By Ethan Faverino |
A top federal health official is scheduled to testify before Arizona lawmakers on September 21 as the state faces scrutiny over repeated delays in completing a federally required audit and potential consequences for federal funding.
The Joint Legislative Audit Committee, chaired by State Rep. Matt Gress (R-LD4), will hold a public hearing to examine Arizona’s failure to submit its required Single Audit by federal deadlines and what steps are being taken to return the state to compliance.
Gustav Chiarello, Assistant Secretary for Financial Resources at the U.S. Department of Health and Human Services (HHS), is scheduled to testify before the committee. HHS notified Governor Katie Hobbs in July that Arizona was not in compliance with federal Single Audit requirements.
A Single Audit is an annual examination of a government entity’s financial statements and its compliance with requirements governing federal awards.
Under federal rules, entities that meet the applicable threshold for federal expenditures are required to undergo a Single Audit, which serves as an oversight mechanism for the use of federal funds.
According to the Arizona House of Representatives, the state has missed its federal Single Audit deadline for four consecutive fiscal years.
Arizona’s fiscal year 2025 audit was due March 31, 2026 but remains outstanding. The Arizona Auditor General has projected the audit may not be issued until March 5, 2027, less than a month before the fiscal year 2026 audit is due.
HHS has warned that continued noncompliance could result in federal enforcement measures, including additional conditions on federal awards, temporarily withheld payments, disallowed costs, or the suspension or termination of federal awards.
HHS has recently increased its focus on Single Audit compliance nationwide.
The department announced an initiative earlier this year examining years of Single Audit information from states and federal grantees, saying its initial review identified repeated unresolved findings and hundreds of grantees that had failed to submit required audits.
According to the PHX Reporter, Gress said the continuing delays have moved beyond a paperwork issue and require greater attention to management and accountability.
“I’m deeply concerned,” Chairman Gress said. “This is something we’ve been raising since I became Chairman of the Joint Legislative Audit Committee in 2023, and the Auditor General has now made clear that the State’s current timeline is not realistic.”
Gress said that addressing the delays will require greater accountability from state agencies responsible for Arizona’s financial reporting.
“The Governor should be driving a coordinated corrective plan across the agencies the Auditor General identified, with clear deadlines and accountability for each one,” said Gress.
“The Auditor General has laid out what has to happen for the audit to be completed by March 5, 2027, so the administration should be treating those milestones as an urgent management priority and doing everything possible to protect federal funding,” he added.
Other Republican lawmakers have also publicly questioned the state’s failure to complete the audit on time.
State Senator Janae Shamp (R-LD29) questioned the delays publicly on X, saying, “@HHSGov just put it in writing: Arizona is NOT compliant on the FY25 Single Audit. Due March 31. Not filed. Why? Hiding something? @katiehobbs @GovernorHobbs what is your action plan to ensure vulnerable, innocent Arizonas do not suffer from your administration’s incompetence?”
State Representative John Gillette responded to Shamp’s post, alleging problems involving the commingling of funds, noncompliant spending and unauthorized payments.
Gress, however, told the PHX Reporter that he would not speculate about whether the delays indicated information was being concealed without evidence.
“I’m not going to speculate that something is being hidden without evidence,” he said. “But the Auditor General documented inaccurate financial information, delayed responses, significant errors requiring revised financial statements, and unresolved reconciliation issues.”
“So there are legitimate questions that deserve rigorous oversight and clear answers,” he added.
The September 21 hearing is expected to examine the causes of the delays, Arizona’s corrective action plan, which federal funding could potentially be affected, and what changes are necessary to prevent another missed deadline.
In addition to Chiarello, lawmakers are scheduled to hear from the Arizona Auditor General, representatives from Arizona’s three public universities, the Arizona Health Care Cost Containment System, the Arizona Department of Education, the Department of Economic Security, the Department of Administration, and the Governor’s Office.
The hearing is scheduled for 9 a.m. Monday in House Hearing Room 1 at the Arizona State Capitol.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
