State Auditor; Unemployment Insurance Fund doesn’t know how much is owed in claims

Following an audit of the Commonwealth of Kentucky’s Comprehensive Annual Financial Report, State Auditor Mike Harmon says the state has an unknown amount owed to those who filed for unemployment benefits during Fiscal Year 2020.

According to a news release, Harmon gave the report a ‘qualified opinion’ on the Unemployment Insurance Fund. A qualified opinion is an auditor’s opinion that the financials are fairly presented, with the exception of a specified area, in this case the Business Type Activities and the Unemployment Compensation Fund.  All other units of the Commonwealth received unmodified or ‘clean’ opinions.

Auditor Harmon says, “What our office found during our CAFR audit is that the Office of Unemployment Insurance is unable to accurately determine the amount of claims still outstanding for the fiscal year that ended on June 30, and a large backlog of claims remain unresolved.”

He goes on to say the Kentucky Office of Unemployment Insurance had poor internal controls over benefit payments which increased the risk of fraud and undetected material misstatements. Management was unable to provide a reasonable or reliable estimate of the financial statement impact of this backlog of claims, says Harmon, therefore his office unable to obtain sufficient appropriate audit evidence to conclude that the accounts payable balance in the unemployment compensation fund was free of material misstatement.