Single Audit – Fiscal Year Ended June 30, 2024

Sign Up For Our Audit Reports Email Distribution List

---

Report Summary

Background

The mission of the Delaware State Housing Authority (DSHA) is to efficiently provide, and assist others to provide, quality, affordable housing opportunities and appropriate supportive services to low- and moderate-income Delawareans.

This engagement was performed in accordance with 31 Del.C. §4015, 29 Del.C. §2906 and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

Key Information and Findings

The books and records are kept in accordance with generally accepted accounting principles and are reconciled with The financial statement report contains an unmodified opinion. An unmodified opinion is sometimes referred to as a “clean” opinion. It is one in which the auditor expresses an opinion that the financial statements present fairly, in all material respects, an entity’s financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. In the Auditors’ opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

The internal controls review section contained significant deficiencies. A Significant Deficiency is a deficiency or combination of deficiencies in internal control that is less severe than a material weakness but important enough to merit attention.

For five (5) of the ten (10) findings, similar conditions were noted in the fiscal year 2023 and 2022 reports and are considered repeat findings:

• Finding 2024-001, Financial Reporting Close Process
• Finding 2024-002, Financial Reporting – Federal Data Submission
• Finding 2024-003, Internal Control Over Compliance – United States Emergency Rental Assistance Program
• Finding 2024-004,Significant Deficiency in Internal Controls over Compliance Requirement: Reporting; Special Tests and Provisions
• Finding 2024-008, Significant Deficiency in Internal Controls over Compliance Requirement: Eligibility

Financial Statement Findings

Auditors found misstatements of the financial statement balances requiring auditor to make material adjusting journal entries to the General Fund, the Federal Programs Enterprise Fund, and the Housing Development Fund. A new loan servicing module resulted in 2 adjustments for $887,891 and $1,039,901, respectively.

• Management concurred with the finding and committed to implementation of the auditor’s recommendations. Additionally, action plans have been implemented immediately for 2025, and will remain in effect going forward.

DSHA’s Financial Data Submission to the U.S. Department of Housing and Urban Development Real Estate Assessment Center (REAC) required material adjustments to the financial data schedule to present it without material misstatement in relation to the audited basic financial statements.

DSHA Management committed to a Corrective Action Plan comprised of three key elements:

• Hire an outside accounting firm to assist with the REAC & HUD reconciliations
• Updating and maintaining its report structures to properly prepare reports
• Will implement procedures to train staff members that handle the FDS reporting to HUD REAC

Auditors found one case where applicant eligibility income was calculated incorrectly; and found 2 cases where utility assistance payments were calculated incorrectly.

• DSHA has expanded the use of the program policy and procedure change log to include this program.

Federal Awards Findings

Auditors determined that internal controls over compliance were not appropriately designed, implemented, or operating to appropriately address the risk of noncompliance with federal program requirements for the federal award of the COVID-19 Emergency Rental Assistance (ERA) Program (2024-04).

Audit testing revealed a case which resulted in the incorrect calculation of the Area Median Income (AMI) percentage (2024-004).

Supporting documentation was not retained for information on the reports selected for audit testing.

• DSHA will implement a policy and procedure requiring the retention of reported backup data to be retained with the submitted report and will require that the review of the submitted report be documented and that any identified report discrepancies be noted and retained with the submitted report.

Auditors found that client assistance expenditures were held by a vendor contracted to process and disburse client assistance and the funds were reported as federal expenditures. Subsequently, $433,522 was off-set against assistance payments processed by the vendor on November 14, 2023 (2024-005).

• DSHA has implemented the process of requiring the reduction of applicable credits to be applied to all future payment batches and be utilized to fund assistance, which will eliminate the funds being held by the vendor and remove the need to report as a federal expenditure.

Homeowner assistance applications did not correctly determine homeowner income which resulted in assistance overpayments (2024-006).

• DSHA management noted that in September 2022, DSHA implemented new processes for preparing and submitting ERA reports to U.S. Treasury (UST).
• DSHA has corrected the calculation error in its income calculations form. Additionally, increased weekly training and case review have been implemented to detect and prevent such errors.

Auditors also found inaccuracies in financial and non-financial data reporting on the quarterly reports submitted to the U.S. Treasury and found that refunded assistance payments were not remitted timely to DSHA (2024-007).

• DSHA will implement a policy and procedure requiring the retention of reporting backup data to be retained with the submitted report and will require that the review of the submitted report be documented and that any identified report discrepancies be noted and retained with the submitted report.

DSHA performed “after-the-fact” reviews that identified several households that potentially received fraudulent assistance payments. DSHA identified and recovered a portion of the payments, but did not pursue resolution of the matter (2024-008).

DSHA will update its policy and procedure to require the documentation of the discontinuation of potential fraudulent assistance recovery efforts.