Performance Audit Report: COVID-19 — Unemployment Relief for Governmental Entities and Nonprofit Organizations Should Have Been Better Managed (DOL OIG…

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REPORT TO THE EMPLOYMENT 
AND TRAINING ADMINISTRATION       
COVID-19: UNEMPLOYMENT RELIEF 
FOR GOVERNMENTAL ENTITIES AND 
NONPROFIT ORGANIZATIONS SHOULD 
HAVE BEEN BETTER MANAGED 
DATE ISSUED: SEPTEMBER 21, 2023
REPORT NUMBER: 19-23-010-03-315
This report was prepared by Rocha & Company, PC under contract to 
the U.S. Department of Labor, Office of Inspector General, and, by 
acceptance, it becomes a report of the Office of Inspector General. 
 
                                                           
 
 
 
 
 
 
 
 
 
 
U.S. Department of Labor  
Assistant Inspector General for Audit 
 

U.S. Department of Labor 
Office of Inspector General 
Audit 
 
 
 
 
BRIEFLY… 
COVID-19: UNEMPLOYMENT RELIEF FOR 
GOVERNMENTAL ENTITIES AND 
NONPROFIT ORGANIZATIONS SHOULD 
HAVE BEEN BETTER MANAGED 
 
September 21, 2023 
 
WHY OIG CONDUCTED THE AUDIT 
 
The Emergency Unemployment Relief for 
Governmental Entities and Nonprofit 
Organizations program (EURGENO) was one 
of several new unemployment insurance (UI) 
programs created under the Coronavirus Aid, 
Relief, and Economic Security (CARES) Act to 
address the economic emergency resulting 
from the COVID-19 pandemic. The 
Employment and Training Administration (ETA) 
was responsible for ensuring implementation 
and program monitoring of EURGENO. Based 
on Office of Inspector General (OIG) audits of 
previous emergency UI program 
implementation and funding, we were 
concerned with ETA’s ability to effectively and 
efficiently deploy UI funding under EURGENO, 
which totaled $6.3 billion. 
 
WHAT OIG DID 
 
We contracted with the independent certified 
public accounting firm of Rocha & Company, 
PC (Rocha) to conduct an audit to answer the 
following question: 
 
To what extent did ETA and states 
effectively execute EURGENO and ensure 
compliance with the related UI provisions of 
the CARES Act and subsequent legislation? 
 
Rocha’s audit procedures included assessing 
ETA’s oversight, performing in-depth testing for 
6 states, and surveying 47 other state 
workforce agencies.  
WHAT OIG FOUND 
 
Rocha found ETA and states did not effectively 
execute EURGENO or ensure full compliance 
with related provisions of the CARES Act and 
subsequent legislation. EURGENO was 
designed to mitigate the effects of the COVID-19 
pandemic on employers that reimburse the 
states for eligible UI benefits paid (reimbursing 
employers). However, reimbursing employers 
experienced delays in receiving pandemic relief, 
and states received funding that needs to be 
returned to the federal government.  
 
Federal guidance advised states to prioritize 
expediency; however, Rocha found the 6 states 
did not consistently provide refunds or credits to 
reimbursing employers in less than 30 days, 
with one state taking over a year. Also, 3 of 
6 states issued bills to reimbursing employers 
that did not reflect EURGENO credits, resulting 
in reimbursing employers overpaying states. 
These issues occurred due to: state challenges 
in implementing new UI programs, legacy IT 
systems, ETA’s insufficient monitoring, and 
untimely notifications to eligible employers of 
available EURGENO pandemic relief funds. As 
a result, pandemic relief intended to timely 
reimburse employers was delayed. 
  
Rocha also found the 6 states received funding 
associated with ineligible benefit weeks, 
including weeks covered by another CARES 
Act provision. This resulted from ETA not 
providing sufficient guidance or monitoring 
reviews to ensure compliance with program 
requirements. Additionally, the states were 
provided funds based on claims later identified 
as fraudulent. As a result, states received 
millions in federal funding that they must return. 
ETA needs to perform a reconciliation to 
determine the exact amount of ineligible funds; 
however, Rocha identified at least $29 million in 
questioned costs in the 6 states alone. 
 
WHAT OIG RECOMMENDED 
 
Rocha made three recommendations to ETA to 
improve oversight of the UI program. ETA agreed 
with our recommendations.  
 
READ THE FULL REPORT 
http://www.oig.dol.gov/public/reports/oa/2023/1
9-23-010-03-315.pdf 

U.S. Department of Labor – Office of Inspector General  
 
 
 
 
 
 
 
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TABLE OF CONTENTS 
INSPECTOR GENERAL’S REPORT .................................................................... 1 
CONTRACTOR’S PERFORMANCE AUDIT REPORT ......................................... 4 
RESULTS ............................................................................................................. 9 
Ineffective Program Execution Led To Delays in Relief for 
Reimbursing Employers ........................................................................... 10 
ETA Issued Relief Funds to States for Ineligible Weeks and Claims 
Subsequently Identified by States As Fraudulent ..................................... 17 
CONCLUSION .................................................................................................... 23 
RECOMMENDATIONS ....................................................................................... 24 
Summary of ETA’s Response .................................................................. 24 
EXHIBIT 1: QUESTIONED COSTS .................................................................... 26 
APPENDIX A: SCOPE AND METHODOLOGY .................................................. 27 
APPENDIX B: ETA’S RESPONSE TO THE REPORT ....................................... 31 
 

U.S. Department of Labor 
Office of Inspector General 
 
 
Washington, DC 20210 
EURGENO EFFECTIVENESS 
 
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NO. 19-23-010-03-315 
INSPECTOR GENERAL’S REPORT 
Brent Parton 
Principal Deputy Assistant Secretary  
  for Employment and Training 
U.S. Department of Labor 
200 Constitution Ave. NW 
Washington, DC 20210 
 
 
The U.S. Department of Labor, Office of Inspector General (OIG) contracted with 
the independent certified public accounting firm of Rocha & Company, PC 
(Rocha) to conduct a performance audit of the Employment and Training 
Administration (ETA) and states’1 execution of the Emergency Unemployment 
Relief for Governmental Entities and Nonprofit Organizations program 
(EURGENO).2 
 
The OIG monitored Rocha’s work to ensure it met professional standards and 
contractual requirements. Rocha’s independent audit was conducted in 
accordance with generally accepted government auditing standards.  
 
Rocha was responsible for the evaluation and conclusions expressed in the 
report, while the OIG reviewed Rocha’s report and supporting documentation. 
                                            
1 This report uses “state” or “state workforce agency” to refer to the administrative body that 
administers the unemployment insurance program within the state, district, or territory. For the 
50 states, as well as the U.S. Virgin Islands, Puerto Rico, and the District of Columbia, that 
administrative body is a state workforce agency. 
2 In Unemployment Insurance Program Letter 18-20, ETA refers to EURGENO as “Emergency 
Unemployment Relief for State and Local Governmental Entities, Certain Nonprofit Organizations, 
and Federally-Recognized Indian Tribes.”  

U.S. Department of Labor – Office of Inspector General  
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PURPOSE 
EURGENO was one of several new unemployment insurance (UI) programs 
created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act 
to address the economic emergency resulting from the COVID-19 pandemic. 
Based on OIG audits of previous emergency UI program implementation and 
funding, we were concerned with ETA’s ability to effectively and efficiently deploy 
UI funding under EURGENO, which totaled $6.3 billion. 
 
Based on these concerns, we contracted with Rocha to conduct a performance 
audit to answer the following question:  
 
To what extent did ETA and states effectively execute EURGENO 
and ensure compliance with the related UI provisions of the CARES 
Act and subsequent legislation? 
 
To answer this question, Rocha conducted a performance audit that covered the 
period March 13, 2020, to September 6, 2021—the end of the program. 
However, to determine the amount of EURGENO funding that was not returned 
to the federal government since the conclusion of the program, Rocha obtained 
states’ EURGENO account balances as of February 1, 2023. The audit included 
procedures at both the ETA and state levels to determine compliance with 
program requirements. Rocha performed in-depth testing and analysis for six 
states—Hawaii, Illinois, Mississippi, Oklahoma, Vermont, and West Virginia—
selected based on an OIG risk analysis. Rocha surveyed the remaining 47 state 
workforce agencies that entered into an agreement with ETA to participate in the 
program. 
 
As of June 30, 2023, ETA transferred $6.3 billion to states’ UI trust funds for 
EURGENO. Of the $6.3 billion, $505 million (8 percent) was provided to the 
six states tested.  
RESULTS 
Rocha found ETA and states did not effectively execute EURGENO or ensure full 
compliance with related UI provisions of the CARES Act and subsequent 
legislation. EURGENO was designed to mitigate the effects of the COVID-19 
pandemic on employers that reimburse the states for eligible UI benefits paid 
(reimbursing employers). However, reimbursing employers experienced delays in 
receiving pandemic relief, and states received funding that needs to be returned 
to the federal government. 
 

U.S. Department of Labor – Office of Inspector General  
EURGENO EFFECTIVENESS 
 
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Guidance from the Office of Management and Budget advised states to prioritize 
expediency; however, Rocha found the six states did not consistently provide 
refunds or credits to reimbursing employers in less than 30 days, with one state 
taking over a year. States issue bills to reimbursing employers for eligible UI 
benefits paid for which they are responsible. However, three of six states issued 
bills that did not reflect EURGENO credits, resulting in reimbursing employers 
overpaying states. These issues occurred due to: (1) state challenges associated 
with implementing new UI programs, (2) legacy information technology systems, 
(3) ETA’s insufficient monitoring, and (4) untimely notifications to eligible 
employers of available EURGENO pandemic relief funds. As a result, pandemic 
relief intended for reimbursing employers was delayed. 
 
Rocha also found the six states received funding associated with ineligible 
benefit weeks, including weeks covered by another CARES Act provision. This 
resulted from ETA not providing sufficient guidance or monitoring reviews to 
ensure compliance with program requirements. Additionally, the states were 
provided funds based upon claims later identified as fraudulent. As a result, 
states received millions in federal funding that they are ineligible to retain. ETA 
needs to perform a reconciliation to determine the exact amount of ineligible 
funds; however, Rocha identified at least $29 million in questioned costs in the 
six states alone.  
 
 
 
 
Carolyn R. Hantz 
Assistant Inspector General for Audit

U.S. Department of Labor – Office of Inspector General 
EURGENO EFFECTIVENESS 
 
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CONTRACTOR’S PERFORMANCE AUDIT REPORT 
 
 
 
Independent Auditors’ Performance Audit Report on the Effectiveness of the 
Execution of the Emergency Unemployment Relief for Governmental Entities and 
Nonprofit Organizations Program and Compliance with the Coronavirus Aid, 
Relief, and Economic Security Act and Subsequent Legislation 
 
 
 
Brent Parton  
Principal Deputy Assistant Secretary  
  for Employment and Training 
U.S. Department of Labor 
200 Constitution Ave. NW 
Washington, DC 20210 
 
 
We were engaged by the U.S. Department of Labor (DOL), Office of Inspector 
General (OIG) to conduct a performance audit of the Employment and Training 
Administration (ETA) and states’ execution of the Emergency Unemployment 
Relief for Governmental Entities and Nonprofit Organizations program 
(EURGENO) under the unemployment insurance (UI) provisions of the 
Coronavirus Aid, Relief, and Economic Security (CARES) Act and subsequent 
legislation. The program was created to mitigate the economic effects of the 
COVID-19 pandemic for governmental entities and nonprofit organizations that 
reimburse the states for eligible UI benefits paid (reimbursing employers). We 
conducted the audit to answer the following question:  
 
To what extent did ETA and states effectively execute EURGENO 
and ensure compliance with the related UI provisions of the CARES 
Act and subsequent legislation? 
 
To answer this question, we performed procedures at the ETA and state levels to 
determine compliance with program requirements. For ETA, we submitted 
questions to UI officials and reviewed their responses and underlying support. 
The OIG selected six states—the States of Hawaii, Illinois, Mississippi, 
Oklahoma, Vermont, and West Virginia—for our in-depth analysis and testing 

U.S. Department of Labor – Office of Inspector General 
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based on a risk analysis including, but not limited to; funding amounts, claims 
information, information technology (IT) modernization projects, and ETA’s 
published improper payment rates.3 We also sent surveys to the remaining 
47 state workforce agencies (SWA or state) that signed an agreement to 
participate in the program to obtain related key information about the program.  
 
In addition, we examined state-level executive orders, agreements between ETA 
and states, correspondence between the states and reimbursing employers, 
billing statements issued to reimbursing employers, refunds provided by the 
states, as well as EURGENO funding activity between the Federal 
Unemployment Account (FUA) and the states. Our audit covered the period 
March 13, 2020, to September 6, 2021; however, to determine the amount of 
EURGENO funding that was not returned to the federal government since the 
conclusion of the program, we obtained EURGENO account balances as of 
February 1, 2023.  
 
We conducted this performance audit in accordance with generally accepted 
government auditing standards. Those 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 objective. 
We believe the evidence obtained provides a reasonable basis for our findings 
and conclusions based on our audit objective. Our scope, methodology, and 
criteria are detailed in Appendix A. 
BACKGROUND 
The UI program is a joint federal-state program that provides temporary benefits 
to workers who become unemployed through no fault of their own. Regular UI4 
payments are primarily5 funded in one of two ways:  
 
• Employers pay state UI taxes ahead of time based on taxable 
wages and layoff history; or  
                                            
3 Throughout this report we refer to the States of Hawaii, Illinois, Mississippi, Oklahoma, Vermont, 
and West Virginia as “the six states.” 
4 Regular UI, also known as state UI, is a program administered by state workforce agencies in 
the United States to provide temporary financial assistance to eligible workers who have lost their 
jobs through no fault of their own. 
5 Three states—Alaska, New Jersey, and Pennsylvania—assess unemployment taxes on 
employees. 

U.S. Department of Labor – Office of Inspector General 
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• Employers receive a bill and pay the state for eligible payments 
already made (reimbursing employers).6  
 
In March 2020, the CARES Act § 2103 established EURGENO and authorized 
emergency unemployment relief for reimbursing employers including state and 
local governmental entities, certain nonprofit organizations, and federally-
recognized Indian tribes.7 Specifically, the CARES Act authorized ETA to provide 
funding for 50 percent8 of the cost of UI benefits states paid to eligible 
reimbursing employer claimants.  
 
Under the initial provisions of EURGENO, reimbursing employers were eligible to 
receive relief through refunds after they paid their bills in full. On August 3, 2020, 
the Protecting Nonprofits from Catastrophic Cash Flow Strain Act of 2020 was 
signed into law, which required states to provide reimbursing employers with 
50 percent relief through credits9 instead of issuing refunds after the reimbursing 
employers paid their bills in full. On March 11, 2021, the American Rescue Plan 
Act of 2021 was signed into law, which, as of April 10, 2021,10 increased the 
relief percentage from 50 percent to 75 percent (see Figure 1).  
                                            
6 Section 3304(a)(6)(B) of the Federal Unemployment Tax Act grants nonprofit organizations 
described in Section 501(c)(3) of the Internal Revenue Code and state and local governmental 
entities, the right, under state law, to elect to make payments in lieu of contributions. 
7 A federally-recognized Indian tribe is an American Indian or Alaska Native tribal entity that is 
recognized as having a government-to-government relationship with the United States, with the 
responsibilities, powers, limitations, and obligations attached to that designation. For the purpose 
of this report, we will include federally-recognized Indian tribes with other governmental entities. 
8 States could opt to provide partial relief to governmental entities and nonprofit organizations 
under state law in excess of the 50 percent provided by the federal government. As noted on 
page 3 of UIPL No. 18-20, relief under state law that is above 50 percent of the amount owed will 
result in the state not being able to use a portion of the federal funds transferred. 
9 For the purpose of clarity in this report, payments made to reimbursing employers subsequent 
to the full payment of their bills will be termed “refunds.” Conversely, EURGENO relief provided 
by the state through the reduction of reimbursing employer bills will be designated as “credits.” 
10 According the UIPL 18-20, Change 2, the amount of emergency relief for weeks of 
unemployment beginning after March 31, 2021, increases from 50 percent of unemployment 
compensation paid to 75 percent paid. For states where the week of unemployment ends on a 
Saturday, this begins with the week ending on April 10, 2021. In states where the week of 
unemployment ends on a Sunday, this increased amount begins with the week ending on 
April 11, 2021. 

U.S. Department of Labor – Office of Inspector General 
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Figure 1: EURGENO Lifecycle 
 
 
Source: Rocha analysis of pandemic-legislation 
 
This report focuses on the performance of ETA and states’ EURGENO 
operations during the audit period, which coincided with the COVID-19 
pandemic. The pandemic had a profound impact on the UI program, presenting 
states with unprecedented challenges. According to ETA officials, these 
challenges included managing an unprecedented surge in claims volume, 
adapting to remote work environments, and implementing three new and 
significant temporary UI programs—Federal Pandemic Unemployment 
Compensation (FPUC), Pandemic Unemployment Assistance (PUA), and 
Pandemic Emergency Unemployment Compensation (PEUC).  
 
As part of the execution of the program, states reported the amount of UI claims 
disbursed that are the responsibility of reimbursing employers to ETA using ETA 
Form 2112 (ETA 2112), which communicates UI Financial Transaction Summary 
data. ETA then calculated the 50 percent or 75 percent funding to be provided to 
the states (depending on the applicable time period) and instructed the 
U.S. Department of the Treasury (Treasury) to transfer that calculated funding 
amount from the FUA to the EURGENO account within the states’ UI Trust Fund. 
States were then able to access the funding as refunds and credits were issued 
to reimbursing employers (see Figure 2).  

U.S. Department of Labor – Office of Inspector General 
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Figure 2: EURGENO Funding and Refund/Credit Process 
 
 
Source: Rocha graphical representation of EURGENO, including state, ETA, and Treasury 
procedures as well as flow of funding. 
 

U.S. Department of Labor – Office of Inspector General 
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RESULTS 
We found ETA and states did not effectively execute EURGENO or ensure full 
compliance with related provisions of the CARES Act and subsequent legislation. 
EURGENO was designed to mitigate the effects of the COVID-19 pandemic on 
employers that reimburse the states for eligible UI benefits paid (reimbursing 
employers). However, reimbursing employers experienced delays in receiving 
pandemic relief, waiting anywhere from a month to more than a year. 
Additionally, states received funding for ineligible weeks and amounts that were 
later determined to be ineligible. 
 
Guidance from the Office of Management and Budget (OMB) advised states to 
prioritize expediency; however, we found the six states did not consistently 
provide refunds or credits to reimbursing employers in less than 30 days, with 
one state taking over a year. Under the program, states were responsible for 
issuing bills to reimbursing employers for eligible UI benefits paid for which they 
were responsible. However, three of six states issued bills that did not reflect 
EURGENO credits, resulting in reimbursing employers overpaying states. These 
issues occurred due to: (1) state challenges associated with implementing new 
UI programs, (2) legacy IT systems, (3) ETA’s insufficient monitoring, and 
(4) untimely notifications to eligible employers of available EURGENO pandemic 
relief funds. As a result, pandemic relief intended for reimbursing employers was 
delayed. 
 
We also found the six states received funding associated with ineligible benefit 
weeks, including weeks covered by another CARES Act provision. This resulted 
from ETA not providing sufficient guidance or monitoring reviews to ensure 
compliance with program requirements. Additionally, the states were provided 
funds based upon claims later identified as fraudulent. As a result, states 
received millions in federal funding that they are ineligible to retain. ETA needs to 
perform a reconciliation to determine the exact amount of ineligible funds; 
however, we identified at least $29 million in questioned costs in the six states 
alone. 

U.S. Department of Labor – Office of Inspector General 
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INEFFECTIVE PROGRAM EXECUTION LED 
TO DELAYS IN RELIEF FOR REIMBURSING 
EMPLOYERS 
On April 10, 2020, OMB issued Memorandum 20-21,11 urging agencies to 
prioritize the speed of the payment process for pandemic relief funds, while 
balancing the need for program integrity. However, we found the six states tested 
did not always provide timely relief to reimbursing employers. Specifically, the 
states did not consistently issue refunds or credits to reimbursing employers in 
less than 30 days, with some relief taking over a year. Additionally, three of the 
six states did not adjust reimbursing employer billing statements to reflect 
EURGENO credits, which resulted in reimbursing employers overpaying states. 
As a result, reimbursing employers were delayed in receiving pandemic relief as 
intended by the CARES Act and subsequent legislation. 
REFUNDS OR CREDITS WERE NOT TIMELY 
PROVIDED TO REIMBURSING EMPLOYERS 
OMB Memorandum 20-21 reminded agencies of the flexibilities announced in 
prior OMB memoranda, emphasizing that “time is of the essence, and the 
Administration is committed to the rapid delivery of these funds to the COVID-19 
relief and response efforts.” Further, OMB Memorandum 20-21 directs agencies 
to “rapidly issue awards and fund programs to meet crucial needs.” 
 
On April 27, 2020, in accordance with the CARES Act, ETA issued 
Unemployment Insurance Program Letter (UIPL) 18-20, which specified that 
employers must “pay their bill in full” before refunds could be processed. A later 
legislative change to the program provided more immediate relief as states were 
required to reduce employer bills using credits instead of providing refunds.12 
 
Neither the CARES Act nor ETA provided requirements or recommendations 
establishing timeliness standards for states to provide refunds or credits to 
reimbursing employers for EURGENO. However, the inherent nature of an 
emergency UI program would suggest relief should be provided quickly.  
 
                                            
11 OMB, Implementation Guidance for Supplemental Funding Provided in Response to the 
Coronavirus Disease 2019, M-20-21 (April 10, 2020), available at: 
https://www.whitehouse.gov/wp-content/uploads/2020/04/Implementation-Guidance-for-
Supplemental-Funding-Provided-in-Response.pdf  
12 Protecting Nonprofits from Catastrophic Cash Flow Strain Act of 2020 was signed into law on 
August 3, 2020. ETA provided guidance to states on the change to the program on 
August 12, 2020, through UIPL 18-20, Change 1. 

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To provide context, as to the performance of states, we applied a 30-day 
standard to define timeliness, since 30 days is regularly used in relation to 
reimbursing employers. Specifically, states are required to submit ETA 2112 
monthly, and four of the six states (67 percent) required reimbursing employers 
to submit payments for eligible UI benefits paid within 30 days. In addition, OMB 
Memorandum 20-21 addressed timely payments to businesses by requiring 
monthly reporting of “large covered funds” from the CARES Act to non-federal 
entities, setting a 30-day reporting standard at both state and federal levels. 
 
Based on the 30-day standard, the six states tested did not always timely provide 
refunds or credits to reimbursing employers. Of the six states, only Oklahoma 
and Vermont began to institute the process of issuing refunds before 
August 3, 2020, when the program was modified to require states to issue credits 
instead of refunds. The other four states that only issued credits did not always 
do so timely, particularly in the early stages of the program (see Figure 3 for 
details on relief delays by state).  
 
Figure 3: EURGENO Relief Delays by State 
 
 
Source: Generated based on Rocha analysis of state EURGENO data 
 
Out of the 43 refunds we examined, only one was processed within 30 days. 
Further, reimbursing employers experienced significant delays in receiving 
credits from EURGENO.  

U.S. Department of Labor – Office of Inspector General 
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REIMBURSING EMPLOYERS BILLING STATEMENTS 
WERE NOT ADJUSTED FOR EURGENO CREDITS 
We found that three states, Illinois, Vermont, and West Virginia, issued billing 
statements to reimbursing employers that were not adjusted for EURGENO 
credits (see Figure 4 for details on unadjusted billing statement effects).  
 
Figure 4: Unadjusted Billing Statement Effects 
 
 
Source: Generated based on Rocha analysis of state EURGENO data 
 
The State of Illinois did not implement EURGENO until November 6, 2020. As a 
result, billing statements were issued to reimbursing employers without reflecting 
EURGENO credits, causing overpayments to be made to the state. The State of 
Vermont included notification to reimbursing employers of EURGENO credits 
with its billing statements. However, due to IT limitations, Vermont could not 
adjust the actual billing statements to reflect the credits. As a result, reimbursing 
employers submitted full payments without EURGENO credits applied, which 
caused reimbursing employers to overpay the state. Additionally, the State of 
West Virginia did not adjust billing statements for EURGENO credits and did not 
provide notification of EURGENO credits with billing statements until April 2021, 
when the state began to implement the program.  
DELAYS IN PROVIDING REFUNDS AND CREDITS 
HAD SEVERAL COMMON CAUSES 
While states were able to implement EURGENO, and ETA was able to offer 
guidance, this was not without delay in relief provided. We attribute the delays 
that reimbursing employers experienced in receiving intended pandemic relief to 
four common causes: 
 

U.S. Department of Labor – Office of Inspector General 
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1. state challenges associated with implementing new UI programs, 
2. programming difficulties associated with legacy IT systems, 
3. insufficient ETA monitoring controls over the program, and  
4. untimely notification to reimbursing employers of EURGENO and 
the available pandemic relief funds the program provided. 
 
More information on each cause follows. 
STATE CHALLENGES ASSOCIATED WITH 
IMPLEMENTING NEW UI PROGRAMS 
According to ETA and state officials, the performance of the EURGENO program 
was significantly affected by difficulties associated with establishing EURGENO 
and other UI programs related to the pandemic, including the high volume of UI 
claims. 
 
After the onset of the pandemic in early 2020, there was a drastic increase in 
unemployment compensation claims in the United States. Within a span of 2 to 
3 weeks, initial claims surged to 10 times the pre-pandemic levels, overwhelming 
the capacity of state systems. By August 15, 2020, a period of 5 months, DOL 
recorded 57.4 million initial claims; the largest increase since DOL started 
tracking UI data in 1967. As a result, state officials reported that their primary 
focus was providing assistance to individuals who had become unemployed due 
to the pandemic, which required increased workload for UI staff members to 
assist claimants.  
 
Furthermore, EURGENO was a new program that was introduced without an 
implementation period. ETA officials stated, for comparison, a swift rollout of a 
new government benefit program, including the policy, product, and operations, 
would require a timeframe of 30 to 48 months.13 As a result, challenges with the 
program had to be worked out in real-time. This was all accomplished while 
states were navigating a 10-fold claims volume increase. 
 
Additionally, ETA and state officials stated that they had other crucial obligations 
to simultaneously fulfill, including processing claims and managing three key 
pandemic-related programs: FPUC, PUA, and PEUC. Collectively, these 
programs provided approximately $664.5 billion in funding, compared to 
$6.3 billion for EURGENO. 
                                            
13 COVID-19: States Struggled to Implement Cares Act Unemployment Insurance Programs, 
Report No. 19-21-004-03-315 (May 28, 2021), https://www.oig.dol.gov/public/reports/oa/2021/19-
21-004-03-315.pdf  

U.S. Department of Labor – Office of Inspector General 
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PROGRAMMING DIFFICULTY ASSOCIATED WITH 
LEGACY IT SYSTEMS 
Our audit found that existing IT systems for the six states tested could not be 
easily modified to handle the execution of EURGENO. 
 
For example, the States of Vermont and West Virginia could not modify their 
existing legacy IT systems and had to heavily rely on spreadsheets to calculate 
refunds or credits. Officials from the State of Vermont specified, “because of the 
legacy nature of the state’s UI mainframe system, we were not in a sufficient [IT] 
state to adequately administer this program. Due to that fact, most of the work 
has been done manually and through manual tracking of information.” 
 
Further, Oklahoma’s and Illinois’ UI IT systems were unable to make adjustments 
necessary to efficiently operate EURGENO. Specifically, the State of Oklahoma’s 
UI IT system required extensive programming adjustments to provide 
reimbursing employers refunds. Oklahoma’s UI IT system required the IT 
department to program an additional report for each governmental entity and 
nonprofit organization. Each report then had to be reviewed and any corrections 
required the IT department to perform additional programming.14 Illinois’ UI IT 
system could not be modified to reflect current EURGENO credits on the current 
quarter reimbursing employer bill. To inform reimbursing employers of pending 
credits, Illinois included the statement, “DO NOT Protest Amounts Due OR Pay 
Amounts Due Directly or Indirectly Related to COVID-19” on reimbursing 
employers billing statements.15  
 
Additionally, the States of Hawaii, Oklahoma, and Mississippi reported significant 
delays in programming as there were limited IT resources available to handle the 
demands of EURGENO, due to the implementation of all the other UI programs. 
INSUFFICIENT ETA MONITORING CONTROLS 
ETA did not sufficiently monitor the implementation of EURGENO to ensure 
states were providing refunds and credits timely. Specifically, the six states 
indicated that ETA did not conduct a compliance review for EURGENO. 
Additionally, 36 surveyed16 states responded that there were no ETA monitoring 
reviews conducted for EURGENO.  
 
                                            
14 In Oklahoma, additional reports were not needed after the implementation of UIPL 18-20, 
Change 1, as credits were able to be reflected as a reduction to the billing statement. 
15 Beginning with the 3rd quarter 2020 billing cycle. 
16 We sent surveys to 47 states. However, 11 states did not respond. 

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Further, ETA did not establish controls to validate the amounts and eligibility of 
claims paid that were reported by the states on ETA 2112. ETA also did not 
establish controls to determine the amount of refunds or credits being provided to 
reimbursing employers. In response to the reported lack of ETA monitoring, ETA 
officials reported: 
 
ETA staff had numerous high priority responsibilities and 
expectations to address during the pandemic, including establishing 
guidance and monitoring tools for significant and major new 
Unemployment Insurance (UI) programs (Pandemic Unemployment 
Assistance, Pandemic Emergency Unemployment Compensation 
and Federal Pandemic Unemployment Compensation) and simply 
lacked capacity to provide the level of oversight that is identified by 
the OIG’s contractor for the reimbursements provide[d] to state UI 
agencies for the amounts reported by states.  
 
ETA encountered significant challenges during the implementation of 
pandemic-related programs. The situation was further complicated by the 
absence of a dedicated program development period in the CARES Act, 
which would have allowed ETA to effectively coordinate guidance and 
operations. Nevertheless, if reviews and controls for EURGENO were in 
place, ETA would have been able to intervene to improve the delivery of 
EURGENO relief to reimbursing employers. 
UNTIMELY NOTIFICATION TO REIMBURSING 
EMPLOYERS 
Reimbursing employers received untimely notifications regarding EURGENO 
relief benefits. Specifically, the six states took an average of approximately 
198 days to send emails, letters, and online messages to formally notify 
reimbursing employers of EURGENO (see Table 1). As a result, reimbursing 
employers did not have sufficient information in a timely manner to request 
assistance from states or ETA to resolve any delays in receiving EURGENO 
relief. Further, states did not always provide refunds or credits ahead of 
notification of the relief benefits.  
 
For example, the State of West Virginia did not formally notify reimbursing 
employers until April 2021. According to state officials, this led to inconsistencies 
in how employers treated billing statements. Specifically, since West Virginia did 
not provide notification to reimbursing employers until April 2021 or adjust billing 
statements to reflect EURGENO credits, some employers paid the full amount of 
bills issued by the state with no relief. State officials indicated other employers 
who became aware through other channels of the impending EURGENO credits 

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likely withheld a portion of the payments in anticipation of receiving the relief 
benefits.  
 
Table 1: Delay in State Notification to Reimbursing Employers 
 
 
State 
Date of Agreement Date of Notification 
Time Delay 
Hawaii 
March 27, 2020 
September 14, 2020 
171 Days 
Illinois 
March 28, 2020 
August 10, 2020 
135 Days 
Mississippi March 28, 2020 
November 10, 2020 
227 Days 
Oklahoma 
March 27, 2020 
June 30, 2020 
95 Days 
Vermont 
March 28, 2020 
October 2, 2020 
188 Days 
West 
Virginia 
March 28, 2020 
April 1, 2021 –
May 26, 2021 
Approx. 1 year 
(369 to 424 Days) 
 
 
Average 
198 Days 
Source: Rocha analysis of state correspondence 
 
Additionally, 32 of 36 (89 percent) surveyed states reported the average 
notification was sent approximately 4 months (128 days) after the date the state 
had signed the agreement with ETA. Among the 36 respondents, 8 indicated 
they provided notification after 180 days or more, and, in one case, the state did 
not provide either notification or credits for 549 days.  
 
ETA officials reported that states were not required to notify reimbursing 
employers on the availability of pandemic relief funds from EURGENO by statute 
or through ETA guidance. Furthermore, ETA officials stated, “it is difficult to see 
how this might have delayed states reimbursing or crediting reimbursable 
employers under this provision.” Contrary to the statements made by ETA 
officials, our audit work revealed a clear correlation between delayed notifications 
and the subsequent benefit relief delays encountered by reimbursing employers. 
DELAYS IN PROVIDING REFUNDS AND CREDITS 
UNDERMINED THE PURPOSE OF EURGENO 
EURGENO was created to mitigate the economic effects of the COVID-19 
pandemic on reimbursing employers. However, ETA and states were challenged 
in implementing the program. As a result, reimbursing employers did not always 
receive the timely pandemic relief the program was intended to provide. ETA 
must plan for future disasters to ensure federal UI programs timely assist 
employers and reduce implementation delays that negatively impact the 
effectiveness of emergency programs. 

U.S. Department of Labor – Office of Inspector General 
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ETA ISSUED RELIEF FUNDS TO STATES FOR 
INELIGIBLE WEEKS AND CLAIMS 
SUBSEQUENTLY IDENTIFIED BY STATES AS 
FRAUDULENT 
We found that states received EURGENO funding for ineligible weeks, as well as 
for UI benefit claims paid that the states subsequently identified as fraudulent 
(fraudulent charges) after funding was received.17 The transfers for ineligible 
weeks were the result of ETA not providing sufficient guidance or monitoring 
reviews to ensure compliance with program requirements, while the funding for 
fraudulent charges occurred based on limitations in the program’s design. As a 
result, states received millions in federal funding that they are ineligible to retain. 
ETA needs to perform a reconciliation to determine the exact amount of funds to 
be returned to the federal government. However, we determined the amount 
includes at least $29 million in questioned costs.  
ETA PROVIDED EURGENO FUNDS FOR WEEKS 
OUTSIDE THE PROGRAM’S ELIGIBILITY PERIOD 
AND WEEKS ALREADY COVERED BY ANOTHER 
CARES ACT UI PROGRAM 
The CARES Act and subsequent legislation authorized EURGENO pandemic 
relief for weeks of unemployment beginning on or after March 13, 2020, through 
weeks ending on or before September 6, 2021. However, ETA provided relief 
funds to the States of Illinois and West Virginia for ineligible weeks. 
 
Specifically, the State of Illinois received approximately $5,687,00018 of excess 
funding related to the first quarter of 2020. ETA 2112 is supposed to be filed on a 
monthly basis, yet Illinois filed and provided data on ETA 2112 on a quarterly 
basis. Therefore, when ETA provided prorated funding based upon the State of 
Illinois’ March 2020 ETA 2112, the amounts reported included amounts for 
January and February 2020, which were not eligible for EURGENO funding. 
 
Additionally, the State of West Virginia’s basis for drawing down program funding 
incorrectly included approximately $289,00019 of reimbursing employer credits 
                                            
17 Fraudulent charges were not identified until after ETA 2112 reports were filed and ETA 
provided funding. 
18 This excess funding amount was estimated using publicly available reports and funding 
provided to the state.  
19 This excess funding amount was estimated using publicly available reports and relief amounts 
provided to reimbursing employers. 

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that were provided for weeks that were outside the program’s eligibility period. 
Specifically, due to legacy IT system issues, the State of West Virginia incorrectly 
provided credits to reimbursing employers for the entire month of 
September 2021, when only 6 days were eligible for funding under the program. 
 
In addition to weeks paid outside the program’s eligibility period, states obtained 
funding from ETA that did not conform to guidance provided by ETA in UIPL 
18-20. Specifically, states received funding based upon first week claims covered 
by another CARES Act program, the Temporary Full Federal Funding of the First 
Week of Compensable Regular Unemployment (TFFF) program. On  
April 27, 2020, ETA issued UIPL 18-20, which stated: 
 
If a state receives full federal funding of the first week of regular 
compensation under Section 2105 of the CARES Act, those benefit 
payments also are not covered under Section 2103. This is 
because for the first compensable week for a claimant, there is no 
employer payment into the state unemployment fund to be 
reimbursed. 
 
However, this guidance without specific reporting instructions was not sufficient 
to prevent states from inappropriately including first week claims paid under 
TFFF from total EURGENO claims paid on ETA 2112. Specifically, all six states 
inappropriately reported first week claims paid under the TFFF program on ETA 
2112. The inclusion of these amounts inappropriately increased the amount of 
EURGENO funding transfers the states received. Of the six states, only three—
the States of Hawaii, Mississippi, and West Virginia—were able to quantify the 
erroneously included amounts (see Table 2).  
 
Table 2: Ineligible EURGENO Funding Transfers Received as a Result of 
Inappropriate Inclusion of TFFF First Week Amounts on ETA 2112 
 
State 
TFFF Amount 
Inappropriately 
Reported on 
ETA 2112 
Transferred 
from FUA to 
State Trust 
Fund for 
TFFF Weeks 
Total 
Transferred 
from FUA 
to State 
Trust Fund 
Incorrect 
Percentage 
of Transfers 
to State 
Hawaii 
$3,375,787 
$1,811,963 $39,563,623 
5% 
Mississippi 
$2,873,284 
$1,436,642 $24,342,316 
6% 
West Virginia 
$3,288,245 
$1,681,456 $20,459,881 
8% 
Total 
$9,537,316 
$4,930,061 $84,365,820 
 
Source: Rocha analysis 
 

U.S. Department of Labor – Office of Inspector General 
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ETA stated they provided guidance to states on the handling of reporting for the 
TFFF program in UIPL 20-20. However, this guidance for the TFFF program, 
without monitoring, was not sufficient to prevent states from including ineligible 
weeks. For three of six tested states, the duplication in pandemic relief funds 
resulted in questioned costs of $4,930,061 (see Exhibit 1). However, since the 
issue appeared in all six states, we concluded this was a systemic issue, which 
likely impacted at least some of the other 47 SWAs.  
RELIEF FOR FRAUDULENT CHARGES MUST BE 
RETURNED TO THE FEDERAL GOVERNMENT 
The CARES Act required the amount of EURGENO funds transferred to the 
account of a state to be equal to 50 percent20 of the amounts of compensation 
attributable under state law. However, states reported amounts on their ETA 
2112 that the states and reimbursing employers subsequently identified as 
fraudulent, which is not compensable under federal law.  
 
Specifically, the States of Mississippi, Oklahoma, and West Virginia removed 
debt associated with fraudulent charges from reimbursing employer bills. The 
three states ultimately did not bill reimbursing employers for fraudulent charges; 
therefore, the federal government transfers received under EURGENO related to 
those charges were not eligible for the states to access or retain. As a result, 
states must return funding that did not meet these CARES Act and ETA 
requirements.  
 
We were unable to identify the total amount of EURGENO transfers that were 
ineligible; however, we identified three of the six states received a combined 
amount of $24,144,00021 related to fraudulent charges that must be returned to 
the Treasury: 
 
• The State of Mississippi paid approximately $1,670,000 in UI claims 
that were the responsibility of reimbursing employers, were 
reported by the state on ETA 2112, and were subsequently 
charged to reimbursing employers. After learning these charges 
were fraudulent, the state removed 100 percent of these amounts 
from reimbursing employer bills. Therefore, the State of Mississippi 
received at least $835,00021 in EURGENO funding from the FUA, 
which must be returned to the federal government. 
 
                                            
20 The American Rescue Plan Act of 2021 increased the relief percentage from 50 percent to 
75 percent. 
21 To be conservative, we used the CARES Act relief percentage of 50 percent to calculate the 
amount of transfers associated with fraudulent charges. 

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• The State of Oklahoma paid approximately $45,868,000 in UI 
claims that were the responsibility of reimbursing employers, were 
reported by the state on ETA 2112, and were subsequently 
charged to reimbursing employers. After learning these charges 
were fraudulent, the state removed 100 percent of these amounts 
from reimbursing employer bills. Therefore, the State of Oklahoma 
received at least $22,934,00021 in EURGENO funding from the 
FUA, which must be returned to the federal government.  
 
• The State of West Virginia paid approximately $750,000 in UI 
claims that were the responsibility of reimbursing employers, were 
reported by the state on ETA 2112, and were subsequently 
charged to reimbursing employers. After learning these charges 
were fraudulent, the state removed 100 percent of these amounts 
from reimbursing employer bills. Therefore, the State of West 
Virginia received at least $375,00021 in EURGENO funding from the 
FUA, which must be returned to the federal government. 
 
States’ receipt of EURGENO funding for the fraudulent charges removed from 
reimbursing employer bills resulted in questioned costs of $24,144,000 (see 
Exhibit 1). ETA officials stated they are planning a reconciliation process to 
determine the amount of funding that needs to be returned; however, states 
reported they were unaware of a pending reconciliation process or were not 
notified on how to close out the program.  
INSUFFICIENT ETA CONTROLS RESULTED IN 
INELIGIBLE FUND TRANSFERS 
ETA did not have sufficient controls in place to ensure integrity over EURGENO 
relief benefits. Specifically, ETA did not conduct monitoring reviews, and its 
reporting guidance to the states was insufficient to ensure compliance with 
program requirements.  
 
For example, ETA did not require that its regional offices perform monitoring 
activity over EURGENO. In October 2020, ETA issued guidance, Employment 
and Training Order No. 1-21, to its National Office and regional offices for 
monitoring three key CARES Act programs (PUA, PEUC, FPUC). However, the 
order did not address EURGENO.  
 
In response to lack of ETA monitoring, ETA officials stated: 
 
As reflected in the Fiscal Year (FY) 2021 Congressional Budget 
Justification (CBJ), funding levels for ETA allowed for a total of 

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168 Full-Time Equivalents (FTE) for Workforce Security (the 
funding for UI program-related staff in ETA’s National and Regional 
Offices). By comparison in the FY 2006 CBJ, the funding level 
provided for 419 FTEs for UI program-related activities. The UI 
program entered the pandemic with significantly reduced staffing 
and resources and did not receive any additional funding for federal 
staff until the enactment of the American Rescue Plan Act in 
2021…ETA was performing these responsibilities without additional 
staffing/funding...It is a very real factor in what could and could not 
be accomplished during this time. 
 
In addition, State agencies were also impacted by significant 
staffing shortages, the dramatic increase in program activity caused 
by the pandemic, and implementation [of the PUA, PEUC, and 
FPUC] programs. Recognizing that state operations were also 
stretched thin, the Office of Unemployment Insurance (OUI) made 
decisions to limit the additional burden of these programs on state 
operations that would further delay the benefit of the underlying 
provisions and lead to additional operational and implementation 
challenges for states. 
 
Compounding this issue, ETA guidance did not provide sufficient detail to prevent 
states from inappropriately reporting first week UI compensation amounts on 
ETA 2112. UIPL 18-20 and subsequent changes provided guidance that 
EURGENO did not cover UI benefits that fall under programs funded 100 percent 
through other sections of the CARES Act. However, the UIPL only addressed this 
issue in its guidance section rather than within the reporting section. Specifically, 
the UIPL did not address the need to reduce amounts reported on ETA 2112 for 
first week UI compensation amounts covered under the TFFF program. This 
resulted in states receiving transfers of funds they were not entitled to retain. 
 
In the past, ETA has provided such clarifying guidance. Specifically, the ETA 401 
Handbook, issued July 2017, provides explicit instructions on backing out 
emergency UI benefits from other benefit program reporting. This set a precedent 
that ETA would offer similar guidance for future emergency programs on what 
should be backed out on the ETA 2112, such as for EURGENO. However, the 
ETA 401 Handbook did not address EURGENO, and UIPL 18-20 did not include 
sufficient reporting instructions addressing the specific requirements of the 
EURGENO program.  
 
Further, none of the state officials interviewed were aware that first week UI 
compensation claims paid under TFFF should be backed out from total 
EURGENO claims paid on ETA 2112, and one state official stated they included 
all TFFF claims paid, believing it was required by DOL guidance. This led to the 

U.S. Department of Labor – Office of Inspector General 
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non-removal of TFFF claims paid across all six states, which indicates a 
pervasive issue and the need for clearer communication and guidance in the 
future. 
 
Adequate guidance from ETA could have prevented the transfer (or expedited 
the return of transfers) of funds states were ineligible to retain. We were able to 
identify $29 million in questioned cost for the six tested states; however, the other 
47 SWAs were likely impacted as well. As a result, there may be additional funds 
that must be returned to the federal government.  
ETA AND STATES MUST RECONCILE EURGENO 
BALANCES AND RETURN FUNDS STATES ARE 
INELIGIBLE TO RETAIN 
As of February 1, 2023, the six states we reviewed still had $50 million available 
of the $505 million in total EURGENO relief funds transferred to their UI Trust 
Funds. In addition, we obtained 26 survey responses (supported by states’ 
Automated Standard Application for Payment “ASAP” reports) detailing that 
approximately $794 million of EURGENO relief funds remained within other 
states’ UI Trust funds as of February 1, 2023. Specifically, 26 survey 
respondents reported that out of approximately $4 billion of program funding 
received, $794 million (20 percent of total funding) remained in these states’ UI 
Trust Funds as of February 1, 2023.  
 
In some instances, ETA may need to work with states to identify reimbursing 
employers that were eligible to receive EURGENO relief benefits but, due to lT 
system implementation difficulties, did not receive them. For example, during the 
course of our audit, we identified that the State of Vermont did not provide relief 
benefits to reimbursing employers for the partial month of March 2020. 
 
ETA and states must reconcile remaining EURGENO account balances in states’ 
UI Trust Funds to identify if any states kept funding they were ineligible to retain, 
or if any reimbursing employers did not receive intended relief (see Table 3).  
 

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Table 3: States' Remaining EURGENO Account Balances22 
  
State 
Total Transfers 
Received 
Balance  
as of 2/1/2023 
Balance as a 
Percent of Funds 
Received 
Hawaii 
$39,563,623 
$2,159,402 
5% 
Illinois 
$323,467,707 
- 
 
0% 
Mississippi23 
$24,342,316 
$24,342,316 
100% 
Oklahoma 
$69,291,110 
$23,018,003 
33% 
Vermont 
$28,200,573 
$209,895 
1% 
West Virginia 
$20,459,881 
$387,861 
2% 
Six States Total 
$505,325,210 
$50,117,477 
10% 
Surveyed States Total 
$4,038,104,162 
$794,009,025 
20% 
Overall Total 
$4,543,429,372 
$844,126,502 
19% 
Source: This funding is available to states through the Automated Standard Application for 
Payments (ASAP).  
 
Ultimately, outstanding balances not otherwise identified as needed for eligible 
relief must be deobligated, and the funding must be returned to the federal 
government in order for those funds to be put to better use. 
CONCLUSION 
Congress provided needed relief to reimbursing employers in a time of a national 
crisis. However, ETA and states did not effectively execute EURGENO or ensure 
its full compliance with UI provisions of the CARES Act and subsequent 
legislation. These issues occurred due to: (1) state challenges associated with 
implementing the new pandemic UI programs, (2) programming difficulties 
associated with legacy IT systems, (3) ETA’s insufficient guidance and 
                                            
22 Remaining balances reflect federal funding amounts that are available to states for 
reimbursements. It does not necessarily indicate amounts to be provided to reimbursing 
employers. 
23 Mississippi has not drawn down any federal reimbursement for EURGENO, which is provided 
in a sub-account of their UI Trust Fund. Initially, Mississippi officials believed they would receive a 
full and final reimbursement based on state reported UI claims disbursed expenditures. However, 
the audit team made the state officials aware that the received funds were not intended to be the 
complete reimbursement, but rather an allocation to replenish the trust fund. Mississippi still 
needs to complete a reconciliation to determine the exact amount for reimbursement and request 
a drawdown once the process is complete. 

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monitoring, and (4) untimely notification to eligible employers regarding available 
program relief funding. As a result, pandemic relief intended for reimbursing 
employers was delayed and millions of pandemic relief funds must be returned to 
the federal government. ETA and states must recover the greatest practicable 
amount of pandemic relief funds states are ineligible to retain.  
RECOMMENDATIONS 
We recommend the Principal Deputy Assistant Secretary for Employment and 
Training: 
 
1. Obtain evidence from the states that ensures all EURGENO refunds and 
credits to which reimbursing employers are entitled have been provided.  
 
2. Work with states to reconcile remaining balances that factor in: (a) the 
actual EURGENO relief provided (or, in some cases, that still must be 
provided) to reimbursing employers and (b) excess EURGENO relief 
provided due to the impact of other unemployment insurance or CARES 
Act provisions or fraud.  
 
3. Determine the proper disposition of excess funds and take necessary 
actions, including recovery of questioned costs. 
SUMMARY OF ETA’S RESPONSE 
In its response to the report, ETA concurred with the recommendations and 
outlined how they plan to address them. While ETA raised concerns about the 
applied 30-day standard, their concerns did not alter the conclusions of the 
report. We appreciate ETA's commitment to rectifying the issues identified for the 
EURGENO program, providing reconciliation guidance to states, and recovering 
any excess funds. ETA should ensure that reconciliation guidance includes 
questioned cost and excess funds, such as those identified for periods outside 
program eligibility including Illinois or West Virginia. 
 
    
 
 
 
 

U.S. Department of Labor – Office of Inspector General 
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We appreciate the cooperation and courtesies ETA extended us during this audit.  
 
 
 
 
Rocha & Company, PC 
Gaithersburg, MD  
September 21, 2023 
 

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EXHIBIT 1: QUESTIONED COSTS 
Table 4: Questioned EURGENO Costs24  
 
Description 
Amount 
Questioned Cost for Funds that Need to be 
Returned due to States’ Removal of 
Fraudulent Charges 
$24,144,000 
Questioned Cost for Funds Covered by other 
CARES Act Provisions—TFFF 
$4,930,061 
Total Questioned Costs 
$29,074,061 
Source: Table generated by the OIG based on Rocha analysis 
 
 
 
 
 
 
                                            
24 Recommendations with questioned costs identify costs that: (a) result from an alleged violation 
of a law, regulation, contract, grant, or other document or agreement governing the use of federal 
funds; (b) are not supported by adequate documentation (also known as an unsupported cost); or 
(c) appear unnecessary or unreasonable. See the Inspector General Act of 1978, as amended, 
Pub. L. 95-452, 5 U.S.C. § 405(a)(4). 

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APPENDIX A: SCOPE AND METHODOLOGY  
SCOPE 
This audit of EURGENO covered the period of March 13, 2020, to 
September 6, 2021. To determine the amount of federal funding that remained 
within the EURGENO account of the states’ UI Trust Funds since the conclusion 
of the program, we obtained EURGENO account balances as of 
February 1, 2023. 
 
The objective of the audit was to determine the extent to which ETA and states 
effectively executed EURGENO and ensured compliance with UI provisions of 
the CARES Act and its amendments. The overall objective was accomplished 
through the following sub-objectives: 
 
• Sub-Objective 1: Obtain an understanding of EURGENO as well 
as the processes and controls in place at the ETA and state levels; 
• Sub-Objective 2: Analyze EURGENO funding transfers from the 
federal government and ETA monitoring; 
• Sub-Objective 3: Determine states that participated in EURGENO; 
• Sub-Objective 4: Test reimbursements and credits provided to 
reimbursing employers as well as state drawdowns from the 
EURGENO account; 
• Sub-Objective 5: Determine what deadlines and procedures ETA 
and states have in place to ensure unused EURGENO funds are 
transferred back to FUA; and 
• Sub-Objective 6: Submit surveys to 47 SWAs to obtain key 
information about the program and assess compliance. 
 
We conducted this performance audit in accordance with generally accepted 
government auditing standards. Those 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 objective. 
We believe that the evidence obtained provided a reasonable basis for our 
findings and conclusions based on our audit objective. 

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METHODOLOGY 
This performance audit was conducted remotely. Of 53 SWAs with signed 
agreements to participate in EURGENO, we selected six states for in-depth 
testing: the States of Hawaii, Illinois, Mississippi, Oklahoma, West Virginia, and 
Vermont. For each of the six states, we used the stratified random sampling 
method to select a sample to test refunds and credits provided to reimbursing 
employers. Our sampling plan was designed under the assumption of moderate 
to high risk. This called for a design with 95 percent confidence and 7 percent 
relative precision of estimate. Populations were stratified and random samples 
were obtained. When the testing was complete, our statistician projected 
differences to the population using appropriate statistical estimation formulas, 
unless differences were clearly inconsequential.  
 
In addition, we sent surveys to the remaining 47 SWAs to verify the following as 
they relate to EURGENO: participation, the extent of that participation, funding 
provided, and whether ETA had conducted monitoring reviews.  
 
To answer our audit objective, we reviewed the CARES Act, ETA guidance, state 
agreements and state executive orders, program funding provided to the states, 
state reporting on ETA 2112, and EURGENO relief benefits provided by the 
states to reimbursing employers through refunds or credits. 
DATA RELIABILITY 
Methods of determining reliability were dependent upon availability of information 
at the state level. Primary methods of ensuring data reliability involved 
reconciliations of datasets to ETA 2112 as well as to amounts the states drew 
down from their EURGENO accounts through the Automated Standard 
Application for Payments system. Analytical comparisons were also used when 
assessing data reliability.  
INTERNAL CONTROLS 
A performance audit includes an understanding of internal controls considered 
significant to the audit objective and testing compliance with significant laws, 
regulations, and other requirements. In planning and performing our audit, we 
considered whether internal controls significant to the audit objective were 
properly designed and placed in operation. This included reviewing policies and 
procedures. We confirmed our understanding of these controls and procedures 
through interviews and the review and analysis of documentation. The objective 
of our audit was not to provide assurance of internal controls; therefore, we did 

U.S. Department of Labor – Office of Inspector General 
EURGENO EFFECTIVENESS 
 
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not express an opinion on ETA’s internal controls. Our consideration of internal 
controls for administering the EURGENO program would not necessarily disclose 
all matters that might be significant deficiencies. Because of the inherent 
limitation on internal controls, misstatements or noncompliance may occur and 
not be detected. 
CRITERIA 
• Public Law 116-136: Coronavirus Aid, Relief, and Economic Security 
(CARES) Act (March 27, 2020) 
• Public 116-260: Consolidated Appropriations Act, 2021, specifically 
Division N, Title II, Subtitle A, the Continued Assistance for Unemployed 
Workers Act of 2020 (December 27, 2020)  
• Public Law 116-151: Protecting Nonprofits from Catastrophic Cash Flow 
Strain Act of 2020 (August 5, 2020) 
• American Rescue Plan Act of 2021 (Pub. L. 117-2), specifically Title IX, 
Subtitle A, Crisis Support for Unemployed Workers (March 11, 2021) 
• Unemployment Insurance Program Letter 18-20: CARES Act of 2020 – 
Emergency Unemployment Relief for State and Local Governmental 
Entities, Certain Nonprofit Organizations, and Federally-Recognized 
Indian Tribes (April 27, 2020) 
• Unemployment Insurance Program Letter 18-20, Change 1: Amendments 
to the CARES Act of 2020 – Emergency Unemployment Relief for State 
and Local Governmental Entities, Certain Nonprofit Organizations, and 
Federally-Recognized Indian Tribes (August 12, 2020) 
• Unemployment Insurance Program Letter 18-20, Change 2: American 
Rescue Plan Act of 2021 (ARPA) – Amendments to the Emergency 
Unemployment Relief for State and Local Governmental Entities, Certain 
Nonprofit Organizations, and Federally-Recognized Indian Tribes 
(March 26, 2021) 
• Office of Management and Budget Memorandum 20-21, Implementation 
Guidance for Supplemental Funding Provided in Response to the 
Coronavirus Disease 2019 (April 10, 2020)  
PRIOR RELEVANT COVERAGE 
During the last 3 years, the OIG has issued three reports of significant relevance 
to the subject of this report. Those reports are the following: 
 

U.S. Department of Labor – Office of Inspector General 
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1. CARES Act: Initial Areas of Concern Regarding Implementation of 
Unemployment Insurance Provisions, Report No. 19-20-001-03-15 
(April 21, 2020), available at: 
https://www.oig.dol.gov/public/reports/oa/2020/19-20-001-03-315.pdf;  
 
2. COVID-19: More Can Be Done to Mitigate Risk to Unemployment 
Compensation under the CARES Act, Report No. 19-20-008-03-315 
(August 7, 2020), available at: 
https://www.oig.dol.gov/public/reports/oa/2020/19-20-008-03-315.pdf; and  
 
3. COVID-19: States Struggled to Implement Cares Act Unemployment 
Insurance Programs. Report No. 19-21-004-03-315 (May 28, 2021), 
available at: https://www.oig.dol.gov/public/reports/oa/2021/19-21-004-03-
315.pdf. 
 

U.S. Department of Labor – Office of Inspector General 
EURGENO EFFECTIVENESS 
 
-31- 
NO. 19-23-010-03-315 
APPENDIX B: ETA’S RESPONSE TO THE REPORT 
 

U.S. Department of Labor – Office of Inspector General 
EURGENO EFFECTIVENESS 
 
-32- 
NO. 19-23-010-03-315 
 
 
 

 
 
 
 
REPORT FRAUD, WASTE, OR ABUSE  
TO THE DEPARTMENT OF LABOR 
 
 
Online 
https://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 
Room S-5506 
Washington, DC 20210

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