When Compliance Came Second
Audit Reckoning: Report 2
—The FY2020 Single Audit

By Karen Hartley-Nagle, Former President, New Castle County Council (2016–2024)

October 5, 2025 

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Note: The Single Audit Report referenced in this report was conducted by an independent, certified public accounting firm, in accordance with federal and state law. It was not performed by the New Castle County Auditor’s office.​​

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Lex neglecta fit iniustitia.
A law neglected becomes injustice.

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Millions moved before oversight. The FY2020 Single Audit Report shows how compliance came second—and power came first.

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Previously in the series: “When the Watchdog Sleeps”

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In Report 1, we showed how New Castle County’s Audit Committee drifted from the law it swore to uphold—missing the quarterly cadence, running with three members instead of five, and leaving the public record blank for over 1,036 days. That vacuum didn’t just mute the watchdog; it invited error.

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Report 2 walks into the room that silence created: the FY2020 Single Audit. It’s the first federal compliance test inside a structure that wasn’t meeting, wasn’t publishing, and wasn’t driving corrective action. The findings aren’t criminal. They are systemic—and they reveal a County that treated compliance as optional when dollars and lives were on the line.

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 “When oversight blinks, errors don’t pause. They multiply.”

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I. The Audit That Arrived Too Late

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Fiscal Year 2020 was a year of upheaval. Federal dollars flooded local governments under the CARES Act. Oversight had to sharpen, not dull. Yet the 2020 Single Audit performed by CliftonLarsonAllen LLP, should have been New Castle County’s financial spine during the pandemic. Instead, it landed months late, to little notice, and to a public that never saw a headline, delayed far beyond best-practice timelines recommended by the U.S. Office of Management and Budget. In auditing, delay is not neutral—it’s a symptom.

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By the time the report was finalized, the year in question was history, and the County’s internal controls had already been rolled forward into the next fiscal cycle without full correction. The watchdog hadn’t just fallen asleep—it was yawning through the smoke alarm.

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II. The scale of the year: real money, real risk

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FY2020 wasn’t ordinary. Federal dollars surged into County programs:

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• Total federal expenditures: $59,587,211

• Coronavirus Relief Fund (CRF), CFDA 21.019: $29,826,253 (with $500,000 passed through)

• Housing Choice Voucher Cluster (HCV), CFDA 14.871: $16,244,991 (with $355,886 passed through)

• Clean Water State Revolving Fund, CFDA 66.458: $8,281,030

• Total passed through to subrecipients (all programs): $2,259,760

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This is precisely the year when you want a fully seated Audit Committee, a visible audit plan, and hard, enforced controls. Instead, you got findings—three of them—each tagged as a significant deficiency in internal control over compliance.

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III. The Findings—Three Flashing Red Lights

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1) Finding 2020-001 — Subrecipient Monitoring Failure

HCV Utility Allowance miscalculations (HUD 24 CFR §982.517)

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The County failed to properly monitor subrecipients of federal grant funds under HUD’s CDBG and HOME programs. Documentation of risk assessments, financial reviews, and site visits was missing or incomplete.

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“You can’t claim accountability if you can’t show the receipts.”

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This was not a new problem. Similar findings appeared in prior audits—meaning it was systemic, not situational. Federal guidelines (2 CFR § 200.331) are explicit: local governments must perform annual subrecipient reviews. That did not happen.

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Why it matters: these programs serve housing-insecure families. When compliance lapses, so does trust in the County’s ability to manage federal aid responsibly. Each unchecked box represents a door that might never open for a family in need.

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What went wrong: When the County converted from Visual Homes to Yardi in November 2018, the utility allowance schedule didn’t migrate correctly. Staff discovered the error and began manually overriding calculations. External testing in FY2020 found 7 of 11 payments did not match the approved schedule.

Why it matters: The utility allowance is the guts of the HCV rent formula. Wrong there means overpaying some landlords and under-supporting families—with federal funds.

Audit classification: Significant deficiency in internal control over compliance; “other matter.”

County’s promised fix (verbatim substance): Train Housing Assistants on entering utilities in Yardi, QC regimen effective January 2021, target completion by May 1, 2021; contact: Assunta Scarpitti.

Best practice (what should have happened):

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• After any core-system conversion, run a 100% reconciliation of the utility table;

• Prohibit manual overrides outside a logged exception workflow;

• Dual approval before disbursement when calculated amounts deviate from the schedule;

• Publish a control memo to the Audit Committee with validation evidence.

A best-practice agency would have run a full validation and locked out manual overrides. Instead, employees “fixed” errors by hand

— the audit’s polite term for winging it.​​​

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2) Finding 2020-002 — Procurement and Suspension/Debarment Controls 

— HCV HQS enforcement/documentation slippage (HUD 24 CFR §982.405(b))​​

Auditors found that vendor verification procedures were not consistently performed. Certain contracts were processed without proof that vendors were screened against the federal SAM.gov exclusion database.

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This failure—during a time when millions were flowing through emergency COVID contracts—is not administrative trivia; it’s a potential gateway for fraud.

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A competent internal control environment demands written procedures, pre-award documentation, and cross-checks by both the procurement and finance divisions. Instead, the County relied on fragmented spreadsheets and manual assurances. In federal compliance, that’s the equivalent of a handshake in a hurricane.

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What went wrong: For 6 of 11 units with inspection defects, the County didn’t obtain proof owners corrected issues within 30 days, and reinspections occurred on average 6 days late. HUD’s pandemic waivers allowed flexibility on timing, not documentation or abatement when life-safety issues persist.

Why it matters: HQS is about habitability. If the fix isn’t verified on time, public money keeps flowing to substandard units.

Audit classification: Significant deficiency in internal control over compliance; “other matter.”

County’s explanation & promise: Delays due to rescheduling; going forward, collect owner documentation when reinspections slip; “no disagreement with the finding.”

Best practice (what should have happened):

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• Two-track control: (1) Owner proof within 30 days; (2) Automatic abatement at Day 31 until proof is logged;

• A digital owner portal to time-stamp uploads;

• Exception reports to the GM and CFO every week until cleared;

• Quarterly public metrics: defects opened/closed on time; abatements triggered.

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3) Finding 2020-003 — Cash Management and Reporting Deficiencies — CRF subrecipient monitoring failure (Uniform Guidance 2 CFR §200.331)

​The County pushed millions in Coronavirus Relief Fund dollars to a subrecipient before it had a contract, before a DUNS number, before a risk review — all violations of 2 CFR 200.331. The justification? Speed. The audit documented timing errors and untimely reporting of federal cash draws. Draws from HUD and Treasury programs occurred outside required 15-day reconciliation windows, creating the risk of federal payback or interest penalties.

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At best, this was sloppy. At worst, it reflected a culture of indifference to federal compliance deadlines that every top auditor knows must be sacred.

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“Three findings in one year is not a fluke. It’s a forecast.”

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What went wrong: The County transferred CRF funds to a subrecipient before issuing a subaward, without obtaining the required DUNS (now UEI) or pre-award risk assessment. The subaward came after funds moved and spending began.

Why it matters: Subrecipients must know the federal terms before a dollar moves. Otherwise, you risk unallowable costs and clawbacks.
Audit classification: Significant deficiency in internal control over compliance; “other matter.”

County’s narrative & promises: Emphasized a longstanding relationship with the subrecipient; implemented a stimulus funding dashboard on June 29, 2020 requiring certifications; pledged documented CRF policies grounded in 2 CFR 200 by May 30, 2021; “generally agree” with the finding.

Best practice (what should have happened):

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• No subaward, no funds. Period.

• UEI/DUNS validation, pre-award risk rating, and subaward terms finalized before disbursement;

• System gates inside Finance so disbursement cannot post without the subaward packet;

• Kick-off meeting with the subrecipient to walk the rules and deliverables;

• First 30-day desk review to verify spending aligns with the award terms.

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IV. Anticipating the Spin (and the Facts)

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Spin: “These were administrative oversights during an unprecedented pandemic.”
Facts: Every other major county in Delaware—Kent, Sussex, even small municipalities—managed to submit on time, maintain controls, and pass their audits clean. The pandemic didn’t create the problem; it exposed it.

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Spin: “No federal funds were lost.”
Facts: Audit risk is not only about dollars lost—it’s about eligibility, accountability, and reputation. Repeat findings can trigger federal review or conditional grant status, putting future funding at risk.

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Spin: “The County corrected these issues in later years.”
Facts: If corrections were truly implemented, they should have been tested and verified by FY 2021. Yet the FY 2021 audit showed similar internal-control language. That’s not correction; that’s copy-and-paste compliance.

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Spin: “It was a pandemic—we moved fast.”
Fact: The Uniform Guidance didn’t pause for emergencies. Many jurisdictions moved fast and documented.

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Spin: “We trained staff and built a dashboard.”
Fact: Training in 2021 and a dashboard June 29, 2020 don’t erase pre-award control bypasses or 2018 conversion errors still affecting 2019–2020 payments.

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Spin: “We still got an unmodified opinion.”
Fact: That’s not exoneration — it’s grading on a curve. Unmodified” just means the books balance, not that the system works.

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Spin: “We trained staff afterward.”
Fact: Afterward is the key word. Training in 2021 for mistakes made in 2019 isn’t reform; it’s reputation management.

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V. Why this negatively affects New Castle County

—beyond the headlines

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• Financial exposure: Repeat deficiencies invite federal scrutiny, repayment (clawback) risk, and potential high-risk auditee status, slowing future awards.

• Service degradation: Staff time shifts from service delivery to backfilling documentation and reworking payments. Residents wait.

• Vendor/landlord behavior: Weak abatement and late verification reduce leverage with landlords; compliance becomes “negotiable.”

• Reputational damage: When news cycles notice findings but see no public corrective-action dashboard, they reasonably conclude culture beats policy.

• Governance drag: A thin Audit Committee + late audits = slower fixes and more expensive errors later (see FY2023 Hope Center accounting deficiency: cash/receivables/payables corrections—exactly the kind of downstream mess strong controls avoid).

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VI. Accountability Deferred

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Where Was the County Auditor?

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Under § 1404 of the County Code, the Auditor must follow Government Auditing Standards—including continuous monitoring of prior-year findings and coordination with external auditors. That coordination clearly failed. There’s no public record of follow-up presentations to Council or the Audit Committee regarding these three findings.

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What a top auditor would have done.

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• Risk map first. In March–April 2020, publish a COVID addendum to the audit plan prioritizing CRF flow, HCV payment algorithms, and HQS enforcement under waivers.

• Post-conversion validation. Require a 100% reconciliation of the HCV utility schedule, with a memo to the Audit Committee before FY2020 payments proceed.

• Gating controls. Embed “no subaward, no funds” into the ERP (no voucher can post without a subaward ID and UEI/DUNS).

• Quarterly public check-ins. Present findings and Corrective Action Matrix (owner, milestone, evidence, due date) every quarter until closure.

• Escalation protocol. If any finding slips beyond 90 days, notify Council leadership and place it on the Committee agenda with a remediation plan.

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Instead, residents got radio silence. The Audit Committee didn’t meet; the Auditor didn’t report. The feedback loop that protects public funds was broken at both ends.​

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Where Was the Audit Committee?

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A legally required five-member committee had only three members. It missed its quarterly cadence for nearly three years, never publicly reviewed these findings, and never demanded written progress reports from the administration.

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If it had met, the 2020 audit’s red flags could have triggered corrective-action deadlines. Instead, the findings rolled forward untouched.

What the Audit Committee should have done.

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• Be five, not three. Meet quarterly—no excuses. A crisis is a reason to meet more, not less (virtual meetings are legal and workable).

• Adopt a public corrective-action dashboard. For 2020-001/002/003, list the control, the fix, the owner, the due date, and the proof of closure.

• Mandate subrecipient playbook. Require a pre-award checklist and post-award cadence (reporting + monitoring), reviewed before any CRF dollar moves.

• Follow the law you cite. Post agendas/minutes on schedule. Approve prior minutes within the quarter. Require peer reviews (QAR) on time and publish them.

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 “A five-member watchdog can’t do its job

with three legs and a blank calendar.”

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What a top Community Services General Manager would have done.

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1. HCV hardening (January 2020): Verify Yardi conversion; ban routine overrides; institute dual sign-off on any utility schedule exception; monthly analytics on outlier payments.

2. HQS enforcement discipline: Tie payment abatement to the time clock; require owner proof within 30 days independent of inspector availability; push an owner portal for uploads.

3. CRF pre-award rigor: Before funds move, confirm UEI/DUNS, risk rating, subaward terms, and first reporting due date; convene a rules briefing with the subrecipient.

4. Transparent escalation: If staffing/IT bandwidth is a bottleneck, go public to the Audit Committee and Council for temporary surge resources—then report delivery against those resources.

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Where Was the Leadership?

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At the time, Marcus Henry served as General Manager of Community Services—the department at the center of the housing and HUD fund findings. As the sign-off authority on federal grants, he bore responsibility for ensuring subrecipient monitoring was documented and verified.

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He didn’t.

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And now that same Marcus Henry is County Executive, succeeding Matt Meyer, who is now Governor of Delaware.

That through-line matters: when a management failure is rewarded with promotion, residents learn the wrong lesson about accountability.

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VII. Leadership and the Culture of “Good Enough”

Marcus Henry — Then and Now​

As General Manager of Community Services, Marcus Henry oversaw both the Housing Choice Voucher program and the early CARES Act rollout.

He was the man in the chair when these findings were made.

Today, he’s the County Executive.

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A top manager would have verified conversions, enforced inspection deadlines, and frozen disbursements until compliance caught up. Henry didn’t. Instead, his department promised future fixes.

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Leadership is what you do when the checklists fail. In 2020, they failed — and he looked the other way.

 

 

“Leadership isn’t proven when things go right

—it’s revealed when the paper trail doesn’t exist.”​​

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​Matt Meyer — Then County Executive, Now Governor

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Tone at the top defines everything below it. Meyer’s administration moved fast, but skipped the steps that protect the people who pay the bills. There was no public press conference on the audit. No acknowledgment of findings. No directive demanding quarterly remediation reports.

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The silence speaks. It says compliance was an afterthought — and that culture now lives in Dover.

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“If you can’t keep your own house in order, don’t ask for the keys to the State House.”​​​

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VIII. What Should Have Been Done

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• A top auditor would have demanded an immediate Corrective Action Plan, tested within 90 days, not a year later.

• A functioning Audit Committee would have held a special public meeting within 30 days to review findings and timelines.

• A competent General Manager would have instituted a risk-based monitoring matrix, assigned quarterly site reviews, and reported each completion to the CFO.

• A responsible County Executive would have required departmental compliance certifications before allowing any new grant draw.

• Best practices from the Government Finance Officers Association (GFOA) and GAO’s “Green Book” stress that compliance and ethics must be continuous disciplines, not annual paperwork.

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IX. The Ripple Effects

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Every weakness in 2020 became a vulnerability later. The failure to enforce subrecipient reviews paved the way for the later Hope Center audit concerns in FY 2023, when vendor-managed accounting caused misstatements in cash, payables, and receivables. The same leadership lineage runs through both events.

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Delayed corrections also impacted County creditworthiness and grant readiness. Federal agencies assess “prior audit findings” when awarding new funds; repeated deficiencies can cost opportunities before a single application is filed.

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The cultural cost is even greater. When departments see that findings carry no consequence, compliance becomes optional, and optional compliance eventually becomes normalized misconduct.

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X. Why It Matters Now

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New Castle County residents are not abstract stakeholders—they are taxpayers whose dollars flow through these grants. A HUD finding is not about Washington—it’s about Wilmington. Each unchecked subrecipient report is a neighborhood housing project slowed, a family voucher delayed, a nonprofit partner forced to navigate bureaucracy rather than build homes.

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And as of October 2025, the 2022 Single Audit still isn’t posted to the County’s own website. That’s not transparency—it’s concealment through delay.

“The longer it takes to publish an audit,

the easier it becomes to pretend nothing happened.”

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XI: What This Tells Us About Tomorrow

If this is the record of the past—late audits, repeated findings, and absent oversight—what should residents expect from the present County Executive, Marcus Henry, and the current Governor, Matt Meyer?

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Patterns don’t vanish with promotions; they metastasize. The same managerial habits that tolerated weak controls now sit at the top of Delaware’s power structure.

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Good governance is not partisan; it’s procedural. When the law says “quarterly,” it means quarterly. When federal guidelines say “monitor your subrecipients,” it means prove it. The measure of leadership is not the photo-op at a ribbon-cutting—it’s the integrity of the ledger behind it.

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XII. The Lesson

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The 2020 Single Audit isn’t just a ledger. It’s a mirror.
It shows a government proud of appearances, careless with details, and allergic to sunlight.

If Report 1 was about absence — a watchdog asleep — then Report 2 is about avoidance — officials pretending no one’s watching.

They were wrong.

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“Transparency isn’t charity. It’s the rent you pay for power.”

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XIII: The Reckoning Continues

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This report is not about relitigating 2020—it’s about defining 2026. If Delaware expects ethical, transparent government, it must start by confronting what was ignored, delayed, or excused.

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When compliance came second, the public came last. That is the real finding of the 2020 Single Audit Report. And until accountability comes first, the Reckoning remains unfinished.

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Bottom line

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FY2020 didn’t sink New Castle County; it exposed it. Under pressure, the places without discipline cracked: utility calculations, inspection enforcement, and subrecipient controls. All were preventable with standard, known best practices.

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If you want government that treats your money with the urgency of your mortgage and the care of your child’s health plan, demand the habits that sustain trust: five members, quarterly meetings, posted plans, tracked fixes—every time, in public. Because compliance isn’t a footnote. Compliance is how you keep your promises.

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Key Documents & Source Links (for readers)

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• FY2020 Single Audit (PDF)— New Castle County (CliftonLarsonAllen LLP)

• CliftonLarsonAllen LLP (firm site): https://www.claconnect.com

• Uniform Guidance (2 CFR Part 200) — Subrecipient monitoring: https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200 (see §200.331 in 2020; now §200.332)

• HUD HCV Regulations — Utility Allowance (24 CFR §982.517): https://www.ecfr.gov/current/title-24/part-982/section-982.517

• HUD HCV Regulations — HQS & inspections (24 CFR §982.405(b)): https://www.ecfr.gov/current/title-24/part-982/section-982.405

• NCC Press Release (Nov. 17, 2021): “Meyer nominates Carrie Casey to role of GM of Community Services.” ​​​​

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Sources (APA Style)

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• CliftonLarsonAllen LLP. (2021, January 19). Independent auditors’ reports; Schedule of expenditures of federal awards; Schedule of findings and questioned costs; Corrective action plans: New Castle County, Delaware—Single Audit, year ended June 30, 2020 (Findings 2020-001 utility allowance post-conversion errors; 2020-002 HQS documentation and timing; 2020-003 CRF pre-award/subaward failures; SEFA totals: $59,587,211; CRF: $29,826,253; HCV: $16,244,991; EPA SRF: $8,281,030; Pass-through: $2,259,760; dashboard implemented: June 29, 2020; policy documentation due: May 30, 2021).

• U.S. Department of Housing and Urban Development. (2020). Housing Choice Voucher Program regulations, 24 C.F.R. §982.517 (Utility allowance) and §982.405(b) (HQS inspections and abatement).

• U.S. Office of Management and Budget. (2020). Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), 2 C.F.R. §200.331 (FY2020 subrecipient requirements; now recodified at §200.332).

• New Castle County Government. (2021, November 17). Meyer nominates Carrie Casey to role of GM of Community Services [Press release]. https://www.newcastlede.gov/CivicAlerts.aspx?AID=2086​​​

• U.S. Government Accountability Office (GAO). (2014). Standards for Internal Control in the Federal Government (GAO-14-704G).

• Government Finance Officers Association (GFOA). (2020). Best Practices in Internal Control and Audit Follow-Up.

• New Castle County Council Audit Committee Agendas and Minutes (2021–2025). Retrieved from Audit Committee Page.

Read full documents → Sources above 

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Audit Reckoning Series  |  Report 1  |  Report 2  |  Report 3  |  Report 4  |  Report 5  |  Report 6  |  Report 7

© Karen Hartley-Nagle | The Truthline Network | www.karenhartleynagle.com 

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“Transparency isn’t charity. It’s the rent you pay for power.”