Attestation Report
- Document type
- Report
- Date
- 2021-12-14
Summary
The attestation report of the Nebraska Department of Labor for July 1, 2020, through June 30, 2021, issued December 14, 2021 by the Nebraska Auditor of Public Accounts. It describes the Department's divisions and key officials, then summarizes comments, identifying comments #1 and #2 as material noncompliance and/or material weaknesses and comments #3, #4, #5, and #6 as significant deficiencies. The auditors report nearly $1.3 billion in accounting errors for fiscal year 2021 and, for unemployment benefit payments, a sample of 60 payments with questioned costs of $17,412, a 53.87% error rate. The comments also address payments to inmates, deceased claimants and State employees, Pandemic Unemployment Assistance identity verification, and bank account fraud investigations. The report ends with Exhibits A, B, C and D on expenditures, initial claims filed and benefit claims paid.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
ATTESTATION REPORT
OF THE
NEBRASKA DEPARTMENT OF LABOR
JULY 1, 2020, THROUGH JUNE 30, 2021
This document is an official public record of the State of Nebraska, issued by
the Auditor of Public Accounts.
Modification of this document may change the accuracy of the original
document and may be prohibited by law.
Issued on December 14, 2021
The Nebraska Auditor of Public Accounts Office was created by the first territorial Legislature in 1855. The Auditor was the
general accountant and revenue officer of the territory. Those duties have expanded and evolved over the decades, as modern
accounting theory has been implemented. The office of the Auditor of Public Accounts is one of six offices making up the
executive branch of Nebraska State Government. Charlie Janssen was elected in November 2014 and re-elected in November
2018, as the Nebraska Auditor of Public Accounts. He was sworn into office on January 8, 2015, as Nebraska’s 25th State
Auditor.
The mission of the Nebraska Auditor of Public Accounts’ office is to provide independent, accurate, and timely audits, reviews,
or investigations of the financial operations of Nebraska State and local governments.
We will provide this information, as required by statute, to all policymakers and taxpayers through written reports and our
Internet-based Budget and Audit databases.
We will maintain a professionally prepared staff, utilizing up-to-date technology, and following current Government Auditing
Standards.
Audit Staff Working On This Examination
Pat Reding, CPA, CFE – Assistant Deputy Auditor
Krista Davis – Audit Manager
Terence Heiser, CPA – Senior Auditor-in-Charge
Caleb Witt – Auditor-in-Charge
Mason Culver – Auditor II
Dennis Sugden – Auditor II
Nick Fleming – Auditor
Adam Hohensee – Auditor
Christian Swift – Auditor
Our reports can be found electronically at: auditors.nebraska.gov
Additionally, you may request them by contacting us at:
Nebraska Auditor of Public Accounts
State Capitol, Suite 2303
P.O. Box 98917
Lincoln, Nebraska 68509
Phone: 402-471-2111
NEBRASKA DEPARTMENT OF LABOR
TABLE OF CONTENTS
Page
Background Information Section
Background 1-2
Key Officials and Department Contact Information 3
Comments Section
Summary of Comments 4-7
Comments and Recommendations 8 - 55
Financial Section
Independent Accountant’s Report 56 - 57
Schedule of Revenues, Expenditures, and Changes in Fund Balances 58 - 62
Notes to the Schedule 63 - 67
Supplementary Information 68
Exhibit A – Expenditures by Fund Type (Excluding Benefit Claims) – 69
Fiscal Years 2017 through 2021
Exhibit B – Expenditures by Major Account (Excluding Benefit Claims) – 70
Fiscal Years 2017 through 2021
Exhibit C – Initial Benefit Claims Filed – Fiscal Years 2017 through 2021 71
Exhibit D – Benefit Claims Paid – Fiscal Years 2017 through 2021 72
NEBRASKA DEPARTMENT OF LABOR
BACKGROUND
The Nebraska Department of Labor (Department) is charged with helping Nebraskans prosper through responsible
workforce services that connect the State’s employers to educated and skilled workers through a service delivery
network of public and private partners.
The Department is organized into eight divisions: The Commissioner of Labor; Administrative Services; Finance;
General Counsel; Labor Market Information; Reemployment Services; Safety; and Unemployment Insurance. The
Department delivers services through one administrative office in Lincoln and career centers in Alliance, Beatrice,
Columbus, Fremont, Grand Island, Hastings, Lexington, Lincoln, McCook, Nebraska City, Norfolk, North Platte,
Omaha, Scottsbluff, Sidney, and York.
Commissioner of Labor
The Commissioner of Labor is the chief executive officer for the Nebraska Department of Labor, appointed by the
governor and confirmed by the Legislature. The office is responsible for oversight of all department divisions, as
well as the public information office and process improvement personnel. In addition to the duties prescribed by
statute, the Commissioner serves on boards, commissions, and task force entities as determined by the governor.
Office of Administrative Services
The Office of Administrative Services coordinates and administers the following divisions: Information
Technology; Human Resources; and Facilities and Buildings.
Finance
The Finance division provides services to programs administering numerous Federal grants, in addition to cash-
funded programs and General Fund appropriations. The Office of Financial Services supports, operates, and
maintains Department financial management systems; oversees budget preparation, financial reporting,
coordination of long-term Department financial needs, and preparation and oversight of the Cost Allocation Plan;
administers accounts payable, contracts, and grant management; prepares fiscal impact statements, coordinates and
resolves audit procedures and issues; completes Unemployment Insurance financial reports; coordinates the
procurement of agency goods and services; manages surplus property and property insurance; maintains facility
plans, building inventory, usage records, space plans, construction requests and documentation; coordinates facility
lease and custodial agreements; and monitors for compliance with Federal grants, State statutes, and agency rules
and regulations, as well as compliance with generally accepted accounting principles.
General Counsel
The Office of General Counsel provides legal and legislative services to the Commissioner, Department divisions,
and agency boards, including legal services for all programs of the Department; hearings on unemployment benefits
and tax appeals; the Benefit Accuracy Measurement (BAM) program, which reviews the payment and denial of
unemployment benefits; programs relating to labor law, contractor registration, and employee classification; and
the Workforce Innovation and Opportunity Act monitoring program.
Labor Market Information
The Labor Market Information division provides a variety of information products and manages various Federal
grants. The office delivers labor market information, which is the applied science of collecting, analyzing,
reporting, and publishing economic activities to describe and predict the relationship between labor demand and
supply. This data is used to describe a local area’s economic picture, which impacts social, fiscal, technological,
and economic policies; employer hiring and other business decisions; allocation of funds by policy makers;
individual career choices; educational programs; and the amount of government assistance individuals receive.
Reemployment Services
The Reemployment Services division provides direct services to employers and job seekers statewide through
American Job Centers and Department locations throughout the state. The division also has grant management and
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NEBRASKA DEPARTMENT OF LABOR
BACKGROUND
(Concluded)
reporting responsibilities for a variety of Federal employment and training grants, including Wagner-Peyser
Employment and Re-employment services; Workforce Innovation and Opportunity Act statewide administrative
activities; Rapid Response programs and WARN (Worker Adjustment and Retraining Notification Act) notices;
Trade Adjustment Act programs; Worker Opportunity Tax Credit and Foreign Labor Certification; Nebraska
Worker Training Program; Greater Nebraska Workforce Innovation and Opportunity Act program delivery; Jobs
for Veterans State Grants program; and other discretionary grants awarded through the Employment and Training
Administration.
Office of Safety
The Office of Safety administers the On-Site Safety and Health Consultation program, which encourages businesses
to provide safe work environments through collaboration between Department inspection staff and business owners
and managers.
Unemployment Insurance
The Unemployment Insurance - Benefits division is responsible for administering unemployment insurance benefits
operations in accordance with Nebraska Employment Security Law. Responsibilities include the processing and
payment of benefits to unemployed workers. Located within the division are several integrity-related programs,
including the Benefit Payment Control Unit, which detects and collects both non-fraudulent and fraudulent
overpayments. The unit establishes overpayment and collects by offsetting payable benefits, negotiating repayment
agreements, court restitution, or State and Federal income tax intercepts.
The Unemployment Insurance-Tax division is responsible for administering the tax and wage systems, as described
in the Nebraska Employment Security Law. The division’s duties include determining new employer liability and
processing transfers of unemployment insurance accounts; collecting and processing employer tax and wage reports
and delinquent payments of combined tax; auditing employers to ensure compliance; investigating allegations of
system abuse and enforcing compliance; and resolving employment issues that prevent benefit claim processing.
Source: Nebraska Blue Book 2020-21
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NEBRASKA DEPARTMENT OF LABOR
KEY OFFICIALS AND DEPARTMENT CONTACT INFORMATION
Nebraska Department of Labor Executive Management
Name Title
John Albin Commissioner
Kim Schreiner Controller (Resigned October 22, 2021)
Katie Thurber Legal Counsel
Angela Hansen Kruse Administrative Services Director
Scott Hunzeker Research Administrator
Bradley Pierce Reemployment Services Director
Andi Bridgmon Unemployment Insurance Director
Nebraska Department of Labor
550 S. 16th Street
P.O. Box 94600
Lincoln, NE 68509
dol.nebraska.gov
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NEBRASKA DEPARTMENT OF LABOR
SUMMARY OF COMMENTS
During our examination of the Nebraska Department of Labor (Department), we noted certain deficiencies and
other operational matters that are presented here. The following comments are required to be reported in accordance
with Government Auditing Standards: Comments #3, #4, #5, and #6, which are considered to be significant
deficiencies, and comments #1 and #2, which are considered to be material noncompliance and/or material
weaknesses.
These comments and recommendations are intended to improve the internal control over financial reporting or result
in operational efficiencies in the following areas:
1. Accounting Issues: The Department did not have procedures to ensure accounting records were recorded
accurately in the State’s accounting system. The financial schedule required material adjustments due to
incorrect journal entries and a lack of adequate procedures to reconcile the Department’s separate tax
system (TMS) and benefit system (GUS) to the State’s accounting system to ensure activity was reflected
properly. We noted nearly $1.3 billion in errors for the fiscal year ended June 30, 2021.
2. Unemployment Insurance Benefit Payments: The Department did not have adequate procedures to ensure
unemployment benefit payments were proper. Our random sample of 60 payments questioned costs of
$17,412, a 53.87% error rate, which estimates potential dollars at risk for fiscal year 2021 to be
$341,096,555. We also noted $1,007,264 of questioned costs during other testing procedures. Issues noted
were as follows:
Ineligible Payments to Inmates: We identified 35 inmates who received payments during the fiscal
year ended June 30, 2021. Of the 35 inmates identified, we tested the claims for the 10 highest-
paid inmates and noted $64,966 and $34,899 paid in fiscal years 2021 and 2020, respectively, while
the inmates were incarcerated.
Benefits Paid to Deceased Claimants: Nine claimants received benefit payments, totaling $70,286
and $1,034, during fiscal years 2021 and 2020, respectively, after the claimants had died. At the
time of our testing, the Department had failed to identify that two of these claimants were deceased.
The Department started investigations of the remaining seven claimants; however, those
investigations were not undertaken timely.
Improper Unemployment Benefits Paid to State Employees: We identified $87,973 in improper
unemployment benefits paid to Nebraska State employees for 23 of 77 claimants tested. We also
noted several instances of the banking information in the benefit system not agreeing to that in the
State’s EnterpriseOne (E1) accounting system, which could be indicative of a third party
fraudulently filing a claim impersonating the State employee. We contacted one of these
employees, who stated that he had not filed a claim and was unaware of someone having filed a
claim using his identity. The address in the benefit system was not his current address. Benefits
paid on this claim totaled $11,687.
Benefits Paid to Claimants Under the Age of Sixteen: We selected six individuals younger than
16 years of age to test. For all six individuals tested, payments were neither reasonable nor
allowable. Job searches for one claimant included concrete mixer truck driver, journeyman
plumber, and truck driver. A concrete mixer truck driver requires a commercial driver’s license
(CDL), and the minimum age to obtain a CDL in Nebraska is 18 years old (intrastate only);
however, the claimant was only 15 years old when the claim was filed.
Adjudication Issues: Because the Department lacked adequate controls, several claimants tested
may have been ineligible to receive benefits. For example, one claimant was paid $4,754 in fiscal
year 2021, despite responding that she had quit her job, and case notes stated that the claimant did
not provide good cause for quitting and, therefore, should be disqualified. Another claimant was
paid $16,700 in fiscal year 2021; however, the employer responded that the claimant was no longer
showing up to scheduled shifts, and hours were available for the claimant to work.
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NEBRASKA DEPARTMENT OF LABOR
SUMMARY OF COMMENTS
(Continued)
Six claimants tested did not complete the work search requirements properly, but they still received
benefit payments, totaling $16,256, for those weeks in fiscal year 2021.
Fifteen claimants tested had wages that met the criteria for the quarterly wage crossmatch; however,
for six of these claimants, no investigation was created, and the investigation was not worked timely
for the other nine claimants. Those nine investigations had not been completed by the time we
conducted our fieldwork. The 15 claimants were paid $62,198 for those quarters.
Three claimants had investigations, and the Department determined that their claims may have been
fraudulent; however, because the investigations were not completed timely, benefit payments
continued to be made. Total payments made on these claims were $18,022 and $34,612 in fiscal
years 2021 and 2020, respectively.
Pandemic Unemployment Assistance (PUA) Issues: Requests for documentation to verify
employment/self-employment for PUA claimants were not sent timely, and identity verification for
the majority of PUA claimants was not completed as required. On January 8, 2021, the U.S.
Department of Labor (USDOL) provided new guidance requiring individuals to submit
documentation substantiating employment or self-employment; however, most PUA claimants
were not made aware of this requirement until May 2021. The USDOL also required states to have
procedures for identity verification by January 26, 2021. According to the Department, PUA
payments after December 27, 2020, were run through its identity verification software on July 19,
2021, almost six months after required. Further, the Department was unable to show that the
claimants tested by the APA were run through the identity verification software. Therefore, it
appears that, as of August 24, 2021, the Department did not perform identity verification procedures
for continuing PUA claims. The amount of continuing PUA payments made for the weeks ended
after December 27, 2020, totaled $28,613,524. For five claimants tested, the claimant either did
not provide self-employment or employment verification, and/or the Department did not perform
identity verification procedures.
Short-Time Compensation (STC) Claimants and Claimants with Excessive Wages: Short-Time
Compensation (STC) is a voluntary program in which an employer can enroll to assist in averting
layoffs by allowing employers to reduce employees’ hours while also permitting employees to
receive prorated unemployment benefit payments. We noted that several members of upper-level
management received benefits despite their wages increasing. This does not appear to have been
in accordance with the program’s objectives.
We also noted issues with 10 claimants who had over $55,000 in wages; however, their wages were
not reported, investigations were not worked timely, and overpayments were not established. One
employer responded to the Department on November 11, 2020, that the claimant was still
employed, the claimant had not filed for benefits, and the claim was likely fraudulent.
Nevertheless, a payment for $1,040 was still processed. Another employer responded on
November 11, 2020, that the claimant was still employed and the claim was fraudulent. Per the
case notes in the benefit system, the Department identified this as fraud on May 18, 2021, over six
months later. However, payments were still made on this claim through June 21, 2021. Payments,
totaling $21,280, were made on this claim in fiscal year 2021.
Untimely Resolution to Bank Account Fraud Investigations: We identified 17 claims as high risk
because a single bank account was used by 10 or more claimants. During our review, we noted
that investigations started by the Department were not completed timely. Payments of $11,087,
$113,937, and $1,010 were made on these claims in fiscal years 2020, 2021, and 2022, respectively.
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NEBRASKA DEPARTMENT OF LABOR
SUMMARY OF COMMENTS
(Continued)
Duplicate Benefit Payments: Four of 20 individuals tested received improper payments, totaling
$50,959, due to the Department making payments from multiple programs for the same benefit
week or duplicating payments for the same program during a week, neither of which is allowed.
For three of the four claimants, the Department had failed to establish an overpayment in the
system, or the overpayment balance that was established was incorrect.
Maximum Benefit Amount (MBA) Not Correctly Calculated: For one of 60 claimants tested, the
MBA was not calculated properly, leading to overpayments of $358.
Inaccurate Social Security Numbers: We noted that the Social Security numbers (SSN) were not
correct in the benefit system for five individuals. Three of these individuals were paid from the
Pandemic Unemployment Assistance (PUA) program, not from regular Unemployment Insurance
(UI) or Pandemic Emergency Unemployment Compensation (PEUC). The Department failed to
identify that these individuals had wages during the base period due to the SSN being wrong in the
benefit system.
Improper Employer Charges: For seven claimants tested, we noted that the employers were not
charged properly.
3. Lack of Timely Response for Audit Requests: The Department failed to comply with Neb. Rev. Stat. § 84-
305 (Cum. Supp. 2020). The Department did not respond to audit requests within the required three
business days and/or did not provide the information requested within the required three weeks after the
initial request.
4. Inadequate Review of Unemployment Insurance Administrative Expenditures: The Department did not
obtain or review adequate documentation to support that payments were proper. We requested timesheets
related to four contract payments, and each payment had errors. As the Department was not reviewing
timesheets, it is likely that additional errors could have occurred. We also noted technology services
allocated to various programs without adequate support.
5. Nebraska Training and Support Cash Fund: Adequate documentation was not on file for two worker
training grant payments tested. We noted alcohol purchases, unreasonable meal charges, and
reimbursements for expenses prior to the grant agreement being signed.
6. Payroll Lacked Segregation of Duties: The Department did not have an adequate segregation of duties or
compensating controls over payroll. We also noted that one employee had the ability to approve her own
timesheet.
7. State Vehicle Usage: An employee drove a State vehicle home without the required approval, and a
Transportation Services Bureau (TSB) rental was not cancelled timely. Excessive mileage and incomplete
travel logs were also noted.
8. Employment Services Monitoring: The Department paid United Way of the Midlands as a contractor rather
than as a subrecipient and did not follow Federal requirements for subrecipients.
9. WIOA Subrecipient Monitoring: A subrecipient payment tested did not have adequate documentation to
support compliance with Federal regulations.
10. Untimely Refund: One claimant had taxes intercepted, totaling $1,200, that should have been refunded in
May; however, they were not refunded until July, after the Auditor of Public Accounts (APA) had inquired
about the delay.
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NEBRASKA DEPARTMENT OF LABOR
SUMMARY OF COMMENTS
(Concluded)
11. Fines & Penalties Incorrectly Coded: The Department incorrectly recorded fines, totaling $45,762, to the
Temporary School Fund instead of to the Common School Fund.
Changes to Banking Information – NE Works: Pursuant to American Institute of Certified Public Accountants
(AICPA) Auditing Standards AU-C Section 265B.A17, we also noted another matter involving internal control and
its operation that we have reported to management of the Department in a separate early communication letter,
dated August 3, 2021, for the fiscal year ended June 30, 2021, Annual Comprehensive Financial Report. During
our review of the process for changing banking information in NEworks, the Department’s case management system
for various Federal programs, including unemployment insurance, we noted a lack of controls to ensure that such
changes were proper and accurate. More detailed information is provided in the August 3, 2021, letter available on
the APA’s website (https://auditors.nebraska.gov/).
Department Response: As stated in the August 3, 2021 response, the Department has implemented new procedures
to address this risk. The system is designed so that the individual filing the claim is the person primarily responsible
for inputting and changing banking information. If the claimant requires assistance in inputting or changing
banking information, the process requires at least two Department employees be involved in changing banking
information.
More detailed information on the above items is provided hereinafter. It should be noted that this report is critical
in nature, containing only our comments and recommendations on the areas noted for improvement and does not
include our observations on any accounting strengths of the Department.
Draft copies of this report were furnished to the Department to provide its management with an opportunity to
review and to respond to the comments and recommendations contained herein. All formal responses received have
been incorporated into this report. Where no response has been included, the Department declined to respond.
Responses that indicate corrective action has been taken were not verified at this time, but they will be verified in
the next examination.
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NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
1. Accounting Issues
The Department lacked procedures for ensuring that accounting records were recorded accurately in the State’s
accounting system. Monies for the Unemployment Compensation Fund are maintained outside of the State
Treasurer in separate bank accounts. Journal entries are prepared to record the activity to the State accounting
system, EnterpriseOne. The financial schedule required material adjustments due to incorrect journal entries and a
lack of adequate procedures for reconciling the Department’s separate tax system (TMS) and benefit system (GUS)
to the State’s accounting system to ensure activity was reflected properly. In addition, the Department did not have
adequate procedures to ensure that accounting entries were completed timely. The Department did not complete
posting entries for the fiscal year ended June 30, 2021, until August 26, 2021.
The table below summarizes nearly $1.3 billion in errors for the fiscal year ended June 30, 2021. The APA proposed
adjustments, and the Department agreed. However, an attestation examination is not designed to test all
transactions; therefore, due to the limitations of an examination and the lack of adequate controls, there is a
significant risk that additional material errors went undetected.
Description Dollar Error
1 Transfers in and out were overstated due to 1) interfund transfer activity not being eliminated; $ 729,038,024
or 2) transfer accounts being used instead of the proper expenditure or revenue accounts.
2 An erroneous entry performed in fiscal year 2020 was reversed in fiscal year 2021, causing 296,242,317
an understatement in benefits. An adjustment was necessary to reflect benefits properly and
to record the adjustment as a beginning balance adjustment.
3 Accounts receivable and claims payable were understated by $93 million due to an error in 93,242,673
fiscal year 2020 that had not been corrected for fiscal year 2021 balances in the accounting
system.
4 The Department performed a tax write-off in the accounting system that overstated activity in 83,074,828
six account codes, including $45 million in operating expenditures.
5 The Department received funds from the Coronavirus Relief Fund (CRF) in September 2021 40,343,463
for benefits incurred during fiscal year 2021. Therefore, the unrecorded revenue should have
been included in the financial schedule as being due from the CRF.
6 First weeks Unemployment Insurance (UI) benefits were reimbursed by the Federal 18,952,915
government. The Department overdrew Federal funds and, when the monies were returned,
revenues were not properly decreased; instead, a transfer out was recorded. Furthermore, $13
million was for benefits incurred during fiscal year 2020 and should have been recorded as a
beginning balance adjustment instead of current year revenues.
7 The Department received funds for Federal Emergency Relief but recorded the receipt as a 14,786,798
transfer in. Because the monies had not been obligated or spent, the balance should have been
recorded as a liability to the Federal government.
8 Emergency Unemployment Insurance Stabilization and Access Act (EUISAA) Federal grant 11,458,658
funding was recorded in the Reed Act fund instead of in the Unemployment Insurance
Administration fund, causing misstatements in several lines of the financial schedule,
including transfers, revenue, and expenditures.
9 Short-time compensation reimbursement was inaccurately recorded to the Federal fund 4,704,845
instead of to the Unemployment Compensation (UC) fund, where the benefits were paid;
therefore, an entry was necessary to correct the Federal fund. The Department made a
correction to the UC fund when the issue was brought up during testing.
10 Construction in progress was inaccurately recorded as operating expenditures. 3,233,779
11 Cash and revenues were overstated for an erroneous entry made in the accounting system for 353,910
the UC fund. The bank reconciliation was not performed properly to identify the error timely
in order to correct the accounting system.
TOTAL $ 1,295,432,210
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NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
1. Accounting Issues (Concluded)
During the process of testing transactions, we identified other transfer activity, totaling $6.6 million, that was not
recorded properly, but we were unable to determine the proper correcting entry. Additionally, several balances in
payables and receivables appear to have been misstated on the financial schedule. As stated in the Independent
Accountant’s Report, we were unable to express an opinion on whether the financial schedule was accurate due to
the numerous material errors and the risk of unrecorded activity, which attestation procedures may not identify.
Good internal control and sound business practices require procedures to ensure that accounting transactions are
accurate and complete.
Without such procedures, there is an increased risk that material misstatements may occur and remain undetected.
We recommend the Department establish procedures to ensure accounting records
are recorded properly in the accounting system, including reconciliation
procedures to ensure accounting records reflect accurately the activity and
appropriate balances of the separate UI systems (TMS & GUS). Additionally, we
recommend the Department implement procedures to ensure accounting entries are
completed in a timely manner.
Department’s Response: The Nebraska Department of Labor recognizes that incorrect journal entries created
issues with the Department's records compared to the State's accounting system. Our discussions with the APA
indicate that all corrective entries have been made, and there are no other known errors that need to be corrected.
The Department stresses that the accounting issues were journal entry errors that did not result in questioned costs
or improper expenditures. The Department is currently in the process of hiring a new Controller. As noted above
the Controller during the period of this audit is no longer with the Department. The new controller will be directed
to work closely with DAS accounting to review existing practices and make sure that all funds are entered in the
correct manner.
2. Unemployment Insurance Benefit Payments
The Department paid $633 million in unemployment insurance (UI) benefits to 96,090 claimants between
July 1, 2020, and June 30, 2021.
Our testing included a random sample of 60 payments, totaling $32,321, and questioned costs for those payments
tested were $17,412. Total benefit payments for the fiscal year ended June 30, 2021, were $633,184,621. Based
on the sample tested, the dollar error rate for the sample was 53.87% ($17,412/$32,321), which estimates the
potential dollars at risk for fiscal year 2021 to be $341,096,555. We also questioned costs, totaling $270,022, for
the same individuals on other payments.
In addition to the $17,412 questioned costs for the 60 random sample payments, we also noted $1,007,264 of
questioned costs during other testing procedures. Similar findings were noted during the previous audit.
The table below summarizes the questioned costs:
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NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Questioned Costs
FY 2020 FY 2021 FY 2022
Ineligible Payments to Inmates $ 34,899 $ 64,966 $ -
Benefits Paid to Deceased Claimants 1,034 70,286 -
Improper Unemployment Benefits Paid to State Employees 10,332 87,973 -
Benefits Paid to Claimants Under the Age of Sixteen - 24,007 -
Random Sample, including:
-Inadequate Controls
-Adjudication Issues
-Weekly Certification Issues
-Wage Crossmatch Issues
-Pandemic Unemployment Assistance (PUA) Issues 99,639 187,795 -
Short-Time Compensation (STC) Plan Issues 45,080 66,840 -
Claimants with Excessive Wages 27,172 127,302 -
Untimely Resolution to Bank Account Fraud Investigations 11,087 113,937 1,010
Duplicate Benefit Payments - 50,959 -
Maximum Benefit Amount (MBA) Not Correctly Calculated - - 358
Total $ 229,243 $ 794,065 $ 1,368
Grand Total All Fiscal Years $ 1,024,676
Background of the Pandemic Funding for Unemployment Benefits
Due to the COVID-19 pandemic, on March 13, 2020, the President of the United States issued a “Proclamation on
Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak.” Additionally,
Congress passed the Emergency Unemployment Insurance Stabilization and Access Act of 2020 (EUISAA), the
Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Continued Assistance to Unemployed Workers
Act of 2020 (CAA), and the American Rescue Plan Act (ARPA) to provide Federal funding for unemployment
compensation to all states, as well as to ease restrictions on the unemployment compensation program. The State
of Nebraska ended its participation in those programs after the week ended June 19, 2021. Below is a summary of
each program.
Federal Pandemic Unemployment Compensation (FPUC): For weeks ended April 4, 2020, through
July 25, 2020, the FPUC program added $600 to each week of benefits paid. For weeks ended
January 2, 2021, through June 19, 2021, the FPUC program was reduced to an additional $300 to each week
of benefits paid. An individual eligible for at least $1 for one week of UI benefits would receive the
additional stimulus of $600 or $300.
Pandemic Emergency Unemployment Compensation (PEUC): For weeks ended April 4, 2020, through
June 19, 2021, if a claimant had exhausted all of his or her regular UI benefits, and the regular UI claim
had a benefit year end date after July 1, 2019, then the claimant was eligible to receive PEUC benefits. The
claimant needed to meet other UI eligibility requirements, such as able and available and work search
requirements. The claimant’s weekly benefit amount (WBA) was the same as the WBA on the previous
regular UI claim.
Pandemic Unemployment Assistance (PUA): PUA was available for individuals who were not eligible for
regular UI benefits, which included self-employed individuals. To be eligible for PUA, the claimant had
to certify that he or she was unemployed, partially unemployed, or unable or unavailable to work due to the
COVID-19 pandemic. The program was effective from weeks ended January 27, 2020, through
June 19, 2021.
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NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Lost Wages Assistance (LWA): On August 8, 2020, the President instructed the Federal Emergency
Management Agency (FEMA) to make available other needs assistance for lost wages. In Nebraska, Lost
Wages Assistance (LWA) was payable for claimants for the weeks ended August 1, 2020, through
September 5, 2020. Recipients of LWA received a $300 stimulus in addition to the UI benefit payment if
the UI benefit payment for the week was at least $100.
Our procedures noted the following:
Ineligible Payments to Inmates
Inmates are not eligible to receive UI benefits because they are not able and available to work in accordance with
Neb. Rev. Stat. § 48-627(3)(f) (Cum. Supp. 2020). During testing, we identified 35 inmates who received benefit
payments during the fiscal year ended June 30, 2021. Of the 35 inmates identified, we selected the 10 highest-paid
inmates to test in detail and noted the following issues:
While incarcerated, all 10 inmates tested received payments, totaling $64,966 and $34,899 in FY 2021 and
FY 2020, respectively.
Four of the 10 inmates tested did not have an investigation or other judicable issues created in the benefit
system for payments received during their incarceration.
For six of 10 inmates who had an investigation or other judicable issues created, all six issues were
adjudicated incorrectly.
The APA identified an additional 25 individuals who received payments, totaling $39,533, while
incarcerated.
Claimant #1 below filed for PUA and received more than the minimum weekly benefit amount (WBA) of
$173. He did not provide the Department with documentation substantiating his income within 21 calendar
days of filing but continued to receive payments at the higher rate of $306. The improper rate was paid for
39 weeks before the Department established an overpayment of $5,187 in December 2020. Furthermore,
the claimant should have been denied all of the benefits during his incarceration for $23,934.
FY 2021 Gross FY 2020 Gross Sentence 1st/ Last
Amount Paid Amount Paid Begin Date / Week Benefits
While While Release Paid While
Claimant Incarcerated Incarcerated Date Incarcerated Observations
Claimant #1 $ 10,932 $ 13,002 1/16/2020 - 3/7/2020 - Three separate investigations
12/25/2020 11/28/2020 were created in the system for
the incarceration, but payments
were incorrectly allowed.
Claimant #2 8,288 - 11/18/2009 - 6/27/2020 - An investigation for the
* 10/10/2020 incarceration was created in
May 2020, but payments were
incorrectly allowed.
Claimant #3 7,465 2,742 12/6/2018 - 6/13/2020 - An investigation for the
10/8/2020 9/12/2020 incarceration was created in
March 2021, disqualifying
benefits for January 2021-2022,
which were not the dates paid
during incarceration.
- 11 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
FY 2021 Gross FY 2020 Gross Sentence 1st/ Last
Amount Paid Amount Paid Begin Date / Week Benefits
While While Release Paid While
Claimant Incarcerated Incarcerated Date Incarcerated Observations
Claimant #4 7,049 9,449 9/25/2003 - 3/28/2020 - No investigations for the
* 11/14/2020 incarceration were created.
Claimant #5 5,133 - 8/13/2020 - 8/15/2020 - No investigations for the
* 1/2/2021 incarceration were created.
Claimant #6 6,622 - 3/7/2019 - 7/4/2020 - No investigations for the
4/27/2021 10/3/2020 incarceration were created.
Claimant #7 4,944 - 1/27/2021 - 1/30/2021 - An investigation for the
* 4/3/2021 incarceration was created in
January 2021, but payments
were incorrectly allowed.
Claimant #8 4,903 346 7/17/2009 - 2/8/2020 - The Department established an
5/4/2020 5/2/2020 overpayment on 11/12/2020.
No investigations for the
incarceration were created.
Claimant #9 4,900 9,360 1/24/2020 - 5/2/2020 - An investigation for the
8/8/2020 8/1/2020 incarceration was created in
January 2021, but payments
were incorrectly allowed.
Claimant #10 4,730 - 1/19/2021 - 2/20/2021 - Four investigations for the
* 4/24/2021 incarceration were created in
January 2021, three were
allowed and one denied.
However, the denied
investigation was not for the
weeks paid during
incarceration.
Totals $ 64,966 $ 34,899
*Still incarcerated as of audit fieldwork.
Neb. Rev. Stat. § 48-627 (Cum. Supp. 2020) provides, in relevant part, the following:
An unemployed individual shall be eligible to receive benefits with respect to any week, only if the Commissioner of
Labor finds:
****
(3)(a) He or she is able to work and is available for work.
****
(f) An inmate sentenced to and in custody of a penal or custodial institution shall be considered unavailable
for work for purposes of this section[.]
20 CFR § 625.6(e)(1) states the following:
In the case of a weekly amount determined in accordance with paragraph (e) of this section, based only on the
individual’s statement of earnings, the individual shall furnish documentation to substantiate the employment or self-
employment or wages earned from or paid for such employment or self-employment or documentation to support that
the individual was to commence employment or self-employment on or after the date the major disaster began. In
either case, documentation shall be submitted within 21 calendar days of the filing of the initial application for DUA.
- 12 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Good internal control requires procedures to ensure that inmates do not receive UI benefits while incarcerated.
Without such procedures, there is an increased risk of the Department disbursing unallowable UI payments.
Benefits Paid to Deceased Claimants
We tested 13 claimants who were paid UI benefits after their date of death. Nine of the claimants’ payments were
for benefit weeks after the date of death, totaling $1,034 and $70,286 in FY 2020 and FY 2021, respectively. The
Department lacked adequate procedures to identify deceased individuals prior to benefits being paid.
Benefit Weeks
Paid after Date FY 2020 FY 2021
Claimant Date of Death of Death Payments Payments Observations
Claimant #1 2/16/2013 6/27/2020 - $ - $ 3,092 The investigation was started but not
7/18/2020 completed for 106 days.
Claimant #2 8/8/2014 4/4/2020 - - 16,671 The APA identified a counterfeit driver’s
10/3/2020 license was submitted to the Department.
The Department did not identify the
counterfeit license. Furthermore, there
was no indication that the Department
was aware the individual was deceased as
of audit fieldwork.
Claimant #3 6/27/2019 6/20/2020 - - 2,319 The investigation was started but not
6/27/2020 completed for 120 days.
Claimant #4 9/27/2020 11/28/2020 - - 12,683 The investigation was started but not
6/19/2021 completed as of audit fieldwork.
Claimant #5 4/15/2020 6/27/2020 - 1,034 11,578 The investigation was started but not
10/24/2020 completed as of audit fieldwork.
Claimant #6 5/17/2020 5/23/2020 - - 4,210 The investigation was started but not
6/20/2020 completed for 142 days.
Claimant #7 11/12/2020 11/21/2020 - - 9,937 There was no indication of the
1/16/2021; Department being aware that the
3/6/2021 - individual was deceased as of audit
5/15/2021 fieldwork.
Claimant #8 2/5/2021 2/13/2021 - - 5,676 The investigation was started but not
4/24/2021; completed as of audit fieldwork.
5/1/2021
Claimant #9 8/7/2020 8/29/2020 - - 4,120 An investigation initiated on 12/4/2020
10/24/2020 identified the individual as deceased.
The claim was denied, and an
overpayment was established.
Total $ 1,034 $ 70,286
Neb. Rev. Stat. § 48-627 (Cum. Supp. 2020) states the following:
An unemployed individual shall be eligible to receive benefits with respect to any week, only if the Commissioner of
Labor finds:
****
(3)(a) He or she is able to work and is available for work.
- 13 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Good internal control requires procedures to ensure that only eligible claimants receive UI benefits.
Without such procedures, there is an increased risk of inappropriate or fraudulent payments.
Improper Unemployment Benefits Paid to State Employees
For the fiscal year ended June 30, 2021, the APA identified $87,973 in improper unemployment benefits paid to
Nebraska State employees for 23 of 77 claimants tested. The claimants tested did not report all State wages to the
Department. The Department’s process for identifying State employees who were also receiving benefit payments
appeared to be not only time consuming but also ineffective.
Active State workers were eligible for unemployment if their State work hours were reduced, they were terminated
from other employment, or their hours from another job were reduced. In these instances, the employee was
required to report State wages in order to determine the claimant’s unemployment benefit. The APA compared the
list of unemployment benefit claimants to the State’s employee management system (Workday) to identify State
employees who had also received unemployment benefits during the fiscal year ended June 30, 2021. In total, the
APA identified 911 State employees who received UI benefits during the fiscal year, and we selected 77 of those
employees to test.
We also noted instances of the State employee’s bank account in the State’s accounting system (E1) not agreeing
to the bank account in the Department’s benefit system. Bank accounts that did not match could indicate that a
third party had fraudulently filed a claim impersonating the State employee. The APA contacted Employee #2, as
shown in the table below, who stated that he neither filed the UI claim nor received any benefit payments.
Gross Benefits Bank Account
Number of Overpaid during in Benefit
State Weeks FY 2021 System Agreed
Employee Agency Overpaid (Questioned Costs) to E1 Observations
#1 DHHS 15 $ 7,045 No
#2 Military 19 11,687 No No wages had been reported by Military for this
employee. The employer response questionnaire was
sent to an employer other than Military, and that
employer reported that the individual was never
employed. The Department did not perform further
procedures to follow up on the response.
#3 DHHS 21 8,106 No This employee was tested during the FY 2020 audit,
and the APA communicated the issue to the
Department on 7/31/2020; however, the claimant
continued to receive payments through 12/19/2020.
#4 DHHS 6 5,725 No This employee was tested during the FY 2020 audit,
and the APA communicated the issue to the
Department on 8/3/2020; however, the claimant
continued to receive payments on 8/3/2020,
8/10/2020, and 9/17/2020.
#5 DHHS 3 3,120 No DHHS responded to the employer questionnaire and
stated that the individual was still working, but the
Department did not perform further procedures to
follow up on the response.
- 14 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Gross Benefits Bank Account
Number of Overpaid during in Benefit
State Weeks FY 2021 System Agreed
Employee Agency Overpaid (Questioned Costs) to E1 Observations
#6 Supreme 4 1,308 No An Intrastate Quarterly Wage Crossmatch
Court investigation was not created in the benefit system,
and the Department had sent out no wage audit
request at the time of testing.
#7 Supreme 2 880 No
Court
#8 DHHS 3 2,400 Yes This employee was tested during the FY 2020 audit,
and the APA communicated the issue to the
Department on 7/31/2020; however, the claimant
continued to receive payments on 8/27/2020 and
9/17/2020.
#9 Veteran's 11 4,229 Yes An overpayment was established for $621 on
Affairs 12/16/2020 but had not been collected as of our
testing.
#10 Corrections / 24 9,161 Yes Overpayments were established on 5/7/2021 for
DHHS $8,151, with penalties of $728, but were not
collected as of testing.
#11 DHHS / 10 8,524 Yes This employee was tested during the FY 2020 audit,
NDOT and the APA communicated this issue to the
Department on 8/3/2020; however, the claimant
continued to receive payments on 9/24/2020.
#12 Military 2 900 No
#13 DHHS 2 806 Yes
#14 DHHS 1 202 Yes
#15 DHHS 5 2,045 Yes An overpayment was established for $440 on
11/12/2020 but was not collected as of testing.
#16 Agriculture 2 1,932 Yes
#17 DHHS 1 836 No This employee was tested during the FY 2020 audit,
and the APA communicated the issue to the
Department on 8/3/2020; however, the Department
had not established any overpayments at the time of
testing.
#18 Game & 1 268 Yes
Parks
#19 Corrections 1 148 Yes
#20 DAS 8 6,501 Yes
#21 DHHS 21 10,570 No The APA also noted 18 weeks of questionable
unemployment payments made during FY 2020 for
$10,332.
#22 DHHS 1 1,040 Yes This employee was tested during the FY 2020 audit,
and the APA communicated the issue to the
Department on 8/3/2020; however, the Department
had not established any overpayments at the time of
testing.
#23 DAS 1 540 Yes
$ 87,973
- 15 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Neb. Rev. Stat. § 48-625(1) (Cum. Supp. 2020) states the following:
Each eligible individual who is unemployed in any week shall be paid with respect to such week a benefit in an amount
equal to his or her full weekly benefit amount if he or she has wages payable to him or her with respect to such week
equal to one-fourth of such benefit amount or less. In the event he or she has wages payable to him or her with respect
to such week greater than one-fourth of such benefit amount, he or she shall be paid with respect to that week an
amount equal to the individual's weekly benefit amount less that part of wages payable to the individual with respect
to that week in excess of one-fourth of the individual's weekly benefit amount. In the event there is any deduction from
such individual’s weekly benefit amount because of earned wages pursuant to this subsection or as a result of the
application of section 48-628.02, the resulting benefit payment, if not an exact dollar amount, shall be computed to
the next lower dollar amount.
Neb. Rev. Stat. § 48-628.02 (Cum. Supp. 2020) provides, in relevant part, the following:
(1) An individual shall be disqualified for benefits for any week in which he or she is receiving or has received
remuneration in the form of:
(a) Wages in lieu of notice or a dismissal or separation allowance;
(b) Vacation leave pay, including that received in a lump sum or upon separation from employment;
(c) Compensation for temporary disability under the workers’ compensation law of any state or under a similar
law of the United States;
(d) Retirement or retired pay, pension, annuity, or other similar periodic payment under a plan maintained or
contributed to by a base period or chargeable employer; or
(e) A gratuity or a bonus from an employer, paid after termination of employment, on account of prior length of
service, or disability not compensated under the workers’ compensation law.
(2) Payments described in subsection (1) of this section that are made in a lump sum shall be prorated in an amount
which is reasonably attributable to such week. If the prorated remuneration is less than the benefits which would
otherwise be due, he or she shall be entitled to receive for such week, if otherwise eligible, benefits reduced by the
amount of such remuneration. The prorated remuneration shall be considered wages for the quarter to which it is
attributed.
A good internal control plan requires adequate procedures to identify improper or questionable benefits for further
investigation and proper resolution.
Without such procedures, there is an increased risk of improper or fraudulent payments being made.
Benefits Paid to Claimants Under the Age of Sixteen
We tested six claimants under the age of 16 years old. For all six claimants tested, the benefit payments were not
reasonable or allowable in accordance with State and Federal laws. All six individuals tested received benefits from
the PUA program. Below is a table of the individuals’ CY2019 and CY2020 wages versus benefits received:
- 16 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Age of
Claimant CY CY FY 2020 FY 2021
for 1st 2019 2020 Benefits Benefits
Claimant Week Paid Wages Wages Paid Paid Observations
Claimant 14 years $ 425 $ 480 $ 5,414 $ 4,038 Work search requirements for the weeks ending
#1 7/18/2020-8/8/2020 were not completed, but
benefits were still paid for $2,492, which are
questioned costs.
Claimant 14 years - - - 17,017 Work search requirements for the weeks ending
#2 7/18/2020-7/25/2020, 8/8/2020, and 8/22/2020-
10/3/2020 were not completed, but benefits
were still paid for $4,130, which are questioned
costs.
Claimant 15 years - - 10,395 6,622 Work search requirements for the weeks ending
#3 7/18/2020-8/8/2020, 8/22/2020-8/29/2020, and
9/12/2020-10/3/2020 were not completed, but
benefits were still paid for $4,130, which are
questioned costs.
Claimant 14 years - 6,028 774 9,621 Work search requirements for the weeks ending
#4 7/18/2020-8/22/2020 were not completed, but
benefits were still paid for $3,438, which are
questioned costs.
Claimant 15 years 2,165 1,814 - 12,883 The claimant was scheduled to start work on
#5 5/22/2020, but the pool was not opened because
of COVID-19. However, the claimant was paid
benefits for weeks ending 2/8/2020-5/23/2020
prior to his regularly schedule resume date.
$7,568 of benefits were paid for these weeks,
which are questioned costs.
Claimant 15 years 986 1,578 10,058 20,523 The claimant received $1,136 in wages during
#6 the period 10/1/2020 to 12/31/2020; however,
the claimant did not self-certify the wages, and
no review was performed by the Department to
ensure benefits were properly reduced. $2,249
of benefits were paid during this time period,
which are questioned costs.
Note: The period used to determine the Weekly Benefit amount for PUA benefits is based on the calendar year.
Claimants #2 and #3 were sisters, and both reported on their respective applications that they worked for their father.
Each also reported on her application that she made $2,000 a quarter prior to the pandemic. Claimant #3
documented the following job searches: concrete mixer truck driver, journeyman plumber, and truck driver. A
concrete mixer truck driver – as well as truck drivers in general – requires a Commercial Driver’s License (CDL).
The minimum age to obtain a CDL in the State of Nebraska is 18 years (intrastate only). Based on the young ages
of the claimants (14 and 15 years old) and certification for the job searches performed, these claims appear to have
been fraudulent and should have been identified and denied by the Department. Both sisters were paid a total of
$34,034.
An individual could be eligible for PUA if his or her employment was disrupted due to the pandemic. However,
the likelihood of someone under the age of 16 having disrupted employment, especially when his or her wages were
minimal, seems remote.
- 17 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Neb. Rev. Stat. § 48-627 (Cum. Supp. 2020) states the following, as is relevant:
An unemployed individual shall be eligible to receive benefits with respect to any week, only if the Commissioner of
Labor finds:
(1) He or she has registered for work at an employment office, is actively searching for work, and thereafter
reports at an employment office in accordance with such rules and regulations as the commissioner may adopt
and promulgate . . . .
Title 219 Nebraska Administrative Code (NAC) 4-004.B provides the following:
A claimant, for whom the work search requirement has not been waived pursuant to 219 NAC 4(007), shall be required
to make an active and earnest search for work that is reasonably calculated to result in the earliest possible
reemployment of the claimant. An active and earnest search for work shall include five reemployment activities each
benefit week. At least two of a claimant’s five reemployment activities each benefit week shall be applications for
permanent employment. Applications for employment shall be made in a method accepted by the employer.
Attachment 1(C)(7)(a) of the U.S Department of Labor’s Unemployment Insurance Program Letter (UIPL) No. 16-
20 (April 5, 2020) says that, in order to be eligible for the PUA program, an individual has to be unemployed,
partially unemployed, unable to work, or unavailable for work due to COVID-19.
Good internal control requires procedures to ensure that claimants are eligible, and benefit payments are proper.
When such controls are not in place, there is an increased risk of inappropriate/fraudulent payments being made.
Adjudication Issues
Inadequate Controls
In response to the high number of claims filed, the Department removed or changed the following system controls.
The issue was noted during the previous audit and had not been corrected for the current period tested:
Effective April 2, 2020, the Department allowed numerous issues that would normally be adjudicated, or
reviewed by staff, to be approved automatically and processed by the system. These included, but were not
limited to, the following:
The claimant’s reason for separation was anything other than Quit or Discharge (such as Still
Employed, Still Working Full-time, Other, etc.), and the last employer did not respond to the
Department’s inquiry regarding the nature of the separation.
The employer’s reason for separation was any reason other than Quit or Discharge.
If the reason for separation reported by both the claimant and the employer did not agree, the claim
was allowed if the reason listed by either party included, but was not limited to, one of the
following:
o Still Employed
o Other
o Suspended from Work
o Still Working Full-Time
- 18 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
In response to the Governor’s executive orders, the Department changed the following system controls:
The work search requirements were waived effective between March 15, 2020, through July 12, 2020.
During testing, we noted that the benefit system did not require claimants to complete work search
requirements until after the week ended October 3, 2020.
For claims filed between March 15, 2020, and August 1, 2020, the requirement to charge employers was
waived if the separation of employment was due to COVID-19. However, the Department did not charge
any employers during this period regardless of the reason for the separation.
The Department reviewed only the last separation of employment during the base period (the one-year
period upon which the benefit payments are calculated) for claims filed on or after March 15, 2020, instead
of reviewing all of the separations during the base period.
The benefit system was able to create investigations for various circumstances, including inconsistencies in email
addresses, claimant addresses, etc. When an investigation was created, payments stopped only if the investigation
was closed, and the benefits were denied. We noted that the majority of investigations were not undertaken timely,
which resulted in fraudulent payments that could have been stopped sooner.
One investigation performed by the Department was the quarterly wage crossmatch, which checked a claimant’s
wages during the quarter that the claimant received benefits. We noted several instances of a claim meeting the
criteria for initiating an investigation; however, investigations were not initiated, or the results were not reviewed
timely.
During fiscal year 2021, the Department established $50,748,768 in overpayments. Of that amount, $11,507,347
had been written off, cancelled, or waived as of November 8, 2021. Additionally, as of November 8, 2021, 593
cases, totaling $2,126,163 from claims filed prior to June 30, 2021, were flagged as potentially fraudulent in the
benefit system and in need of review by the Department for a final determination.
Due to the lack of controls, there was an increased risk for fraudulent claims and improper benefits being paid
during the fiscal year tested.
Moreover, during testing, the Department stated that Neb. Rev. Stat § 48-636 (Cum. Supp. 2020) precluded the
making of redeterminations for errors noted on claims tested. This makes it all the more important that the
Department have adequate procedures in place to ensure that claims are processed properly.
During our testing of 60 random payments, we noted adjudication issues with the following:
Issues Regarding Adjudication of Employer Responses
When a claimant files for UI benefits, the Department sends a “Request to Employer for Separation Information”
to the claimant’s previous employers to provide information, such as beginning and ending dates of employment,
reason for termination, and whether vacation, severance, or other wages were paid after termination. Employers
are required to respond within 10 days after the mailing or electronic transmission of such a request in accordance
with Neb. Rev. Stat. § 48-632(1) (Cum. Supp. 2020). Additionally, per the Governor’s Executive Order No. 20-26
(June 2, 2020), the Department was required to adjudicate only the last separation from a claimant’s employment
for claims filed on or after March 15, 2020, to 30 days after the lifting of the COVID-19 state of emergency.
- 19 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
For seven claimants tested, the most recent separating employer did not provide a response to the Department when
requested. According to the Department, when an employer does not respond to a request for separation
information, another attempt is made, via telephone, mail, etc., to obtain the needed information. There was no
documentation that the Department performed follow-up procedures for these seven claimants. Therefore,
procedures were not adequate to ensure that the claimant was eligible to receive benefits. All seven of these claims
were filed during fiscal year (FY) 2020, but payments were made during FY 2021; therefore, we reviewed the
adjudication procedures performed in FY 2020 to verify that eligibility was determined correctly for payments
during the fiscal year tested.
The following table details the benefits paid to the seven claimants per the Department’s benefit system.
Benefit Weeks FY 2020 FY 2021
Claimant Ending Paid Payments Payments
Claimant #1 4/4/2020 - 9/26/2020 $ 13,520 $ 9,920
Claimant #2 4/11/2020 - 9/12/2020 11,064 6,498
Claimant #3 7/4/2020 - 10/10/2020 - 4,754
Claimant #4 5/30/2020 - 9/5/2020 3,970 6,140
Claimant #5 5/9/2020 - 6/19/2021 5,488 10,940
Claimant #6 4/4/2020 - 6/19/2021 13,246 24,776
Claimant #7 6/20/2020 - 6/19/2021 - 23,712
Claimant #3 indicated that he had quit his employment. According to the case notes, the claimant did not provide
good cause for quitting and should have been disqualified; however, the claim was still allowed. After discussion
with the Department, staff agreed that the claim should have been denied. For Claimant #4, the employer provided
a response well after the date the request was sent. That response said that the claimant was “terminated/fired,” but
no further follow up was performed. For Claimant #7, the Department did not adjudicate the last employer; instead,
the Department adjudicated the previous employer. When the APA pointed this out, the Department sent the request
to the last separating employer, who responded promptly that the claimant had “resigned/quit.” Had the Department
followed up properly with the employer/claimant responses, the claimants would likely have been denied benefits.
The payments to these three claimants, totaling $3,970 and $34,606 in FY 2020 and 2021, respectively, are
considered questioned costs.
For an additional seven claimants tested, we noted that the most recent separating employer provided a response
that should have required adjudication by Department staff; however, these issues were either incorrectly allowed
by an adjudicator or automatically allowed by the system. Six of these claims were filed in FY 2020. Because the
claimants received payments during FY 2021, however, we reviewed the adjudication procedures performed to
determine eligibility.
The following table shows the benefits paid to the seven claimants per the Department’s benefit system.
Employer Benefit Paid for Weeks FY 2020 FY 2021
Claimant Response Result Ending Payments Payments
Claimant #8 Terminated due Allowed by the System 4/11/2020-10/3/2020 $ 9,576 $ 6,972
to Theft
Claimant #9 Still Employed Allowed by the System 5/16/2020-6/19/2021 5,227 25,174
Claimant #10 Quit Not Reviewed 3/28/2020-9/12/2020 10,740 3,829
Claimant #11 Terminated/Fired Allowed by the System 4/11/2020-11/7/2020 10,944 10,087
Claimant #12 Still Employed Allowed by Adjudicator 1/2/2021-6/19/2021 - 16,700
Claimant #13 Quit Not Reviewed 4/18/2020-8/22/2020 11,440 7,120
Claimant #14 Terminated/Fired Allowed by the System 3/1/2020-3/6/2021 14,400 12,560
- 20 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
For Claimant #12, the employer responded that the claimant was no longer showing up to his scheduled shifts, and
hours were available for the claimant to work. The claim was still allowed by the adjudicator. For Claimant #11,
both the claimant and the employer stated that the claimant lost her job due to illegal drug use. The separation from
the employer was automatically allowed by the system. An adjudicator should have reviewed this claim to
determine if the claimant was disqualified from UI benefits. Lastly, for Claimant #10, the employer responded that
the claimant quit, but this response was not entered into the benefit system, which resulted in the system
automatically allowing the claim.
Neb. Rev. Stat. § 48-628.10 (Cum. Supp. 2020) provides the following:
(1) An individual shall be disqualified for benefits for the week in which he or she has been discharged for misconduct
connected with his or her work, if so found by the commissioner, and for the fourteen weeks immediately thereafter.
(2) If the commissioner finds that the individual was discharged for misconduct that was not gross, flagrant, and
willful or unlawful but which included being under the influence of any intoxicating beverage or any controlled
substance listed in section 28-405 not prescribed by a physician licensed to practice medicine or surgery while the
individual is on the worksite or while the individual is engaged in work for the employer, the commissioner shall
cancel all wage credits earned as a result of employment with the discharging employer.
(3) If the commissioner finds that the individual’s misconduct was gross, flagrant, and willful, or was unlawful, the
commissioner shall totally disqualify such individual from receiving benefits with respect to wage credits earned prior
to discharge for such misconduct.
Neb. Rev. Stat. § 48-628.12 (Cum. Supp. 2020) states, in relevant part, the following:
An individual shall be disqualified for benefits:
(2) For any benefit year beginning on or after October 1, 2018, for the week in which he or she has left work voluntarily
without good cause, if so found by the commissioner, and for all subsequent weeks until the individual has earned
wages in insured work in an amount of at least four times his or her weekly benefit amount and has separated from
the most recent subsequent employment under nondisqualifying conditions.
Good internal control requires procedures to ensure that the Department adjudicates properly each claimant’s last
separation from employment, as directed by the Governor’s executive orders.
Without such procedures, there is an increased risk of not only benefit payments being made to ineligible claimants
but also noncompliance with the Governor’s executive orders.
Weekly Certification Issues
Six claimants tested did not complete the work search requirements properly, but they still received payment for
those weeks.
Claimants are required to perform work searches in order to be eligible to receive unemployment compensation
benefits under Neb. Rev. Stat. § 48-627 (Cum. Supp. 2020), which states, in relevant part, the following:
An unemployed individual shall be eligible to receive benefits with respect to any week, only if the Commissioner of
Labor finds:
(1) He or she has registered for work at an employment office, is actively searching for work, and thereafter
reports at an employment office in accordance with such rules and regulations as the commissioner may adopt
and promulgate. The commissioner may, by rule and regulation, waive or alter any of the requirements of this
subdivision as to individuals attached to regular jobs and as to such other types of cases or situations if the
commissioner finds that compliance with such requirements would be oppressive or inconsistent with the
purposes of the Employment Security Law[.]
- 21 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Further, the Department has also adopted the following rules and regulations related to the work search requirements
under 219 NAC 4, which states, in relevant part, the following:
002. In order to establish his or her availability for work in the job market to which he or she is attached, a
claimant shall register for work and engage in an active work search.
****
004. A. In order for a claimant to be “available for work” within the meaning of Neb. Rev. Stat. §48-627(3), a
claimant for whom the work search requirement has not been waived pursuant to 219 NAC 4(007) must
actively seek work in accordance with the provisions of this Chapter. (See also, 20 C.F.R. §604.5 and
42 U.S.C.A. 503.)
B. A claimant, for whom the work search requirement has not been waived pursuant to 219 NAC 4(007),
shall be required to make an active and earnest search for work that is reasonably calculated to result
in the earliest possible reemployment of the claimant. An active and earnest search for work shall
include five reemployment activities each benefit week. At least two of a claimant’s five reemployment
activities each benefit week shall be applications for permanent employment. Applications for
employment shall be made in a method accepted by the employer.
Executive Orders No. 20-04 (March 17, 2020), No. 20-14 (April 2, 2020), and No. 20-22 (April 30, 2020) waived
the work search requirements, otherwise required under § 48-627 and 219 NAC 4, for claims filed on or after
March 15, 2020. Executive Order No. 20-31 (July 6, 2020) reinstated the work search requirements, effective
July 12, 2020.
However, the Department did not update its benefit system to require claimants to complete work search
requirements when the work search waiver ended on July 12, 2020. Based on the APA’s testing, it appears the
issue was resolved after the week ended October 3, 2020.
The following table shows the weeks during which the six claimants tested did not complete the work search
requirements and how much the claimants were overpaid for those weeks.
Weeks Work Search FY 2021
Requirements were not Amount
Claimant Completed Paid Observations
Claimant #1 10/17/2020 $ 173 Though certifying that he searched for work, the claimant did
not specify the employers he contacted, which was required.
Claimant #2 7/18/2020 - 8/1/2020 1,999
Claimant #3 7/18/2020 - 10/3/2020 5,208
Claimant #4 7/18/2020 - 10/3/2020 5,076
Claimant #5 4/10/2021 - 4/17/2021 1,040 The claimant reported only two work searches for the week
ending 4/10/2021 and three work searches for the week
ending 4/17/2021. Five job activities are required each week.
Claimant #6 7/18/2020 - 8/1/2020 2,760
Additionally, Claimant #3 responded “No” to this question: “Other than for reasons that were the direct result of
COVID-19, were you able and available to work each day of the week?” On April 5, 2020, the Employment and
Training Administration (ETA) Advisory System of the U.S. Department of Labor (USDOL) issued UIPL No. 16-
20 (April 5, 2020), which contains the following:
PUA provides up to 39 weeks of benefits to qualifying individuals who are otherwise able to work and available for
work within the meaning of applicable state UC law . . . .
- 22 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Section 48-627(3) requires claimants to be able to work and be available for work in order to be eligible for UI
benefits.
According to the Department, there was a system issue with the PUA work search in the benefit system, but the
issue was resolved beginning in July 2020. However, the claimant selected “No” to being able and available to
work for the weeks ending April 25, 2020, through October 3, 2020, which extended well past the date on which
the issue was supposedly fixed. Claimant #3 was paid a total of $7,736 and $6,880 in FY 2020 and FY 2021,
respectively, for the period that “No” was selected as the answer to the question regarding being able and available
to work on the weekly certifications.
Good internal control requires procedures to ensure that benefit payments are made in compliance with applicable
Federal and State requirements.
Without such procedures, there is an increased risk of improper benefit payments being made in violation of Federal
and State requirements.
Wage Crossmatch Issues
On May 11, 2020, the ETA Advisory System of the USDOL issued UIPL No. 23-20 (May 11, 2020) to remind
states of program integrity functions required for the regular UI program and to provide states with guidance
regarding required program integrity functions for the UI programs authorized by Sections 2102 (PUA), 2104
(FPUC), and 2017 (PEUC) of the CARES Act. Included is the requirement to perform a quarterly wage records
crossmatch per 20 CFR § 603.23(b) (April 1, 2020), which provides the following:
The State UC agency must crossmatch quarterly wage information with UC payment information to the extent that
such information is likely, as determined by the Secretary of Labor, to be productive in identifying ineligibility for
benefits and preventing or discovering incorrect payments.
According to the Department, a quarterly wage crossmatch was performed. The benefit system checked the
claimant against the Department’s wage database to see if a claimant met the criteria for further investigation. If
the criteria was met, an investigation was created automatically in the benefit system. The investigation included
sending a wage audit request to the employer to obtain the amount of wages earned for each week the claimant was
receiving benefits.
For 15 claimants tested, we noted that the claimants met the criteria, but an investigation was either not created or
not completed timely.
The following table details the 15 claimants’ wages for the quarter tested, the amount self-certified by the claimant
as required, the amount of benefits paid to the claimant for the quarter tested, and the dates of any investigations
created.
- 23 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Wages for Wages Benefits Paid
Quarter the Certified by for the Quarter Questioned Date Investigation
Claimant Tested Quarter Claimant Tested Costs Created
Claimant #1 1/1/2021 - $ 4,101 $ - $ 6,620 $ 600 8/12/2021
3/31/2021
Claimant #2 7/1/2020 - 446 - 4,900 1,040 1/14/2021
9/30/2020
Claimant #3 10/1/2020 - 7,910 476 1,063 372 5/13/2021
12/31/2020
Claimant #4 1/1/2021 - 5,808 - 3,764 756 Not Created
3/31/2021
Claimant #5 1/1/2021 - 1,988 720 6,016 600 Not Created
3/31/2021
Claimant #6 7/1/2020 - 8,947 - 8,600 440 1/14/2021
9/30/2020
Claimant #7 10/1/2020 - 3,150 - 2,521 194 5/13/2021
12/31/2020
Claimant #8 7/1/2020 - 2,753 - 2,580 1,720 2/11/2021
9/30/2020
Claimant #9 1/1/2021 - 1,386 - 8,140 1,410 8/11/2021
3/31/2021
Claimant #10 10/1/2020 - 527 - 3,780 420 Not Created
12/31/2020
Claimant #11 7/1/2020 - 3,056 1,099 4,242 815 Not Created
9/30/2020
Claimant #12 7/1/2020 - 5,343 - 1,461 782* Not Created
9/30/2020
Claimant #13 7/1/2020 - 666 - 3,565 773 2/11/2021
9/30/2020
Claimant #14 1/1/2021 - 5,108 570 2,790 700 8/12/2021
3/31/2021
Claimant #15 4/1/2021 - 6,007 - 2,156 614 Not Created
6/30/2021
*An investigation was created for the week ending 7/11/2020 due to the claimant being flagged in the National Directory
of New Hires, not for the system wage crossmatch. However, based on that investigation, the employer responded that
the claimant did have a break in wages from 5/16/2020 to 7/23/2020; therefore, the payment for this claimant was not
questioned.
Another claimant tested was overpaid $5,227 for FY 2020 and $4,896 for FY 2021. Investigations were created on
March 9, 2021, for the weeks ended May 16, 2020, through June 27, 2020, and on May 13, 2021, for the weeks
ended October 3, 2020, through December 26, 2020. These investigations had not been worked as of August 2,
2021, however. An investigation should have been created also for the weeks ended July 4, 2020, through
September 26, 2020, but none was created as of August 2, 2021. Upon the APA’s inquiry, the Department sent a
wage audit request to the employer on August 25, 2021, and received a response from the employer the following
day. Based on the employer’s response, the claimant should have been disqualified for the weeks ended May 16,
2020, through August 8, 2020.
Furthermore, on August 31, 2021, the APA inquired with the Department about whether the wage crossmatch was
working properly in the system, based on the issues noted with the claimants above. The APA requested
documentation that the wage crossmatch was performed for all 60 claimants tested. But the Department did not
provide additional documentation that the system was working properly and provided no further response as to why
the wage crossmatch investigations had not been created for those claimants noted above.
- 24 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Good internal control requires procedures to ensure that wage crossmatches are performed, and benefits are paid in
compliance with applicable Federal requirements.
Without such procedures, there is an increased risk of improper benefit payments being made in violation of Federal
requirements.
Other Adjudication Issues
For three claimants tested, the Department had created investigations due to a variety of factors, including the State
having flagged the email address as being potentially fraudulent or the claimant’s physical address, email address,
or listed phone number being used by multiple other claimants. For each of these claimants, we noted that the
Department completed the investigations and made determinations that these claims may be fraudulent due to the
claimant not providing identity verification. However, the Department did not work these investigations timely,
causing payments to be made before the possibly fraudulent claims were identified.
Date
Investigation Date of FY 2020 FY 2021
Claimant Created Determination Weeks Ending Paid Payments Payments
Claimant #1 7/17/2020 7/12/2021 4/11/2020 - 10/3/2020 $ 9,576 $ 6,972
Claimant #2* 6/8/2020 7/19/2021 3/28/2020 - 8/1/2020 11,356 3,970
Claimant #3 9/10/2020 6/14/2021 3/28/2020 - 10/3/2020 13,680 7,080
*The Department determined that no overpayments were necessary because the identity verification request was sent
on 1/4/2021, and no payments were made to the claimant after this date. However, it would appear reasonable to
perform further procedures to determine if payments made prior to the request were fraudulent.
For one PUA claimant tested, the application was filed on May 14, 2020, and the claimant self-certified that he
received $28,000 in self-employment income during calendar year 2019. Therefore, the claimant’s weekly benefit
amount (WBA) was calculated to be $268, which is more than the minimum WBA of $173. In accordance with
UIPL No. 16-20, Change 1 (April 27, 2020), Attachment I, PUA claimants were required to provide documentation
of self-employment income within 21 days to substantiate the wages earned; otherwise, the WBA was to be reduced
to $173. The claimant did not provide documentation to support his wages, but the Department continued to pay
the claimant at the greater WBA. The Department did not adjudicate this issue until December 2020, seven months
after the application was filed. The total amount overpaid was $570 and $2,185 in FY 2020 and FY 2021,
respectively.
Another claimant tested was eligible for regular UI at a WBA of $318; however, the claimant was paid PEUC
instead at only $304. The claimant was underpaid $168. The Governor issued Executive Order No. 21-03
(January 22, 2021), which ordered the following:
Suspend that portion of Nebraska Revised Statute § 48-625 which requires the payment of regular unemployment
benefits to an individual for any week of unemployment, if the individual is eligible for a greater PEUC weekly benefit
amount pursuant to section 206 of the Continued Assistance Act, subject to the following conditions. In order for the
suspension of regular unemployment benefits to occur, the following conditions must apply:
1. The individual has been determined to be entitled to PEUC with respect to a benefit year;
2. The benefit year with respect to which the PEUC eligibility was established (i.e., the parent claim) has
expired after the date of the enactment of the Continued Assistance Act;
3. The individual has remaining eligibility for PEUC with respect to such benefit year; and
- 25 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
4. The individual would qualify for regular unemployment compensation in a subsequent (new) benefit year
and the weekly benefit amount for regular unemployment compensation in the new benefit year would be at
least $25 less than the weekly benefit amount payable on the individual’s PEUC claim.
According to UIPL No. 17-20, Change 2 (December 31, 2020), an individual may continue to be eligible to receive
PEUC as long as he or she meets the requirements in section 206(c)(1) of the Continued Assistance Act. That same
document adds the following:
ii. Criteria for determining if an individual may continue to receive PEUC when eligible for regular UC in a
subsequent benefit year. Individuals may be eligible to continue to receive PEUC instead of regular UC if all of
the following criteria are met:
Criterion #1: The individual has been determined to be entitled to PEUC with respect to a benefit year;
Criterion #2: The benefit year with respect to which the PEUC entitlement had been established (i.e., the
parent claim) has expired after the date of the enactment of the Continued Assistance Act (December 27,
2020);
Criterion #3: The individual has remaining entitlement to PEUC with respect to such benefit year; and
Criterion #4: The individual would qualify for regular UC in a subsequent (new) benefit year and the WBA
for regular UC in the new benefit year would be at least $25 less than the WBA payable on the individual’s
PEUC claim.
Lastly, one claimant tested had a vacation payout by his previous employer that was not correctly applied to reduce
payments for the week ended March 28, 2020. Per Neb. Rev. Stat. § 48-628.02 (Cum. Supp. 2020), lump sum
payments of vacation pay must be prorated in an amount reasonable to such week and reduce benefit payments.
The claimant was paid $420 but should have been paid only $183 for that week, a difference of $237.
Good internal control requires procedures to ensure that benefit payments are proper, overpayments are established
timely, and claims are reviewed by staff when required.
Without such procedures, there is an increased risk of improper benefit payments and overpayments not being
established timely.
PUA Issues
The Department did not perform identity verification procedures or obtain self-employment or employment
verification for the following five claimants:
Self-Employment/
Employment Verification Identity Verification Amount Paid
Claimant Received Procedures Performed after 12/27/2020
Claimant #1 No No $ 11,825
Claimant #2 Yes No 17,400
Claimant #3 No No 11,783
Claimant #4 No No 3,784
Claimant #5 No No 9,375
- 26 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Generally, PUA claimants were not made aware of the requirement to provide verification of employment or self-
employment until May 2021, over four months after the required timeframe per the Continued Assistance Act.
Furthermore, the APA requested the Department’s written procedures for verifying the legitimacy of documentation
provided by claimants. The Department explained that there were no specific, written procedures for verifying each
different type of documentation that a claimant could provide. Total PUA payments made for the weeks ended
after December 27, 2020, through the fiscal year ended June 30, 2021, were $30,638,698.
The identity verification requirement applied to all PUA claimants who received payment after December 27, 2020.
The Department stated that all continuing PUA claims that had received payments prior to December 27, 2020, and
continued to receive payments after December 27, 2020, were run through its identity verification software on
July 19, 2021. However, in a meeting on August 24, 2021, the Department was unable to provide documentation
that the claimants tested had been run through the identity verification software. As of August 24, 2021, the
Department had not performed identity verification procedures for continuing PUA claims. The amount of
continuing PUA payments made after December 27, 2020, totaled at least $28,613,524.
On January 8, 2021, the ETA Advisory System of the USDOL issued UIPL No. 16-20, Change 4 (January 8, 2021),
to provide States with updated guidance for the PUA program, as amended by the Continued Assistance Act and
updated instructions for reporting PUA program activities. That document includes the following language
regarding new requirements for individuals to submit documentation substantiating employment or self-
employment:
b. New Requirement for Individuals to Submit Documentation of Employment or Self-Employment. Section 241
of the Continued Assistance Act, creates a new requirement for individuals to submit documentation
substantiating employment or self-employment . . . .
i. Filing New Applications for PUA. Individuals filing a new PUA application on or after
January 31, 2021 (regardless of whether the claim is backdated), are required to provide documentation
within 21 days of application or the date the individual is directed to submit the documentation by the
State Agency, whichever is later. The deadline may be extended if the individual has shown good cause
for not submitting documentation under state UC law within 21 days.
ii. Filing Continued Claims for PUA. Individuals who applied for PUA before January 31, 2021 and
receive a payment of PUA on or after December 27, 2020 (regardless of which week ending date is being
paid), are required to provide documentation substantiating employment or self-employment, or the
planned commencement of employment or self-employment, within 90 days of application or when
directed to submit the documentation by the State Agency, whichever is later. The deadline may be
extended if the individual has shown good cause under state UC law.
In providing guidance regarding acceptable documentation, Attachment 1 of UIPL 16-20, Change 4, rejects reliance
solely upon agency records:
This documentation demonstrates a recent attachment to the labor force and serves as an important tool against fraud
by requiring the individual to submit documentation to prove eligibility, rather than have such documentation
automatically added to the file based on agency records. As such, states may not rely solely on agency records to
satisfy this condition – the individual must submit documentation to the agency to be entitled to benefits.
a. Type of acceptable documentation. The requirements to submit documentation substantiating employment
or self-employment and to submit documentation for a higher WBA are distinct. As described in Section C
of Attachment I and in Attachment II to UIPL No. 16-20, Change 1, an individual is already required to
submit documentation substantiating wages if the individual is to receive a WBA that is higher than the state
minimum WBA. However, the documentation that an individual submits in support of a higher WBA may
also be used to satisfy the documentation requirement to substantiate employment or self-employment.
- 27 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
An individual who has not submitted documentation in support of a higher WBA must still provide
documentation substantiating employment or self-employment. While documentation to support a higher
WBA must demonstrate earnings during the entire look-back period, documentation to substantiate
employment or self-employment need only demonstrate the existence of employment or self-employment at
some point between the start of the applicable tax year and the date of filing.
In general, proof of employment includes, but is not limited to, paycheck stubs, earnings and leave statements
showing the employer’s name and address, and W-2 forms when available. Proof of self-employment
includes, but is not limited to, state or Federal employer identification numbers, business licenses, tax
returns, business receipts, and signed affidavits from persons verifying the individual’s self-employment.
Proof of employment with organizations such as the Peace Corps, AmeriCorps, and educational or religious
organizations includes, but is not limited to, documentation provided by these organizations and signed
affidavits from persons verifying the individual’s attachment to such organizations. Proof of the planned
commencement of employment includes, but is not limited to, letters offering employment,
statements/affidavits by individuals (with name and contact information) verifying an offer of employment.
Proof of the planned commencement of self-employment includes, but is not limited to, business licenses,
state or Federal employer identification numbers, written business plans, or a lease agreement.
Individuals must present the proof of employment and the state may verify the proof submitted using records
the state may have available, such as wage records or state revenue records.
The Continued Assistance Act also implemented new requirements regarding identity verification of individuals.
Attachment 1 of UIPL No. 16-20, Change 4, includes the following language regarding new requirements for States
to implement procedures for verifying the identity of individuals receiving PUA program benefit payments:
1. Verification of Identity (Section 242(a) of the Continued Assistance Act) (new). Section 242(a) of Continued
Assistance Act modifies Section 2102(f)(1) of the CARES Act. For states to have an adequate system for
administering the PUA program, states must include procedures for “identity verification or validation and for
timely payment, to the extent reasonable and practicable” by January 26, 2021, which is 30 days after
December 27, 2020 (enactment of the Continued Assistance Act). States that previously verified an individual’s
identity on a UC, EB, or PEUC claim within the last 12 months are not required to re-verify identity on the PUA
claim, though the Department encourages the state to take additional measures if the identity is questioned.
Individuals filing new PUA initial claims that have not been through the state’s identity verification process must
have their identities verified to be eligible.
Good internal control requires procedures to ensure that verification of identity and employment or self-employment
for individuals is performed in compliance with applicable Federal requirements.
Without such procedures, there is an increased risk of improper benefit payments being made in violation of Federal
requirements.
Short-Time Compensation (STC) Plan Issues and Claimants with Excessive Wages
The Department provided an unemployment benefits program called Short-Time Compensation (STC), which was
a voluntary program in which an employer could enroll in to assist in averting layoffs. The program allowed
employers to reduce employees’ hours while also permitting employees to receive a prorated unemployment benefit
payment. The Department was authorized to administer the STC program under Neb. Rev. Stat. §§ 48-607 and 48-
672 through 48-683 (Reissue 2010, Cum. Supp. 2020).
In UIPL No. 21-20 (May 3, 2020), the USDOL provided additional background for the STC program as it relates
to the COVID-19 pandemic and Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020:
- 28 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
In the context of re-opening businesses closed temporarily by a pandemic, STC can also serve as a means of bringing
most or all of a temporarily laid-off workforce back to the job, even if social-distancing measures, a decline in
business, or other factors prevent operating at full staffing levels full time. Specifically, this benefit may be made
available to individuals returning to work with reduced hours who worked for the employer prior to the temporary
lay-off due to COVID-19. This program preserves employees’ jobs and employers’ trained workforces during a
disruption to the firm’s regular business activity by reducing hours of work for an entire group of affected employees,
rather than by laying off some employees while others continue to work full time. The STC benefit payment cushions
the adverse effect of the reduction in business activity on workers and, by maintaining their connection to their
employers, ensures that these workers will be available to resume prior employment when business demand increases.
As explained above, the primary purpose of the STC program was to assist employers in avoiding laying off their
employees while their businesses were experiencing a disruption in normal operations. Within STC agreements,
the employer could stipulate groups of employees to participate in the plan. Thus, in accordance with the objectives
of the program, the Department should have allowed agreements for groups affected by a disruption in their working
schedules. Instead, the Department entered into STC agreements with two employers that allowed upper-level
management to participate in the agreements. We observed that these individuals were high-wage earners and did
not appear to meet the agreements’ decreased-hour requirements; instead, they sometimes earned wages in excess
of those in the quarter prior to the start of the agreement.
Employer #1 – STC Agreement
For 16 claimants tested for Employer #1, the STC agreement stipulated a 12%-50% reduction in hours, varying by
employee, for the period March 22, 2020, through March 20, 2021. Each of the 16 claimants received a large
increase in wages during the fourth quarter (October 1, 2020, through December 31, 2020), and 14 of the claimants
continued to receive UI benefit payments during that quarter, which were determined to be questioned costs.
Because wages are reported in summary by quarter, we were unable to determine if the benefit weeks paid were
allowable and in accordance with the STC agreement. All 16 of these employees were upper-level management at
the company, including the President, Vice President, CEO, CFO, etc. It is not reasonable that upper-level
management, that received extremely large payments in a benefit quarter, would be included in the agreement with
the Department. The likelihood of these employees being laid off would appear to be minimal.
FY 2020 UI FY 2021 UI Questioned
CY 2020 CY 2020 CY 2020 Benefits Benefits Costs for Q4 UI
Claimant Q2 Wages Q3 Wages Q4 Wages Paid Paid Benefits Paid
Claimant #1 $ 28,074 $ 84,580 $ 4,087,625 $ 6,560 $ 6,890 $ 550
Claimant #2 25,368 75,055 3,230,936 5,740 6,290 660
Claimant #3 20,724 61,339 2,857,978 5,740 6,290 660
Claimant #4 16,304 50,214 1,961,109 - 7,980 -
Claimant #5 15,882 47,726 1,792,762 6,560 6,290 660
Claimant #6 14,179 43,573 1,656,332 6,560 6,290 660
Claimant #7 15,174 45,080 1,436,271 7,380 6,290 660
Claimant #8 14,189 43,693 1,360,506 7,380 4,700 -
Claimant #9 12,735 39,475 771,256 7,380 6,290 660
Claimant #10 9,527 30,251 752,516 7,380 6,290 660
Claimant #11 8,193 25,419 757,105 7,380 5,580 660
Claimant #12 10,472 22,510 528,061 6,560 9,960 1,430
Claimant #13 15,178 23,489 528,719 - 17,558 676
Claimant #14 14,219 21,898 526,793 8,850 7,896 676
Claimant #15 11,095 12,174 514,439 10,660 13,040 2,860
Claimant #16 29,654 34,582 261,166 5,868 4,928 52
Totals $ 260,967 $ 661,058 $23,023,574 $ 99,998 $ 122,562 $ 11,524
- 29 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Employer #2 – STC Agreement
For nine claimants from Employer #2, the STC agreement stipulated a 10% reduction in hours for employees during
the period March 29, 2020, through October 3, 2020. However, the nine claimants’ wages either were not reduced
or increased from the first quarter of calendar year 2020 to the end of the calendar year. Because wages are reported
in summary by quarter, we were unable to determine if the benefit weeks paid were allowable and in accordance
with the STC agreement. Again, all nine of these employees were upper-level management at the company,
including the General Manager, Operations Manager, Controller, etc., which did not appear reasonable and in
accordance with the purpose of the STC program.
FY2020 FY2021 QC QC
CY2020 CY 2020 CY 2020 CY 2020 UI UI FY2020 FY2021
Q1 Q2 Q3 Q4 Benefits Benefits Benefits Benefits
Claimant Wages Wages Wages Wages Paid Paid Paid Paid
Claimant #1* $246,917 $224,662 $295,190 $347,882 $ 4,508 $ 8,036 $ - $ 4,816
Claimant #2 68,560 67,129 111,463 89,850 6,440 6,104 6,440 6,104
Claimant #3 54,921 56,917 92,457 76,938 6,440 6,104 6,440 6,104
Claimant #4 41,723 39,823 58,909 58,197 6,440 6,104 6,440 6,104
Claimant #5 51,471 49,834 76,014 76,170 6,440 6,104 6,440 6,104
Claimant #6 52,207 49,941 63,919 78,507 - 12,544 - 12,544
Claimant #7 46,389 44,360 57,986 69,365 6,440 6,104 6,440 6,104
Claimant #8* 43,353 41,512 37,998 67,732 6,440 6,104 6,440 1,332
Claimant #9 41,341 39,563 51,194 56,460 6,440 6,104 6,440 6,104
Totals $646,882 $613,741 $845,130 $921,101 $49,588 $ 63,308 $ 45,080 $ 55,316
*Claimants #1 and #8 had a 9% reduction in quarter 2 and a 12% reduction in quarter 3, respectively. The reductions
appeared reasonable; therefore, these were not included in questioned costs.
Other High-Wage Earners
We tested 10 claimants with wages reported over $55,000 for the fiscal year ended June 30, 2021. The first table
below shows wages by quarter, and the second table shows the questioned costs by quarter.
CY2020 CY2020 CY2020 CY2020 CY2021 Q1 CY2021 Q2
Claimant Q1 Wages Q2 Wages Q3 Wages Q4 Wages Wages Wages
Claimant #1 $ 363,394 $ 208,314 $ 208,018 $ 215,820 $ 434,643 $ 232,167
Claimant #2 43,127 1,085 3,356 531,377 4,188 -
Claimant #3 14,422 15,226 17,442 14,730 11,079 18,990
Claimant #4 75,904 97,540 65,123 - - -
Claimant #5 75,061 68,871 58,836 - - -
Claimant #6 10,937 8,277 11,774 14,525 12,980 17,366
Claimant #7 48,558 52,977 64,312 2,186 - -
Claimant #8 15,878 6,317 18,654 15,689 9,839 12,285
Claimant #9 33,843 16,022 18,628 19,068 30,584 16,179
Claimant #10 12,541 12,035 15,434 12,962 13,168 16,410
Totals $ 693,665 $ 486,664 $ 481,577 $ 826,357 $ 516,481 $ 313,397
- 30 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
QC CY2020 QC CY2020 QC CY2020 QC CY2020 QC CY2021 QC CY2021
Q1 for UI Q2 for UI Q3 for UI Q4 for UI Q1 for UI Q2 for UI
Claimant Benefits Paid Benefits Paid Benefits Paid Benefits Paid Benefits Paid Benefits Paid
Claimant #1 $ - $ 1,040 $ - $ - $ - $ -
Claimant #2 - 13,520 4,900 - - -
Claimant #3 - - 8,880 4,400 6,660 5,720
Claimant #4 - - 1,320 - - -
Claimant #5 - - 1,320 - - -
Claimant #6 418 13,234 9,216 5,434 9,174 -
Claimant #7 - - - 3,960 - -
Claimant #8 - - 7,060 2,640 6,308 6,336
Claimant #9 - - - 3,520 9,620 8,140
Claimant #10 - - - 3,894 9,620 8,140
Totals $ 418 $ 27,794 $ 32,696 $ 23,848 $ 41,382 $ 28,336
*Total Questioned Costs by fiscal year: FY2020 = $27,172; FY2021 = $127,302
For Claimants #1, #9, and #10, the separating employer responded to the Department’s request for information,
explaining that the claimant was still employed, and the claims were likely fraudulent; however, benefit payments
continued to be made on the claims.
For Claimant #1, in addition to the separating employer stating that the claim was likely fraudulent because
the employee was still working, the IP address for the claim was located in Rhode Island. The Department
created an investigation in the benefit system on June 7, 2020; however, the investigation was closed with
no decision. No further review was performed to identify this claim as fraudulent.
For Claimant #9, the separating employer provided a response on November 11, 2020, but the Department
did not identify this as a fraudulent claim until May 18, 2021, six months later, and payments continued to
be made through June 21, 2021.
For Claimant #10, the separating employer provided a response on October 7, 2020, but the Department
still allowed the claim, and payments were made through June 21, 2021.
For Claimant #2, two wage crossmatch investigations were created in February and March 2021, but the
investigations were inactive and not resolved. Furthermore, an investigation was created on June 8, 2020, because
the claimant had high wages during the benefit base period. The Department requested the claimant provide identity
verification, but the claimant did not provide it, so the Department denied this claim and flagged it as fraudulent on
August 9, 2021. However, no overpayments were established in the system.
For Claimants #3 through #7, an investigation was not created for the quarterly wage crossmatch, as required for
four of the five claims. For the fifth claim (Claimant #6), an investigation was created, but staff had not completed
the investigation when we conducted our fieldwork. For each of these, the wages certified by the individual were
not reasonable when compared to the wages reported by the employer per the Department’s records.
For Claimant #8, the claimant was included as part of an employer’s STC agreement, which specifies that the
claimant is to have a 50% reduction in normal working hours effective from March 22, 2020, through
March 19, 2022. However, the claimant received only a 50% reduction for Quarter 2 of Calendar Year 2020. For
the remaining quarters, the claimant did not receive a reduction in wages commensurate with the STC agreement
while benefits were being paid.
- 31 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Claimants were required to perform weekly certifications, which included reporting all wages earned during that
week, to ensure that benefit reductions were unnecessary. These certifications were performed to ensure compliance
with Neb. Rev. Stat. § 48-625(1) (Cum. Supp. 2020), which provides the following:
Each eligible individual who is unemployed in any week shall be paid with respect to such week a benefit in an amount
equal to his or her full weekly benefit amount if he or she has wages payable to him or her with respect to such week
equal to one-fourth of such benefit amount or less. In the event he or she has wages payable to him or her with respect
to such week greater than one-fourth of such benefit amount, he or she shall be paid with respect to that week an
amount equal to the individual’s weekly benefit amount less that part of wages payable to the individual with respect
to that week in excess of one-fourth of the individual’s weekly benefit amount. In the event there is any deduction
from such individual’s weekly benefit amount because of earned wages pursuant to this subsection or as a result of
the application of section 48-628.02, the resulting benefit payment, if not an exact dollar amount, shall be computed
to the next lower dollar amount.
The Department had a system control to crossmatch wages reported on a quarterly basis by employers through the
Tax Management System (TMS). If a claimant did not certify wages properly, the crossmatch would identify wages
that required further adjudication and staff review to follow up with the employers. That system ensured compliance
with 20 CFR § 603.23(b) (April 1, 2020), which states the following:
The State UC agency must crossmatch quarterly wage information with UC payment information to the extent that
such information is likely, as determined by the Secretary of Labor, to be productive in identifying ineligibility for
benefits and preventing or discovering incorrect payments.
The crossmatch reviewed wages two quarters in arrears, meaning a crossmatch performed in Quarter 1 of Calendar
Year 2021 reviewed wages for Quarters 3 and 4 of Calendar Year 2020. If the wages met the crossmatch criteria,
an Intrastate Quarterly Crossmatch investigation should be created. However, as noted above, several claimants
who had large wages while receiving benefits either did not have an investigation created or the investigations had
not been completed.
Good internal control requires procedures, including periodic verifications or audits, to ensure compliance with the
provisions of approved STC agreements.
Without such procedures, there is an increased risk of improper benefit payments to claimants.
Untimely Resolution to Bank Account Fraud Investigations
Within the Department’s benefit system, investigations or issues were automatically created using various
parameters set by the Department. We tested 17 claimants whose bank accounts and routing numbers were used
by 10 or more claimants. Such claimants would be at greater risk of fraud, as it would be unusual for 10 or more
people to use the same bank account. For 16 of the 17 claimants tested, the investigations created were not
adjudicated and resolved in a timely manner.
The following table shows the questioned costs, totaling $126,034, for the claimants tested. For 15 of 16
investigations performed, the Department determined the claims to be fraudulent. However, while the
investigations were being completed, benefit payments were not stopped; therefore, fraudulent claims continued to
be paid, leading to questioned costs, even after an employer and/or claimant made it known that they had not filed
the claim. The investigations were not completed timely, ranging from 102 to 218 days to complete. Additionally,
one of the investigations was still ongoing as of audit fieldwork, and another had yet to be created.
- 32 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
QC
Benefit
QC Weeks
FY2020 QC QC Ending Investigation
Gross FY2021 FY2022 Begin Begin Days
UI Gross UI Gross UI Date/End Date/End Investigation
Claimant Benefits Benefits Benefits Date Date was Open Observations
Claimant #1 $ - $ 1,300 $ - 1/2/2021 - 1/19/2021 - 202
1/9/2021 8/9/2021
Claimant #2 - 1,974 - 2/13/21 - 2/15/2021 - 165
2/27/2021 7/30/2021
Claimant #3 - 3,048 - 1/2/2021 - 1/19/2021 - 196
2/6/2021 8/3/2021
Claimant #4 - 4,032 - 2/13/2021 - 2/11/2021 - As of 9/14/2021
4/3/2021 Not (audit
completed fieldwork) 215
days
Claimant #5 11,087 11,224 - 2/22/2020 - 2/7/2021 - 177 The employer responded to the
6/19/2021 8/3/2021 Department’s separation
information request on
6/24/2020, stating that the
claimant was never an
employee. An issue was
created in the system on
6/25/2020, but it was auto-
adjudicated and allowed.
Additionally, the driver’s
license on the application was
invalid. No overpayments have
been established as of
9/14/2021.
Claimant #6 - 8,328 - 2/20/2021 - 3/6/2021 - 150 The claimant notified the
5/22/2021 8/3/2021 Department that he had not
filed the claim, but benefits
continued to be paid even after
the investigation was completed
and the claim was determined
to be fraudulent.
Claimant #7 - 6,636 - 8/15/2020 - No -
3/20/2021 Investigation
Claimant #8 - 4,050 - 2/20/2021 - 2/28/2021 - 130
6/19/2021 7/8/2021
Claimant #9 - 10,002 - 1/2/2021 - 2/7/2021 - 102
6/5/2021 5/20/2021
Claimant #10 - 11,240 - 12/19/2020 1/7/2021 - 154
- 5/29/2021 6/10/2021
Claimant #11 - 5,567 - 11/7/2020 - 12/20/2020 - -14 According to the Department’s
3/13/2021 12/6/2020 benefit system, this
investigation was completed
prior to being started.
- 33 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
QC
Benefit
QC Weeks
FY2020 QC QC Ending Investigation
Gross FY2021 FY2022 Begin Begin Days
UI Gross UI Gross UI Date/End Date/End Investigation
Claimant Benefits Benefits Benefits Date Date was Open Observations
Claimant #12 - 11,584 - 2/13/2021 - 3/10/2021 - 119 The Department requested
6/19/2021 7/7/2021 identity verification from the
claimant on 2/3/2021. On
2/5/2021, the claimant
responded that she did not file
for benefits. However,
payments continued to be made
through the week ending
6/19/2021. No overpayments
have been established as of
9/14/2021.
Claimant #13 - 12,009 - 10/10/2020 2/8/2021 - 162
- 6/19/2021 7/20/2021
Claimant #14 - 7,840 - 2/13/2021 - 2/16/2021 - 176
6/19/2021 8/11/2021
Claimant #15 - 9,803 1,010 2/6/2021 - 2/7/2021 - 164 The claimant notified the
8/14/2021 7/21/2021 Department that she had not
filed the claim, but benefits
continued to be paid even after
the investigation was completed
and the claim was determined
to be fraudulent.
Claimant #16 - 5,300 - 11/14/2020 2/7/2021 - 165
- 2/20/2021 7/22/2021
Totals $ 11,087 $113,937 $ 1,010
For 12 of the claimants tested, the claims originally filed appeared to be legitimate. However, after payments
stopped being made on these claims, they were later reopened. The claims appear to have been reopened by an
individual(s) impersonating the claimant, as the bank accounts on the claims were changed to a new bank account
and were frequently changing. For example, Claimant #5 had payments sent to bank accounts in Oklahoma,
Massachusetts, Alabama, California, Virginia, and Maine. Similar activity was noted for the other 11 claimants.
Good internal control requires procedures to ensure the timely completion of investigations, the proper adjudication
of claims, and the finalization of determinations regarding the eligibility of claimants to receive unemployment
benefits.
Without such procedures, there is an increased risk of improper benefit payments to claimants.
Duplicate Benefit Payments
We tested 20 claimants who were paid more than $35,000 in benefits during the period July 1, 2020, through
June 30, 2021, to determine if payments were made either in amounts greater than allowed for a single week or
from multiple programs in the same week.
- 34 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Four of the 20 individuals tested received payments from multiple programs for the same week or received multiple
benefit payments from the same program during a week, which is not allowed. Furthermore, three of the four
claimants either had no overpayment established or an incorrect overpayment balance was established at the time
of testing.
# of Weeks APA Overpayment
Program with Multiple Calculated Established by
Claimant Overpaid Payments Overpayment the Department Observations
Claimant #1 UI, FPUC 23 $ 15,176 $ - The Department recouped $4,768
through overpayment offset,
leaving a balance of $10,408.
However, the benefit system did
not have an overpayment balance
remaining for this claimant.
Claimant #2 PUA, 38 27,163 27,163 An overpayment for $27,163 was
FPUC, established by the Department on
LWA 3/5/2021. As of 8/17/2021,
$11,224 had been recaptured,
leaving a balance of $15,939.
Claimant #3 LWA 3 2,700 - The Department failed to
establish an overpayment.
Claimant #4 PEUC, 8 5,920 - A $5,920 overpayment was
FPUC started in the system; however, as
of 8/17/21, the Department had
taken no action to finalize or
recoup that amount.
In accordance with Unemployment Insurance Program Letter (UIPL) No. 14-21 (March 15, 2021), Attachment I,
individuals may only receive benefits under one program for any given week.
Good internal control requires procedures to ensure that claimants do not receive benefit payments from more than
one program during the same week or multiple payments from the same program for one week.
Without such procedures, there is an increased risk of making overlapping payments to benefit recipients in
contradiction of applicable Federal guidelines.
Maximum Benefit Amount (MBA) Not Correctly Calculated
For 1 of 60 claims tested, the MBA was calculated incorrectly. The claim had a reduction due to a separation issue
with a previous employer; however, the reduction was not calculated correctly. The separation issue resulted in a
disqualification of 14 weeks. The claim’s original MBA was $6,794 and should have been reduced by $4,172 ($298
multiplied by 14 weeks) for a maximum benefit of $2,622. The claimant was paid $2,980, leading to an
overpayment of $358.
Neb. Rev. Stat. § 48-626 (Cum. Supp. 2020) states, in relevant part, the following:
(2) For any benefit year beginning on or after October 1, 2018, any otherwise eligible individual shall be entitled
during any benefit year to a total amount of benefits equal to whichever is the lesser of (a) twenty-six times his or her
weekly benefit amount or (b) one-third of his or her wages in the employment of each employer per calendar quarter
of his or her base period; except that when any individual has been separated from his or her employment with a base
period employer under circumstances under which he or she was or could have been determined disqualified under
- 35 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
section 48-628.10 or 48-628.12, the total benefit amount based on the employment from which he or she was so
separated shall be reduced by an amount determined pursuant to subsection (3) of this section, but not more than one
reduction may be made for each separation. In no event shall the benefit amount based on employment for any
employer be reduced to less than one benefit week when the individual was or could have been determined disqualified
under section 48-628.12.
(3) For purposes of determining the reduction of benefits described in subsection (2) of this section:
****
(b) If the claimant has been separated from his or her employment under circumstances under which he or she
was or could have been determined disqualified under section 48-628.10, his or her total benefit amount shall be
reduced by fourteen times his or her weekly benefit amount.
Neb. Rev. Stat. § 48-628.10(1) (Cum. Supp. 2020) provides the following:
An individual shall be disqualified for benefits for the week in which he or she has been discharged for misconduct
connected with his or her work, if so found by the commissioner, and for the fourteen weeks immediately thereafter.
Good internal control requires procedures to ensure that maximum benefit amounts are calculated properly.
Without such procedures, there is an increased risk of improper benefit payments to claimants and noncompliance
with State statue.
Inaccurate Social Security Numbers
During testing, we noted that the Social Security numbers (SSN) for five claimants were not correct in the benefit
system. For three of the claimants, the individuals were paid through the PUA program. Had the SSNs been
accurate, however, the three individuals would have been paid regular UI and PEUC instead. The incorrect SSNs
prevented the Department from identifying that the claimants had received wages during the benefit base period.
Amount Paid
Claimant From PUA
Claimant #1 $ 12,548
Claimant #2 25,369
Claimant #3 15,031
The Department had procedures for verifying with the Social Security Administration that a claimant’s name agreed
with his or her SSN. Nevertheless, the Department was unable to provide support that these five claimants went
through the verification process.
Good internal control requires procedures to ensure that Department records, including claimant SSNs, are accurate.
Without such procedures, there is an increased risk of inappropriate or fraudulent payments.
Improper Employer Charges
According to Neb. Rev. Stat. § 48-652 (Cum. Supp. 2020), employers are typically charged for benefits paid to
former employees. For claims filed on or after March 15, 2020, through August 1, 2020, the Governor’s Executive
Orders No. 20-4 (March 17, 2020), No. 20-14 (April 2, 2020), and No 20-22 (April 30, 2020) granted employers
relief from being charged for benefits paid to individuals eligible for unemployment benefits solely as a result of
COVID-19 exposure or illness. Claims filed after August 1, 2020, were chargeable to employers based on normal
charging rules.
- 36 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Claims not charged to employers due to COVID-19 were charged instead to the “Pool Account (COVID-19),”
which were paid from the UI trust fund.
During testing of benefit payments, we noted seven of 60 claimants tested, the employer was not properly charged.
Three claims were filed after August 1, 2020, but the benefits paid were charged to the “Pool Account (COVID-
19).” One claim was filed before August 1, 2020, and neither the employer nor the claimant reported that the
separation was due to COVID-19, but the benefits paid were charged to the “Pool Account (COVID-19).” Three
claims were filed before August 1, 2020, and, based upon available information, the separations were due to
COVID-19; however, the employers were charged.
Should Have
Claim Filed Actual Charges Charged to the
Claimant Date to the Employer Employer Observations
Claimant #1 1/7/2021 $ - $ 10,032 Charged improperly to the “Pool Account.”
Claimant #2 3/25/2020 - 3,360 Separation was not reported to be due to COVID-
19; therefore, the employer should have been
charged.
Claimant #3 4/9/2020 2,131 - Separation was reported to be due to COVID-19;
therefore, the employer should not have been
charged.
Claimant #4 3/23/2020 2,705 - Separation was reported to be due to COVID-19;
therefore, the employer should not have been
charged.
Claimant #5 6/19/2020 1,522 - Separation was reported to be due to COVID-19;
therefore, the employer should not have been
charged.
Claimant #6 3/22/2021 - 2,736 Charged improperly to the “Pool Account.”
Claimant #7 10/29/2020 - 2,675 Charged improperly to the “Pool Account.”
During additional testing of 17 benefit payments, one of the payments was inappropriately charged to the employer.
The claim was filed on July 8, 2020, and the employer reported to the Department that the separation was due to
COVID-19. However, the employer was still charged $94.
Good internal control requires procedures to ensure compliance with all applicable directives contained in the
Governor’s executive orders. Without such procedures, there is an increased risk of noncompliance with mandatory
executive directives.
We recommend the Department implement procedures to prevent the payment of
improper unemployment compensation benefits. Those same procedures should
also ensure compliance with State and Federal requirements, ensuring the
following: 1) procedures are improved for identifying incarcerated individuals,
claimants who are deceased, and identifying and assessing whether State
employees are eligible for UI benefits; 2) employer responses to requests for
separation information are properly adjudicated and followed up on; 3)
investigations are properly created and completed in a timely manner; 4) claimants
are eligible and paid from the correct program; 5) benefit overpayments are
established and recouped in a timely manner; and 6) verification of claimants’
identity and employment or self-employment is performed properly and in a timely
- 37 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
manner. We also recommend reviewing STC agreements to ensure that program
objectives are met, and the employer is compliant with the agreement. Lastly, we
recommend the Department implement procedures to ensure that system records,
including claimant SSNs, are accurate, and employers are charged or not charged
properly. We are referring the information herein to the Nebraska Attorney
General.
Department and APA Responses:
Ineligible Payments to Inmates; Benefits Paid to Deceased Claimants; and Improper Unemployment Benefits
Paid to State Employees
Department Response: The Department recognized issues within the Benefit Payment Control Unit during the
pandemic. The employee responsible for performing the crossmatches did not perform them and supervisor follow-
up was not done. All supervisors within the unit have been changed and additional employees added. All fraud
detection processes have been reviewed and are being revised. The Department has two years to investigate and
establish an overpayment due to fraud. New management is going through all crossmatch hits for inmates, deceased
claimants, and state employees to ensure they were accurately worked. Referrals for criminal prosecution will be
made as appropriate.
Benefits Paid to Claimants Under the Age of Sixteen
Department Response: The Department disagrees with this conclusion. The age of an unemployment benefit
recipient is immaterial in addressing payment accuracy. All of the children were paid under the Pandemic
Unemployment Assistance program at a time that relied solely on self-attestation. The sisters mentioned should
have been exempt from work search as they had an anticipated return to work date with their father's business.
APA Response: The applications for Claimant #2 and #3 both stated that they do not have an expected return
to work date; therefore, work searches were required. Based on the lack of work searches performed and
the documented job searches for truck driver, plumber, etc., these claims appear to be fraudulent and should
be reviewed further by the Department.
Adjudication Issues
Department Response: The Department acknowledges human error occurred in the adjudication of some claims.
Further, there were system issues with work search not working correctly. For reasons not known, not all regular
UI claims were picked up when the system was reset to require work search activities effective July 13, 2020. The
error was discovered approximately July 13, 2020, and an OPC was entered to correct it. The regular UI claims
missed on July 13, 2020, were corrected for all weeks beginning August 2, 2020. The PUA claims were not
corrected until October 3, 2020.
The Department has two years to investigate and establish an overpayment. That is the only timeliness standard
that exists and the APA's assertion that some other timeliness standard applies is misleading. The investigation
that was created is not enough information for the Department to flag the claim as fraud. According to USDOL
guidance, the mere creation of an investigation is not sufficient for the Department to suspend payments. The
Department must investigate a claim and provide the claimant opportunity to respond before stopping or delaying
payment. See -- UIPL 04-01, UIPL 1145, UIPL 01-16, and UIPL 01-16, Change I.
APA Response: As noted by the Department, the creation of an investigation is not sufficient to suspend
payments; therefore, it is critical that investigations be worked timely so that fraudulent payments can be
stopped and recouped.
- 38 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Continued)
Pandemic Unemployment Assistance (PUA) Issues
Department Response: The Department required all PUA claimants to report and provide identity verification
beginning in fall of 2020 before identity verification was required by USDOL. UIPL 16-20, Change 4 states for
New Applications for PUA that, "individuals filing a new PUA application on or after January 31, 2021, are
required to provide documentation within 21 days of application or the date the individual is directed to submit the
documentation by the State Agency, whichever is later" [emphasis supplied] and for Continued Claims for PUA
that, "individuals who applied for PUA before January 31, 2021 and receive a payment of PUA on or after
December 27, 2020 (regardless of which week ending date is being paid) are required to provide documentation
substantiating employment or self-employment, within 90 days of application or when directed to submit the
documentation by the State Agency, whichever is later." [emphasis supplied] The UIPL required that the agency
notify claimants. The code changes for implementing the new requirements were requested in January 2021 upon
receiving USDOL guidance. The technology changes were not complete until May 2021 and claimants were
notified of the requirement at that time. A separate manual letter was sent in June 2021 to address any potentially
missed claimants. Additionally, the Department had other identity verification processes in place. It implemented
two-factor authentication for all claimants in January 2021.
APA Response: The UIPL providing the requirements to obtain documentation substantiating employment
or self-employment was issued in January 2021. The Department did not implement procedures to notify
claimants to provide documentation until May 2021. A majority of the claimants would not have been
required to submit the documentation until 90 days after, or until July 2021 at the earliest. The PUA
program ended in the State of Nebraska on June 19, 2021. Therefore, no payments would have been stopped
as a result of this requirement.
Short-Time Compensation (STC) Claimants and Claimants with Excessive Wages
Department Response: STC eligibility is not based upon weekly earnings. STC eligibility is based upon a reduction
in hours worked regardless of income. Since STC claimants continue to work while drawing STC benefits, there
will always be wages in the same quarter and only wages earned from other employers would reduce their weekly
benefit amount.
The Department recognized issues within the Benefit Payment Control Unit during the pandemic. All supervisors
within the unit have been changed and additional employees added. All fraud detection processes have been
reviewed and are being revised. the Department has two years to investigate and establish an overpayment.
According to USDOL guidance, the mere creation of an investigation is not sufficient for the Department to suspend
payments. The Department must investigate a claim and provide the claimant opportunity to respond before
stopping or delaying payment. See -- UIPL 04-01, UIPL 1145, UIPL 01-16, and UIPL 01-16, Change 1.
APA Response: The APA is aware that STC claimants will have wages during the quarter in which benefits
are earned. However, as noted in the comment, the individuals tested did not have a corresponding reduction
of wages in accordance with their agreement and, in some instances, the wages actually increased. This calls
into question whether the STC agreements were being adhered to and whether the Department was
performing adequate monitoring of these agreements.
Untimely Resolution to Bank Account Fraud Investigations
Department Response: The date an investigation is finally closed does not equate to the date payment was stopped
and in many of the claims referenced above unemployment benefit payments were stopped for other reasons prior
to the conclusion of the fraud investigation. The Department has implemented the data integrity hub's recommended
standard for preventing this issue. The Department has two years to investigate and establish an overpayment.
According to USDOL guidance, the mere creation of an investigation is not sufficient for the Department to suspend
payments. The Department must investigate a claim and provide the claimant opportunity to respond before
stopping or delaying payment. See -- UIPL 04-01, UIPL 1145, UIPL 01-16, and UIPL 01-16, Change 1.
- 39 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
2. Unemployment Insurance Benefit Payments (Concluded)
APA Response: As noted by the Department, the creation of an investigation is not sufficient to suspend
payments; therefore, it is critical that investigations be worked timely so that fraudulent payments can be
stopped and recouped.
Duplicate Benefit Payments
Department Response: The Department acknowledges human error led to some duplicate payments. These are
being reviewed. As stated above the Department has two years to establish these overpayments.
Maximum Benefit Amount (MBA) Not Correctly Calculated
Department Response: The amount of $6,794 was based on premonetary calculations, which were not sent to the
claimant. Per Nebraska Revised Statute § 48-626(2), the 14-week reduction is only applicable to the wages from
the separating employer, and not the total benefits available under the claim. The monetary determination shows
a total benefit amount after reduction of $3,359. The claimant was paid $2,980 and has no further eligibility on
the claim in question. No overpayment exists.
APA Response: On August 6, 2021, we inquired with the Department regarding how the MBA was
calculated. The Department responded on September 3, 2021, that the reduction was calculated incorrectly;
however, no effort was made to explain how it should have been calculated. The APA’s subsequent inquiry
as to the proper calculation received no response from the Department. Consequently, the APA recalculated
the MBA based on the relevant provisions of § 48-626. No answer to the APA’s inquiry was received until
after the draft audit report was issued, and the Department responded to the comments therein. At this time,
the Department has yet to provide sufficient evidence that the MBA was proper or why the contrary response
to previous discussions was warranted.
Inaccurate Social Security Numbers
Department Response: The individuals filing claims provided inaccurate SSN. The Department crossmatches
against the SSN provided. Based upon the SSN information provided by the claimant, wage records are provided
to the individual and the individual may protest the wage finding. Based upon the initial finding determined on the
claimant provided information, the individuals were placed in the PUA program as per the CARES Act.
APA Response: The Department should improve procedures to ensure that SSNs are accurate. The
crossmatch to which the Department refers should have resulted in an error, as the name of the claimant
would not have agreed with the SSN crossmatch. No such error was documented in the system, however.
Improper Employer Charges
Department Response: The Department agrees these were errors.
3. Untimely Responses to Records Requests
While we appreciate all the time spent by Department staff on this attestation, the Department failed to respond
timely to several requests for information. There were several instances of failure to comply with Neb. Rev. Stat.
§ 84-305 (Cum. Supp. 2020), which requires responses to requests by the APA to be made within the three business
days and the information sought to be provided within three weeks after the initial request.
The table below provides examples of the Department’s belated responses to the APA’s information requests:
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NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
3. Untimely Responses to Records Requests (Continued)
Initial Request Response
Request Date Received Date Total Days
Memo on UI COVID Controls – Update by NDOL 6/21/2021 7/20/2021 29
UI Benefit Payment Questions #5 8/2/2021 8/25/2021 23
UI Benefit Payment Questions #6 8/6/2021 9/3/2021 28
Self-Employment Documentation 8/13/2021 9/7/2021 25
UI Benefit Payment Questions #7 8/18/2021 9/10/2021 23
Payment to Deceased Claimants 8/20/2021 9/21/2021 32
UI Journal Entries - Cancelled Payments 8/24/2021 9/27/2021 34
Intrastate Quarterly Crossmatch Investigation 9/10/2021 Note 1 N/A
Revenue Document Support 6/17/2021 7/14/2021 27
State Income Tax Intercept Question 8/16/2021 Note 1 N/A
Note 1: As of October 4, 2021, the APA had not received a response to this request.
Delays in responses to the APA’s requests for information, such as those detailed above, impede the APA’s ability
to conduct the attestation in a timely manner. These delays waste the time of both the APA and the Department.
In order to ensure expedient testing, our requests for information must be fulfilled timely, precisely, and in
accordance with State statute. Given that we were trying to ensure accurate testing and audit results, moreover, it
was in the Department’s best interest to respond properly. Nevertheless, many of the responses took three weeks
or more, nearly a month after the APA inquired or submitted a request to the Department for additional information.
Further, on several occasions, the Commissioner of Labor claimed that the APA had been granted full and complete
access to NEworks, the Department’s unemployment system, in compliance with § 84-305. On more than one
occasion, however, the APA had to ask the Department to expand our scope of access within the system – indicating
that, contrary to the Commissioner’s prior assertions, APA access to NEworks was not unrestricted. For example,
the Commissioner stated on August 30, 2021, that the APA was given full access to all information in NEworks;
however, on September 16, 2021, the APA had to request that access be granted to run UI reports and, on
September 29, 2021, the APA had to request that access be granted to view Lost Wage Assistance (LWA) self-
certifications.
Additionally, there were numerous instances of the Department failing to inform us of its inability to respond to our
requests within three business days, as required by State statute.
Section 84-305(1) states the following:
The Auditor of Public Accounts shall have access to any and all information and records, confidential or otherwise,
of any public entity, in whatever form or mode the records may be, unless the auditor is denied such access by federal
law or explicitly named and denied such access by state law. If such a law exists, the public entity shall provide the
auditor with a written explanation of its inability to produce such information and records and, after reasonable
accommodations are made, shall grant the auditor access to all information and records or portions thereof that can
legally be reviewed.
Subsection (2) of that same statute adds, as is relevant, the following:
Upon receipt of a written request by the Auditor of Public Accounts for access to any information or records, the
public entity shall provide to the auditor as soon as is practicable and without delay, but not more than three business
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NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
3. Untimely Responses to Records Requests (Concluded)
days after actual receipt of the request, either (a) the requested materials or (b)(i) if there is a legal basis for refusal
to comply with the request, a written denial of the request together with the information specified in subsection (1) of
this section or (ii) if the entire request cannot with reasonable good faith efforts be fulfilled within three business days
after actual receipt of the request due to the significant difficulty or the extensiveness of the request, a written
explanation, including the earliest practicable date for fulfilling the request, and an opportunity for the auditor to
modify or prioritize the items within the request. No delay due to the significant difficulty or the extensiveness of any
request for access to information or records shall exceed three calendar weeks after actual receipt of such request by
any public entity.
Finally, Neb. Rev. Stat. § 84-305.01 (Cum. Supp. 2020) reads as follows:
Any person who willfully fails to comply with the provisions of section 84-305 or who otherwise willfully obstructs or
hinders the conduct of an audit, examination, or related activity by the Auditor of Public Accounts, or who willfully
misleads or attempts to mislead any person charged with the duty of conducting such audit, examination, or related
activity shall be guilty of a Class II misdemeanor.
The Department’s failure to respond promptly to information requests not only constitutes a violation of § 84-305
but also interferes with the APA’s testing and timely completion of the examination.
We recommend the Department implement procedures to ensure compliance with
§ 84-305 by responding timely to APA requests for information.
Department Response: The APA misstates § 84-305. Section 84-305 requires that agencies provide "access" to
records. Black's law dictionary defines a record as "A documentary account of past events, usu. designed to
memorialize those events; information that is inscribed on a tangible medium or that, having been stored in an
electronic or other medium, is retrievable in perceivable form." The Department complied within the Black letter
law of Neb. Rev. Stat. § 84-305 NEworks access is managed at a permission group level. At the beginning of the
audit, the existing Auditor account group established for record access in prior CAFR audits was updated to include
newer UI privileges and reports during the 2021 ACFR. The APA staff were given unlimited access to the expanded
file. When additional access was requested, it was provided within 24 hours in most cases and within 3 business
days in all known cases. Requests for additional explanation of records are outside the scope of Neb. Rev. Stat. §
84-305
APA Response: Neb. Rev. Stat. § 84-305 grants the APA access to “to any and all information and records,
confidential or otherwise, of any public entity, in whatever form or mode the records may be . . . . ” The
words “any and all information” were added specifically to ensure that the APA would have comprehensive
and immediate access to anything, including explanatory information, needed to carry out a thorough audit.
Moreover, as set out clearly in the report comment, the APA was denied timely access to requested records
and correlative explanatory information alike.
4. Inadequate Review of Unemployment Insurance (UI) Administrative Expenditures
Due to the COVID pandemic, the Department entered into several contracts for administrative assistance to handle
the influx of UI claims. We noted that the Department did not obtain or review adequate supporting documentation
to ensure the propriety of the payments for those services.
2 CFR § 200.403 (January 1, 2021) requires costs charged to Federal programs to be reasonable, necessary, and
adequately documented.
- 42 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
4. Inadequate Review of Unemployment Insurance (UI) Administrative Expenditures (Continued)
Additionally, good internal control requires procedures for both maintaining adequate supporting documentation
and implementing effective contract-monitoring procedures to ensure the reasonable and proper expenditure of
Federal funds.
Without such procedures, there is an increased risk for errors and overpayments to occur.
We noted the following:
Nelnet, Inc.
The Department contracted with Nelnet, Inc., (Nelnet) to provide staffing services to assist in processing the
increased number of UI claims. Payments to Nelnet totaled $10,924,480 for the fiscal year ended June 30, 2021.
The contract required each invoice to represent actual hours of services provided by Nelnet. After an inquiry,
however, we learned that billings were based upon the number of associates rather than the actual hours worked.
Also, per discussion with staff, the Department did not request, receive, or review supporting documentation, such
as timesheets, to verify that the amount paid to Nelnet was accurate.
The agreement between the Department and Nelnet states the following, in relevant part:
Each bi-weekly invoice will represent actual hours of services provided to NDOL by NELNET during the two-week
time period covered by the invoice . . . . NDOL will be billed for the actual number of hours, up to forty (40) hours
per week per individual, for the actual number of individuals, up to two hundred (200) individuals per week.
We reviewed two payments to Nelnet and noted the following:
The first payment tested was for work performed from January 1, 2021, through January 15, 2021, totaling
$556,640. We requested five timesheets for workers that represented $7,000 of the payment. One timesheet
reviewed contained leave hours, which were included in the invoice. This resulted in a $280 overpayment.
The second payment tested was for work performed from January 18, 2021, through January 29, 2021,
totaling $504,000. We requested five timesheets for workers representing $6,160 of the payment. Two of
the five timesheets contained leave hours, which were included in the invoice. This resulted in a $435
overpayment.
We reviewed timesheets, totaling $13,160, and noted overpayments of $715, a 5.4% error rate. As the Department
was not reviewing timesheets, it is likely that additional significant errors could have occurred.
North End Teleservices, LLC
The Department contracted with North End Teleservices, LLC, (NET) to provide data entry services and to answer
UI questions from employers and applicants. Payments to NET totaled $6,153,167 for the fiscal year ended
June 30, 2021. The contract rate was $30 per hour.
The contract between the Department and NET stated the following, in relevant part:
Since invoices may be submitted by NET at the start of a Service Period, following the first Invoice Date, NET must
submit supporting documentation of actual hours of service performed during the previous Service Period. In the
event of a discrepancy between the hours of services and the invoiced amount, NDOL may adjust subsequent payments
accordingly, and may withhold and/or adjust the final payment under this Agreement until all hours of services are
reconciled (subject to the maximum invoice amount and maximum expenditures under this Agreement). Supporting
documentation must include, but is not limited to, the position titles and reference number (which are specific to
individuals and traceable) that performed services during the applicable Service Period, and actual hours worked by
such individuals.
- 43 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
4. Inadequate Review of Unemployment Insurance (UI) Administrative Expenditures (Continued)
The invoices included full-time equivalent (FTE) identification (ID) reference numbers, number of hours by FTE
ID, and hourly rate; however, timesheets to support the number of hours were not provided. The Department did
not request, receive, or review supporting documentation, such as timesheets, to verify the accuracy of the hours
billed.
We requested five timesheets for workers that were included in the payment for services provided from
March 16, 2021, through March 31, 2021, for $175,975. The five timesheets represented 413 hours of the invoice.
We noted that one timesheet was underbilled by 7 hours, and another timesheet was overbilled by 11 hours, resulting
in 4 hours, or $120, overbilled.
As the Department was not reviewing timesheets, it is likely that additional errors could have occurred.
Protiviti Government Services, Inc.
The Benefit Payment Control (BPC) unit is responsible for the detection, investigation, recovery, and prosecution
relating to UI overpayments. The Department contracted with Protiviti Government Services, Inc., (Protiviti) to
provide additional staffing for the BPC unit. Payments to Protiviti totaled $1,653,126 for the fiscal year ended
June 30, 2021.
The agreement between the Department and Protiviti states the following, in relevant part:
D. Each monthly invoice must include actual hours of services provided to NDOL by Contractor and actual numbers
of Support Staff during the month covered by the invoice.
****
3. NDOL is not responsible for payment of any holiday hours/holiday pay. As stated in the SOW, any overtime (hours
in excess of forty (40) hours per week for an individual, must be requested by NDOL, in writing, and/or approved by
NDOL, in writing (e-mail request or approval from NDOL’s designated POC is acceptable).
4. Contractor uses a timekeeping system (TCast), and this will be system of record for tracking hours for the purposes
of billing and invoices. Contractor will provide NDOL with a weekly report of number of Support Staff that provided
services, and number of hours per Support Staff. NDOL agrees to notify Contractor of any concern/perceived
discrepancy in time reported as soon as reasonably possible.
The invoices included staff names, number of hours by each, and hourly rate; however, timesheets to support the
number of hours were not provided. The Department did not request, receive, or review supporting documentation,
such as timesheets, to verify that the hours billed were accurate, and no holiday or unapproved overtime hours were
paid.
We requested five timesheets for workers included in the payment for February 2021 services provided. The
payment tested totaled $364,755, and the timesheets tested represented $74,282 of that payment. The APA noted
that one individual was overpaid $367.
As the Department was not reviewing timesheets, it is likely that additional errors could have occurred.
OCIO
The Department of Administrative Services Office of the Chief Information Officer (OCIO) provides technology
services to State agencies. We selected five workorders from the May 2021 payment to the OCIO. One of these
workorders was related to running the data warehouse and was charged to various business units based on
communications between the Department and OCIO staff; however, there was no supporting documentation to
ensure that the percentages were accurate or in accordance with Federal cost principles. Payment for the workorder
was charged to the following programs:
- 44 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
4. Inadequate Review of Unemployment Insurance (UI) Administrative Expenditures (Concluded)
Business Unit Federal Assistance Listing % Charged Total
23000919 Various, agency wide allocation* 10% $ 1,582
23208719 Wagner Peyser 17.207 10% 1,582
23370021 UI Administration 17.225 20% 3,164
23370021 UI Administration 17.225 60% 9,491
Total Workorder $ 15,819
*Allocated as indirect cost to various programs per Cost Allocation Plan.
2 CFR § 200.403(d) (January 1, 2021) states, “A cost may not be assigned to a Federal award as a direct cost if any
other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect
cost.”
Additionally, 2 CFR § 200.413(a) (January 1, 2021) provides the following:
Direct costs are those costs that can be identified specifically with a particular final cost objective, such as a Federal
award, or other internally or externally funded activity, or that can be directly assigned to such activities relatively
easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated
consistently as either direct or indirect (F&A) costs.
Without adequate documentation to support the allocation of costs, there is an increased risk for misuse of funds.
We recommend the Department implement procedures to ensure adequate
supporting documentation is maintained, contract payments are proper, and
Federal requirements are followed.
Department Response: The data warehouse monthly billing with the OCIO is split across a predefined list of
applicable cost centers and business units each month. Charged amounts by the contractor are split based on
project assignment and additional ad-hoc requests that are reported by the contractor. The Department was in the
midst of a pandemic with record breaking unemployment numbers and staff was not available to conduct an audit
of the number of hours billed. The Department relied upon information provided and the fact that all requested
work was completed to determine hours billed were reasonable.
5. Lack of Documentation for Nebraska Training and Support Cash Fund
Neb. Rev. Stat. § 48-622.02(2) (Cum. Supp. 2020) provides, in relevant part, the following with regard to the proper
use of money in the Nebraska Training and Support Cash Fund:
Money in the Nebraska Training and Support Cash Fund shall be used for . . . . (c) support of public and private job
training programs designed to train, retrain, or upgrade work skills of existing Nebraska workers of for-profit and
not-for-profit businesses, (d) recruitment of workers to Nebraska, (e) training new employees of expanding Nebraska
businesses . . . .
Neb. Rev. Stat. § 48-622.03 (Reissue 2020) created the Nebraska Worker Training Board (Board), which consists
of seven members appointed by the Governor and is required to establish an annual program plan and guidelines
for the criteria to evaluate requests for the use of money under § 48-622.02.
The Worker Training Program Guidelines (Revised 5/28/20), Training Requirements (pg. 4), contains the
following:
- 45 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
5. Lack of Documentation for Nebraska Training and Support Cash Fund (Continued)
Training providers must maintain and make available:
a. records that clearly document all aspects of training and retention related to the training,
b. applicable financial records which document funds received and disbursed,
c. records of attendance of training recipients, and
d. any certificate or documentation of completed training.
Those same guidelines, “Grant Award and Performance” (pg. 5), state the following:
The board shall review grant applications recommended by the commissioner for compliance with these guidelines.
We selected two worker training grant payments for review and noted the following:
Grant 9542 – Becton, Dickinson and Company
In May 2019, Becton, Dickinson and Company, a multinational corporation based in New Jersey, was awarded a
worker training grant, through March 2022, to enhance employee skill levels and promote the retention and
expansion of the Nebraska workforce. The grantee was paid $123,024 in fiscal year 2020 and $112,006 during
fiscal year 2021 – for a total payment of $235,030.
Per the Worker Training Program Guidelines, all training records, including class rosters, attendance records, and
billing invoices, must be provided at the completion of a grant. The Department did not perform any interim
monitoring or sampling of expenditures to ensure that the $235,030 paid was proper. Because the grant was still
ongoing, the Department did not have supporting documentation on file for the expenditure being tested.
We requested supporting documentation for one training session, for 10 individuals, totaling $21,419, of the
$112,006 payment. The training expenses included travel, meals, and registration fees. We noted several instances
of insufficient documentation and/or unreasonable expenses:
Nine of 10 items tested did not have a certificate or documentation that training was completed.
No training agenda was on file for 5 of 10 individuals tested in order to determine if meals were provided.
Several meals, totaling $1,386, were purchased and reimbursed without an itemized receipt on file to
support that the expenditures were allowable and reasonable.
Alcohol purchases were reimbursed by the Department. One individual purchased alcohol, including a
Long Island iced tea, a margarita, three Bud Lights, and a Yuengling Beer, totaling $59. Another individual
was also reimbursed for alcohol on two meals.
To determine the reasonableness of meal costs, the APA compared the costs to the U.S. General Services
Administration (GSA) per diem rates. We noted several meals over GSA guidelines, including the
following:
o Dinner for two costing $134, a total of $82 over the Connecticut GSA rate of $26 per meal.
o Dinner in Chicago for two costing $110, a total of $42 over the GSA rate of $34 per meal.
o Dinner in Chicago for three costing $178, a total of $76 over the GSA rate of $34 per meal.
- 46 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
5. Lack of Documentation for Nebraska Worker Training and Support Cash Fund (Continued)
Several items, totaling $495, lacked adequate support, such as invoices or receipts. The items included
airfare, Uber transportation, gas purchased, and a self-assessed tax.
One of the events attended was the “K Show,” an international trade fair for plastics and rubber, which took
place in Germany. The lodging invoice was in Euros, and there was no support on file showing the
conversion rate used to support the amount reimbursed.
One employee upgraded a flight from Economy Plus for $77. We were told that Becton, Dickinson and
Company’s policy allowed employees to upgrade seats on flights exceeding six hours; however, the policy
was not provided for our review. The same employee also left a hotel two nights early but still had to pay
for those missed nights, the cost of which totaled $631. The APA believes that no reimbursement should
have been made for the two nights that the employee did not use the hotel.
Good internal control requires procedures to ensure that grant expenditures are reasonable and adequately
supported. Those same procedures should require interim monitoring of grants that cover multiple years.
Without such procedures, there is an increased risk for misuse of funds.
Grant 9859 – Nebraska Dev Lab (NeDL)
NeDL, an academic/corporate partnership between Doane University in Lincoln, NE, and Don’t Panic Labs, a
software engineering and corporate innovation company also based in Lincoln, was awarded a worker training grant
to enhance employee skill levels and promote the retention and expansion of the Nebraska workforce. The grantee
was paid $72,844 during fiscal year 2021.
Per the grant agreement, “The term of this Agreement shall be from the date of execution of this Agreement through
6/30/21.” The Department signed the grant agreement on August 27, 2020.
We noted the following:
According to the invoice, expenses were billed from October 1, 2019, through June 30, 2020, at $150 per
hour. When questioned about the billing, the Department provided attendance records for July 1, 2020,
through October 9, 2020; however, the grant agreement was not in effect until signed on August 27, 2020.
Per the attendance records provided, there were only 248 hours, starting August 27, 2020, which at $150
per hour would total $37,200.
We reviewed July 28, 2020, Board minutes, and Grant 9859 was not listed therein as having been approved.
The Director of the Department’s Reemployment Services stated that this was a clerical error, and Grant
9859 should have been listed under “remaining grants.”
Good internal control requires procedures to ensure that payments are adequately supported, and Board approval of
grant applications is documented in the appropriate meeting minutes.
Without such procedures, there is an increased risk for loss or misuse of funds.
We recommend the Department improve procedures to ensure grant payments are
reasonable and adequately supported. We further recommend all grants approved
by the Board be documented in the appropriate meeting minutes.
- 47 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
5. Lack of Documentation for Nebraska Worker Training and Support Cash Fund (Concluded)
Department Response: The Worker Training Program is under new management. The Department is revising
Worker Training Program Grant Guidelines to align program design with GSA Travel Management Policies, to
include Meal and Incidental (M&IE) Rates and Restrictions, Lodging, and Travel Reimbursement Rates.
Additionally, the program has been restructured to include multiple layers of review to ensure grant payments are
reasonable and adequately supported, and Worker Training Board meeting minutes are sufficiently documented.
In addition, the Department has increased its capacity to monitor the Worker Training Program fiscally and
programmatically on a quarterly basis. The standard Grant Agreement will be amended to accurately reflect the
Program Grant Guidelines. This amendment will allow for reimbursement of expenses after the grant application
is received as currently provided for in the Program Grant Guidelines.
6. Lack of Payroll Segregation of Duties
The State’s accounting system does not have an established segregation of duties for payroll processing. Therefore,
employees with access to process payroll are able to perform all procedures without a secondary individual being
required to approve transactions. Accordingly, the Department should have compensating procedures in place, such
as a documented review of the final payroll register, as well as changes to pay rates and other payroll information,
by an individual without payroll access, to ensure that no one individual is able to conceal errors or irregularities.
The Department worked with the Department of Administrative Services (DAS) to process payroll through the
Shared Services program. The Department prepared the payroll, and DAS was involved in necessary changes and
external reviews of the payroll, including certification that the payroll was ready to be posted to the general ledger.
However, six Department employees had access to perform all procedures within the system, including one-time
overrides of pay rates, hours worked, type of pay paid (such as vacation, sick leave, etc.), and there were no
documented procedures to identify unapproved changes by those individuals.
The Department used EnterpriseOne, the State’s accounting system, to track employee time worked and leave used.
Employees submitted their time worked for each pay period to a supervisor who approved the timesheet prior to
payment. Each supervisor could also set up delegates in the system to approve timesheets and leave requests should
the supervisor be unavailable. We noted that one employee tested was a delegate for her supervisor. This allowed
the employee to approve her own timesheets.
The Department had $22,945,597 in personal service expenditures during the fiscal year ended June 30, 2021.
A good internal control plan requires an adequate segregation of duties to ensure no one individual is in a position
both to perpetrate and to conceal errors or irregularities. This would require someone without payroll access to
perform a documented review of payroll – including a review of timesheets and leave usage – to ensure that it is
proper. Such a segregation of duties also requires controls to ensure employees are not able to approve their own
timesheets.
Without an adequate segregation of duties, there is an increased risk of overpayments, improper payments, and
errors or irregularities occurring and not being detected.
A lack of segregation of duties over payroll was also noted in our calendar year 2012 attestation report.
We recommend the Department implement policies and procedures to have an
individual without payroll access, or a DAS staff person through the Shared
Services program, perform a documented review of the payroll register,
timesheets, leave usage, and changes to pay rates for accuracy and reasonableness.
We further recommend the Department ensure delegates are proper, and no
employee is able to approve his or her own timesheet.
- 48 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
6. Lack of Payroll Segregation of Duties (Concluded)
Department Response: The Department utilizes the Enterprise Payroll system in E1 and will work with the Nebraska
Department of Administrative Services to explore other options available to state agencies for payroll.
7. Improper State Vehicle Usage
During the fiscal year, the Department paid DAS – Transportation Services Bureau (TSB) $28,026 for State-owned
vehicle usage. Our review of the March payment of $1,706 revealed the following concerns:
An employee drove a State vehicle home without agency head approval.
A TSB vehicle rental was not cancelled timely.
Mileage appeared excessive based on recorded destinations.
Travel logs were incomplete.
More detailed information about each of the above issues is provided below.
One Department employee took a TSB vehicle home. The employee needed to leave for Sidney, NE, early
on the morning of February 23, 2021, so she rented the TSB vehicle on February 22, 2021, and drove the
vehicle to her home in Elkhorn, NE, resulting in an extra day’s rental and an additional 111 miles being
driven, for extra charges of $47. The employee should have checked the vehicle out after 4 p.m. on
February 22, 2021, and driven her personal vehicle to pick up the TSB car on the morning of her departure.
The employee did not have the required approval of the agency head to drive the TSB vehicle home.
Five travel logs were incomplete. Each travel log had an entry for the day the vehicle was used; however,
entries were lacking for the multiple stops made with each of these rental cars. Both State law and TSB
Policies & Procedures require travel logs for State-owned vehicle usage to contain a new entry for each
starting and stopping point.
One TSB rental car was not cancelled timely after it was no longer needed by a Department employee who
used a personal vehicle to complete H-2A (Temporary Agricultural Worker) housing inspections in rural
western Nebraska. The employee completed multiple inspections from January 19, 2021, through
January 22, 2021, and then determined that he needed a four-wheel drive vehicle for the remainder of his
inspections. Rather than being returned to the TSB motor pool, the unused State-owned vehicle remained
at the Department’s office in North Platte for five days. The vehicle was not returned until
February 1, 2021, costing the Department $62.50 for those five idle days. The employee did not request
mileage reimbursement for his personal vehicle usage.
One TSB rental vehicle was driven for H-2A housing inspections between these Nebraska locations: North
Platte to Bridgeport, Scottsbluff, Sidney, and then back to North Platte. A total of 455 miles were reported
driven; however, according to Google Maps, the entire trip took only 401 miles, a variance of 54 miles, or
13.47%. When the auditor inquired about this discrepancy, it was explained that H-2A housing inspections
often take place in extremely rural areas, leading to employees becoming lost while trying to find their
destinations. However, neither the travel logs nor any other documentation contained information to
support that contention.
- 49 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
7. Improper State Vehicle Usage (Concluded)
Executive Order # 99-01 (effective date April 19, 1999) states, in relevant part, the following:
3. No employee will be allowed to drive a state-owned vehicle home except for the reasons set forth below:
****
(b) The agency head approves a vehicle going home for one night, for a specific, scheduled event, e.g., traveling
to an out-of-town conference. Agencies are required to report these trips to the Accounting Division of the
Department of Administrative Services for submission to the Internal Revenue Service.
Neb. Rev. Stat. § 81-1025(1) (Reissue 2014) provides the following:
Each operator of a bureau fleet vehicle shall report the points between which the bureau fleet vehicle traveled each
time used, the odometer readings at such points, the time of arrival and departure, the necessity and purpose for such
travel, the license number of such vehicle, and the department to which such vehicle is assigned.
Section 7 (“Official Travel Log”) of the TSB Policies & Procedures contains the following:
State statutes mandate all travel in state-owned vehicles to be recorded and reported in detail (§81-1025). An entry
is defined as a record of the following information required each time the vehicle is stopped and started: date,
beginning and ending mileage, number of miles traveled, start time, finish time, from and to destinations, purpose of
trip, and the driver’s signature.
Additionally, a good internal control plan requires procedures to ensure compliance with Executive Orders, State
statutes, and TSB Policies & Procedures governing the use of State-owned vehicles. In particular, care should be
taken to ensure that travel destinations and vehicle mileage are recorded accurately and completely, and TSB rentals
are returned timely when not in use.
Without such procedures, there is an increased risk for misuse of State property.
We recommend the Department implement procedures to ensure compliance with
Executive Orders, State statutes, and TSB Policies & Procedures governing the use
of State-owned vehicles. Particular care should be taken to ensure that travel
destinations and vehicle mileage are recorded accurately and completely, and TSB
rentals are returned timely when no longer needed.
Department Response: The employee was new to the Department and was not aware of the policy. Employees of
the Department have been reminded of the policy.
8. Lack of Employment Services Monitoring
The Department utilized Employment Services/Wagner-Peyser Federal program funds (Federal Assistance Listing
17.207) to pay the United Way of the Midlands (UWM) for implementation and operation of Jobs for America’s
Graduates (JAG) in Nebraska. JAG is a set of services designed to keep middle school and high school students in
school and assist them in their careers. The Employment Service (ES) program provides job seekers with career
services.
We tested a $65,930 payment to UWM for January 2021 services and noted the following:
- 50 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
8. Lack of Employment Services Monitoring (Continued)
The agreement required 90% of the students enrolled in the JAG program to be eligible for free/reduced
lunch. The January roster showed 7 of 10 schools with less than 90% – with an overall total of 83% – of
students eligible for free/reduced lunch. According to Department staff, that requirement was merely a
goal, and the contractual language was in error.
The Department paid UWM as a contractor rather than a subrecipient and did not follow Federal
requirements regarding subrecipients. We noted the following characteristics that indicate UWM is a
subrecipient: 1) the agreement is for a public purpose; 2) career services provided are the primary objective
of the ES program; 3) UWM determines eligibility and is required to adhere to Federal Regulations; 4)
UWM is not providing services for the Department’s own use but instead to students; 5) the contract with
UWM was not competitively bid; and 6) the agreement language states specifically that the agreement will
be funded as a subaward.
The Department paid UWM $610,643 during fiscal year 2021. Of that total, $442,616 was reimbursed to the
Department with Temporary Assistance for Needy Families (TANF) funds from the Department of Health and
Human Services, and $168,027 was paid with Employment Services/Wagner-Peyser funds. For the payment tested,
$54,564 was funded by TANF and $11,366 by Employment Services.
The agreement between the Department and the UWM states the following, in relevant part:
I.D.2. In particular, as a minimum, an average of ninety percent (90%) of students enrolled in the Program must be
eligible for free/reduced lunch.
****
III. A. Subject to the maximums provided herein, this Agreement will be funded from a subaward of a combination of
funds made available to NDOL through a grant of Wagner-Peyser Act Employment Service funds from the United
States Department of Labor (NDOL Funds), and a grant of Temporary Assistance to Needy Families funds (TANF
Funds). The TANF Funds are being provided to NDOL from the Nebraska Department of Health and Human Services
(DHHS) . . . .
****
III. G. The parties understand that use of state and/or Federal funding sources for services provided under this
Agreement will require compliance with applicable funding source requirements. In addition to requirements
included in this Agreement, UWM agrees that such funding will be used only as permitted by the applicable Federal
funding agency, as well as applicable law, regulation, and policy . . . .
III. H. UWM may invoice NDOL for actual Eligible Costs at a rate not to exceed Seven thousand Fifty-Eight Dollars
and Thirty -three cents ($7,058.33) per month per participating school . . . .
****
XXXIX. A. Both NDOL Funds and TANF Funds require compliance with 2 CFR Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirement. UWM agrees to compliance with such requirements.
(Emphasis added.) 2 CFR § 200.331 (January 1, 2021) provides, in part, the following:
(a) Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal
assistance relationship with the subrecipient. See definition for Subaward in §200.1 of this part. Characteristics
which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity:
- 51 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
8. Lack of Employment Services Monitoring (Continued)
(1) Determines who is eligible to receive what Federal assistance;
(2) Has its performance measured in relation to whether objectives of a Federal program were met;
(3) Has responsibility for programmatic decision-making;
(4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award;
and
(5) In accordance with its agreement, uses the Federal funds to carry out a program for a public purpose specified
in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity.
(b) Contractors. A contract is for the purpose of obtaining goods and services for the non-Federal entity’s own use
and creates a procurement relationship with the contractor. See the definition of contract in §200.1 of this part.
Characteristics indicative of a procurement relationship between the non-Federal entity and a contractor are when
the contractor:
(1) Provides the goods and services within normal business operations;
(2) Provides similar goods or services to many different purchasers;
(3) Normally operates in a competitive environment;
(4) Provides goods or services that are ancillary to the operation of the Federal program; and
(5) Is not subject to compliance requirements of the Federal program as a result of the agreement, though similar
requirements may apply for other reasons.
Requirements for pass-through entities are detailed in 2 CFR § 200.332.
2 CFR § 200.403 (January 1, 2021) requires costs charged to Federal programs to be reasonable, necessary, and
adequately documented.
Additionally, good internal control requires procedures to ensure costs are allowable and in accordance with Federal
requirements and contract provisions.
Without such procedures, there is an increased risk for loss or misuse of funds and noncompliance with Federal
regulations.
We recommend the Department implement procedures to ensure adherence to all
provisions of grant agreements. We also recommend the Department adequately
monitor contracts/subawards to ensure expenditures are allowable and in
accordance with Federal regulations. Lastly, we recommend the Department
review Federal subrecipient regulations and comply with all requirements.
Department Response: The Department disagrees. The Department purchased services from United Way of the
Midlands (UWM) in administering the JAG program. The JAG program is not a federal program and the services
provided by UWM do not "carry out a part of a federal program." (2 CFR §200.74). There is no federal program
eligibility requirement for UMW to implement. With respect to the UWM contract, the Department does not meet
the definition of a pass through agency as defined in 2 CFR §200.74. There is no reference in the CFRs that would
- 52 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
8. Lack of Employment Services Monitoring (Concluded)
make determinations of participants in accordance with a contractual agreement a subaward. The services
purchased under the contract are by any fair reading of 2 CFR §200.22, contractual services and the suggestion
that it merits a finding is unfounded and not supported in the Uniform Guidance. Because of additional funding
sources that will be available to the JAG program in FY22, the Department plans to treat all funds awarded or paid
to UWM as a subaward going forward. The Department is developing both fiscal and programmatic monitoring
guides, as well as standardized monitoring schedules, for all grants awarded to non-federal entities in which the
Department serves as a pass-through entity.
APA Response: UWM was paid with Employment Services/Wagner-Peyser Federal program funds (Federal
Assistance Listing 17.207) and the Department did meet the definition of a pass through entity as defined in
Federal regulations. Despite the Department’s denial of both the subaward status of the payments to UWM
and its own function as a pass-through entity, the agreement between the two parties states plainly that it
will be “funded from a subaward of a combination of funds made available to NDOL through a grant of
Wagner-Peyser Act Employment Service funds from the United States Department of Labor (NDOL Funds),
and a grant of Temporary Assistance to Needy Families funds (TANF Funds).”
9. Lack of Workforce Innovation and Opportunity Act Subrecipient Monitoring
We tested one payment for $253,774 to Heartland Workforce Solutions (HWS), a subrecipient of the Department
and recipient of Workforce Innovation and Opportunity Act (WIOA) funds. We noted that the Department had not
performed financial monitoring of HWS for fiscal year 2021. The subrecipient had a Single Audit performed for
fiscal year 2020, with WIOA as a major program; however, the 2021 audit for the subrecipient was not yet
completed.
The request for reimbursement from HWS for the payment tested was a summary of expenses and income
statements from the subrecipient. No detailed supporting documentation, such as payroll registers, timesheets,
invoices, etc., was on file. Therefore, the APA requested that additional documentation be obtained to support that
the expenditures were allowable and in accordance with Federal requirements.
We noted the following:
HWS used two allocations, based on the number of customers served and the square footage of the service
facility, to charge expenses to various programs. The APA requested documentation to support the
allocation basis, and HWS responded that detailed support was not obtained for the number of customers
served.
Three invoices, totaling $4,244, were not allocated using the current allocation basis and/or were not
mathematically correct.
HWS subawards funds to its own subrecipients. Included in the payment to HWS was $212,249 for the
personnel and operating costs of the HWS subrecipients. HWS provided the APA with documentation of
its subrecipient monitoring, which consisted of reviewing timesheets and verifying allocation of
expenditures. Comprised of only a summary with no detailed support or timesheets, however, that
documentation was insufficient to support that expenditures were allowable and within the period of
performance. The APA attempted to tie the payroll register to the requested personnel expenses but was
unable to do so. Personnel costs totaled $81,456.
Payments to HWS totaled $3,151,830 for fiscal year 2021.
- 53 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
9. Lack of Workforce Innovation and Opportunity Act Subrecipient Monitoring (Concluded)
2 CFR § 200.403 (January 1, 2021) requires costs charged to Federal programs to be reasonable, necessary, and
adequately documented.
Additionally, good internal control requires proper subrecipient monitoring procedures to ensure that the
expenditure of grant funds is reasonable and in accordance with Federal regulations
Without such procedures, there is an increased risk for errors or misuse of funds.
We recommend the Department improve monitoring procedures, including
periodically testing a sample of expenditures to ensure compliance with Federal
cost principles.
Department Response: The Department's monitoring unit integrated fiscal monitoring in October 2021. Every
local workforce development area will be fiscally monitored on an annual basis to ensure compliance with Federal
cost principles, in addition to existing programmatic monitoring.
10. Untimely Refund
To recoup overpayments paid out to claimants, the Department can intercept claimant tax refunds to apply towards
the overdue balances. We tested State income tax intercepts for 25 claimants. For one claimant, we noted that the
Department had established an overpayment of $5,400. A tax intercept recouped $1,200 in February 2021 and was
applied towards that balance. The claimant filed and won an appeal on May 21, 2021, at which time the
overpayment of $5,400 was adjusted by the Department. On June 30, 2021, we inquired as to why the $1,200 had
not been refunded to the claimant. The $1,200 was subsequently refunded to the claimant on July 14, 2021, after
the APA’s inquiry.
Good internal control and sound business practices require procedures to ensure that refunds are made in a timely
manner.
Without such procedures, there is an increased risk for errors causing a hardship for the claimant.
We recommend the Department implement procedures to ensure all refunds are
paid to claimants in a timely manner.
Department Response: The Department acknowledges the refund should have been issued in a more timely manner.
11. Fines & Penalties Incorrectly Coded
During fiscal year 2021, the Department deposited $45,762 in fines received to the Temporary School Fund rather
than to the Common School Fund. Per Neb. Rev. Stat. § 48-2907(1) (Cum. Supp. 2020), the Department “may
issue a citation to a contractor when an investigation reveals that a contractor has violated the Employee
Classification Act.”
Article VII, § 5(1), of the Nebraska Constitution provides, in relevant part, the following:
[A]ll fines, penalties, and license money arising under the general laws of the state . . . . shall belong and be paid over
to the counties respectively where the same may be levied and imposed . . . . All such fines, penalties, and license
money shall be appropriated exclusively to the use and support of the common schools in the respective subdivisions
where the same may accrue . . . .
- 54 -
NEBRASKA DEPARTMENT OF LABOR
COMMENTS AND RECOMMENDATIONS
(Continued)
11. Fines & Penalties Incorrectly Coded (Concluded)
The Common School Fund has been designated to receive funds under Article VII, § 5(1). Compliance with Article
VII, § 5(1), requires the Department’s fines to be deposited to the Common School Fund (61270), not the Temporary
School Fund.
We recommend the Department review procedures to ensure fines and penalties
are deposited to the correct school fund.
Department Response: The Department has corrected this going forward.
- 55 -
NEBRASKA AUDITOR OF PUBLIC ACCOUNTS
Charlie Janssen Charlie.Janssen@nebraska.gov
State Auditor PO Box 98917
State Capitol, Suite 2303
Lincoln, Nebraska 68509
402-471-2111, FAX 402-471-3301
auditors.nebraska.gov
NEBRASKA DEPARTMENT OF LABOR
INDEPENDENT ACCOUNTANT’S REPORT
Nebraska Department of Labor
Lincoln, Nebraska
We were engaged to examine the accompanying Schedule of Revenues, Expenditures, and Changes in Fund
Balances of the Nebraska Department of Labor (Department) for the fiscal year ended June 30, 2021. The
Department’s management is responsible for the Schedule of Revenues, Expenditures, and Changes in Fund
Balances based on the accounting system and procedures set forth in Note 1. Our responsibility is to express an
opinion on the Schedule of Revenues, Expenditures, and Changes in Fund Balances based on conducting the
examination in accordance with attestation standards established by the American Institute of Certified Public
Accountants.
The Department was unable to provide timely and accurate records of the Unemployment Compensation Fund
(Fund). Monies for the Fund are maintained outside of the Nebraska State Treasurer in separate bank accounts.
Journal entries are prepared to record the activity in the State accounting system, EnterpriseOne. Our testing noted
numerous errors and we proposed adjustments, totaling nearly $1.3 billion. The Department agreed with the
proposed adjustments; however, due to the inability of the Department to provide accurate and complete accounting
records we were unable to determine whether any further adjustments may have been necessary.
Because of the limitation on the scope of our examination discussed in the preceding paragraph, the scope of our
work was not sufficient to enable us to express, and we do not express, an opinion on whether the Schedule of
Revenues, Expenditures, and Changes in Fund Balances for the fiscal year ended June 30, 2021, is based on the
accounting system and procedures prescribed by the State of Nebraska Department of Administrative Services, as
set forth in Note 1, in all material respects.
In accordance with Government Auditing Standards, we are required to report all deficiencies that are considered
to be significant deficiencies or material weaknesses in internal control; noncompliance with provisions of laws,
regulations, contracts, or grant agreements that have a material effect on the Schedule of Revenues, Expenditures,
and Changes in Fund Balances; fraud that is material, either quantitatively or qualitatively, to the Schedule of
Revenues, Expenditures, and Changes in Fund Balances; and any other instances that warrant the attention of those
charged with governance. We are also required to obtain and report the views of management concerning the
findings, conclusions, and recommendations, as well as any planned corrective actions. We were engaged to express
an opinion on whether the Schedule of Revenues, Expenditures, and Changes in Fund Balances is presented in
accordance with the criteria described above and not for the purpose of expressing an opinion on the internal control
over the Schedule of Revenues, Expenditures, and Changes in Fund Balances or on compliance and other matters;
accordingly, we express no such opinions. Our examination disclosed certain findings that are required to be
reported under Government Auditing Standards, and those findings, along with the views of management, are
described in the Comments Section of the report.
- 56 -
The purpose of this report is described in paragraph one above. Accordingly, this report is not suitable for any other
purpose. This report is a matter of public record, and its distribution is not limited.
December 8, 2021 Charlie Janssen
Auditor of Public Accounts
Lincoln, Nebraska
- 57 -
NEBRASKA DEPARTMENT OF LABOR
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
For the Fiscal Year Ended June 30, 2021
Employment Contractor & Professional Sector
Security Special Employer Organization Partnership
State General Contingent Cash Registration Cash Fund Program Cash
Fund 10000 Fund 22320 22330 Fund 22385
REVENUES:
Appropriations $ 562,289 $ - $ - $ -
Intergovernmental - - - -
Sales & Charges 23,080 1,090 533,210 -
Miscellaneous - 543,736 22,854 10,623
Unemployment Insurance Contributions - - - -
TOTAL REVENUES 585,369 544,826 556,064 10,623
EXPENDITURES:
Personal Services 495,417 - 333,390 106,258
Operating 62,596 15,425 236,033 166,066
Travel 3,086 - 897 1
Capital Outlay 1,190 3,192,468 957 2,015
Government Aid - - - -
Unemployment Insurance Benefits
TOTAL EXPENDITURES 562,289 3,207,893 571,277 274,340
Excess (Deficiency) of Revenues Over
(Under) Expenditures 23,080 (2,663,067) (15,213) (263,717)
OTHER FINANCING SOURCES (USES):
Sales of Assets - - - -
Adjustments to Fund Balances (Note 6) - (1,582) - -
Deposit to General Fund (23,080) - - -
Deposit to Common Fund (Note 7) - - - -
Operating Transfers In - - - 300,000
Operating Transfers Out - (285) - -
TOTAL OTHER FINANCING
SOURCES (USES) (23,080) (1,867) - 300,000
Net Change in Fund Balances - (2,664,934) (15,213) 36,283
FUND BALANCES, JULY 1, 2020 310 5,772,603 1,446,950 528,780
FUND BALANCES, JUNE 30, 2021 $ 310 $ 3,107,669 $ 1,431,737 $ 565,063
FUND BALANCES CONSIST OF:
General Cash $ - $ 3,110,241 $ 1,431,737 $ 565,063
Insufficient Funds Items - 1,202 - -
Deposits with Vendors 310 - - -
Accounts Receivable Invoiced - - - -
Due From Other Funds - 1,090 - -
Due From Other Government - - - -
Due to Vendors - (3,774) - -
Accounts Payable and Accrued Liabilities - - - -
Claims Payable - - - -
Tax Refunds Payable - - - -
Deposits - - - -
Due to Fund - (1,090) - -
Due to Government - - - -
TOTAL FUND BALANCES $ 310 $ 3,107,669 $ 1,431,737 $ 565,063
(Continued)
The accompanying notes are an integral part of the schedule. - 58 -
NEBRASKA DEPARTMENT OF LABOR
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
For the Fiscal Year Ended June 30, 2021
Nebraska Employment Employment Occupational
Training and Services Security Safety & Health
Support Cash Administration Administration Administration
Fund 22390 Fund 42300 Fund 42310 Fund 42320
REVENUES:
Appropriations $ - $ - $ - $ -
Intergovernmental - 5,198,952 767,463 575,379
Sales & Charges - 336 - -
Miscellaneous 48,249 1,480 12,383 87
Unemployment Insurance Contributions - - - -
TOTAL REVENUES 48,249 5,200,768 779,846 575,466
EXPENDITURES:
Personal Services 92,962 3,809,177 658,694 494,317
Operating 14,674 1,310,465 79,763 67,428
Travel 2,046 26,129 (1,972) 11,629
Capital Outlay 1,007 2,015 40,958 2,092
Government Aid 683,741 - - -
Unemployment Insurance Benefits
TOTAL EXPENDITURES 794,430 5,147,786 777,443 575,466
Excess (Deficiency) of Revenues Over
(Under) Expenditures (746,181) 52,982 2,403 -
OTHER FINANCING SOURCES (USES):
Sales of Assets - - 3,104 -
Adjustments to Fund Balances (Note 6) - 1,582 - -
Deposit to General Fund - - - -
Deposit to Common Fund (Note 7) - - - -
Operating Transfers In 1,089,957 - - -
Operating Transfers Out (335,858) - - -
TOTAL OTHER FINANCING
SOURCES (USES) 754,099 1,582 3,104 -
Net Change in Fund Balances 7,918 54,564 5,507 -
FUND BALANCES, JULY 1, 2020 3,395,677 44,595 801,558 -
FUND BALANCES, JUNE 30, 2021 $ 3,403,595 $ 99,159 $ 807,065 $ -
FUND BALANCES CONSIST OF:
General Cash $ 3,403,595 $ 99,068 $ 800,511 $ -
Insufficient Funds Items - - - -
Deposits with Vendors - - 1,135 -
Accounts Receivable Invoiced - 91 7,259 -
Due From Other Funds - - - -
Due From Other Government - - - -
Due to Vendors - - - -
Accounts Payable and Accrued Liabilities - - - -
Claims Payable - - - -
Tax Refunds Payable - - (8) -
Deposits - - (1,832) -
Due to Fund - - - -
Due to Government - - - -
TOTAL FUND BALANCES $ 3,403,595 $ 99,159 $ 807,065 $ -
(Continued)
The accompanying notes are an integral part of the schedule. - 59 -
NEBRASKA DEPARTMENT OF LABOR
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
For the Fiscal Year Ended June 30, 2021
Disabled Veterans Outreach Workforce Workforce
Program & Local Veterans Investment Act Innovation &
Employment Representatives Greater Omaha Opportunity Act
Fund 42330 Fund 42340 Fund 42350
REVENUES:
Appropriations $ - $ - $ -
Intergovernmental 888,612 - 6,407,826
Sales & Charges - - -
Miscellaneous 128 4,162 2,282
Unemployment Insurance Contributions - - -
TOTAL REVENUES 888,740 4,162 6,410,108
EXPENDITURES:
Personal Services 701,411 - 1,300,602
Operating 176,775 - 509,137
Travel 6,667 - 9,300
Capital Outlay 3,887 - 899
Government Aid - - 4,590,170
Unemployment Insurance Benefits
TOTAL EXPENDITURES 888,740 - 6,410,108
Excess (Deficiency) of Revenues Over
(Under) Expenditures - 4,162 -
OTHER FINANCING SOURCES (USES):
Sales of Assets - - -
Adjustments to Fund Balances (Note 6) - - -
Deposit to General Fund - - -
Deposit to Common Fund (Note 7) - - -
Operating Transfers In - - -
Operating Transfers Out - - -
TOTAL OTHER FINANCING
SOURCES (USES) - - -
Net Change in Fund Balances - 4,162 -
FUND BALANCES, JULY 1, 2020 - 269,754 100,103
FUND BALANCES, JUNE 30, 2021 $ - $ 273,916 $ 100,103
FUND BALANCES CONSIST OF:
General Cash $ - $ 273,847 $ 81,011
Insufficient Funds Items - - -
Deposits with Vendors - - 2,370
Accounts Receivable Invoiced - 69 16,694
Due From Other Funds - - -
Due From Other Government - - 28
Due to Vendors - - -
Accounts Payable and Accrued Liabilities - - -
Claims Payable - - -
Tax Refunds Payable - - -
Deposits - - -
Due to Fund - - -
Due to Government - - -
TOTAL FUND BALANCES $ - $ 273,916 $ 100,103
(Continued)
The accompanying notes are an integral part of the schedule. - 60 -
NEBRASKA DEPARTMENT OF LABOR
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
For the Fiscal Year Ended June 30, 2021
Unemployment State
Insurance Temporary Unemployment
Reed Act Fund Administration School Fund Insurance Trust
42380 Fund 42390 61360 Fund 62310
REVENUES:
Appropriations $ - $ - $ - $ -
Intergovernmental 2,042,474 41,912,195 - -
Sales & Charges - 675 - -
Miscellaneous 2,594 10,225 45,762 3,156,837
Unemployment Insurance Contributions - - - -
TOTAL REVENUES 2,045,068 41,923,095 45,762 3,156,837
EXPENDITURES:
Personal Services - 14,953,369 - -
Operating 233,609 22,832,146 - -
Travel - 5,047 - -
Capital Outlay 1,811,285 3,482,184 - -
Government Aid - 398,712 - -
Unemployment Insurance Benefits
TOTAL EXPENDITURES 2,044,894 41,671,458 - -
Excess (Deficiency) of Revenues Over
(Under) Expenditures 174 251,637 45,762 3,156,837
OTHER FINANCING SOURCES (USES):
Sales of Assets - - -
Adjustments to Fund Balances (Note 6) (226,082) - -
Deposit to General Fund - - -
Deposit to Common Fund (Note 7) - (45,762) -
Operating Transfers In - 36,144 - -
Operating Transfers Out - - - (1,089,957)
TOTAL OTHER FINANCING
SOURCES (USES) - (189,938) (45,762) (1,089,957)
Net Change in Fund Balances 174 61,699 - 2,066,880
FUND BALANCES, JULY 1, 2020 160 286,849 - 69,724,192
FUND BALANCES, JUNE 30, 2021 $ 334 $ 348,548 $ - $ 71,791,072
FUND BALANCES CONSIST OF:
General Cash $ 59,552 $ 287,300 $ - $ 71,791,072
Insufficient Funds Items - - - -
Deposits with Vendors - - - -
Accounts Receivable Invoiced - 2,030 - -
Due From Other Funds - - - -
Due From Other Government - - - -
Due to Vendors - - - -
Accounts Payable and Accrued Liabilities - - - -
Claims Payable - - - -
Tax Refunds Payable - - - -
Deposits - - - -
Due to Fund (59,218) 59,218 - -
Due to Government - - - -
TOTAL FUND BALANCES $ 334 $ 348,548 $ - $ 71,791,072
(Continued)
The accompanying notes are an integral part of the schedule. - 61 -
NEBRASKA DEPARTMENT OF LABOR
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
For the Fiscal Year Ended June 30, 2021
Unemployment
Income Tax Insurance Benefits Unemployment Totals
Setoff Fund Administration Compensation (Memorandum
72310 Fund 72320 Fund Only)
REVENUES:
Appropriations $ - $ - $ - $ 562,289
Intergovernmental - - 733,724,867 791,517,768
Sales & Charges - - - 558,391
Miscellaneous - - 10,895,724 14,757,126
Unemployment Insurance Contributions - - 65,932,177 65,932,177
TOTAL REVENUES - - 810,552,768 873,327,751
EXPENDITURES:
Personal Services - - - 22,945,597
Operating - - - 25,704,117
Travel - - - 62,830
Capital Outlay - - - 8,540,957
Government Aid - - - 5,672,623
Unemployment Insurance Benefits 605,920,646 605,920,646
TOTAL EXPENDITURES - - 605,920,646 668,846,770
Excess (Deficiency) of Revenues Over
(Under) Expenditures - - 204,632,122 204,480,981
OTHER FINANCING SOURCES (USES):
Sales of Assets - - - 3,104
Adjustments to Fund Balances (Note 6) - - 296,242,317 296,016,235
Deposit to General Fund - - - (23,080)
Deposit to Common Fund (Note 7) - - - (45,762)
Operating Transfers In - - 7,853,936 9,280,037
Operating Transfers Out - - (4,554,847) (5,980,947)
TOTAL OTHER FINANCING
SOURCES (USES) - - 299,541,406 299,249,587
Net Change in Fund Balances - - 504,173,528 503,730,568
FUND BALANCES, JULY 1, 2020 466 (252) 6,382,271 88,754,016
FUND BALANCES, JUNE 30, 2021 $ 466 $ (252) $ 510,555,799 $ 592,484,584
FUND BALANCES CONSIST OF:
General Cash $ 224,429 $ 4,651 $ 454,597,111 $ 536,729,188
Insufficient Funds Items - - - 1,202
Deposits with Vendors - - - 3,815
Accounts Receivable Invoiced - - 48,615,383 48,641,526
Due From Other Funds - - 40,343,463 40,344,553
Due From Other Government - - - 28
Due to Vendors - - - (3,774)
Accounts Payable and Accrued Liabilities - - (2,616,750) (2,616,750)
Claims Payable - - (16,850,229) (16,850,229)
Tax Refunds Payable - - - (8)
Deposits (158,850) (2,657) - (163,339)
Due to Fund (65,113) (2,246) (1,294,355) (1,362,804)
Due to Government - - (12,238,824) (12,238,824)
TOTAL FUND BALANCES $ 466 $ (252) $ 510,555,799 $ 592,484,584
(Concluded)
The accompanying notes are an integral part of the schedule. - 62 -
NEBRASKA DEPARTMENT OF LABOR
NOTES TO THE SCHEDULE
For the Fiscal Year Ended June 30, 2021
1. Criteria
The accounting policies of the Nebraska Department of Labor (Department) are on the basis of accounting, as
prescribed by the State of Nebraska Department of Administrative Services (DAS).
Per Neb. Rev. Stat. § 81-1107(2) (Reissue 2014), the duties of the State of Nebraska’s Director of DAS include:
The keeping of general accounts and the adoption and promulgation of appropriate rules, regulations, and
administrative orders designed to assure a uniform and effective system of accounts and accounting, the approval of
all vouchers, and the preparation and issuance of warrants for all purposes[.]
In accordance with Neb. Rev. Stat. § 81-1111(1) (Reissue 2014), the State Accounting Administrator has prescribed
the system of accounts and accounting to be maintained by the State and its departments and agencies and has
developed necessary accounting policies and procedures. The prescribed accounting system currently utilizes
EnterpriseOne, an accounting resource software, to maintain the general ledger and all detailed accounting records.
Policies and procedures are detailed in the Nebraska State Accounting Manual published by DAS State Accounting
Division (State Accounting) and are available to the public.
The financial information used to prepare the Schedule of Revenues, Expenditures, and Changes in Fund Balances
was obtained directly from the general ledger and fund balance information maintained on EnterpriseOne.
EnterpriseOne is not an accrual accounting system; instead, accounts are maintained on a modified cash basis. As
revenue transactions occur, the agencies record the accounts receivable and related revenues in the general ledger.
As such, certain revenues are recorded when earned, regardless of the timing of related cash flows. State
Accounting does not require the Department to record all accounts receivable and related revenues in
EnterpriseOne; as such, the Department’s schedule does not include all accounts receivable and related revenues.
In a like manner, expenditures and related accounts payable are recorded in the general ledger as transactions occur.
As such, the schedule includes those expenditures and related accounts payable posted in the general ledger as of
June 30, 2021, and not yet paid as of that date. The amount recorded as expenditures on the schedule, as of
June 30, 2021, does not include amounts for goods and services received before June 30, 2021, which had not been
posted to the general ledger as of June 30, 2021.
Other liabilities (primarily in the Distributive Fund Type) are recorded in accounts entitled Accounts Payable and
Accrued Liabilities, Claims Payable, Tax Refunds Payable, Deposits, Due to Fund, and Due to Government for the
Department. The assets in these funds are being held by the State as an agent and will be used to pay those liabilities
to individuals, private organizations, other governments, and/or other funds. The recording of those liabilities
reduces the fund balance/equity.
The Department had accounts receivable included in the Schedule for unemployment insurance benefit
overpayments. The Department also had accounts receivable, for unemployment insurance, not included in the
Schedule. Liabilities for accrued payroll and compensated absences are not recorded in the general ledger.
The following fund types are established by the State and used by the Department:
10000 – General Fund – accounts for activities funded by general tax dollars and related expenditures and
transfers.
20000 – Cash Funds – account for revenues generated by specific activities from sources outside of State
government and the expenditures directly related to the generation of the revenues. Cash funds are
established by State statutes and must be used in accordance with those statutes.
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NEBRASKA DEPARTMENT OF LABOR
NOTES TO THE SCHEDULE
(Continued)
1. Criteria (Continued)
40000 – Federal Funds – account for the financial activities related to the receipt and disbursement of
funds generated from the Federal government as a result of grants and contracts. Expenditures must be
made in accordance with applicable Federal requirements.
60000 – Trust Funds – account for assets held by the State in a trustee capacity. Expenditures are made
in accordance with the terms of the trust.
70000 – Distributive Funds – account for assets held by the State as an agent for individuals, private
organizations, other governments, and/or other funds.
Unemployment Compensation Fund – an enterprise fund used to account for unemployment insurance
contributions, payments of benefits and earnings. This fund was established to be separate from all public
money or funds of the State for the exclusive purposes of the Employment Security Law.
The following major revenue account classifications are established by State Accounting and used by the
Department:
Appropriations – Appropriations are granted by the Legislature to make expenditures and to incur
obligations. The amount of appropriations reported as revenue is the amount of expenditures.
Intergovernmental – Revenue from other governments in the form of grants, entitlements, shared
revenues, payments in lieu of taxes, or reimbursements.
Sales & Charges – Income derived from sales of merchandise and commodities, compensation for services
rendered, and charges for various licenses, permits, and fees.
Miscellaneous – Revenue from sources not covered by other major categories, such as investment income.
The following major revenue account classification is used by the Unemployment Compensation Fund:
Unemployment Insurance Contributions – The share of combined tax that is paid by employers quarterly
and credited to the State’s account in the Unemployment Compensation Fund. Contributions together with
State Unemployment Insurance Tax make up the combined tax.
The following major expenditure account classifications are established by State Accounting and used by the
Department:
Personal Services – Salaries, wages, and related employee benefits provided for all persons employed by
the Department.
Operating – Expenditures directly related to a program’s primary service activities.
Travel – All travel expenses for any State officer, employee, or member of any commission, council,
committee, or board of the State.
Capital Outlay – Expenditures that result in the acquisition of or an addition to capital assets. Capital
assets are resources of a long-term character, owned or held by the government.
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NEBRASKA DEPARTMENT OF LABOR
NOTES TO THE SCHEDULE
(Continued)
1. Criteria (Concluded)
Government Aid – Payment of Federal and/or State money to governmental subdivisions, State agencies,
local health and welfare offices, individuals, etc., in furtherance of local activities and accomplishment of
State programs.
The following major expenditure account classification is used by the Unemployment Compensation Fund:
Unemployment Insurance Benefits – Payments to individuals for unemployment claims.
Other significant accounting classifications and procedures established by State Accounting and used by the
Department include the following:
Assets – Resources owned or held by a government that have monetary value. Assets include cash
accounts, Insufficient Funds items, deposits with vendors, and receivable accounts. Accounts receivable
are recorded as an increase to revenues resulting in an increase to fund balance on the schedule. Cash
accounts and deposits with vendors are also included in fund balance and are reported as recorded in the
general ledger.
Liabilities – Legal obligations arising out of transactions in the past that must be liquidated, renewed, or
refunded at some future date. Accounts payable transactions are recorded as expenditures, resulting in a
decrease to fund balance. Other liabilities recorded in the general ledger for the Department’s funds at
June 30, 2021, included amounts recorded in Accounts Payable and Accrued Liabilities, Claims Payable,
Tax Refunds Payable, Deposits, Due to Fund, and Due to Government. The activity of these accounts is
not recorded through revenue and expenditure accounts on the Schedule of Revenues, Expenditures, and
Changes in Fund Balances.
Other Financing Sources – Operating transfers, adjustments to fund balances, deposit to General fund,
deposit to Common fund, and proceeds from the sales of assets.
2. Reporting Entity
The Department is a State agency established under and governed by the laws of the State of Nebraska. As such,
the Department is exempt from State and Federal income taxes. The schedule includes all funds of the Department
included in the general ledger.
The Department is part of the primary government for the State of Nebraska.
3. Totals
The Totals “Memorandum Only” column represents an aggregation of individual account balances. The column is
presented for overview informational purposes and does not present consolidated financial information because
interfund balances and transactions have not been eliminated.
4. General Cash
General cash accounts are under the control of the State Treasurer or other administrative bodies, as determined by
law. All cash deposited with the State Treasurer is initially maintained in a pooled cash account. On a daily basis,
the State Treasurer invests cash not needed for current operations with the State’s Investment Council, which
maintains an operating investment pool for such investments. Interest earned on those investments is allocated to
funds based on their percentage of the investment pool. General cash accounts for the Unemployment
Compensation Fund are maintained outside the State Treasurer in bank accounts under the control of the
Commissioner of Labor per Neb. Rev. Stat. § 48-618 (Cum. Supp. 2020).
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NEBRASKA DEPARTMENT OF LABOR
NOTES TO THE SCHEDULE
(Continued)
5. Capital Assets
Capital assets include land, buildings, equipment, improvements to buildings, construction in progress, and
infrastructure assets (e.g., roads, bridges, sidewalks, and similar items). Under State Accounting policies,
expenditures for such capital assets are not capitalized as an asset in the funds used to acquire or construct them.
Rather, costs of obtaining the capital assets are reflected as expenditures in the general ledger and are reported as
such on the Schedule.
However, State Accounting does adjust such expenditures and reports the capital assets as assets for the State of
Nebraska in the Annual Comprehensive Financial Report (ACFR). In addition, the Department takes an annual
inventory, recording in the State Accounting System all equipment that has a cost of $1,500 or more at the date of
acquisition, and all computers.
For the ACFR, the State requires the Department to value all capital assets at cost where historical records are
available and at estimated historical cost where no historical records exist. Donated capital assets are valued at their
estimated fair market value on the date received. Generally, equipment that has a cost of $5,000 or more at the date
of acquisition and has an expected useful life of more than two years is capitalized. Substantially, all initial building
costs, land, and land improvements are capitalized. Building improvements and renovations are capitalized if a
substantial portion of the life of the asset has expired and if the useful life of the asset has been extended as a result
of the renovation or improvement. Depreciation expenses are reported in the ACFR in the funds used to acquire or
construct them for the State of Nebraska. The cost of normal maintenance and repairs that does not add to the value
of the asset or extend the asset’s life is not capitalized.
Buildings and Equipment are depreciated in the ACFR using the straight-line method. The following estimated
useful lives are used to compute depreciation:
Buildings 40 years
Equipment 3 to 10 years
Capital asset activity of the Department recorded in the State Accounting System for the fiscal year ended
June 30, 2021, was as follows:
Beginning Ending
Balance Increases Decreases Balance
Capital Assets
Land $ 374,000 $ - $ - $ 374,000
Buildings 5,869,722 - - 5,869,722
Equipment 1,092,953 291,530 207,516 1,176,967
Total $ 7,336,675 $ 291,530 $ 207,516 $ 7,420,689
Less accumulated depreciation for:
Buildings $ 3,243,178
Equipment 789,503
Total 4,032,681
Total capital assets, net of depreciation $ 3,388,008
Capital outlay on the financial schedule also includes approximately $8 million in construction in progress.
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NEBRASKA DEPARTMENT OF LABOR
NOTES TO THE SCHEDULE
(Concluded)
6. Adjustments to Fund Balance
Adjustments to Fund Balance transactions are those recorded directly to a fund’s asset account or equity account
rather than through a revenue or expenditure account. Included within the adjustments is a reversal of a fiscal year
2020 entry corrected by the Department of Administrative Services.
7. Deposits to Common Funds
Per Neb. Rev. Stat. § 48-2907 (Cum. Supp. 2020), the Department may issue an administrative penalty to a
contractor that violates the Employee Classification Act, of not more than five hundred dollars per misclassified
individual for the first offense and not more than five thousand dollars per misclassified individual for each second
or subsequent offense. These penalties were deposited to the Temporary School Fund 61360.
8. Unemployment Overpayments and Write-Offs
During fiscal year 2021, the Department established $50,748,768 in overpayments. Of that amount, $11,507,347
had been written off, cancelled, or waived as of November 8, 2021. Additionally, as of November 8, 2021, 593
cases, totaling $2,126,163 from claims filed prior to June 30, 2021, were flagged as potentially fraudulent in the
benefit system and in need of review by the Department for a final determination.
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NEBRASKA DEPARTMENT OF LABOR
SUPPLEMENTARY INFORMATION
Our examination was conducted for the purpose of forming an opinion on the Schedule of Revenues, Expenditures,
and Changes in Fund Balances. Supplementary information is presented for purposes of additional analysis. Such
information has not been subjected to the procedures applied in the examination of the Schedule of Revenues,
Expenditures, and Changes in Fund Balances, and, accordingly, we express no opinion on it.
- 68 -
NEBRASKA DEPARTMENT OF LABOR Exhibit A
EXPENDITURES BY FUND TYPE (EXCLUDING BENEFIT CLAIMS)
Fiscal Years 2017 through 2021
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
$-
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Trust $- $406 $2,358 $2,917 $-
Federal $35,023,175 $37,541,154 $34,891,292 $37,455,237 $57,515,895
Cash $3,352,643 $3,047,627 $2,829,597 $2,541,858 $4,847,940
General $623,948 $628,902 $517,043 $525,070 $562,289
Source: State Accounting System
- 69 -
NEBRASKA DEPARTMENT OF LABOR Exhibit B
EXPENDITURES BY MAJOR ACCOUNT (EXCLUDING BENEFIT CLAIMS)
Fiscal Years 2017 through 2021
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$-
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Personal $21,884,820 $22,138,451 $21,853,268 $21,386,114 $22,945,597
Operating $9,198,638 $9,189,637 $8,592,159 $9,916,348 $25,704,117
Travel $432,217 $491,207 $485,965 $263,366 $62,830
Capital Outlay $85,921 $201,603 $198,213 $2,494,283 $8,540,957
Govt Aid $7,398,170 $9,197,191 $7,110,685 $6,464,971 $5,672,623
Source: State Accounting System
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NEBRASKA DEPARTMENT OF LABOR Exhibit C
INITIAL BENEFIT CLAIMS FILED
Fiscal Years 2017 through 2021
250,000
200,000
150,000
100,000
50,000
-
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Initial Claims Filed 48,052 43,322 41,940 218,457 157,426
Source: Legislative Guide and Department website
- 71 -
NEBRASKA DEPARTMENT OF LABOR Exhibit D
BENEFIT CLAIMS PAID
Fiscal Years 2017 through 2021
$900,000,000
$800,000,000
$700,000,000
$600,000,000
$500,000,000
$400,000,000
$300,000,000
$200,000,000
$100,000,000
$-
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Benefits Paid $73,001,041 $73,001,962 $64,118,980 $802,153,612 $640,596,687
Source: Schedule of Expenditures of Federal Awards
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