Review of Unemployment Insurance Costs Charged to Federal Programs by the University of Puerto Rico Medical Sciences Campus Under the Contribution Method

EXECUTIVE SUMMARY:

This report presents the results of our REVIEW OF UNEMPLOYMENT INSURANCE COSTS CHARGED TO FEDERAL PROGRAMS BY THE UNIVERSITY OF PUERTO RICO, MEDICAL SCIENCES CAMPUS, UNDER THE CONTRIBUTION METHOD during the period January I, 1988 to June 30, 1995.

The objective of our audit was to determine whether the Medical Sciences Campus (MSC) had adequate procedures and controls for charging unemployment insurance costs to federal programs under the mandated contribution method and whether the amounts charged complied with applicable regulations and were reasonable, allowable and allocable.

The contribution method is a funding system for unemployment costs which requires quarterly contributions based on a portion of employee salaries times an unemployment contribution rate which is set by the Puerto Rico Department of Labor (PRDOL), the agency that administers the unemployment program in Puerto Rico.

Our review disclosed significant weaknesses in MSC's administration of the unemployment insurance program under the contribution method. We found extensive noncompliance with the quarterly reporting requirements. We identified inaccurate reports including a significant overpayment made to the PRDOL, the submission of reports without the required remittances, the failure to file required reports, as well as reports that were filed untimely. Because of this noncompliance, the PRDOL assessed significant fines, penalties and interest against MSC's contribution account. We also identified overcharges to Federal programs and improper penalty charges to Federal programs.