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State auditors report $2.88M in CCDF payments lacking documentation; JLAC orders broad special audit
Summary
Auditor General staff told JLAC auditors found questioned costs of $2,880,442 for one child-care provider and reporting errors in CCDF subaward reporting; the committee authorized a broad special audit of the Child Care and Development Fund to cover FY2021–25, with an estimated cost of $547,000–$625,000 and reports due by July 31, 2027.
The Joint Legislative Audit Committee on June 1 authorized a comprehensive special audit of Arizona’s Child Care and Development Fund after Auditor General staff outlined multi-year federal‑single‑audit findings and reporting errors that federal authorities have flagged.
Catherine Edwards Decker, director of the Auditor General’s Financial Audit Division, told JLAC that the Auditor General reaudited the CCDF program for FY2024 after finding documentation gaps in earlier work. In one instance the office expanded its testing and identified $2,880,442 in payments for a provider that lacked sufficient supporting documentation, which auditors “questioned” as potentially unallowable costs. The Auditor General also reported subaward-reporting errors totaling tens of millions of dollars in prior single‑audit filings and said federal agencies have increased scrutiny of CCDF programs in several states.
Auditor General Lindsey Perry asked JLAC to approve a special audit with a broad scope to examine DES’s oversight of providers, licensing and monitoring by the Department of Health Services, and a sample of providers’ billing and attendance records; the scope would focus on fiscal years 2021 through 2025. Perry said the special audit could include on‑site visits, retain consultants, and would likely cost between $547,000 and $625,000 if approved. The office proposed issuing reports on components of the scope as they are completed, with all work finished by July 31, 2027.
Committee members expressed concern that the single‑audit process is limited by federal scope and agreed that JLAC’s special audit authority allows a deeper, operational review of provider monitoring and the accuracy of claims. Some members urged including the implementation and design of DES’s forthcoming electronic billing system as an audit component to ensure it addresses the previously identified gaps.
Co‑chair Finchem moved a motion that the special audit proceed and include access to records and staff from multiple state agencies reporting CCDF expenditures; the committee approved the motion. The Auditor General said staff would hold entrance conferences with DES and other agencies and begin evidence collection once the committee’s direction is formalized.
