DIRECTIVE	:	UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 23-91
TO	:	ALL STATE EMPLOYMENT SECURITY AGENCIES
FROM	:	DONALD J. KULICK Administrator for Regional Management
SUBJECT	:	Compliance Supplement for Single Audits of State and Local Governments

1. Purpose. To ensure State Employment Security Agencies (SESAs) are aware of the revised Compliance Supplement for Single Audits of State and Local Governments.

2. Reference. Training and Employment Information Notice (TEIN) No. 20-90.

3. Background. The U.S. Department of Labor, Employment and Training Administration (ETA), issued TEIN No. 20-90 dated December 1, 1990, which transmitted the Department's portion of the Office of Management and Budget's (OMB) updated Compliance Supplement for Single Audits of State and Local Governments. The supplement was revised to provide better compliance coverage for all Federal funding. OMB has indicated that significant improvements have been included in the General Requirements section. In particular is the inclusion of testing the requirement for periodic Federal financial reports. Testing the recipients' compliance with the requirement will provide the Federal establishment with better assurances of completeness and reliability of such reports. Also, better coverage of indirect costs has been addressed in the General Requirements section, "Allowable Costs/Cost Principles."

   Attached is the Introduction, General Requirements, and the Unemployment Insurance sections of the Compliance Supplement transmitted with the TEIN.

   Subsequent to the issuance of the TEIN, the National office discovered that the Compliance Supplement relating to Unemployment Compensation for Ex-Service Members (page 3G-6) is obsolete due to a 1982 law change. Following are the current requirements for UCX eligibility as set forth in (5 U.S.C 8521):

   8521. Definitions; application

   (a)  For the purpose of this subchapter-

   (1)  "Federal service" means active service (not including active duty in a reserve status unless for a continuous period of 180 days or more) in the armed forces or the Commissioned Corps of the National Oceanic and Atmospheric Administration if with respect to that service-

   (A)  the individual was discharged or released under honorable conditions (and, if an officer, did not resign for the good of the service); and

   (B)(i)  the individual was discharged or released after completing his first full term of active service which the individual initially agreed to serve, or (ii) the individual was discharged or released before completing such term of active service--

   1. for the convenience of the Government under an early release program,

   2. because of medical disqualification, pregnancy, parenthood, or any service-incurred injury or disability,

   3. because of hardship, or

   4. because of personality disorders or inaptitude but only if the service was continuous for 365 days or more.

4. Action Required. SESAs should assure that auditors are aware of a) the requirements set forth in the attached Compliance Supplement for Single Audits of State and Local Governments and b) the current requirements for UCX eligibility when auditing the Unemployment Insurance activities.

5. Inquiries. Inquiries concerning this UIPL should be directed to the appropriate ETA Regional Office.

6. Attachment. Compliance Supplement for Single Audits of State and Local Governments (Introduction, General Requirements, and Unemployment Insurance Sections).