Overview
The Executive Office of Labor and Workforce Development’s (EOLWD) Department of Economic Research did not ensure that all UITF reports due to the Legislature during the audit period were submitted on time, or at all in some cases. Five reports were not transmitted at all, and four reports were submitted after the due date. For two of the reports, we were not provided support to determine when they were submitted.
Untimely or missing UITF reports can delay legislative oversight, accountability and decisions related to the UITF. In this instance, the failure to issue timely UITF reports coincided with an estimated $2.5 billion in being overdrawn by the Commonwealth from the UITF. These overpayments may need to be repaid by businesses, taxpayers, and state government. Failure to submit these reports in a timely manner also prevented policymakers, including the Legislature, from participating in the process of identifying and implementing solutions to this issue, potentially resulting in a larger overspending than otherwise would have occurred.
Authoritative Guidance
Section 14F of Chapter 151A of the General Laws states the following:
On or before the fifteenth day of October of each year, the commissioner is hereby authorized and directed to file with the house and senate committees on ways and means and the clerks of the house of representatives and the senate and the joint committee on commerce and labor a report which contains a proposal of an adequate and proper average balance to be maintained and credited to the commonwealth’s account in the Unemployment Trust Fund during the ensuing calendar year and a statement of the actual balance then projected to be credited to the commonwealth’s account during such year. . . .
On or before the fifteenth day of every month of the calendar year next following the submission of the report required by the first sentence hereof, the commissioner is hereby further authorized and directed to file with the chairman of said committees an updated report detailing the most recently available statement of the actual balance then credited to the commonwealth’s account in the Unemployment Insurance Trust Fund together with a revised statement of the actual balance then projected to be credited to the commonwealth’s account during such year.
Reasons for Issue
EOLWD officials told us there were inconsistencies in the accounting system and they found it necessary to temporarily suspend UITF reporting to effectively address these inconsistencies and undertake reconciliation efforts during the audit period.
Recommendations
- EOLWD should determine the causes of and address the inconsistencies in its accounting system.
- EOLWD should submit UITF reports to the Legislature by required due dates.
Auditee’s Response
In 2021, the Executive Office of Labor and Workforce Development (EOLWD) identified inconsistencies with the Unemployment Insurance Trust Fund (UITF) which prompted the agency to conduct a full reconciliation of the UITF. To ensure accurate reporting for these months, the Department of Economic Research (DER) and EOLWD determined that it would be most prudent to temporarily suspend/pause reporting while reconciliation efforts remained ongoing. Subsequently, it was determined that it would not be feasible to go back and supply the missing reports because it is not possible to project against future risk; as a result, reports were not filed between July 2021 to November 2021. Submission of reports was reinstated by the Department of Economic Research in December 2021.
Auditor’s Reply
EOLWD identified inconsistencies in the UITF that were significant enough to require it to suspend reporting to the Legislature for a five-month period. EOLWD states in its response that a reconciliation was performed, and it began filing reports upon its completion, which presumably identified issues in why they could not provide accurate reports on the activity of the fund. We reiterate our recommendation that EOLWD should determine the causes of these inconsistencies in their accounting system and address them.
Based on its response, EOLWD explained why it did not file unsubmitted reports. However, we identified four reports that were submitted late. We reiterate our recommendation that EOLWD should ensure that its UITF reports are submitted to the Legislature by required due dates.
| Date published: | December 12, 2024 |
|---|