State audit reveals $2 million in potential inaccuracies for Department of Labor

(From State Auditor Nicole Galloway)

Missouri State Auditor Nicole Galloway has issued a report revealing millions in potential inaccuracies by the Department of Labor related to unemployment insurance program financial activities. The report also found a continued failure by the state to properly account for federal dollars used for several state programs.

The report details issues resulting from changes to the Unemployment Insurance system at the Department of Labor, which is used to pay unemployment benefits. Incorrect calculations and inconsistencies resulted in $2 million in potential inaccuracies. The inadequate system affected several functions within the unemployment program, including at least $134,000 in overpayments to claimants who had exceeded their maximum unemployment benefit. These errors went undetected for approximately a year.

"Businesses throughout Missouri pay millions into the unemployment system, which is why it is so disconcerting to find that there are funds being managed without proper oversight or accountability," Auditor Galloway said. "Even simple checks and balances have not been implemented, leaving the Department of Labor unable to accurately provide basic financial information."

The new system, which cost more than $40 million, was not fully developed or tested before implementation. As a result, the Department delayed generating financial reports and ultimately provided inaccurate information on required state and federal filings.

The annual audit also noted an increasing number of concerns throughout state agencies and identified hundreds of millions of dollars in questionable costs in social safety net programs, like Medicaid. The 2016 report had six findings, while this year's report found 17 areas of concern.

The review identified a lack of accountability in two additional agencies that administer federal funds: The Department of Mental Health and the Department of Social Services. Multiple findings included in the report related to these two departments were repeat issues identified in prior year audits.

"The state spends billions in federal dollars each year that must be managed properly and spent appropriately on programs and services Missourians depend on," Auditor Galloway. "Failing to properly account for that money can put those dollars, and the programs they support, at risk. "

The Statewide Single Audit annually identifies weaknesses in the state's financial reporting and reviews the management and spending of $12 billion in federal funds.

A complete copy of the audit report is available online.