U.S. Fish and Wildlife Service Wildlife and Sport Fish Restoration Program Grants Awarded to the State of Arizona, Arizona Game and Fish Department From July 1, 2013, Through June 30, 2015

We audited the costs claimed by the Arizona Game and Fish Department (Department), under grants awarded by the U.S. Fish and Wildlife Service (FWS). The FWS provided the grants to the State under the Wildlife and Sport Fish Restoration Program. The audit included claims totaling $70.2 million on 11 grants that were open during the State fiscal years that ended June 30, 2014, and June 30, 2015. The audit also covered the Department’s compliance with applicable laws, regulations, and FWS guidelines, including those related to collecting and using hunting and fishing license revenue and reporting program income.We questioned costs totaling $3,948,965 due to 1) unallowable payroll charges, 2) out-of-period costs, 3) inadequate subrecipient financial management systems, 4) deficiencies in documenting in-kind contributions, and 5) inadequate competition. In addition, we determined that the Department:Potentially diverted license revenue by writing off $21,276 from the State’s accounting records without maintaining adequate documentation to justify this actionDid not consistently comply with subaward requirementsSubmitted annual performance reports to the FWS that were missing key informationDid not comply with all comprehensive management system requirementsInappropriately drew down $23,425 in Federal funds from the FWSThe FWS Region 2 and the Department responded to our draft report. We consider all recommendations to be resolved but not implemented