Auditor General: Inadequate reporting leads to no opinion on unemployment office financials

[June 17, 2022]  By Greg Bishop | The Center Square

(The Center Square) – Not even the Illinois Auditor General can estimate how much fraud the state’s unemployment system has seen.

Unemployment spiked at the beginning of the pandemic because of government actions limiting economic activity. How much of that was fraud has not been revealed by the Illinois Department of Employment Security.

Thursday, the Illinois Auditor General released an audit of the department for the fiscal year ending June 30, 2021.

“The Department has not maintained certain accounting records and supporting documents for the Trust Fund relating to transactions with its beneficiaries, nor is the Trust Funds’ internal control adequate to provide safeguards over the Trust Fund assets and to assure the proper recording of transactions,” a disclaimer for the report said. “Accordingly, we were unable to extend our auditing procedures sufficiently to determine the extent to which the financial statements may have been affected by these conditions.”

An audit for the previous fiscal year, which included the first two months of the COVID-19 pandemic, showed IDES paid nearly $97 million for Pandemic Unemployment Assistance over the minimum and did not validate wages of all claimants, paid more than $41.6 million in benefits to more than 4,500 claimants whose identities were not validated, paid more than $2.6 million to those whose birthdays were the same day or later than the date of the claims, and paid more than $343,000 to 35 deceased claimants.

“Failure to accurately document PUA eligibility resulted in potentially ineligible claimants receiving benefits totaling $154,906,354,” last year’s audit summary said. “Noncompliance with federal laws and regulations could lead to sanctions and/or loss of future federal funding. Due to the absence of adequate information to support the eligibility of paid claimants as described above, the amounts recorded could not be audited.”
 

This year, the department didn’t provide adequate information to the auditor.

“Because of the significance of the matter described, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion,” the report said. “Accordingly, we do not express an opinion on these financial statements.”

The audit does show that the state paid out more than $8.1 billion in claims to more than 420,000 claimants in the year ending June 30, 2021.

“We recommended the Department implement controls to ensure the claimants’ data is complete and accurate,” the report said. “The Department accepted our recommendation.”

Senate Minority Leader Dan McConchie, R-Hawthorn Woods, said the report shows Gov. J.B. Pritzker mismanaged IDES.
 

“While thousands were waiting for a dysfunctional and chaotic system to issue them the benefits they were owed, fraud was running rampant throughout the system, leaving hundreds of thousands of residents victimized by fraudulent claims,” McConchie said. “The Pandemic Unemployment Assistance program was so poorly run that the Auditor General’s office couldn’t even conduct a proper audit to determine the amount of fraud that occurred. The saddest thing is, Illinoisans are on the hook for this disaster.”

“Had Pritzker prioritized the issue and not been so focused on arbitrarily shutting down businesses and then criminalizing them for noncompliance of his mandates, these problems could have been mitigated,” he said.

Nationwide, the U.S. Government Accountability Office reported nearly 1 in 5 claims might have been paid improperly.

Greg Bishop reports on Illinois government and other issues for The Center Square. Bishop has years of award-winning broadcast experience and hosts the WMAY Morning Newsfeed out of Springfield.