Summary

The Agency for Workforce Innovation (Agency) is responsible for administering the State’s Unemployment Insurance (UI) Program.  The Agency contracted, through an interagency agreement, with the Department of Revenue (DOR) to perform the duties of the tax collection service provider.  These duties include determining and assigning employer tax rates annually and providing other unemployment tax collection services as needed and agreed upon by both parties. 

The Unemployment Compensation (UC) System is the system used by the Agency to determine eligibility and calculate benefit amounts for individuals seeking unemployment compensation.  Additionally, the UC System was used by DOR until March 10, 2008, to calculate employer UI taxes, after which this process was converted into DOR’s System for Unified Taxation (SUNTAX).  The Department of Management Services (DMS) provides support services for the Agency’s computer operations and mainframe applications, including the UC System.

Our audit focused on determining the status of corrective actions regarding prior audit findings disclosed in audit report No. 2008-037, relating to Agency, DOR, and DMS information technology (IT) controls over the UC System.  Our audit included the period July 1, 2007, through June 30, 2008, and selected actions through October 16, 2008.

The results of our follow-up audit are summarized below:

Finding No. 1:         The Agency’s contract with ISOCORP, Inc. (ISOCORP), a contractor providing applications development services, did not require that appropriate background screening be conducted of ISOCORP staff, and adequate background checks were not performed for all contracted staff.

Finding No. 2:        Access controls needed improvement in the areas of monitoring of access privileges and access violations reports.

Finding No. 3:        Certain security controls protecting the UC System, in addition to the matters noted in Finding No. 2, needed improvement.

Finding No. 4:        The Agency’s Department of Highway Safety and Motor Vehicles (HSMV) cross-match application processing needed improvement.

Finding No. 5:        The Agency’s Social Security Administration (SSA) cross-match application processing needed improvement. 

Finding No. 6:        The Agency reorganized the Office of UC Services to provide the Benefit Accuracy Measurement (BAM) unit appropriate organizational independence from the UC Claims and Benefits Operations Section.

Finding No. 7:        The Agency developed procedures to support the decision-making process for the methodology used in the annual calculation of employers’ experience-based tax rates, including systems documentation of the calculation process. 

Finding No. 8:        Program change controls over the UC System had been implemented.

The Directors' responses are included at the end of this report as Exhibit A.