Full text
OIG Project No. 22-1- 12BH
DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
Financial Statements and Management’s Discussion and Analysis
(With Independent Auditor’s Report)
For Fiscal Years Ended September 30, 2021 and 2020
January 2022
Mission
Our mission is to independently audit, inspect, and investigate
matters pertaining to the District of Columbia government in
order to:
•
prevent and detect corruption, mismanagement, waste,
fraud, and abuse;
•
promote economy, efficiency, effectiveness, and
accountability;
•
inform stakeholders about issues relating to District
programs and operations; and
•
recommend and track the implementation of corrective
actions.
Vision
Our vision is to be a world-class Office of the Inspector General
that is customer-focused and sets the standard for oversight
excellence!
Core Values
Excellence * Integrity * Respect * Creativity * Ownership
* Transparency * Empowerment * Courage * Passion
* Leadership
GOVERNMENT OF THE DISTRICT OF COLUMBIA
Office of the Inspector General
OIG
717 14th Street, N.W., Washington, D.C. 20005 (202) 727-2540
Inspector General
January 31, 2022
The Honorable Muriel Bowser
Mayor of the District of Columbia Mayor’s
Correspondence Unit
John A. Wilson Building
1350 Pennsylvania Avenue, N.W., Suite
316 Washington, D.C. 20004
The Honorable Phil Mendelson
Chairman
Council of the District of Columbia
John A. Wilson Building
1350 Pennsylvania Avenue, N.W., Suite 504
Washington, D.C. 20004
Dear Mayor Bowser and Chairman Mendelson:
Enclosed is the final report entitled District of Columbia Unemployment Compensation
Financial Statements and Management’s Discussion and Analysis (With Independent Auditor’s
Report) for the Fiscal Years Ended September 30, 2021, and 2020 (OIG No. 22-1-12BH) by
McConnell Jones, LLP (MJ). MJ conducted the audit and submitted this component report as
part of our overall contract for the audit of the District of Columbia’s general-purpose financial
statements for fiscal year 2021.
On January 18, 2022, MJ issued its opinion and concluded that the financial statements are
presented fairly in all material respects, in accordance with accounting principles generally
accepted in the United States of America. MJ identified no material weaknesses in internal
control over financial reporting, but has made one recommendation intended to improve the
effectiveness of internal control over the District operations and programs (see OIG No. 22-1-
12BH(a)).
If you have questions about this report, please contact me or Fekede Gindaba, Assistant Inspector
General for Audits, at (202) 727-2540.
Sincerely,
Daniel W. Lucas
Inspector General
DWL/wms
Enclosure
cc: See Distribution List
Mayor Bowser and Chairman Mendelson
DC Unemployment Compensation
OIG Final Report No. 22-1-12BH
January 31, 2022
Page 2 of 2
DISTRIBUTION (via email):
Mr. Kevin Donahue, City Administrator for the District of Columbia, Office of the City
Administrator
Mr. Barry Kreiswirth, General Counsel, Office of the City Administrator, District of Columbia
Mr. Eugene Adams, Director, Mayor’s Office of Legal Counsel
Mr. John Falcicchio, Deputy Mayor for Planning and Economic Development and Chief of Staff,
Executive Office of the Mayor
The Honorable Elissa Silverman, Chairperson, Committee on Labor and Workforce
Development, Council of the District of Columbia
The Honorable Robert C. White, Jr., Chairperson, Committee on Government Operations and
Facilities, Council of the District of Columbia
Ms. LaToya Foster, Director of Communications, Office of Communications, Executive Office
of the Mayor
Ms. Jennifer Reed, Director, Office of Budget and Performance Management, Office of the City
Administrator
Dr. Unique N. Morris-Hughes, Director, Department of Employment Services
Ms. Nyasha Smith, Secretary to the Council
The Honorable Karl Racine, Attorney General for the District of Columbia
Dr. Fitzroy Lee, Acting Chief Financial Officer, Office of the Chief Financial Officer
Mr. Timothy Barry, Executive Director, Office of Integrity and Oversight, Office of the Chief
Financial Officer
The Honorable Kathy Patterson, D.C. Auditor, Office of the D.C. Auditor
Mr. Jed Ross, Director and Chief Risk Officer, Office of Risk Management
Mr. Wayne McConnell, Managing Partner, McConnell & Jones LLP
GOVERNMENT OF THE
DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
An Enterprise Fund of the District of Columbia
For the Years Ended September 30, 2021 and 2020
(Together with Reports of the Independent Auditor’s Report)
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
TABLE OF CONTENTS
Independent Auditor’s Report ...................................................................................................................................1
Management’s Discussion and Analysis ................................................................................................................. 3
Basic Financial Statements:
Statements of Net Position ............................................................................................................................... 14
Statements of Revenues, Expenses, and Changes in Net Position ............................................................ .15
Statements of Cash Flows ............................................................................................................................... .16
Notes to the Financial Statements ........................................................................................................................ .17
Report of Internal Control Over Financial Reporting and on Compliance and Other Maters
Based on an Audit of Financial Statements Performed in Accordance with Government Auditing
Standards – Independent Auditor’s Report ........................................................................................................ .24
Diverse Thinking | Unique Perspectives
5101 Wisconsin Ave., NW
Suite 210
Washington, DC 20016
Phone: 202.207.3570
Fax: 202.968.1601
WWW.MCCONNELLJONES.COM
INDEPENDENT AUDITOR’S REPORT
To the Mayor, Members of the Council of the Government of the District of Columbia
and Inspector General of the Government of the District of Columbia
Washington, D.C.
Report on the Financial Statements
We have audited the accompanying financial statements of Government of the District of Columbia
Unemployment Compensation Fund (the Fund), an enterprise fund of the Government of the District of
Columbia, as of and for the years ended September 30, 2021 and 2020, and the related notes to the
financial statements, which collectively comprise the Fund’s basic financial statements as listed in the
table of contents.
Management’s Responsibility for the Financial Statements
The Fund’s management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of America;
this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors’ judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
2
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the Fund as of September 30, 2021 and 2020, and the respective changes
in its financial position and its cash flows for the years then ended in accordance with accounting
principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 1 to the financial statements, the financial statements present only those of the
Fund and do not purport to, and do not present fairly the financial position of the Government of the
District of Columbia as of September 30, 2021 and 2020, the changes in its financial position or, its cash
flows for the years then ended, in conformity with U.S. generally accepted accounting principles. Our
opinion is not modified with respect to the matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis on pages 3 through 13, be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial reporting
for placing the basic financial statements in an appropriate operational, economic, or historical context.
We have applied certain limited procedures to the required supplementary information in accordance
with auditing standards generally accepted in the United States of America, which consisted of inquiries
of management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audits of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
January 18, 2022, on our consideration of the Fund’s internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and
other matters. The purpose of that report is solely to describe the scope of our testing of internal control
over financial reporting and compliance and the results of that testing, and not to provide an opinion on
the effectiveness of internal control over financial reporting or on compliance. That report is an integral
part of an audit performed in accordance with Government Auditing Standards in considering the Fund’s
internal control over financial reporting and compliance.
Washington D.C.
January 18, 2022
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
3
This section of the annual financial report of the Government of the District of Columbia Unemployment
Compensation Fund (the Fund) presents our discussion and analysis of the financial performance of the
Fund during the fiscal years (FY) ended September 30, 2021 and 2020, compared to the fiscal year ended
September 30, 2019. This discussion has been prepared by management and should be read in
conjunction with the financial statements and the accompanying notes to the basic financial statements.
The financial statements, footnote disclosures, and management’s discussion and analysis are the
responsibility of the Fund’s management.
Reporting Entity
The Fund was established by the Government of the District of Columbia (the District) to account for its
unemployment compensation program. The Fund is administered by the District’s Department of
Employment Services (DOES). Substantially all administrative costs of the program are paid by federal
grants and special purpose revenues, which are recorded in the District’s General Fund.
Financial Statement Presentation
The Fund’s basic financial statements consist of (a) statement of net position; (b) statement of revenues,
expenses, and changes in net position, and (c) statement of cash flows.
•
Statement of Net Position
The Statement of Net Position presents the Fund’s assets, liabilities, and net position. Net position
is the difference between assets and liabilities. The net position is comprised of the restricted net
position. Over time, increases or decreases in the Fund’s net position may serve as a useful
indicator of whether the Fund’s financial position is improving or deteriorating.
•
Statement of Revenues, Expenses, and Changes in Net Position
The Statement of Revenues, Expenses, and Changes in Net Position presents the Fund’s revenues
and expenses. The difference between revenues and expenses is reported as “changes in net
position”. All changes in the net position are reported as soon as the events underlying the
changes occur regardless of the timing of the related cash flows. Thus, revenues and expenses
reported in this statement also include items that will result in cash flow in future fiscal periods
(for example, accrued revenues and accrued expenditures).
•
Statement of Cash Flows
The Statement of Cash Flows presents information on sources and uses of cash for operating and
investing activities.
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
4
FINANCIAL HIGHLIGHTS
The District’s average unemployment rate for the fiscal year ended September 30, 2021 was 7.7%, which
is a 0.6% increase compared to 7.1% at the end of September 30, 2020, and a 1.6% decrease in FY 2020,
compared to 5.5% at the end of September 30, 2019.
In early 2020, an outbreak of the novel strain of coronavirus (COVID-19) emerged globally and the
World Health Organization (WHO) declared it a pandemic in March 2020. The COVID-19 pandemic
affected major economic and financial markets, and virtually all industries and governments are facing
challenges associated with the economic conditions resulting from efforts to address it along with record
level unemployment across all states. The Coronavirus Aid, Relief, and Economic Security (CARES) Act
was passed by Congress to protect the American people from the public health and economic impacts of
COVID-19 and new unemployment compensation programs were established.
Unemployment Compensation Programs under the CARES Act are Pandemic Unemployment Assistance
(PUA), Pandemic Emergency Unemployment Compensation (PEUC), Federal Pandemic Unemployment
Compensation (FPUC) and Mixed Earners Unemployment Compensation (MEUC). Other federal
assistance under the Act included Extended Benefits (EB), Reimbursement for Waived Wait Week as
well as emergency unemployment relief for eligible employers.
Provisions for new unemployment programs under the CARES Act were extended by the American
Rescue Plan Act of 2021 that was passed by Congress in March 2021. In accordance with Federal and
District law, several federal unemployment benefits (PUA, PEUC, FPUC, and MEUC) offered through
the American Rescue Plan Act (ARPA) expired on September 4, 2021; Extended Benefits expired on
September 11, 2021.
All unemployment compensation benefits paid for programs under the CARES and ARP Acts are 100%
federally funded.
In addition to the expanded unemployment programs/assistance under the Act, the District also received a
federal grant for Lost Wages Supplemental Payment Assistance and Short Time Compensation Benefits.
Additionally, on December 7, 2020 the Mayor announced a one-time stimulus payment to extend support
to those District residents hit hardest by the COVID-19 pandemic using funds received in FY 2020 under
the CARES Act. The one-time direct payment of $1,200 was paid to District residents who filed and were
deemed eligible for Pandemic Unemployment Assistance (PUA) as of November 30, 2020. PUA covers
individuals who are not eligible for traditional unemployment insurance (UI) benefits.
As of September 30, 2021, the Fund’s assets exceeded its liabilities by $34,668. The Fund reported a
decrease in net position of $38,870 or 52.86% in FY 2021, as compared to $415,858 or 84.97% decrease
in FY 2020.
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
5
OVERALL FINANCIAL ANALYSIS
The Fund’s overall financial position significantly declined as UI benefits paid exceeded employers’ tax
and governmental contributions received. The Fund’s financial position and operations for the past three
years are summarized in Tables 1 and 2.
Table 1
Condensed Statement of Net Position
(Dollar amounts expressed in thousands)
2021
2020
Change
2019
Change
Assets
Cash Held with U.S. Treasury
$
50,028
$
142,891
$
(92,863)
$
524,003
$ (381,112)
Receivables (net)
114,387
105,112
9,275
14,796
90,316
Total Assets
164,415
248,003
(83,588)
538,799
(290,796)
Liabilities
Payables
97,796
156,966
(59,170)
32,916
124,050
Due to D.C. Government
16,234
17,499
(1,265)
16,487
1,012
Due to Federal Government
15,717
-
15,717
-
-
Total Liabilities
129,747
174,465
(44,718)
49,403
125,062
Net Position
Restricted for Unemployment
Compensation Benefits
$
34,668
$
73,538
$
(38,870)
$
489,396
$ (415,858)
The Fund’s largest asset is the receivables, net of allowance for doubtful accounts, which represented
69.57% of the Fund’s total assets. The FY 2021 cash balance decreased by $92,863 or 64.99%, primarily
due to the unemployment benefit payments significantly exceeding the cash receipts from employer taxes.
The FY 2020 cash balance decreased by $381,112 or 72.73% from FY 2019.
Receivables, net of allowance for doubtful accounts increased by $9,275 or 8.82% in FY 2021, compared
to FY 2020, mainly due to an increase in receivables from claimants because of COVID-19 activities as
well as funds transfers in from the District in FY 2021. The Fund’s receivables consist of amounts due
from employers for unpaid taxes, CARES Act credit to employers, claimants for unemployment benefit
overpayments, the Federal government, and other states for unemployment benefits paid. In FY 2020,
there was a net increase in receivables of $90,316 or 610.41% from FY 2019.
The Fund’s total liabilities for FY 2021 decreased by $44,718 or 25.63%, as compared to an increase by
$125,062 or 253.15% in FY 2020. The Fund reported an estimated claimants’ payable of $79,831 in
FY 2021, which represents a decrease of $46,918 or 37.02%, compared to the prior fiscal year, mainly
due to the decrease of the number of claims filed and the expiration of expanded unemployment
programs. In addition, accounts payable decreased by $12,252 or 40.55% compared to FY 2020 mainly
due to a reduction in CARES Act credit due to employers. In FY 2020, estimated claimants’ payable was
$126,749, an increase of $107,113 or 545.49% from FY 2019.
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
6
Due to D.C. Government represents unspent Reed Act, Unemployment Compensation Modernization
funds, Short Time Compensation Admin Assistance, interest, and penalties assessed, payments made by
the District on behalf of the Fund and collection from employers for late tax payments/penalties but not
yet paid to the District. Due to Federal Government represents claimants’ overpayments from federal
programs mostly expended programs under the Acts. For FY 2021, the Fund’s payables to D.C.
Government decreased by $1,265 or 7.23%, compared to September 30, 2020, and an increase by $1,012
or 6.14% in FY 2020, as compared to September 30, 2019. The increase was primarily due to
administrative assistance related to the pandemic in FY 2021. The unspent Reed Act and Unemployment
Compensation Modernization funds totaled $10,438 in FY 2021, compared to $10,205 in FY 2020 and
$10,346 in FY 2019. The Reed Act and Unemployment Compensation Modernization funds were
received from the Federal government through the Reed Act and Modernization Accounts to pay for the
Fund’s administrative and modernization costs.
For FY 2021, the Fund’s current assets of $164,415 were sufficient to cover current liabilities of
$129,747; a ratio of $1.27 in assets for every dollar in liabilities. For FY 2020, the total current assets and
current liabilities of the Fund were $248,003 and $174,465 respectively; a ratio of $1.42 in assets for
every dollar in liabilities. Total current assets and current liabilities of the Fund were $538,799 and
$49,403 respectively; a ratio of $10.91 in assets for every dollar in liabilities in FY 2019.
Table 2
Condensed Statement of Revenues, Expenses, and Changes in Net Position
(Dollar amounts expressed in thousands)
2021
2020
Change
2019
Change
Operating Revenues:
Employer Taxes
$
145,775
$ 139,833
$
5,942
$
142,877
$
(3,044)
Governmental
Contributions
1,262,717
1,001,721
260,996
17,841
983,880
Total Operating
Revenues
1,408,492
1,141,554
266,938
160,718
980,836
Operating Expenses:
Unemployment Benefits
1,497,798
1,568,065
(70,267)
120,010
1,448,055
Operating Income/
(Loss)
(89,306)
(426,511)
337,205
40,708
(467,219)
Non-operating
Revenues:
Transfer In from the
District
49,000
-
49,000
-
-
Interest Revenue
1,436
10,653
(9,217)
11,949
(1,296)
Total Non-operating
Revenues
50,436
10,653
39,783
11,949
(1,296)
Change in Net Position
(38,870)
(415,858)
376,988
52,657
(468,515)
Total Net Position -
Beginning
73,538
489,396
(415,858)
436,739
52,657
Total Net Position -
Ending
$
34,668
$
73,538
$ (38,870)
$
489,396
$
(415,858)
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
7
Total operating revenues and non-operating revenues were $1,458,928 in FY 2021, compared to
$1,152,207 in FY 2020 and $172,667 in FY 2019.
In FY 2021, the Fund’s operating revenues totaled $1,408,492 compared to $1,141,554 in FY 2020 and
$160,718 in FY 2019. Operating revenues increased by $266,938 or 23.38% from FY 2020 to FY 2021,
primarily due to an increase in governmental contributions under the CARES Act. Operating revenues
increased by $980,836 or 610.28% from FY 2019 to FY 2020. Federal, and other state and local
governments reimburse the Fund 100% for benefits paid to their former employees as well as claimants in
expanded CARES Act programs. Non-operating revenue increased by $39,783 in FY 2021 compared to
FY 2020 due to funds transferred in from the District.
Table 3 shows sources of operating revenues for the Fund in FY 2021, 2020 and 2019.
Table 3
Operating Revenue by Sources
(Dollar amounts expressed in thousands)
Operating Revenues
by Sources
2021
2020
Change
%
change
2019
Change
%
Change
Employer Taxes
$ 145,775
$ 139,833
$
5,942
4.25%
$ 142,877
$
(3,044)
(2.13%)
Governmental
Contributions:
Federal Government
1,254,987
980,232
274,755
28.03%
8,207
972,025
11843.85%
Other States’
Contributions
5,563
13,542
(7,979)
(58.92%)
4,679
8,863
189.42%
D.C. Government
2,167
7,947
(5,780)
(72.73%)
4,955
2,992
60.38%
Total
$ 1,408,492
$ 1,141,554
$ 266,938
23.38%
$ 160,718
$ 980,836
610.28%
Federal government contributions were $1,254,987 for FY 2021, compared to $980,232 in FY 2020
mainly due to an increase in Federal contributions as result of COVID -19 activities. In FY 2020, Federal
government reimbursements revenue was $980,232 compared to $8,207 in FY 2019.
Non-operating revenue increased to $50,436 in FY 2021 from $10,653 in FY 2020, resulting in an
increase of $39,783 or 373.44%; this is mainly due to a transfer in $49,000 from the District. Non-
operating revenue in FY 2019 was $11,949.
Figures 1, 2 and 3 shows the percentage of revenues received from the Fund’s different sources during FY
2021, FY 2020 and FY 2019. Governmental contributions were the largest source of revenues, which
represented 87% of total revenues in FY 2021, compared to 87% of total revenues in FY 2020 and 10% of
the total revenue in FY 2019.
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
8
Figure 1
Total Revenues (Operating and Non-Operating) for the Year Ended September 30, 2021
Figure 2
Total Revenues (Operating and Non-Operating) for the Year Ended September 30, 2020
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
9
Figure 3
Total Revenues (Operating and Non-Operating) for the Year Ended September 30, 2019
Operating Expenses
The Fund’s only operating expense is unemployment benefit payments. Figure 3 shows the comparison of
benefits payments in FY 2021, FY 2020 and FY 2019.
Figure 4
Total Operating Expenses for the Fiscal Years Ended September 30, 2021, September 30, 2020 and
2019
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
10
The Fund’s unemployment benefit payments decreased by $70,267 or 4.48% in FY 2021, compared to an
increase of $1,448,055 or 1206.61% in FY 2020, and a decrease of $11,754 or 8.92% in FY 2019. The
decrease was primarily a result of a decrease in claims filed by eligible unemployed Civilian Federal
Employees, other state and local government and claimants in expanded programs under the CARES Act.
The CARES Act established new programs which expanded unemployment benefit compensation to
District residents impacted by COVID-19. The average unemployment rate within the District increased
to 7.7% as of September 30, 2021 from 7.1% as of September 30, 2020, representing a 0.6% increase.
Table 4
District’s Unemployment Rate by Month for the Year Ended September 30, 2021
FY 2021 Average Unemployment Rate = 7.7%
Current Year
Month
Labor Force
Number of
Employed
Number of
Unemployed
Unemployment
Rate (%)
2020
Oct
409,507
373,663
35,844
8.8
2020
Nov
409,612
373,627
35,985
8.8
2020
Dec
409,328
373,290
36,038
8.8
2021
Jan
409,154
374,800
34,354
8.4
2021
Feb
408,389
375,159
33,230
8.1
2021
Mar
406,901
375,385
31,516
7.7
2021
Apr
406,223
375,667
30,556
7.5
2021
May
405,366
376,136
29,230
7.2
2021
Jun
405,737
377,272
28,465
7.0
2021
Jul
407,200
379,802
27,398
6.7
2021
Aug
409,695
382,110
27,585
6.7
2021
Sep
410,752
384,041
26,711
6.5
Table 5
District’s Unemployment Rate by Month for the Year Ended September 30, 2020
FY 2020 Average Unemployment Rate = 7.1%
Current Year
Month
Labor Force
Number of
Employed
Number of
Unemployed
Unemployment
Rate (%)
2019
Oct
418,385
397,434
20,951
5.0
2019
Nov
419,325
398,766
20,559
4.9
2019
Dec
419,987
399,603
20,384
4.9
2020
Jan
420,360
399,827
20,533
4.9
2020
Feb
420,448
399,437
21,011
5.0
2020
Mar
420,581
398,895
21,686
5.2
2020
Apr
406,769
361,647
45,122
11.1
2020
May
397,922
362,414
35,508
8.9
2020
Jun
399,915
364,192
35,723
8.9
2020
Jul
402,618
366,931
35,687
8.9
2020
Aug
405,503
369,909
35,594
8.8
2020
Sep
407,913
372,267
35,646
8.7
Source: U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics. FY 2020 unemployment data have been revised to reflect updates
from source data.
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
11
ECONOMIC CONDITION AND OUTLOOK
For the year ended September 30, 2021, federal civilian employment accounted for 26.8% of all
wage and salary jobs located in the District and 30.3% of wages and salaries generated in the
city. Approximately 15.00% of employed District residents worked for the federal government.
Furthermore, federal contracting accounted for additional jobs and income in the area, which also
contributed to the tax base of the District. With such a dominant federal presence, as we look to the
future, significant changes in federal spending can have a major impact on the economy and revenues of
the District.
In addition, trends in population growth may also affect the District economy. Historically for the
District, continuous population growth has been important in increasing the income, property, and sales
tax bases, and has been one of the driving forces behind rising home values. However, population
growth has slowed in recent years. Between 2015 and 2020, the population of the District grew by
35,802, an increase that averaged about 7,160 residents per year. Nevertheless, over that five-year
period, the rate of annual population growth gradually declined from 2.0% growth in 2015 to
approximately 0.6% in 2020.
HIGHLIGHTS: THE DISTRICT ECONOMY
As a consequence of the COVID-19 pandemic, the District experienced contractions in hospitality and
business services jobs, a slowing population, and a weakening outlook for commercial property.
Highlights of these and other recent trends in the District economy are presented below:
•
In the three months ended September 2021, there were 20,773, or 2.80%, more wage and salary
jobs located in the District than in the same period a year earlier but still almost 50,000 below the
pre-COVID-19 level in February 2020. Hospitality and retail jobs in particular have not recovered
growing 16,100 jobs in September 2021 over 2020 but still about 30,000 below pre-COVID-19
levels, accounting for most of the gain over the year and the loss in private sector jobs since
February 2020.
•
District resident employment in the three months ended September 2021 was 17,980, or 4.90%,
higher than a year earlier.
•
The September 2021 unemployment rate was 6.50% (seasonally adjusted), down from 8.70% a
year ago.
•
Overall wages earned in the District grew 7.60% in the quarter ended September 30, 2021,
compared to the same quarter a year ago, led by growth in the high-wage professional and
management sector.
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
12
D.C. UNEMPLOYMENT COMPENSATION FUND NET POSITION HISTORY
Historical data of the principal components of the Fund’s net position are shown in Table 6.
Table 6
Unemployment Compensation Fund Net Position Components
2021
2020
2019
2018
2017
Employer taxes / Government
Contributions / Transfer In from
District
$1,457,492
$1,141,554
$160,718
$160,904
$167,504
Interest Earned
1,436
10,653
11,949
10,347
9,453
Benefits Paid
1,497,798
1,568,065
120,010
131,764
143,942
Net Position
34,668
73,538
489,396
436,739
397,252
Total wages
**
18,142,929
18,680,015
18,094,623
17,467,741
Source: DOES, Office of Labor Market Research and Information. FY 2020 and prior years’ total wage data have
been revised to reflect updates from source data. * Data not yet available.
D.C. UNEMPLOYMENT COMPENSATION FUND OUTLOOK
The financial condition of the Unemployment Compensation Fund depends on three factors: benefit
outlays, employer taxes/government contributions, and taxable wages.
Table 7
Employer Taxes / Government Contributions / Transfer In and Benefits
Year
Employer taxes / Government
Contributions / Transfer In
Benefits Payments
Surplus / (Deficit)
2017
$
167,504
$
143,942
$
23,562
2018
160,904
131,764
29,140
2019
160,718
120,010
40,708
2020
1,141,554
1,568,065
(426,511)
2021
1,457,492
1,497,798
(40,306)
Table8
Taxable Wages
Quarter Ending
FY2021
FY2020
FY2019
December 31,
$ 357,718
$ 501,603
$ 493,928
March 31,
3,327,117
3,810,581
3,662,991
June 30,
*
492,886
773,257
September 30,
*
380,650
590,572
Source: DOES, Office of Labor Market Research and Information. *Data not yet available
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
13
Contact Information
This financial report is designed to provide a general overview of the Fund’s finances. Questions
concerning any information provided in this report, or requests for additional financial information,
should be addressed to the Office of the Chief Financial Officer; Government of the District of Columbia;
1350 Pennsylvania Avenue, NW; Washington, D.C., 20004.
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
STATEMENTS OF NET POSITION
AS OF SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
The accompanying notes are an integral part of these financial statements.
14
2021
2020
Current Assets:
Cash Held With U.S. Treasury (note 2)
$
50,028
$
142,891
Accounts Receivable, Net (note 3)
36,579
19,681
Due From D.C. Government (note 4)
49,302
929
Due From Federal Government (note 5)
28,506
84,502
Total Current Assets
164,415
248,003
Current Liabilities:
Accounts Payable (note 6)
17,965
30,217
Claimants Payable (note 7)
79,831
126,749
Due To D.C. Government (note 8)
16,234
17,499
Due To Federal Government (note 9)
15,717
-
Total Current Liabilities
129,747
174,465
Net Position:
Restricted for Unemployment Compensation Benefits
$
34,668
$
73,538
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
FOR THE YEARS ENDED SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
The accompanying notes are an integral part of these financial statements.
15
2021
2020
Operating Revenues:
Employer Taxes
$
145,775
$
139,833
Governmental Contributions (note10)
1,262,717
1,001,721
Total Operating Revenues
1,408,492
1,141,554
Operating Expenses:
Unemployment Benefits (note 11)
1,497,798
1,568,065
Total Operating Expenses
1,497,798
1,568,065
Operating (Loss)
(89,306)
(426,511)
Non-operating Revenues:
Transfer in from the District
49,000
-
Interest Revenues
1,436
10,653
Total Non-Operating Revenues
50,436
10,653
Change in Net Position
(38,870)
(415,858)
Total Net Position – Beginning
73,538
489,396
Total Net Position - Ending
$
34,668
$
73,538
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
The accompanying notes are an integral part of these financial statements.
16
2021
2020
Cash Flows from Operating Activities:
Cash Receipts from Employers
$
128,877
$
133,795
Cash Receipts from Governmental Contributions
1,270,340
917,443
Cash Payments for Other Liabilities
2,200
17,949
Cash Payments to Claimants
(1,544,716)
(1,460,952)
Net Cash Used In Operating Activities
(143,299)
(391,765)
Cash Flows from Investing Activities:
Interest Income Received
1,436
10,653
Net Cash Provided by Investing Activities
1,436
10,653
Cash Flows from Noncapital Financing Activities
Transfer in from the District
49,000
-
Net Cash Provided by Noncapital Financing Activities
49,000
-
Net Decrease in Cash
(92,863)
(381,112)
Cash, Beginning of Year
142,891
524,003
Cash, Ending of Year
$
50,028
$
142,891
Reconciliation of Operating Income to Net Cash Used in
Operating Activities:
Operating Income (Loss)
$
(89,306)
$
(426,511)
Adjustments to reconcile operating income (loss) to
net cash provided by (used for) operating activities
Increase Receivables/Due from D.C. Govt.
(65,271)
(6,512)
Increase/(Decrease) in Due from Federal Govt.
55,996
(83,804)
Increase/(Decrease) in Current Liabilities
(44,718)
125,062
Total Adjustments
(53,993)
34,746
Net Cash Used In Operating Activities
$
(143,299)
$
(391,765)
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
17
NOTE 1
NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature of Activities: Pursuant to Federal law, the Government of the District of
Columbia (the District) maintains an Unemployment Compensation Fund (the Fund). The
Fund pays up to 26 weeks of regular statutory benefits to eligible unemployed former
employees working in the District of Columbia or the Federal government. The Fund
does not currently pay any additional weeks of benefits to eligible claimants who have
exhausted their regular 26 weeks of benefits.
The Fund’s Operating Revenues consist of employer taxes and reimbursements from
governmental agencies for regular unemployment benefits paid to former employees.
Non-operating Revenue represents the interest generated by the Fund.
The Fund is administered by the Director of the District’s Department of Employment
Services. Substantially all administrative costs of the program are paid by Federal grants
and Special purpose funds, which are recorded in the District’s General Fund. These
financial statements present only assets, liabilities, revenues, and expenses of the Fund
and are not intended to present the financial position and results of operations of the
Government of the District of Columbia taken as a whole.
Basis of Presentation: The Fund’s financial statements are presented in accordance with
U.S. generally accepted accounting principles (GAAP) as promulgated by the
Governmental Accounting Standards Board (GASB). The Fund is considered an
enterprise fund under GAAP for governmental entities.
Basis of Accounting: The accompanying financial statements are prepared on the accrual
basis of accounting. Under this accounting method, all revenues are recognized in the
fiscal year earned, and expenses are recognized in the fiscal year incurred.
Measurement Focus: The financial statements are accounted for on a flow of economic
resources measurement focus, wherein all assets and liabilities are included in the
Statements of Net Position. The related Statements of Revenues, Expenses, and Changes
in Net Position present increases (revenues) and decreases (expenses) in net position.
Use of Estimates: The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
18
Accounting Pronouncements: During the fiscal year, the District has adopted GASB
Statement No. 84, Fiduciary Activities, and early adopted GASB Statement No. 98, The
Annual Comprehensive Financial Report issued by the Governmental Accounting
Standards Board. There was no impact on the Fund’s financial statements.
NOTE 2
CASH HELD WITH U.S. TREASURY
The Fund’s cash is held at the U.S. Department of Treasury (the Treasury) in a trust fund
in the District’s name. The Federal Unemployment Trust Fund includes deposits from the
unemployment insurance funds of all states. The Trust Fund is required by federal law to
invest only in obligations guaranteed by the United States. Pursuant to the Social Security
Act, the funds held at the Treasury earn interest quarterly based on the interest rates of
the Treasury’s Certificates of Indebtedness. Interest earned for the years ended September
30, 2021 and 2020 was $1,436 and $10,653 respectively. As of September 30, 2021, cash
held at the Treasury was $50,028, compared to $142,891 as of September 30, 2020. The
Federal Unemployment Trust Fund held at the Federal Reserve Bank is not categorized in
accordance with the criteria under GASB Statement No. 40, Deposit and Investment Risk
Disclosures—an Amendment of GASB Statement No. 3, because the Trust Fund is neither
a deposit with a financial institution nor an investment.
NOTE 3
ACCOUNTS RECEIVABLE, NET
The Fund’s accounts receivables consisted of the following as of September 30, 2021 and
2020:
2021
2020
Employer Receivables
$
34,853
$
31,808
Claimant Receivables
32,455
6,453
Due from Other States
966
7,204
Total Receivables
68,274
45,465
Less: Allowance for Doubtful Accounts
(31,695)
(25,784)
Accounts Receivable, Net
$
36,579
$
19,681
Employer contributions are recognized as revenues in the accounting period in which
they become due and measurable. Any contributions not received within the accounting
period are recognized as employer receivables. Claimants’ receivable are benefits paid to
claimants who are ultimately proven to be ineligible to receive all or a portion of those
benefits. The Fund recognizes a receivable from these claimants when the benefits
overpayment is identified. Due from other states is the amount owed to the Fund from
other states for unemployment benefits paid on their behalf. The percentage of ending
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
19
accounts receivable method is used to estimate and establish an allowance for doubtful
accounts for the employers and claimants’ receivables.
NOTE 4
DUE FROM D.C. GOVERNMENT
Due from D.C. Government is the amount owed to the Fund from the District for
unemployment benefits paid on its behalf to former employees as well as funds
transferred in. In the FY 2021 Budget Support Act passed on August 23, 2021, the
District transferred $49,000 to the Trust. As of September 2021, and 2020, the amount
due from the District was $49,302 and $929, respectively.
NOTE 5
DUE FROM FEDERAL GOVERNMENT
As of September 30, 2021, the amount due from the federal government is $28,506,
compared to $84,502 as of September 30, 2020. The balance due from federal
government represents benefit payments accrued for eligible unemployed civilian federal
employees (UCFE), eligible ex-military personnel (UCX) and claimants in expanded
federal programs under the Acts as well as credits to employers and state taxes withheld
for claimants.
NOTE 6
ACCOUNTS PAYABLE
As of September 30, 2021, and 2020, the Fund had payables to employers for taxes
overpaid; to various states for unemployment benefits paid to former District employees;
and to others for related activities.
2021
2020
Employer Tax Refund Payable
$
11,774
$
22,277
Cares Act (Reimb Employer Payment)
2,889
Due to Other States
2,742
4,425
Income Tax Payable
516
3,508
Others
44
7
Total Accounts Payable
$
17,965
$
30,217
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
20
NOTE 7
CLAIMANTS PAYABLE
Claimants’ payable is estimated amounts due to claimants for the remaining periods of
eligibility for claims filed as of year-end and are payable in the next fiscal year. The
claimants payable as of September 30, 2021 and 2020 are detailed as follows:
Programs
2021
2020
UI Regular
$
56,226
$
59,649
CARES Act 2020
23,605
67,100
Total Claims Payable
$
79,831
$
126,749
Certain CARES Act 2020 programs ended in September 4, 2021 and September 11,
2020, and no new claims beyond the end date.
NOTE 8
DUE TO D.C. GOVERNMENT
The amounts reported as Due to D.C. Government consisted of Reed Act, Unemployment
Compensation Modernization funds obligated for administrative costs, payments made by
the District on behalf of the Fund, CARES Act related activities, administrative
assessments, interest and penalties assessed and collected from employers for late tax
payments but not yet paid to the District. The amounts payable to the District as of
September 30, 2021 and 2020 were $16,234 and $17,499, respectively.
2021
2020
UC Modernization
$
8,484
$
8,735
District of Columbia on behalf of UI Trust Fund
4,927
7,061
REED ACT
1,954
1,470
Admin asses, int & penalties
437
233
UI Admin COVID 19
432
-
Total Due to D.C Government
$ 16,234
$ 17,499
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
21
NOTE 9
DUE TO FEDERAL GOVERNMENT
The amounts reported as Due to federal Government relates to claimant overpayments for
federally funded programs. The amounts payable to the Federal Government as of
September 30, 2021 is $15,717.
2021
2020
Federal Pandemic Unemployment Comp (FPUC)
$ 14,074
$
-
Pandemic Emergency Unemployment Comp (PEUC)
1,536
-
UI Benefits - Temporary Extension (EUC 08)
107
-
Total Due to Federal Government
$ 15,717
$
0
NOTE 10
GOVERNMENTAL CONTRIBUTIONS
Governmental contributions consisted of the following for the years ended September 30,
2021 and 2020.
2021
2020
Contribution – Other States
$
5,563
$ 13,542
Contribution – D. C Government
2,167
7,947
Federal Programs
UC – Federal Employees (UCFE)
4,810
10,362
UC – Ex-Servicemen (UCX)
152
165
CARES Act 2020/ARP Act 2021
Federal Pandemic Unemployment Comp (FPUC)
591,913
751,006
Pandemic Emergency Unemployment Comp (PEUC)
358,795
23,976
Extended Benefits (EB)
140,989
-
Pandemic Unemployment Assistance (PUA)
119,122
58,591
FEMA-Lost Wages Assistance
30,403
96,038
CARES Act District PUA Stimulus
11,513
-
Short Time Compensation
4,354
-
CARES Act Waived Wait Week Reimbursement
4,307
25,691
Mixed Earner Unemployment Comp (MEUC)
142
-
CARES Act (Reimb Employers Payment)
(11,513)
14,403
Total
$1,262,717
$1,001,721
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
22
NOTE 11
UNEMPLOYMENT BENEFITS
Unemployment expenses consisted of the following for the years ended September 30,
2021 and 2020.
2021
2020
UI Regular
$ 242,669
$ 587,847
Federal Programs
UC – Federal Employees (UCFE)
4,810
10,362
UC – Ex-Servicemen (UCX)
152
165
CARES Act 2020
Federal Pandemic Unemployment Comp (FPUC)
591,913
751,006
Pandemic Emergency Unemployment Comp (PEUC)
358,808
23,963
Extended Benefits (EB)
140,989
-
Pandemic Unemployment Assistance (PUA)
119,122
58,591
FEMA-Lost Wages Assistance
30,403
96,037
CARES Act – District PUA Stimulus
11,513
-
Short Time Compensation
4,354
-
CARES Act Waived Wait Week Reimbursement
4,307
25,691
Mixed Earner Unemployment Comp (MEUC)
142
-
UI Benefits – Temporary Ext.
129
-
CARES Act (Reimb Employers Payment)
(11,513)
14,403
Total
$1,497,798
$1,568,065
NOTE 11
COMMITMENTS AND CONTINGENCIES
As of September 30, 2021, and September 30, 2020, there were no matters of litigation
involving the Fund which would materially affect the Fund’s financial position should
any court decisions on pending matters not be favorable to the Fund.
NOTE 12
SUBSEQUENT EVENTS
In the FY 2022 Budget Support Act effective November 13, 2021 - the Delayed
Unemployment Compensation Payments Relief Amendment Act of 2021 was passed
approving $500 payment to eligible 10,000 claimants with the greatest number of days
between the timeframes described in the Act by December 31, 2021.
GOVERNMENT OF THE DISTRICT OF COLUMBIA
UNEMPLOYMENT COMPENSATION FUND
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2021 AND 2020
(Dollar amounts expressed in thousands)
23
The Fund evaluated the subsequent events and transactions through January 18th, 2022,
the date these financial statements were available for issue and has determined that no
subsequent material events other than stated above have occurred that would affect the
information presented in the financial statements or require additional disclosure.
individually or in the aggregate.
24
Diverse Thinking | Unique Perspectives
5101 Wisconsin Ave., NW
Suite 210
Washington, DC 20016
Phone: 202.207.3570
Fax: 202.968.1601
WWW.MCCONNELLJONES.COM
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND
ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR’S REPORT
To the Mayor, Members of the Council of the Government of the District of Columbia and
Inspector General of the Government of the District of Columbia
Washington, D.C.
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the Government of
the District of Columbia Unemployment Compensation Fund (the Fund), an enterprise fund of the
Government of the District of Columbia, as of and for the year ended September 30, 2021, and the
related notes to the financial statements, which collectively comprise the Fund’s basic financial
statements, and have issued our report thereon dated January 18, 2022.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Fund’s internal
control over financial reporting (internal control) as a basis for designing audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinion on the financial statements,
but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control.
Accordingly, we do not express an opinion on the effectiveness of the Fund’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control, such that there is a reasonable possibility that a material
misstatement of the entity’s financial statements will not be prevented or detected and corrected on a
timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may
exist that have not been identified. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material weakness
may exist that have not been identified.
25
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Fund’s financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on
the financial statements. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
entity’s internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the Fund’s internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Washington, D.C.
January 18, 2022
To report fraud, waste, abuse, or mismanagement:
(202) 724-TIPS (8477) and (800) 521-1639
http://oig.dc.gov
oig@dc.gov