Fiscal Year Ended June 30, 2024

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Report Summary

Background

The Office of Auditor of Accounts, Department of Finance, and Division of Accounting present the State of Delaware Annual Comprehensive Financial Report (ACFR) for Fiscal Year ended June 30,2024.

The ACFR was conducted using generally accepted auditing standards (GAAS) in the United States. The ACFR Internal Control Report and findings were conducted according to Generally Accepted Government Auditing Standards (GAGAS), and do not express an opinion on the effectiveness of the State’s internal controls. The auditing standards require the state to issue a report on the controls relied upon in the financial statement audit of the state’s Annual Comprehensive Financial Report (ACFR),which was released on December 27, 2024.

The purpose of the ACFR is to be transparent about the use of taxpayers’ money and to provide an accounting of all state expenditures. The ACFR does this by including dozens of basic and intricate financial reports, along with notes, narratives and supporting data. The ACFR is an important tool used to analyze the state’s overall financial position for purposes of bond financing and for establishing financial transparency and credibility with its creditors and oversight agencies.

The audit was performed according to AOA’s authority as set forth in 29 Del. C. §2906.

Key Information and Findings

CliftonLarsonAllen, LLP (CLA) issued its opinions on the State of Delaware Annual Comprehensive Financial Report (ACFR) as of and for the year ended June 30, 2024. For the second consecutive year, CLA included a disclaimer of opinion in its Independent Auditors’ Report on the ACFR for the Department of Labor – Unemployment Insurance Trust Fund:

In its Independent Auditors’ Report on Internal Control, CLA’s auditors identified a material weakness in internal control over financial reporting, considered a repeat finding from 2022 and 2023, for the Department of Labor – Unemployment Insurance Trust Fund.

CLA identified several material accounts and balances for which account reconciliations are not being performed. These recurring weaknesses are indicative of systemic accounting and financial reporting deficiencies in internal control, which ultimately led to the disclaimer of opinion on the ACFR. 

Auditors attributed the cause to; a substantial amount of employee turnover in the last few years, a loss of a significant institutional knowledge, and a lack of adequate staffing in place to complete required accounting work on a timely basis. Lastly, the accounting system used by the Unemployment Trust Fund is an antiquated system, and, due to turnover mentioned above, there is a lack of knowledge about the system and how to generate reports.

Management concurred with the findings and noted that business process improvements to provide efficiencies in internal control procedures have been developed.  The State’s Department of Finance Division of Accounting engaged an external accounting firm to work with the Department of Labor to resolve all deficiencies and improve processes.