Annual Comprehensive Financial Report Internal Controls FY25
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, 2025.
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.
This engagement was performed in accordance with 29 Del. C. § 2906(a).
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, 2025. For the third 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, 2023, and 2024, for the Department of Labor – Unemployment Insurance Trust Fund.
The Department of Labor’s Division of Unemployment made progress this year in preparing and reconciling the Unemployment Insurance Trust Fund’s financial records, but material weaknesses remain. The division produced a year‑end trial balance and reconciled cash accounts, and completed some additional reconciliations based on historical data. These efforts resulted in a $9.7 million prior‑period adjustment. Ongoing issues, such as incomplete reconciliations, lack of supporting documentation, unresolved systemic accounting, and reporting weaknesses previously identified by auditors were not fully corrected. Because of the continuing deficiencies, auditors could not determine whether additional adjustments were needed, leading to a disclaimer of opinion on the Unemployment Insurance Trust Fund and related business‑type activities.
Auditors attributed the cause to various factors; a substantial amount of employee turnover in the last few years, a loss of significant institutional knowledge, and a lack of adequate staffing in place to complete required accounting work on a timely basis. Additionally, 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. Therefore, it has become difficult to produce user friendly information out of this system on a timely basis for account reconciliations and review.
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 deficiencies and improve processes.
The ACFR Internal Control Report for fiscal year ended June 30, 2025, can be found on our website: Click Here
For any questions regarding the attached report, please contact OAOA_Comms@delaware.gov.