Commerce Committee recommends continuing Department of Insurance and Financial Institutions with revisions after audit finds inconsistent enforcement and grant‑

The Arizona House Commerce Committee recommended continuing the Arizona Department of Insurance and Financial Institutions with revisions following a sunset review that identified shortcomings in enforcement, conflict‑of‑interest processes and oversight of automobile‑theft grant funds.

Auditor General senior performance auditor Liam Van Pelt told the committee the office’s review found the department "did not follow recommended practices for consistently considering licensing disciplinary and non disciplinary history when determining enforcement actions, and lacked documentation explaining how it determines some enforcement actions." Van Pelt said auditors reviewed enforcement files and found similar violations produced different levels of documentation and escalation.

Why it matters: Inconsistent enforcement or missing documentation can leave consumers at greater risk of repeated violations, inhibit the department’s ability to deter future misconduct and raise equal‑treatment concerns, the Auditor General said. Van Pelt also told members the audit identified conflict‑of‑interest disclosure forms that did not capture all statutorily required information and noted the department’s special file was missing some disclosures.

DIFI Director Barbara Richardson told the committee the agency has been implementing the audit recommendations and described steps the department has taken since the review. "The department does intend to implement all of the Auditor General's recommendations and has been making great progress to do so," Richardson said. She described a revised enforcement policy that requires staff to document mitigating and aggravating factors in a violation scoring matrix and said the department adopted a four‑tier system for penalties and is encouraging corrective action plans.

The Auditor General also raised concerns about oversight of monies appropriated from the Automobile Theft Authority (ATA) Fund. Van Pelt said the department required monthly reports from the Department of Public Safety’s vehicle theft task force but those reports did not demonstrate that the statutorily required 75 percent of certain appropriations were spent on personnel and employee‑related expenses. Van Pelt noted auditors reviewed a grant file where documentation was incomplete yet payments were made.

James McGuffin, executive director of the Arizona Automobile Theft Authority and an assistant director within DIFI, described the vehicle theft task force funded from ATA grants. McGuffin said the task force included 12 DPS officers fully funded and seven outside‑agency detectives funded at 75 percent. He said the task force recovered about 2,050 stolen vehicles in fiscal 2024 with an estimated value of $43,600,000, and told the committee the program provides a strong return on investment.

Committee action and votes: After question‑and‑answer exchanges and testimony by DIFI leaders and audit staff, the committee moved to recommend continuation of DIFI with revisions. The motion passed by roll call: 10 Aye, 0 Nay, 0 Present, 0 Absent. The committee’s recommendation will be transmitted for further legislative consideration.

What’s next: The Auditor General reported the department agreed with most findings and later indicated it would implement all recommendations; auditors will follow up on implementation in April 2025, the office said. The committee noted it expects to track updates to the department’s policies and the status of implementation while legislation is considered.