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State audit delay raises risk of withheld federal funding; single audit likely months late
Summary
Auditors told JLAC that Arizona's FY2024 financial statement and single (federal) audit remain incomplete due to late prior reports, agency data errors and delayed agency responses, and estimated issuance dates in early 2026; auditors warned of federal consequences and urged stronger agency reporting capacity.
Auditor General staff updated JLAC on the status of Arizona’s fiscal‑year‑2024 statewide financial statement and related federal single audit and warned of mounting risk from continued delays.
Catherine Edwards Decker, the Auditor General’s financial audit director, explained that federal law requires states to submit the single audit by March 31 each year. Arizona’s FY2024 financial statements and single audit were due 03/31/2025 but remain incomplete because the FY2023 reports were issued late (Dec 2024), many agencies have delivered draft or corrected financial information late, and auditors continue to encounter material errors — notably in ACCESS — that must be corrected before the statewide statements can be finalized.
Decker said the Auditor General’s office estimates issuing the FY2024 financial statements by 2026‑02‑13 and the federal single audit by 2026‑03‑31, but those are estimates and subject to change as agencies provide corrected data. She noted the federal cognizant agency (HHS) denied a requested filing extension to 09/30/2025 and that persistent late reporting raises the risk of federal actions, including withheld awards and reduced future funding, and could also affect the state’s bond ratings.
Members pressed for a plan of action. Auditors emphasized the need for agencies to improve financial reporting capacity and recommended that the Arizona Department of Administration and large agencies (ACCESS, DES, ADE) ensure accurate, complete and timely submissions — including validating data before the Auditor General’s review to avoid rework. The AG’s office said it has already begun preliminary FY2025 audit work to reduce future lag.
Next steps: The Auditor General will continue audit work, monitor agency corrections and report timing to JLAC; legislators requested that ADOA and relevant agency leadership provide a written plan showing how they will deliver accurate data on time and what staffing or procedural changes are being made to meet the schedule.
