Unemployment Compensation:

Payments to Ineligible Former Employees

GGD-87-17: Published: Dec 19, 1986. Publicly Released: Dec 19, 1986.

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In response to a congressional request, GAO reviewed six agencies' unemployment compensation procedures and payments to their former employees.

GAO found that: (1) the six agencies were incurring greater than necessary unemployment compensation costs because they did not have effective internal control systems to ensure that states were furnished timely, complete and accurate information; (2) former employees who separated under circumstances which made them ineligible for unemployment compensation received payments; (3) agencies missed opportunities to reduce their unemployment costs and prevent payments to ineligible former employees when they did not appeal inappropriate payments; (4) agencies did not report to Congress in compliance with the Federal Managers' Financial Integrity Act (FMFIA) on internal control weaknesses that allowed improper payments; and (5) several agencies employed contractors to manage their unemployment compensation programs.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: OSD sent, on June 22, 1988, a memo to all DOD components that outlines the new department policy for handling unemployment claims. This policy assigns responsibility to each component for centralizing these activities, and making sure that they are handled properly. The memo also establishes new guildelines for appealing these cases.

    Recommendation: The Secretaries of the Army, Health and Human Services, the Interior, the Navy, and the Treasury, and the Administrator of Veterans Affairs should establish effective internal control systems to ensure that states are provided accurate, complete, and timely wage and separation information for former employees who apply for benefits, and appeal decisions when it appears that the state misinterpreted the facts or the determination is not in accordance with state law. The agencies' evaluations and reports required by FMFIA should specifically address the status of internal controls for avoiding improper payments in the unemployment compensation program and the agencies' plans for and accomplishments toward developing effective internal control systems.

    Agency Affected: Department of Defense: Department of the Navy

  2. Status: Closed - Implemented

    Comments: The Office of the Secretary of Defense (OSD) sent a memo to all DOD components that outlines the new department policy for handling unemployment claims. This policy assigns responsibility to each component for centralizing these activities, making sure that they are handled properly, and requires proper validation of Labor billings. The memo establishes guidelines for appealing these cases.

    Recommendation: The Secretaries of the Army, Health and Human Services, the Interior, the Navy, and the Treasury, and the Administrator of Veterans Affairs should establish effective internal control systems to ensure that states are provided accurate, complete, and timely wage and separation information for former employees who apply for benefits, and appeal decisions when it appears that the state misinterpreted the facts or the determination is not in accordance with state law. The agencies' evaluations and reports required by FMFIA should specifically address the status of internal controls for avoiding improper payments in the unemployment compensation program and the agencies' plans for and accomplishments toward developing effective internal control systems.

    Agency Affected: Department of Defense: Department of the Army

  3. Status: Closed - Implemented

    Comments: The Department of Health and Human Services (HHS) revised its Personnel Manual Instructions (HHS 86.19) to provide guidance and accountability for the program. HHS also initiated an appeal process, and will include unemployment insurance weaknesses within the FMFIA report.

    Recommendation: The Secretaries of the Army, Health and Human Services, the Interior, the Navy, and the Treasury, and the Administrator of Veterans Affairs should establish effective internal control systems to ensure that states are provided accurate, complete, and timely wage and separation information for former employees who apply for benefits, and appeal decisions when it appears that the state misinterpreted the facts or the determination is not in accordance with state law. The agencies' evaluations and reports required by FMFIA should specifically address the status of internal controls for avoiding improper payments in the unemployment compensation program and the agencies' plans for and accomplishments toward developing effective internal control systems.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed - Implemented

    Comments: The Department of the Interior stated that its contractor-assisted program solved the internal control weaknesses identified in the report and it saw no need for further action. The contractor has been awarded about $1.9 million since January 1, 1986.

    Recommendation: The Secretaries of the Army, Health and Human Services, the Interior, the Navy, and the Treasury, and the Administrator of Veterans Affairs should establish effective internal control systems to ensure that states are provided accurate, complete, and timely wage and separation information for former employees who apply for benefits, and appeal decisions when it appears that the state misinterpreted the facts or the determination is not in accordance with state law. The agencies' evaluations and reports required by FMFIA should specifically address the status of internal controls for avoiding improper payments in the unemployment compensation program and the agencies' plans for and accomplishments toward developing effective internal control systems.

    Agency Affected: Department of the Interior

  5. Status: Closed - Implemented

    Comments: Treasury has delegated, to its Bureau, the decision to either use the National Finance Center's unemployment program or contract the function to an expert contractor.

    Recommendation: The Secretaries of the Army, Health and Human Services, the Interior, the Navy, and the Treasury, and the Administrator of Veterans Affairs should establish effective internal control systems to ensure that states are provided accurate, complete, and timely wage and separation information for former employees who apply for benefits, and appeal decisions when it appears that the state misinterpreted the facts or the determination is not in accordance with state law. The agencies' evaluations and reports required by FMFIA should specifically address the status of internal controls for avoiding improper payments in the unemployment compensation program and the agencies' plans for and accomplishments toward developing effective internal control systems.

    Agency Affected: Department of the Treasury

  6. Status: Closed - Implemented

    Comments: The Veterans Administration (VA) revised its UC7E procedures by updating VA Manual MP-5, part 1, chapter 850, included UC7E in its personnel management evaluation program, and reinforced field facility responsibilities through periodic information bulletins.

    Recommendation: The Secretaries of the Army, Health and Human Services, the Interior, the Navy, and the Treasury, and the Administrator of Veterans Affairs should establish effective internal control systems to ensure that states are provided accurate, complete, and timely wage and separation information for former employees who apply for benefits, and appeal decisions when it appears that the state misinterpreted the facts or the determination is not in accordance with state law. The agencies' evaluations and reports required by FMFIA should specifically address the status of internal controls for avoiding improper payments in the unemployment compensation program and the agencies' plans for and accomplishments toward developing effective internal control systems.

    Agency Affected: Veterans Administration

  7. Status: Closed - Implemented

    Comments: On October 6, 1986, the Assistant Secretary of Labor sent a memorandum to key policy officials in 75 major federal agencies.

    Recommendation: The Secretary of Labor should, in keeping with his overall responsibility for agencies' unemployment compensation programs, again send a memorandum to all federal agencies providing information on how to reduce improper unemployment benefits.

    Agency Affected: Department of Labor

  8. Status: Closed - Implemented

    Comments: The Department of Labor did not agree with this recommendation and plans no action.

    Recommendation: The Secretary of Labor should evaluate the use of the contractors' services used by the Department of the Interior and other agencies to determine if it can serve as a solution for avoiding improper benefit payments.

    Agency Affected: Department of Labor

 

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