Two new audits related to Employment Security Department released, one deeply flawed
OLYMPIA – The Washington State Auditor’s Office (SAO) released two new audit reports on Tuesday related to the Employment Security Department (ESD).
The first is an overall Performance Audit, examining the scope of, and reasons behind, the fraud and customer service delays in the state’s unemployment benefits program during the COVID-19 pandemic. This thorough audit confirms there is no evidence of further imposter fraud loss known, as it states, “ESD did not make significant payments to fraudsters after [the May 2020 attack] despite high demand for unemployment assistance throughout 2020.”
The second is an Accountability Audit, examining the illegitimate unemployment claims and payments made from Jan. 1, 2020 through Dec. 31, 2020. ESD is committed to preventing and stopping all types of fraud. While there are aspects of the Accountability Audit that ESD agrees with, there are also deep flaws, numerous pieces of incorrect information and overall, a characterization of the total amount of possible imposter fraud paid in 2020 that is false.
The Performance Audit resulted in no recommendations to ESD, stating, “ESD has already taken steps to restructure and expand its fraud program and to hire additional staff to address concerns about customer service. We make no additional formal recommendations, but strongly encourage ESD to continue its efforts to address these issues.” ESD greatly appreciates the work done in this audit and agrees that, while there have been significant challenges and lessons learned over the course of the crisis, the steps the agency has and continues to make are effective in combatting fraud and improving customer service.
The Department’s swift action to halt the imposter fraud attack last year was highly effective in stopping further fraud. Even using the SAO’s figures for illegitimate payments, less than 5 percent of total benefits were paid to imposters during 2020. That makes ESD currently well below the 10 percent baseline for improper payments made during the pandemic, assumed by the U.S. Department of Labor’s Office of Inspector General.
Contrary to the figures in the SAO’s own Performance Audit, the Accountability Audit claims higher possible imposter fraud figures. The inflated numbers come from the inclusion of the category “Questionable” claims, which contains tens of thousands of claims that have already been found to not be fraudulent, that have been investigated and determined, or have yet to be investigated and on which payments have been stopped. Recently, the data from this “Questionable” category was revaluated, and of more than $200 million in claims, no fraudulent payments were confirmed. This clearly illustrates the “Questionable” category should not be included in the possible imposter fraud paid.
The Accountability Audit includes a number of other inaccuracies and inconsistencies beyond the total potential imposter fraud. For example, an incorrect statement that there was a backlog of 56,000 uninvestigated claims, when this number was closer to 19,000. It also asserted that 1,500 incarcerated individuals have fraudulently filed claims when in fact only 67 new cases of fraud were flagged upon review – the rest were legitimate claims, already caught by ESD or otherwise found to be not fraudulent.
Further explanation can be found in this document on the ESD website.