Report 2020-628.2 Recommendation 6 Responses

Report 2020-628.2: Employment Development Department: Significant Weaknesses in EDD's Approach to Fraud Prevention Have Led to Billions of Dollars in Improper Benefit Payments (Release Date: January 2021)

Recommendation #6 To: Employment Development Department

To ensure that it reviews each account that Bank of America reports to it as suspicious or potentially fraudulent, by February 2021, EDD should establish a centralized tracking tool that allows it to review and stop payment on claims, as appropriate. EDD should use this tool to monitor its own internal decisions and track whether the claimant responds to its requests for identity information and should, therefore, have their account unfrozen.

The Employment Development Department (EDD) continues to use the automated central repository to track accounts that have been frozen and continues to work with Bank of America (BofA) on having verified accounts unfrozen. Files containing frozen and verified accounts from and to BofA are being sent through a Secure File Transfer Protocol (SFTP) with the EDD's Business Intelligence Competency Center (BICC) on a weekly basis. A screenshot of the central repository which reflects more recent unfreeze request dates to BofA is attached. The attached BofA File Tracking Extract file is an extract of total lists received by BofA and tracked in the central repository. Also included is a recent correspondence confirming BofA's receipt of the file transmitted through the SFTP for unfreeze action. Detailed information on the agreed upon steps between EDD and BofA are provided in the EDD Business Requirements Document (EDD BRD), which replaces the EDD Master Plan that was previously provided.

California State Auditor's Assessment of Status: Fully Implemented

EDD has created a centralized tracking tool that pulls information from the lists of accounts Bank of America reports to it as suspicious or potentially fraudulent. We also reviewed evidence showing that EDD communicates with Bank of America regarding accounts that can be unfrozen. EDD must continue to provide appropriate assistance to individuals who contact it regarding concerns about frozen accounts in the coming months. Doing so will be essential to maintaining full implementation of our recommendation.

The BofA reports are stored and tracked in the ITB-created central repository. Additionally, the reports and their statuses are updated regularly to enable the EDD to track each account's appropriate action and the outcome of each benefit claim. Attached is a screen shot of the tracking system. Also included are EDD procedures on the handling of BofA lists. These procedures are currently in the process of being automated and will ultimately be superseded by that automation.

California State Auditor's Assessment of Status: Partially Implemented

EDD has created a centralized tracking tool that pulls information from the lists of accounts Bank of America reports to it as suspicious or potentially fraudulent. However, the tracking tool relies on multiple units to regularly manually perform actions to update the tool. Therefore, we will obtain a status update at the next 90-day to verify that EDD regularly uses the tool to monitor its internal decisions and tracks when claimants should have their accounts unfrozen.

All Recommendations in 2020-628.2

Agency responses received are posted verbatim.