The State Auditor’s Office releases its fiscal year 2023 Delaware State Housing Authority’s (DSHA) audit, finding several "significant deficiencies."
Significant deficiencies are defined as a deficiency or combination of deficiencies in internal control that is less severe than a material weakness but important enough to merit attention.
State Auditor Lydia York says many of the findings are not necessarily a concern on their own, including various reporting errors, overpayments and examples of non-compliance.
The concern is that the same deficiencies have repeated year-over-year.
She says like many state agencies, DSHA is understaffed and lacking resources, but she questions if the larger issue is the authority’s review system itself.
“The purpose of having a system is to catch errors. So if you're not fully implementing your system, you might not be catching real errors. And so that's why when we see that, that's how it becomes a finding. So it's not saying that there's something wrong, it's saying that something could go wrong," York said.
The audit’s findings required six material adjustments to the Housing Development Fund and the Federal Programs Enterprise Fund, resulting in a net increase to assets and a corresponding net decrease in revenue of $877,000 — a similar inconsistency was found in FY22.
DSHA identified potential errors in the processing and payment of assistance totaling approximately $7,090, which auditors considered to be an internal control design weakness.
Auditors also found two assistance processing errors resulting in overpayments and inaccuracies in financial and non-financial data reporting on the quarterly reports submitted to the U.S. Treasury.
DSHA management notes that in September 2022, DSHA implemented new processes for preparing and submitting these reports to U.S. Treasury.
But DSHA largely agreed with the findings and have committed to various corrective action plans, further reviews and staff re-trainings as necessary.
But York says the auditor's office has heard this story before and hopes this time is different.
"Respectfully, management needs to take them seriously," she said. "When we have repeat findings over several years — in some cases here, — and management keeps saying that they're going to fix it, and then it becomes a finding again, it starts to look more like management is quite literally giving us lip service."
York praises DSHA for how they have been helping residents during the state's affordable housing crisis, but she hopes a new administration following the upcoming election will bring corrective changes.
“I can only hope that in some of these initial conversations that we would have with entities that have multiple findings, or repeat findings for sure, that they will take them to heart in the way that we really intend that they do, which is to figure out how to do this better.”
DSHA authorities committed to reviewing and enhancing financial closing processes, conducting secondary reviews, preparing reconciliations for all significant year-end balances and hiring an outside accounting firm to assist with finance reconciliations.
