Narrative: a. 4.

Corrective Action Plan 1

State: Arkansas

Federal Fiscal Years: 2016-2017

Measure: Effective Audit Measure (EAM) - Score = 7; exceed all 4 factors

ADWS did not pass the Effective Audit Measure, though it continued to perform well in two of the four factors. In Factor 2, ADWS ranked seventh with a 4.5%, while in Factor 4, ADWS an average of 2.7 misclassified workers were detected per audit. Two of the factors were deficient for the following reasons: Factor 1 - Contributory Employers Audited - ADWS has thirteen auditor positions: Four auditors are still in training and are not auditing - a process that can take as long as a year; two are non-auditing positions; and two conduct audits on blocked claims only. The 1% penetration rate was not met due to a lack of staff, staff turnover, and other competing job responsibilities assigned to the auditors. Factor 3 - Total Wages Audited - This factor was not met due to audits being performed on employers with smaller amounts of annual wages. In Arkansas 80% of employers have fewer than 10 employees and account for only 13% of the total wages. Previous audit identification processes did not weigh audit selection in favor of larger employers.

Alternate Plan Updates: ADWS continues to experience staffing shortages within the Field Audit unit. At the beginning of FY 2016, ADWS had thirteen auditor positions. Presently, ADWS has eleven auditor positions. Two auditors are still in training and are not expected to being auditing until the end of September 2016.

ADWS has already undertaken the following actions to cure the deficiencies: Factor 1 - Training of new employees will continue to enable newly hired auditors to begin auditing. ADWS increased the production quotas for auditors in an effort to increase the penetration rate and removed other responsibilities to increase productivity. Factor 3 - Audit identification processes were adjusted to select employers with payrolls exceeding $700,000.

Alternate Plan Updates: ADWS will continue with the training of the two newest auditors. The increase in production quotas has enabled ADWS to improve in Factor 1 and Factor 3.

ADWS did not meet its projected pass for CY 2015 under the existing corrective action plan largely due to the loss of three seasoned auditors and lower production quotas for remaining staff. In an effort to pass Factor 1, audit quotas have been increased and the responsibility of collecting has been centralized taking this responsibility from out-stationed auditors. While ADWS believed it was poised to pass Factor 3, a miscommunication between two Field Audit Supervisors resulted in the increase in total annual wages not being communicated to all field auditors. Once the miscommunication was detected it was corrected; however, it was not soon enough to increase the percentage for Factor 3.

Alternate Plan Updates: ADWS has continued to make progress in passing Factor 1 and Factor 3. ADWS will continue to focus on training of new staff to enable newly hired auditors to begin auditing. The focus will be to continue to maintain or exceed production quotas for auditors.

In order to monitor and assess the accomplishment of the planned actions and for controlling quality after achieving performance goals, ADWS will undertake the following actions: Factor 1 - Once the new staff has been trained the Field Auditor Supervisors will monitor and assess the contributory employers audited percentage rate. If necessary, auditor job responsibilities will we reviewed and standards adjusted with an increase in the audit quota assigned to each auditor. Factor 3 - Field Auditor supervisor will work with the TPS Coordinator in reviewing the 581 report each quarter to ensure this goal is met and to make certain that the quality of audits have remained unchanged.

Alternate Plan Updates: ADWS has continued to make progress in passing Factor 1 and Factor 3. ADWS will continue to focus on training of new staff to enable newly hired auditors to begin auditing. The focus will be to continue to maintain or exceed production quotas for auditors.

Corrective Action Plan 2

State: Arkansas

Federal Fiscal Years: 2016-2017

Measure: Benefits Data Validation

Performance Measure: Data Validation Benefits - All Submitted and Passing

ADWS did not pass Data Validation - Benefits Population 4. A passing measure is validation within plus or minus 1%. Of the 13 groups for Population 4.11 Report Validation, ADWS did not pass Group 4.11 ETA 5159 Claims and Payment Activities related to federal claims. An analysis of the data suggests that this group did not pass in large part due to cancelled claims. The cancellation of claims impacts the "Amounts Paid" by creating variances in the dollar amounts causing the population to not be able to pass validation.

Alternate Plan Updates: Of the 13 subgroups in Population 4, ADWS did not pass Group 4.02 First Payments; Group 4.07 Weeks Compensated; Group 4.09 Combined Wage Claim First Payment Totals; and 4.11 ETA 5159 Claims and Payment Activities related to federal claims. An analysis of the data suggests that the groups are not passing in large part due to the amount of time that elapsed from the end of the quarter and the date the sample is drawn and the cancellation of federal claims and combined wage claims.

ADWS believes that the variance between the numbers reported and the numbers validated were due to cancelled federal claims. ADWS will draw an extract for the universe closer in days to the reported count to minimize the risk of cancelled claims having an impact on the extract universe. The decrease in the claims load should also result in a decrease in the number of potential cancellations.

Alternate Plan Updates: ADWS will again draw extracts for the universe closer in days to the reported count to preserve the integrity of the data in the universe with regard to canceled claims and Combined Wage Claim changes. Emphasis will also be placed on a deeper analysis of the universe to determine if the addition or removal of wage credits are impacting the extracts with regard to first payment data integrity.

ADWS will continue to analyze data to identify and isolate potential factors that could create a variance in the reported count and the validation count.

Alternate Plan Updates: ADWS will continue to identify and isolate potental factors creating the variance in the reported counts and validation counts.

Alternate Plan Updates: Further analysis of the universe is being conducted by IT programming experts to analyze the reported count and validation counts.

Corrective Action Plan 3

State: Arkansas

Federal Fiscal Years: 2016-2017

Measure: Tax Data Validation - All Submitted and Passing

Performance Level: Current - Fail (Pop 3); 12/31 - Pass; 03/31 - Pass; 06/30 - Pass; 09/30 - Pass

ADWS passed all of CY 2015 Data Validation requirements with the exception of terminations which caused Population 3 to receive a failing score. This resulted from a previously reported error that Tax 21 had erroneously counted federal accounts as active employers. When the federal accounts were eliminated it created a variance in the number of termination account records for the remainder of the validation year.

The programming error that caused Population 3 to erroneously record federal accounts as active employers was corrected and is not expected to recur during the CY 2016 Data Validation.