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ADOT Audit Finds MVD Failures In Overseeing Third Parties

August 28, 2023

By Daniel Stefanski |

A recent audit from the Arizona Auditor General has bad news for a division within the Arizona Department of Transportation.

On Thursday, the Arizona Auditor General released a report on the Arizona Department of Transportation – Motor Vehicle Division’s (MVD) Oversight of Third Parties.  The overview of the report summarized that “MVD failed to ensure authorized third-party companies consistently issued vehicle titles, driver licenses, and identification cards only to qualified and/or authorized individuals/entities, increasing public safety risks such as unsafe drivers, vehicle and identity theft, fraud, and terrorism.” The report was delivered by the Auditor General, Lindsey Perry, who transmitted the findings to Members of the Arizona Legislature, Governor Katie Hobbs, and the Director of the Arizona Department of Transportation.  

The purpose of this audit was to “determine whether MVD effectively oversaw third parties to ensure they issued vehicle titles, driver licenses, and identification cards only to qualified and authorized individuals/entities.”

Out of more than 17 million documents (vehicle titles, registrations, driver licenses, and identification cards) issued in Arizona, 36% have been disseminated by third parties. The Arizona Department of Transportation has 96 third parties across 175 locations.  

Through a review of a 130-transaction sample from third parties between March and October 2022, the Auditor General discovered that 25 of these records “lacked documentation that confirmed that the individuals/entities who received vehicle titles, driver licenses, and identification cards were qualified and/or authorized to receive them.” Twenty-two of those results were exposed as having “high-risk errors according to MVD guidance.”  

The report warned that “fraudulently obtained identification documents may facilitate criminal activity, including fraud, identity theft, and terrorism,” noting that “individuals who fraudulently obtain identification documents may do so to commit other crimes, such as fraud of acts of terrorism.”

The Auditor General made six recommendations to MVD, which Perry told state officials that “the Arizona Department of Transportation agrees with all the findings and plans to implement all the recommendations.” The recommendations for MVD were as follows:

  • Ensure its third-party contract performance measurement attachment includes clearly defined performance requirements;
  • Ensure third parties issue vehicle titles, driver licenses, and identification cards only to qualified and/or authorized individuals/entities by developing and implementing written policies, procedures, and guidance for its third-party quality assurance process;
  • Develop and implement training on its quality assurance policies and procedures for all applicable MVD staff who support the third-party quality assurance process to ensure adherence to established oversight policies, procedures, and guidance;
  • Develop and implement training for all third parties or their authorized representatives, and verify their completion of the training;
  • Conduct an initial analysis of transactions the third parties were provided for self-review dating back to February 2022 to assess third-party compliance with statutory minimum quality standards and MVD’s quality assurance process, and continue to complete a monthly analysis thereafter up until MVD implements a revised third-party quality assurance process as described in Recommendation 2;
  • Identify and implement changes to align its third-party quality assurance process more closely with its quality assurance process for MVD field offices, including conducting a staffing and workload analysis, and taking action as needed to ensure sufficient staffing resources are allocated to third-party oversight.

The State’s Department of Transportation was called out for its inconsistency in upholding the recommendations made by the Auditor General in 2015. The Auditor General highlighted that its office had “recommended MVD ensure any changes to its processes did not weaken its oversight of third parties, with specific recommendations to improve its oversight of third-party transaction accuracy and to take corrective actions against third parties with serious errors or patterns of problems.” The Auditor General followed up with the Department two years after the audit, finding that MVD had successfully implemented the recommendations. However, that adherence apparently came to an end a handful of years later when “MVD established a new quality assurance process in February 2022 that is inconsistent with recommended practices for monitoring and overseeing third parties’ performance.”  

According to the Arizona Auditor General, its mission is to “provide independent and impartial information and specific recommendations to improve the operations of State and local government entities.”

Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.

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