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IDES describes huge obstacles to explain its late report

Wednesday, Nov 24, 2021

* Center Square

The Illinois Department of Employment Security is nearly a month late in filing a report about the state’s unemployment trust fund, according to the Illinois Senate Republican Caucus.

A spokesperson for IDES didn’t immediately respond to a request for comment.

The Republicans said the legislative leaders received a letter from the Illinois Comptroller that IDES failed to submit necessary financial information on the trust fund’s financial activities and is nearly a month delinquent.

“If regular Illinois businesses and families miss financial reporting they are fined and can even face criminal penalties,” said Illinois Senate Republican Leader Dan McConchie, R-Hawthorn Woods. “The governor is not above the law. The UI Trust Fund is deeply in debt and without this report, we have absolutely no idea how big the problem really is.”

Neither the Illinois Comptroller, the House Speaker or Senate President’s office immediately returned a message seeking comment.

* The comptroller and all four legislative leaders were sent this response by the IDES director two weeks ago. It’s quite something, but it basically boils down to IDES has been overwhelmed for more than a year…

Thank you for the letter dated November 4, 2021 regarding financial information necessary for the Annual Comprehensive Financial Report (ACFR). The Illinois Department of Employment Security (IDES) takes its role in providing information essential to completing the ACFR seriously, and we appreciate the opportunity to provide an action plan. The circumstances that caused the delay in the submission of our draft financial statements, footnotes, and Form SCO- 599, Contingencies, Commitments and Related Party Transactions, are described below as well as the estimated timeline to complete.

As a result of the COVID-19 pandemic, the time to complete the prior year audit and the complexity and volume of the financial transactions were significant, and on average 2-3 times as many transactions than in the normal course of the Department’s operations. This resulted in a delay in the posting of the initial SFY 2021 Trust Fund transactions to the general ledger. In addition, the Department’s Trust Fund software application prohibits the user from having two years open concurrently, and although we were current in preparing and recording journal entries on our worksheets, we could not upload any journal entries or prepare reconciliations until SFY 2020 was closed.

It is also important to note that our financial operations and Department of Innovation and Technology (DOIT) staffing resources are stretched across five concurrent audits, and we are preparing to begin a sixth:

    ▪ RSM Financial Audit
    ▪ RSM Compliance Audit
    ▪ KPMG Single Audit
    ▪ Emergency Unemployment Relief for Government Entities and Non-Profit Organization (EURGENO) Audit
    ▪ Department of Labor: Bureau of Labor Statistic Audit
    ▪ OAG Performance Review Audit (entrance conference was 10/27/2021)

IBIS Accrual – DOIT resources have been strained due to high volume processing in our benefit system (IBIS), implementation of seven complex new programs, subsequent system adjustments as a result of new and updated federal laws and guidance, and requests from multiple audits. While the IBIS accrual data has been verified, the auditors have requested that the accrual be documented with a daily match to our benefit payment reports.

PUA Accrual – Given the complexity of the Pandemic Unemployment Assistance (PUA) program accrual and the fact the Department will need to restate the beginning accrual amounts as a result of the last audit, numbers will need to be pulled internally. The DOIT employee who is qualified and able to do this is currently working on a large data file request for the OAG. Once completed, he will start pulling the data for the PUA accrual.

Overpayments – Due to the complexity and volume of transactions, the process for pulling the data has become far more challenging than in the past. In addition, the new processes for waiving recovery of overpayments in both federal and non-federal programs will require that overpayments be placed in different risk buckets to determine the allowance associated with these receivables.

Cash Reconciliations – Due to the extended length of the last audit and staff shortages, the Department contracted an outside public accounting firm, Crowe LLP, to assist in preparing cash reconciliations.

IDES’ Estimated Timetable to Completion:

IBIS Accrual – The Department is building the IBIS accrual by day per the auditor’s request. We anticipate this will be completed and verified no later than November 12, 2021.

PUA Accrual – DOIT is currently pulling large amounts of data for the OAG for the RSM Financial Audit. Once completed, pulling the data for the PUA accrual will begin. We anticipate this will be completed and verified no later than November 17, 2021.

IBIS Overpayments – The Department is reviewing this large data file for accuracy. We anticipate this will be completed and verified no later than November 12, 2021.

PUA Overpayments – The Department is reviewing this large data file for accuracy. We anticipate this will be completed and verified no later than November 12, 2021.

Cash Reconciliations – The Department is working with staff from Crowe LLP to complete the cash reconciliations. We anticipate these reconciliations will be completed and verified no later than November 17, 2021.

Once these tasks are completed, the Department will prepare and post journal entries to submit to the IOC for GAAP. The Department will then prepare Form SCO-599, the financial statements, and footnotes. We anticipate this to be completed by end of day November 30, 2021.

- Posted by Rich Miller        

10 Comments »
  1. - Donnie Elgin - Wednesday, Nov 24, 21 @ 10:42 am:

    They certainly were busy, especially dealing with The huge amount of fraudulent claims.

    “Indeed, an IDES spokeswoman says the $14.8 million is “reflective of fraud” committed by people who were allegedly working at the same time they were collecting benefits.

    “This does not include any number associated with identity theft-related unemployment fraud,” she says in an email, adding “IDES is one of many states still quantifying a dollar amount attributable to” that crime.

    https://wgntv.com/news/wgn-investigates/illinois-unemployment-fraud-losses-nearly-15-million-and-counting/


  2. - Shark Sandwich - Wednesday, Nov 24, 21 @ 11:09 am:

    That’s a lot of audits. It’s accrual world, indeed.


  3. - vern - Wednesday, Nov 24, 21 @ 11:11 am:

    I understand McConchie’s point to a certain extent, but if Republicans want government agencies to be able to handle black swan events without missing deadlines they’ll need to support more slack in the system.

    If everyone at IDES had 7.5 hours of work to do a day in January 2020, how can we expect them to have had any surge capacity when the pandemic started? We demand government agencies respond perfectly to crises and also react with horror at stories of government workers taking long lunch breaks or getting paid overtime when they work overtime. Something’s gotta give.


  4. - Annonin' - Wednesday, Nov 24, 21 @ 11:13 am:

    Wondering if it is different in other states? Maybe we need a Vockian national round-up


  5. - H-W - Wednesday, Nov 24, 21 @ 11:19 am:

    I am not sure why the Republican Leader wants to politicize this. The Pandemic year clearly has been extraordinary in so many ways with regard to unemployment claims and federal assistance. Suggesting “the Governor is not above the law” in terms of this agency’s report is a penny wise and a pound foolish. There are other battles to pick. Thus is not one of them.


  6. - Oswego Willy - Wednesday, Nov 24, 21 @ 11:31 am:

    If they can’t get their TPS reports in on time… they could be asked to come in on Saturday… so if they can get caught up on them, that would be great


  7. - Responsa - Wednesday, Nov 24, 21 @ 11:52 am:

    They don’t know what they’re doing at IDES. This has been obvious for months.


  8. - anon - Wednesday, Nov 24, 21 @ 12:11 pm:

    EZ to beat up on DES and Kristin–but anyone that has followed state govt knows that this agency has been run by biz and labor for decades–their “advisory” board is more concerned about cutting UI taxes or raising benefits; and wholly disregarded the agency’s need for technology, personnel etc. This group owns every bit as much of this debacle as the agency.


  9. - NonAFSCMEStateEmployeeFromChatham - Wednesday, Nov 24, 21 @ 12:14 pm:

    ==and wholly disregarded the agency’s need for technology, personnel etc.==

    Unless their attitude was “Don’t worry, CMS will take care of those.”


  10. - RNUG - Wednesday, Nov 24, 21 @ 12:35 pm:

    I will concede that is a lot of audits, and the last 2 years have been overwhelming for almost everyone. But …

    Part of what I took away from the long explanation was that IDES is like every other State agency: minimal staffing and even less cross-training. Used to fight that all the time. Even when you could see waves of retirements coming, you couldn’t hire and train replacements in a timely manner. The State has operated like that for the last 35 or 40 years, but it’s gotten worse the last 15 - 20.

    And contrary to some beliefs, more / better IT is not necessarily the answer. You still need skilled staff to use the tools.


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