The State Auditor’s office releases its Annual Comprehensive Financial Report three months late with an unprecedented disclaimer — the Delaware Unemployment Compensation Fund could not be audited.
The Fund is managed by the Department of Labor’s Division of Unemployment Insurance, led by former state legislator Darryl Scott, and reported cash assets of about $390 million last year.
State Auditor Lydia York says a combination of outdated accounting systems and historical volumes of federal money during the pandemic led to material weaknesses and significant deficiencies in internal controls over the last several years.
“Specifically it’s their systems," she says. "When I say antiquated, I really am talking 20th century.”
She notes that the systems piece is being addressed.
“The Feds are actually covering the cost of the new system because in some respects, we were not alone," York says. "And so the Feds are doing this across the country. But we need to have accurate data going into a new system, and so that’s where we are getting, not hung up, but that’s the challenge that we have moving forward.”
The report says the Division was unable to provide detailed accounting records of any kind.
“The $390 million is a number that we all agree on, but the goal here is to determine which employers are owed any credit, if appropriate. That’s what we cannot figure out," York says. "And that $390 million should represent what employers have paid in, and then we should also be able to determine whether that’s the correct number that they should have paid in.”
York says the information they need to complete an audit is not lost, but it will be difficult to re-gather and post correctly.
The report further details that Division management contributed to a deterioration in business operations by not following internal accounting procedures, and by fiscal year 2023, internal accounting work had stopped entirely.
York says her office will continue to oversee a Corrective Action Plan to determine if FY24 records can be audited or require another disclaimer.
