Delaware State Housing Authority FY25 Financial Statement Audit Unmodified Opinion Two Deficiencies

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Financial Statement Audit – Fiscal Year Ended June 30, 2025

April 21, 2026

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Report Summary

Background

The Delaware State Housing Authority (the Authority) is a component unit of the State of Delaware and is a public corporation whose director is appointed by and reports directly to the Governor of the State. The Authority’s functions are to provide home ownership, affordable rental housing and rehabilitation assistance in housing.  The Authority’s programs are funded through mortgage-backed security purchases, State & Federal grants and through the State sponsored Housing Development Fund.

The primary objective of a financial statement audit is to provide reasonable assurance that the financial statements present fairly, in all material respects, the financial position of an entity.

This audit was performed in accordance with 29 Del. C. §2906.

Key Information and Findings

Although the overall report contains an unmodified opinion, the audit report documents two significant deficiencies. One finding was identified as a repeat issue to the previous year. These recurrent issues highlight areas where previous recommendations have not yet been fully implemented or where challenges continue to persist:

• The Authority’s does not possess the necessary staffing to timely and accurately prepare the Authority’s financial statements, in a timely manner.  In July 2025, the Authority’s Financial Analysis & Reporting Section Manager resigned. In August 2025, the Authority engaged a consultant to prepare the June 30, 2025 financial statements. The Authority’s consultant did not timely prepare the financial statements and the Authority, and its consultants encountered significant difficulties in preparing the financial statements.
• Three material misstatements to the financial statements required journal entry adjustments which should have been made during the DSHA year-end financial close. A similar finding was identified in the prior fiscal year. These adjustments are as follows:
  • A $1,000,000 adjusting journal entry was required to correctly record debt service principal payments in the
  • An adjusting journal entry was required to decrease assets and increase expense by $688,016 to record an allowance on loans receivable in the Non-Major Funds.
  • A material adjusting journal entry was required to decrease revenue and expense by $5,864,456 to properly record the change in unrealized gains and losses that were incorrectly recorded as expense in the Single-Family Enterprise Fund. In response to the audit findings, management has committed to revising its year-end financial close checklist to include a comprehensive review of all material and non-routine transactions, including loan loss reserves and unrealized investment gains/losses. A second-level review process will be implemented for all significant journal entries and reconciliations, a rolling log of prior-year adjustments will be maintained, new internal controls will be implemented, and updates to procedures and training will be completed by March 31, 2026. Further, DHSA has hired a permanent Financial Operation Reporting Section Manager and plans to develop a detailed financial reporting calendar and calendar/quarterly close procedures will be implemented by June 30, 2026. The financial reporting module will also be evaluated by September 2026.

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