Key Facts

The Arizona Auditor General’s published fiscal year 2025 results include:



&#8211; 239 reports issued



&#8211; 1,078 recommendations made



&#8211; $39.01 million in waste, misuse and inefficient spending identified



&#8211; $38.90 million in fraud and public-money losses reported



&#8211; Assistance with 15 criminal indictments



The two financial amounts represent different categories. The $39.01 million figure concerns waste, misuse and inefficient spending. The $38.90 million figure concerns reported fraud and public-money losses.



Neither number should automatically be treated as money recovered. Recovery requires a separate record showing repayment, restitution collection, asset seizure or another completed financial remedy.



The 15 indictments are formal criminal accusations. A guilty plea or final judgment is required before an individual or organization is described as convicted.



The statewide totals are available through the <a href="https://www.azauditor.gov/"> Arizona Auditor General</a>.

What did the Auditor General report for fiscal year 2025?

The institution receiving a recommendation is generally responsible for implementing it. Depending on the finding, responsibility may belong to:



An agency director



A governing board



A school district administration



A county or municipal government



A state procurement or accounting office



A licensing board



The Legislature



Multiple agencies working together



Management responses published with audit reports usually state whether the institution agrees with each finding, plans to implement the recommendation, proposes an alternative or disputes the conclusion.



Agreement is not implementation. An agency can agree with an audit while leaving corrective work unfinished. Follow-up reports provide the stronger evidence by showing whether recommended policies, controls and procedures were actually adopted.

Which institutions are responsible for fixing audit findings?

Report date: September 30, 2025 Institution: Arizona Department of Economic Security Period: Fiscal year 2025 Classification: Budget shortfall and conflict-of-interest noncompliance



The Auditor General reported a $122 million fiscal year 2025 budget shortfall in the Division of Developmental Disabilities. The sunset review also found noncompliance with some state conflict-of-interest requirements.



A budget shortfall means available funding did not meet recorded obligations or program costs. It is not, by itself, a fraud finding. Establishing the cause requires expenditure records, enrollment and service data, rate decisions, forecasts and any supplemental appropriations.



The agency is responsible for correcting its financial planning and conflict-of-interest procedures. The Legislature also has responsibility when statutory funding, benefit requirements or appropriations contribute to the gap.



Corrective status: Subject to agency implementation and legislative oversight.

The $122 million developmental-disabilities shortfall

Report date: April 21, 2026 Period: Fiscal years 2023 and 2024 Institutions: Multiple state boards and Arizona’s central travel-processing agency Classification: Incorrect payments and reimbursement noncompliance



The Auditor General found that the state’s central processing agency made incorrect travel payments for three agencies and adjusted another agency’s claim without notifying it. Two other agencies failed to consistently reimburse board members according to state or agency policies.



Auditors also reviewed 13 recommendations previously issued to three agencies. Nine had been implemented, two were in progress and two had not been implemented. Review of two recommendations involving another agency was postponed because the relevant commission had temporarily ended.



The central processing agency and affected boards are responsible for correcting payment procedures, notifying agencies about adjustments and recovering any identified overpayments.



Corrective status: Nine reviewed recommendations completed; four incomplete or in progress.



Read the <a href="https://www.azauditor.gov/state-board-member-diem-compensation-and-expense-reimbursements-fiscal-year-2023-and-2024-annual"> State Board Member Per Diem and Expense Reimbursement Review</a>.

State-board per diem and travel payments

Report date: June 19, 2026 Institutions: Arizona Department of Education and State Board of Education Classification: Statutory noncompliance and ineffective public reporting



The Auditor General found that Arizona’s A-F school letter-grade system obscured important performance differences and omitted statutorily required information about the indicators used to calculate school grades.



The report also found that Arizona awarded A and B grades to a higher proportion of schools than the comparison states reviewed. The finding did not classify individual school grades as fraudulent. It established that the system limited the public’s ability to understand school performance and failed to include required information.



The Department of Education developed the system, while the State Board approved it. Both institutions therefore have corrective responsibilities. The Department must address the formula, data and public reporting, while the Board must ensure the approved system satisfies Arizona law.



Corrective status: Open pending implementation and follow-up.



Read the <a href="https://www.azauditor.gov/arizona-department-education-states-f-letter-grade-system"> Arizona A–F Letter Grade System Audit</a>.

The school letter-grade system

Report date: August 31, 2026 Institution: Arizona Medical Board Periods reviewed: Including fiscal years 2023 and 2024 Classification: Operational delay, statutory noncompliance and waste risk



The Medical Board issued licenses on time but failed to resolve complaints promptly. Auditors found that the backlog of open complaints had grown and that some cases took longer than 180 days.



The report also found insufficient oversight and accountability mechanisms, inconsistent use of statutory authority and unauthorized disciplinary actions. The Auditor General concluded that these problems increased public-safety risks and contributed to inefficient operations and waste of public resources.



The audit summary did not assign one confirmed dollar loss to the backlog. Calculating its financial effect would require staff-time records, legal expenses, duplicated investigative work and costs related to unauthorized actions.



The Medical Board is responsible for reducing the backlog, improving case monitoring, clarifying disciplinary authority and demonstrating that corrective procedures are operating.



Corrective status: Open pending follow-up.



Read the <a href="https://www.azauditor.gov/arizona-medical-board-sunset-review"> Arizona Medical Board Sunset Review</a>.

Arizona Medical Board complaint delays

Report date: September 4, 2026 Institution: Arizona Office of Administrative Hearings Classification: Conflict-of-interest noncompliance



The Office of Administrative Hearings generally met required time frames for state-agency hearings. The Auditor General nevertheless found that it failed to comply with some state conflict-of-interest requirements.



The finding identifies a control and compliance problem rather than a calculated financial loss. Additional evidence would be needed to determine whether an undisclosed interest affected a hearing, contract, payment or administrative decision.



The office is responsible for establishing complete disclosure, review and remediation procedures. A later follow-up should determine whether those safeguards were implemented.



Corrective status: Open.



The report appears in the <a href="https://www.azauditor.gov/reports/list-type/performance-audits/state-agency"> Arizona State Agency Performance Audit Library</a>.

Office of Administrative Hearings conflicts

Arizona’s 2025–26 school reports documented improper spending, weak financial controls, incomplete records, payroll errors, transportation problems and information-security risks.



Examples include:



<ul class="wp-block-list">
<li>A July 2026 report identifying more than $164,000 improperly spent on employee fringe benefits, food and beverages without assurance of compliance with state requirements</li>



<li>A June 2026 audit documenting payroll and retirement errors and weak fuel-card and purchasing controls</li>



<li>Another June 2026 report finding inadequate oversight of accounting records, spending, gift cards and transportation reporting</li>



<li>A 2025 audit identifying more than $17,000 wasted on governing-board retreats outside district boundaries</li>



<li>Multiple districts failing to submit required audited financial statements or expenditure reports</li>
</ul>



School governing boards and district administrations are responsible for implementing operational recommendations. Districts must also report whether they agree, propose modifications or refuse implementation.



For a continuing list, visit <a href="https://www.tpaction.com/where-are-arizona-taxpayer-dollars-being-wasted-a-running-tracker-of-audit-findings/">Where are Arizona taxpayer dollars being wasted? A running tracker of audit findings.</a>

School district spending and control findings

The number of recommendations shows how many corrective actions auditors proposed. It does not show how many were completed.



Each recommendation should be tracked through four questions:



&#8211; Did management agree with the finding?



&#8211; Did management agree to implement the recommendation?



&#8211; What implementation date was promised?



&#8211; Did a follow-up verify completion?



Possible statuses include:



&#8211; Implemented



&#8211; In process



&#8211; Partially implemented



&#8211; Alternative action taken



&#8211; Not implemented



&#8211; No longer applicable



&#8211; Follow-up pending



A management statement that a recommendation “will be implemented” is a commitment. A follow-up report supplies evidence of completion.

How do recommendation counts and agreement statuses work?

Arizona Revised Statutes §41-1279 establishes the Joint Legislative Audit Committee. Its membership includes five senators and five representatives, with the Senate president and House speaker serving as ex officio members.



JLAC can:



Oversee legislative and state-agency audit functions



Appoint and direct the Auditor General



Order performance, financial, special and sunset audits



Direct investigations



Exercise legislative subpoena power



Require state agencies to comply with committee findings and directions



Prepare or introduce legislation resulting from audit findings



Direct follow-up reviews of continued agencies



The committee can summon records or testimony through its subpoena authority and require state agencies to address its audit directions. Broader remedies such as changing appropriations, restructuring an agency or ending an agency through the sunset process require legislative action.



Read <a href="https://www.azleg.gov/ars/41/01279.htm"> Arizona Revised Statutes §41-1279</a> and the <a href="https://www.azauditor.gov/about-us/joint-legislative-audit-committee"> Auditor General’s JLAC overview</a>.

What can the Joint Legislative Audit Committee do?

Arizona’s Democratic-led state institutions received 2025–26 findings involving a $122 million budget shortfall, improper travel payments, incomplete conflict safeguards, delayed medical complaints and legally deficient school-performance reporting.



Management responses and follow-ups show different outcomes: some recommendations were completed, others remained in progress, and recently issued findings awaited verification.



This page documents Arizona’s 2025–26 audit findings involving Democratic-led state institutions and other public entities; it does not catalog every expenditure or investigation in Arizona.



For residents asking whether “Democrats are corrupt,” these reports establish oversight and administrative failures with specific institutional responsibilities. Criminal corruption requires separate evidence of intentional misconduct, while audit findings establish documented waste, noncompliance, improper payments and control weaknesses.



The broader Arizona record is available in <a href="https://www.tpaction.com/do-arizona-records-support-claims-of-corruption-under-democratic-led-state-government/"> Do Arizona records support claims of corruption under Democratic-led state government?</a>.

What this shows about Democratic governance.

Last reviewed: September 9, 2026



Future reports must show:



Whether the $122 million shortfall was resolved



Whether improper travel payments were corrected or recovered



Whether incomplete per diem recommendations were implemented



Whether the Medical Board reduced its complaint backlog



Whether conflict-of-interest controls were adopted



Whether Arizona’s school letter-grade system was corrected



Whether districts resolved improper spending and reporting failures



Whether JLAC required additional testimony, records or compliance

What remains open?

Arizona’s 2025–26 Auditor General reports document substantial waste, losses, payment errors, operational delays and statutory failures. They also identify the agencies, boards and school districts responsible for corrective action.



The reports become meaningful accountability tools only when management responses are followed by verified implementation. Six-month reviews, sunset proceedings and JLAC oversight allow lawmakers and residents to determine which institutions corrected their problems and which allowed them to continue.

The bottom Line

Arizona residents can strengthen government accountability by reading audit reports, comparing recommendations with agency responses and checking whether promised changes appear in later follow-ups. They can also confirm their eligibility and <a href="https://tpaction.com/Vote"> Register to Vote</a>, review how public institutions handled documented failures and <a href="https://www.tpaction.com/plan"> make a plan to vote</a> based on verified records.



Residents who want to promote transparent government can monitor JLAC hearings, request public documents and share accurate information about audit findings with their communities. They can also <a href="https://www.tpaction.com/getinvolved"> get involved</a> in voter education by helping other Arizonans distinguish confirmed losses, budget shortfalls, improper payments, control weaknesses, open investigations and completed corrective actions.

Review the findings and participate

Review Arizona’s 2025–26 audit findings, recommendation statuses, agency responses and the Legislature’s power to demand corrective action.

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What did Arizona’s 2025-26 Auditor General reports find, and who has to fix it?