL’s compliance with the 
requirements of PIIA as defined in Chapter 33 of Title 31, United States Code 
(U.S.C), section 3351.2. This included determining whether DOL:  
 
(1) Published improper payments information with the annual financial 
statement of DOL for the most recent fiscal year, and posted on the 
website of DOL that statement and any accompanying materials required 
under guidance of OMB; 
 
(2) Conducted a program-specific risk assessment for each program or 
activity that conforms with the requirements of section 3352(a) (if 
required); 
 
(3) Published improper payment estimates for all programs and activities 
identified under section 3352(a) in the accompanying materials to the 
annual financial statement (if required); 
 
(4) Published programmatic corrective action plans prepared under section 
3352(d) that DOL may have in the accompanying materials to the annual 
financial statement; 
 
(5) Published improper payments reduction targets established under section 
3352(d) that DOL may have in the accompanying materials to the financial 
statement for each program or activity assessed to be at risk, and has 
demonstrated improvements and developed a plan to meet the reduction 
targets; and 
 
(6) Reported an improper payment rate of less than 10 percent for each 
program and activity for which an estimate was published under section 
3352(c). 
SCOPE AND METHODOLOGY 
The scope of our performance audit was DOL’s FY 2020 improper payment and 
reporting data as presented in the Other Information section of the FY 2020 

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Agency Financial Report (AFR); as well as the accompanying materials required 
under guidance of the OMB reported on paymentaccuracy.gov.5 
 
During our planning and testing phase, we conducted interviews, collected and 
inspected auditee-provided documentation and evidence, and participated in 
process and control walkthroughs with the programs identified as susceptible. A 
summary of the procedures we performed is as follows:  
 
• Obtained an understanding of DOL’s improper payments reporting process 
and associated controls through inquiries with management; 
• Reviewed DOL’s policies and procedures over the PIIA reporting process; 
• Reviewed management’s agency-wide risk assessment for all agency 
disbursements/programs; 
• Reviewed applicable legislation and regulations, increases in funding levels, 
or changes to the program-specific risk assessment process for each 
program or activity; 
• Reviewed the statistically-determined improper payments estimates for each 
program deemed susceptible to improper payments and the underlying 
sampling methodologies; 
• Reviewed a sample of SWA-submitted BAM claims data, and FECA benefit 
payments; 
• Reviewed DOL’s corrective action plans as reported on 
https://paymentaccuracy.gov through the annual OMB payment integrity data 
call; and 
• Obtained any OMB Waivers/Exemptions for improper payments reporting, if 
applicable.  
 
In carrying out this methodology, we obtained sufficient, appropriate evidence to 
provide a reasonable basis for our conclusions related to our audit objective. 
RESULTS AND CONCLUSIONS 
Based on our audit procedures performed, we determined that DOL met the PIIA 
compliance requirements. See below for additional details of our results.  
 
• Requirement 1 – Determine if DOL published improper payments information 
with the annual financial statement of DOL for the most recent fiscal year, and 
posted on the website of DOL that statement and any accompanying 
materials required under guidance of OMB. 
 
 
5 Beginning with FY 2020 reporting, information previously contained in the AFR that was no 
longer explicitly required by OMB Circular No. A-136, Financial Reporting Requirements, to be 
reported in the AFR was reported on https://paymentaccuracy.gov/ through the annual OMB 
payment integrity data call.  

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Yes. DOL published its AFR for FY 2020 on November 16, 2020, and posted the 
AFR on the agency website at www.dol.gov. The AFR included a Payment 
Integrity section with the applicable required subsections, which included a link to 
paymentaccuracy.gov for the accompanying materials required under guidance 
of the OMB. The information presented in the AFR and accompanying materials 
agreed to supporting documentation provided by DOL. 
 
• Requirement 2 – Determine if DOL conducted a program-specific risk 
assessment for each program or activity that conforms with the requirements 
of section 3352(a). 
 
Yes. DOL conducted a risk assessment based on the requirements in the 
applicable guidance issued by OMB. DOL continued to identify the UI and FECA 
programs as susceptible to improper payments. The NDWG program was also 
deemed susceptible to improper payments by its enabling legislation.  
 
DOL assessed 10 other programs for FY 2020, of which all 10 were identified as 
not susceptible to significant improper payments. The remaining DOL programs 
were reviewed in the last two years and were also identified as not susceptible to 
significant improper payments. Lastly, DOL reported four new programs that did 
not require a risk assessment. 
 
• Requirement 3 – Determine if DOL published improper payment estimates for 
all programs and activities identified under section 3352(a) in the 
accompanying materials to the annual financial statement. 
 
Yes. DOL published improper payment estimates for the UI, FECA, and NDWG 
programs. The UI program modified its statistical estimation process in FY 2020 
based on direction from OMB, and the FECA program utilized a statistical 
estimation approach that met a 95 percent confidence level, plus or minus 3 
percent. The UI program reported an improper payment rate of 9.17 percent, 
which resulted in an estimated $8.0 billion in gross improper payments. The 
FECA program reported an improper payment rate of 2.34 percent, which 
resulted in an estimated $69.2 million in gross improper payments. Lastly, the 
NDWG census approach did not identify any improper payments, reporting an 
improper payment rate of 0%. 
  
• Requirement 4 – Determine if DOL published programmatic corrective action 
plans prepared under section 3352(d) that DOL may have in the 
accompanying materials to the annual financial statement. 
 
Yes. DOL reported corrective actions for each of the reported root causes in the 
accompanying materials posted to paymentaccuracy.gov. Specifically, DOL 
reported corrective actions related to the following UI root cause categories: 
Program Design or Structural Issue, Inability to Authenticate Eligibility, 

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Administrative or Process Error Made, and Insufficient Documentation to 
Determine. In addition, DOL reported corrective actions related to the following 
FECA root cause categories: Inability to Access Data, Data Needed Does Not 
Exist, Administrative or Process Error Made, Other Party and Fraud Restitution. 
As the NDWG reported no improper payments, corrective actions were not 
applicable for that program.  
 
• Requirement 5 – Determine if DOL published improper payments reduction 
targets established under section 3352(d) that DOL may have in the 
accompanying materials to the financial statement for each program or 
activity assessed to be at risk, and has demonstrated improvements and 
developed a plan to meet the reduction targets. 
 
Yes. DOL met the established reduction targets of 9.99 percent and 3.15 percent 
published in the DOL FY 2019 AFR for the UI and FECA programs, respectively. 
The NDWG was a newly reported program for FY 2020; as such, no reduction 
target was established in the prior year. The demonstrated improvement for the 
UI program was based on information from the BAM State Data provided by 
management to support the 9.17 percent IP rate. We did note certain cases in 
the BAM State Data for which there were no investigations of work search 
activities; however, the applicable BAM investigators ultimately determined the 
related payments were proper for other reasons. The FY 2021 UI, FECA and 
NDWG reduction targets published by DOL in the FY 2020 OMB payment 
integrity data call were 9.00 percent, 3.10 percent, and 1.49 percent, 
respectively. 
 
• Requirement 6 – Determine if DOL reported an improper payment rate of less 
than 10 percent for each program and activity for which an estimate was 
published under section 3352(c). 
 
Yes. The UI, FECA, and NDWG programs met the requirement with an estimated 
improper payment rate of 9.17 percent, 2.34 percent, and 0 percent, respectively. 
However, as noted in the Background section of this report, the estimated UI 
improper payment rate was based on data that only included the first three 
quarters of the program year. Accordingly, we were not able to determine 
whether this estimated rate was representative of the improper payments that 
occurred during the fourth quarter of program year 2020. As this methodology 
was approved by OMB, we did not identify an instance of non-compliance related 
to this matter. 
FINDINGS AND RECOMMENDATIONS 
Our 2020 performance audit identified one finding, which is presented below. We 
discussed the finding with management and received their response, which is 
included in the appendix of this report. 

U.S. Department of Labor – Office of Inspector General 
DOL FY 2020 REPORTING OVER IMPROPER PAYMENTS 
 
-16- 
NO. 22-21-007-13-001 
 
Finding No. 20-01:  Improvements needed in documentation of changes to 
improper payments methodology 
 
As noted in the Background section above, the UI program experienced an 
unprecedented increase in claims activity in the fourth quarter of the program 
year because of increasing unemployment resulting from the COVID-19 
pandemic. This extraordinary increase in claims activity as well as the transition 
to remote work requirements caused significant challenges to the SWAs in 
processing claims during the fourth quarter. In response to these increasing 
burdens on SWA resources, DOL permitted SWAs to suspend the BAM sampling 
for the fourth quarter of the program year. 
 
Although DOL began permitting states to suspend the sampling of fourth quarter 
claims in March 2020, management did not formally request guidance from OMB 
on changes to the sampling and estimation plan until October of 2020. DOL did 
inform us that informal discussions were held with OMB prior to October 2020; 
however, they were unable to provide evidence of these discussions.  
 
The COVID-19 pandemic presented significant challenges to the UI program, 
which caused DOL to prioritize its resources for certain tasks in order to support 
the SWAs as they administered a high volume of unemployment claims and 
related benefits. Furthermore, the estimation process for the UI had not required 
any significant changes in a number of years and, therefore, DOL did not have 
procedures in place to formally communicate such changes in a timely manner.  
 
Lack of timely communication of proposed changes to improper payment 
estimation plans could impact OMB’s ability to properly assess the change and to 
consider potential alternatives to estimating the improper payment for the 
program year. 
 
OMB Circular No. A-123, Requirements for Payment Integrity Improvement, 
dated June 26, 2018, Part I.D.1, Step 2 states: 
 
Agencies should update their sampling and estimation plans, as 
needed, to reflect the current design and methods being used and 
incorporate refinements based on previous results, consultations 
with others, and/or recommendations from Inspectors General, 
GAO, or OMB. Any updated plans will need to be submitted to 
OMB no later than June 30 of the fiscal year for which the estimate 
is being produced. … Agencies should err on the side of caution 
and resubmit their plans if they are in doubt as to whether or not 
they need to. 

U.S. Department of Labor – Office of Inspector General 
DOL FY 2020 REPORTING OVER IMPROPER PAYMENTS 
 
-17- 
NO. 22-21-007-13-001 
RECOMMENDATION 
We recommend that DOL management develop procedures to ensure changes 
to its improper payment process are communicated to OMB in a timely manner 
and those communications are properly maintained for subsequent review and 
inspection. 
PRIOR YEAR RECOMMENDATION 
The following recommendation was issued in the Reporting over the U.S. 
Department of Labor’s FY 2019 Compliance with the Improper Payments and 
Elimination and Recovery Act report issued by the OIG on May 15, 2020. We 
followed up with management on the status of each recommendation.  
 
• Maintain management’s current focus on increasing its technical assistance 
and funding to states to improve the improper payment reduction strategies in 
order to reduce the improper payments estimate rate below the 10 percent 
threshold. 
 
Status: DOL has continued to provide SWA with guidance and assistance in 
addressing improper payments. However, we were unable to determine the 
impact of the fourth quarter UI activity, which comprised 74 percent of total UI 
expenses for the program year, on the estimated improper payment rate. As 
such, the recommendation remains open. We will conduct follow-up 
procedures in fiscal year 2021 to assess the current status of corrective 
actions.  
ADDITIONAL IMPROVEMENT OBSERVATION 
During our current year testing, we also identified a performance improvement 
opportunity related to DOL’s estimation sampling and estimation methodology for 
the NDWG program. Specifically, we noted DOL estimated an improper payment 
rate for the program using a census approach that relied on Single Audit Reports 
submitted by recipients and subrecipients to the Federal Audit Clearinghouse. 
We noted that for the program year, the NDWG program had 7 recipients and 54 
subrecipients.  
 
Although this approach was approved by OMB, we noted that no Single Audit 
Reports related to the NDWG program were identified as of October 2020. 
Furthermore, even if a Single Audit Report that contained the program was 
submitted, it may not have been selected as a major program and audited. As 
such, DOL’s estimation methodology may not be sufficient to determine an 
annual amount of improper payments for the NDWG program.  
 

U.S. Department of Labor – Office of Inspector General 
DOL FY 2020 REPORTING OVER IMPROPER PAYMENTS 
 
-18- 
NO. 22-21-007-13-001 
Accordingly, we suggest that DOL enhance its process for selecting the 
estimation methodology for new programs. Specifically, DOL should evaluate 
proposed methodologies and ensure the underlying data will be available and 
sufficient to properly estimate an annual amount of improper payments for the 
associated program.  
 
 

U.S. Department of Labor – Office of Inspector General 
DOL FY 2020 REPORTING OVER IMPROPER PAYMENTS 
 
-19- 
NO. 22-21-007-13-001 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
APPENDIX: AGENCY’S RESPONSE TO THE REPORT 
 
 

U.S. Department of Labor – Office of Inspector General 
DOL FY 2020 REPORTING OVER IMPROPER PAYMENTS 
 
-20- 
NO. 22-21-007-13-001 
 
 
 
 

U.S. Department of Labor – Office of Inspector General 
DOL FY 2020 REPORTING OVER IMPROPER PAYMENTS 
 
-21- 
NO. 22-21-007-13-001 
 
 
 
 

U.S. Department of Labor – Office of Inspector General 
DOL FY 2020 REPORTING OVER IMPROPER PAYMENTS 
 
-22- 
NO. 22-21-007-13-001 
 
 
 
 

U.S. Department of Labor – Office of Inspector General 
DOL FY 2020 REPORTING OVER IMPROPER PAYMENTS 
 
-23- 
NO. 22-21-007-13-001 
 
 
 

 
 
 
 
REPORT FRAUD, WASTE, OR ABUSE  
TO THE DEPARTMENT OF LABOR 
 
 
 
 
Online 
http://www.oig.dol.gov/hotline.htm 
 
Telephone 
(800) 347-3756 or (202) 693-6999 
 
Fax 
(202) 693-7020 
 
Address 
Office of Inspector General 
U.S. Department of Labor 
200 Constitution Avenue, NW 
Washington, DC 20210

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