Report Mi Auditor General Uia Establishing Pua Eligibility Criteria 186 0319 21a 2022 02

Summary

A corrective action plan response dated February 2, 2022 from the Michigan Department of Labor and Economic Opportunity to the Office of Internal Audit Services, State Budget Office, answering the Michigan Office of the Auditor General's audit of establishing Pandemic Unemployment Assistance eligibility criteria at the Unemployment Insurance Agency. The cover letter is signed by the department's Chief Internal Control Officer. The audit period is January 1, 2020 through September 30, 2021. The response states the agency has complied with Finding 1, on internal controls, describing consultants, a workload dashboard and documentation of executive decisions. For Finding 2, on eligibility criteria not authorized in the CARES Act or USDOL guidance, it reports resolving eight of 11 findings from a January 2021 USDOL report, with compliance estimated by August 31, 2022.

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STATE OF MICHIGAN
GRETCHEN WHITMER DEPARTMENT OF LABOR AND ECONOMIC OPPORTUNITY SUSAN CORBIN
GOVERNOR LANSING DIRECTOR

February 2, 2022

Mr. Rick Lowe, Chief Internal Auditor
Office of Internal Audit Services
State Budget Office
George W. Romney Building
111 S. Capitol Avenue, 6th Floor
Lansing, Michigan 48913

Dear Mr. Lowe:

In accordance with State of Michigan, Financial Management Guide, Part VII, please see the
attached summary of findings and associated corrective action plans to address recommendations
contained in the Michigan Office of the Auditor General’s (OAG) Audit of Establishing
Unemployment Assistance Eligibility Criteria, Unemployment Insurance Agency, Michigan
Department of Labor and Economic Opportunity

Should you have any questions regarding the attached information, please contact me directly at
(517) 231-1720 or at WilliamsA6@michigan.gov.

Respectfully,

Allen Williams
Allen Williams
LEO Chief Internal Control Officer

c: Julia Dale

LEO is an equal opportunity employer/program.
Auxiliary aids, services and other reasonable accommodations are available upon request to individuals with disabilities.
105 WEST ALLEGAN STREET, LANSING, MICHIGAN 48933 • www.michigan.gov/leo • 517-241-6712
Establishing Pandemic Unemployment Assistance Eligibility Criteria
Unemployment Insurance Agency
Michigan Department of Labor & Economic Opportunity
Audit Period: January 1, 2020 through September 30, 2021

I. Audit recommendations the agency has complied with:
Finding 1

II. Audit recommendations the agency agrees with and will comply:
Finding 2 – Estimated date of compliance is August 31, 2022.

III. Audit recommendations the agency disagrees with:
None.

FINDING 1

UIA did not have effective internal controls to successfully administer the PUA program in
accordance with the CARES Act and USDOL guidance.

A variety of actions and inactions by UIA’s senior leadership during the COVID-19 pandemic
contributed to a poor control environment, often referred to as tone at the top. Those actions
directly contributed to the creation of invalid PUA application and certification processes, and
on several occasions, UIA’s failure to timely and appropriately address issues pointed out by
USDOL and UIA staff.

Recommendation

We recommend that UIA improve its internal control and maintain an effective tone at the top to
support the proper administration of UI programs in accordance with federal laws and guidance.

Final Response / Corrective Action Plan Update

LEO and UIA have complied. During the past year, UIA has been pro-active in acquiring
external expertise to support the management team, efficiently addressing the work backlogs,
and addressing the fraud issues associated with the PUA program. With the assistance of
consultants, UIA established a workload dashboard to track progress of processing
claims. Consultants also assisted with extracting data to identify priority work. Through these
mechanisms, UIA gained efficiencies in targeting and processing priority work.

LEO and UIA have made improvements documenting and maintaining records of key executive
decisions to ensure better transparency and accountability. Key executive decisions related to UI
program and system changes are being memorialized through an established clearance process
which includes an approval document and/or documented service request. UIA is enforcing
documentation for every single service request before the service request can be opened. This
includes but is not limited to suggestions that arise from meetings. UIA is also requiring the
business analyst to reach out to the requestor and division during testing to ensure the change
accomplishes the intended goal and is correct, prior to moving to production. And lastly, UIA
has been adding staff resources to its internal control functions.

LEO is an equal opportunity employer/program.
Auxiliary aids, services and other reasonable accommodations are available upon request to individuals with disabilities.
105 WEST ALLEGAN STREET, LANSING, MICHIGAN 48933 • www.michigan.gov/leo • 517-241-6712
To ensure that OAG are expeditiously granted access to confidential and sensitive UIA data, we
will maintain data sharing agreement (DSA) templates which can be customized for the specific
audit.

Anticipated Completion Date: Completed

FINDING 2

UIA established eligibility criteria in its PUA application and weekly benefit certifications not
authorized in the CARES Act or other USDOL guidance. Consequently, UIA likely paid PUA
and associated PUC and LWA program benefits to ineligible PUA claimants. Also, UIA
continued to make improper eligibility determination and related overpayments 9 months after
USDOL first notified Michigan of deficiencies with its PUA applications and weekly
certifications.

Recommendation

We recommend going forward that UIA ensure eligibility criteria for UI benefits applications
and certifications align with federal eligibility criteria.

Final Response / Corrective Action Plan Update

UIA has implemented corrective action and resolved eight of 11 findings identified in the
January 2021 USDOL Enhanced Desk Monitoring Report.

UIA has implemented fraud notice acknowledgements, ran queries to identify claimants with
various outstanding issues, conducted wage crossmatches, opened fact-finding where necessary
and appropriate, added automated notes in the Michigan Integrated Data Automated System
(MiDAS) as required, and corrected claims cases based on COVID eligible conditions.

Anticipated Completion Date: August 31, 2022

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File: REPORT_MI-Auditor-General_UIA-establishing-PUA-eligibility-criteria_186-0319-21A_2022-02.pdf
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Our copy: REPORT_MI-Auditor-General_UIA-establishing-PUA-eligibility-criteria_186-0319-21A_2022-02.pdf
Original: audgen.michigan.gov

Report Mi Auditor General Uia Establishing Pua Eligibility Criteria 186 0319 21a 2022 02

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