Watchdog: Audit of Illinois’ unemployment agency shows security failure

[July 07, 2023]  By Greg Bishop | The Center Square

(The Center Square) – A newly released audit of Illinois’ unemployment agency shows some of the government’s response to the COVID-19 pandemic was a major national security failure, according to a critic.

In March 2020, when Gov. J.B. Pritzker ordered all nonessential businesses to close in an effort to slow the spread of COVID-19, unemployment spiked. The federally-funded Illinois Department of Employment Security experienced a slew of problems including fraud. Without knowing the full scope of the fraud, the state had to take on debt to pay claims, debt that was later paid off with federal federal COVID-relief tax funds.

Previous audits showed the state had at least $2 billion in fraudulent claims, but the full scope was not known because the agency didn’t keep proper records. A new audit released Thursday doubled down on those findings.

“We have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the statements of revenues, expenses, and changes in net position and cash flows for the year ended June 30, 2022,” the audit said.

Wirepoints founder Mark Glennon said the lack of a workable benefits program in a time of an emergency should be seen as a national security failure.

“They poured money into unemployment programs with no accounting or regulations in place and that’s why up to half of it … was lost to fraud,” Glennon said. “It’s really unbelievable that they weren’t prepared for this and to my knowledge they haven’t done anything to rectify it either.”

One finding the Illinois Auditor General released Thursday notes the agency’s lack of information to be audited was because it contracted out with a vendor to conduct pandemic benefits programs. Records show for fiscal years 2021 and 2022, IDES entered into multiple contracts with Deloitte totaling $14.3 million.

Glennon said not all the findings can be deferred to the contractor.

“Failure to perform timely cash reconciliations,” Glennon said. “Well, gee, every tiny company does that once a month. Failure to implement information technology controls over the assistance program. So whatever they did with Deloitte was not adequate in the views of the auditor.”

Nationwide, reports indicate the total amount of fraud in unemployment programs was about $60 billion.