Arizona legislators discuss failures in federal fund audits

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(The Center Square) – The Joint Legislative Audit Committee met Monday for a public hearing on Arizona’s failure to submit its required annual Single Audit by federal deadlines.

Committee Chairman Matt Gress, a Phoenix Republican member of the House, said Arizona has missed the deadline for the federal Single Audit, which reviews the state’s financial statements and Arizona's distribution of federal funds, for four consecutive years.

House Majority Leader Michael Carbone, R-Buckeye, said this does not fly with ordinary citizens and the government.

"If I was late to file my taxes 420 days, it's going to come with consequences,” said Carbone.

The Fiscal Year 2025 audit, which was due March 31, is still outstanding, and the state Auditor General's Office projects it may not be ready until March 2027. This could mean federal funding freezes.

Brian Stutzman, the Arizona financial audit manager, said millions of federal dollars have already been frozen or withheld, including $154 million for the University of Arizona and Arizona State University from the National Institutes of Health and $74 million for the University of Arizona from the U.S. Department of Energy.

"We are now starting to see these significant risks begin to solidify into real actions taken against the state and universities,” said Stutzman.

Sen. Catherine Miranda, D-Laveen, defended the Hobbs administration by emphasizing that it inherited longstanding systemic delays from previous executive leadership.

"It's very difficult to walk into a mess,” said Miranda. “Basically, that's what our governor has done is walk into a mess because there have been several years with the executive that was in charge of this responsibility."

Katie Hobbs, a Democrat, became governor of Arizona on Jan. 2, 2023. She's running for reelection in the Nov. 3 general election against U.S. Rep. Andy Biggs, R-Gilbert.

Gustav Chiarello, assistant secretary for financial resources at the U.S. Department of Health and Human Services, warned Hobbs in July that ongoing noncompliance could lead to federal enforcement actions, such as withheld payments, disallowed costs, or suspended/terminated awards. On Monday, Chiarello warned JLAC members about sloppy accounting and administrative noncompliance.

"Fraud follows money, and you should all know that,” said Chiarello. “Fraud follows money, and so when the government sends out money, fraudsters are going to come right after it."

As of press time, the committee had not taken a vote on the issue. The Center Square contacted Gress for further comments, but did not hear back by publication time.