Audit Report

This report reflects the findings of the Office of Inspector General at the time that the audit report was issued. More current information may be available as a result of the resolution of this audit by the Department of Labor program agency and the auditee. For further information concerning the resolution of this report's findings, please contact the program agency.

Report Number:  05-98-003-03-315

Issue Date:  March 27, 1998
 
In September 1995, Iowa Department of Employment Services, now known as Iowa Workforce Development (IWD) entered into an agreement with Verification of Income and Employment, Inc. (VIE), a wholly owned subsidiary of Norwest Mortgage, Inc. The Agreement allows VIE to obtain electronic access to State unemployment insurance (UI) wage reporting records for the purpose of consumer credit verification. VIE, in turn, has Agreements with subscribers who can access the wage records through VIE. The purpose of the Agreements is to provide consumers with a vehicle to expedite the loan approval process by furnishing their wage record information to third party lending institutions. Access is based upon the consent of the individual consumer whose wage record is the subject of the inquiry.

On May 31, 1996, the Unemployment Insurance Service (UIS) issued Unemployment Insurance Program Letter (UIPL) No. 23-96 to clarify the Department of Labor's position regarding disclosure. In summary, the Department permits the disclosure of wage records if state law permits such disclosure and if certain conditions related to informed consent, safeguards, and income and costs are satisfied.

We performed a program audit of the first State Agreement subject to the UIPL to determine compliance with the UIPL provisions. We audited the procedures associated with the Agreement between IWD and VIE for the period August 1, 1995 through May 19, 1997.

Our audit disclosed that 1) IWD is in compliance with the informed consent provision of the UIPL; 2) with respect to the UIPL safeguard provision, IWD has not developed written policies and procedures for conducting periodic audits to assure that the information is not misused; 3) IWD has adequate controls for reporting costs and revenues and IWD assured us that all excess revenue from the VIE project will be used solely to fund unemployment compensation programs; and 4) the VIE reimbursement covered IWD's costs of system design changes and additional equipment.

We recommended that program management: 1) require IWD to develop written policies and procedures for conducting periodic audits of VIE's audit process to assure that each subscriber has on file a written release authorizing each access;  2) require IWD to develop written policies and procedures for conducting periodic audits to assure that the information is not being misused; and 3) direct the Unemployment Insurance Service to monitor VIE project revenues received by IWD to ensure that excess revenues are used only for UI purposes, in accordance with UIPL No. 23-96.  IWD officials generally concurred with our audit findings.

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