Performance audit, Arizona Game and Fish Commission, Heritage Fund : report to the Arizona Legislature

              A REPORT
TO THE
ARIZONA LEGISLATURE
Debra K. Davenport
Auditor General
Performance Audit
Arizona Game and
Fish Commission
Heritage Fund
Performance Audit Division
December • 2011
REPORT NO. 11-14
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five senators and five
representatives. Her mission is to provide independent and impartial information and specific recommendations to improve the opera-tions
of state and local government entities. To this end, she provides financial audits and accounting services to the State and political
subdivisions, investigates possible misuse of public monies, and conducts performance audits of school districts, state agencies, and
the programs they administer.
The Joint Legislative Audit Committee
Audit Staff
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You may request them by contacting us at:
Office of the Auditor General
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Additionally, many of our reports can be found in electronic format at:
www.azauditor.gov
Dale Chapman, Director
Jeremy Weber, Manager and Contact Person
Cathy Clark
Rita Seto
Cheya Wilson
Genny Wilson
Senator Rick Murphy, Chair
Senator Andy Biggs
Senator Olivia Cajero Bedford
Senator Rich Crandall
Senator Kyrsten Sinema
Senator Steve Pierce (ex officio)
Representative Carl Seel, Vice Chair
Representative Eric Meyer
Representative Justin Olson
Representative Bob Robson
Representative Anna Tovar
Representative Andy Tobin (ex officio)
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
MELANIE M. CHESNEY
DEPUTY AUDITOR GENERAL
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
December 27, 2011
Members of the Arizona Legislature
The Honorable Janice K. Brewer, Governor
Mr. Larry D. Voyles, Director
Arizona Game and Fish Department
Mr. Robert R. Woodhouse, Chair
Arizona Game and Fish Commission
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Arizona
Game and Fish Commission Heritage Fund. This report is in response to Arizona Revised
Statutes (A.R.S.) §17-298.01 and was conducted under the authority vested in the Auditor
General by A.R.S. §41-1279.03. I am also transmitting within this report a copy of the Report
Highlights for this audit to provide a quick summary for your convenience.
As outlined in its response, the Arizona Game and Fish Department agrees with all of the
findings and plans to implement or implement in a different manner all of the
recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on December 28, 2011.
Sincerely,
Debbie Davenport
Auditor General
Attachment
cc: Arizona Game and Fish Commission Members
Statute establishes five Heritage
Fund program areas and the
specific allocation of monies to
those areas. The largest part, 60
percent, is to be used for the
identification, inventory, acquisi-tion,
protection, and manage-ment
of sensitive habitat, includ-ing
habitat for endangered and
threatened wildlife species.
Heritage Fund monies have been
used to restore the endangered
Sonoran pronghorn, the California condor,
and many other species around the State.
The Heritage Fund is also used for
2011
December • Report No. 11-14
Arizona Game and
Fish Commission
Heritage Fund
Our Conclusion
The Arizona Game and
Fish Commission
(Commission) Heritage
Fund was created by a
1990 voters’ initiative for
the purpose of preserving,
protecting, and enhancing
Arizona’s natural
environment. Although the
Arizona Game and Fish
Department (Department)
has policies and
procedures to direct the
use of Heritage Fund
monies, the Department
should strengthen these
policies and procedures to
ensure that monies are
used appropriately,
particularly with regard to
administrative costs,
contracts, and escrow
accounts. A major purpose
of the Heritage Fund is to
purchase land to conserve
wildlife habitat, and the
Department needs to
improve the management
of these properties.
REPORT
HIGHLIGHTS
PERFORMANCE AUDIT
Heritage Fund used to protect species and acquire sensitive
habitat
program areas that address education,
urban wildlife, and habitat and to provide
access to public lands.
Policies need strengthening to ensure appropriate use of
the Heritage Fund
Department policies and procedures
help guide Heritage Fund
expenditures—The Department has
policies to ensure that Heritage Fund
monies are spent for the purposes
prescribed by statute. For example, the
Department has policies and procedures
to ensure it pays only appropriate payroll
costs to employees who perform Heritage
Fund work and awards grants to entities
such as the state universities for Heritage
Fund purposes.
Policies and procedures needed for
allocating administrative and shared
costs—In fiscal year 2011, the
Department used Heritage Fund monies
to pay more than $761,000 of the
Department’s administrative costs,
including the salaries and benefits of 12
positions. In addition, the Department
uses Heritage Fund monies to pay some
shared costs. For example, in fiscal year
2010, the Department used Heritage Fund
monies to pay for $15,389 of the $82,227
used to publish its Arizona Wildlife Views
magazine. Although this magazine
featured articles on all Heritage Fund
program areas, the Department used only
public access and urban wildlife monies
to pay the shared costs.
Although it may be appropriate to allocate
administrative and shared costs to the
Heritage Fund, the Department could not
support the amounts allocated to the
Heritage Fund or among its program
areas for the expenditures reviewed.
Procedures needed for monitoring
contracts paid with Heritage Fund
monies—In one contract, the Department
paid a private landowner $6,700 to restore
nearly 670 acres of grassland habitat and
in another, the Department funded the
position of an employee at the
Department of Water Resources for
Heritage Fund-related work. However, the
Heritage Fund program areas and statutory
allocations
• Identification, inventory, acquisition, protection, and
management of sensitive habitat (IIAPM)—60 percent
• Urban wildlife and habitat—15 percent
• Habitat evaluation and protection—15 percent
• Environmental education—5 percent
• Public access—5 percent
Arizona Game and
Fish Commission
Heritage Fund
REPORT
HIGHLIGHTS
PERFORMANCE AUDIT
December 2011 • Report No. 11-14
A copy of the full report is available at:
www.azauditor.gov
Contact person:
Jeremy Weber (602) 553-0333
Department does not have procedures to monitor
these contracts.
Department should report accurate financial
information and establish policies and
procedures for managing land acquisition
monies in escrow—The Department deposits
money into an escrow account held with a title
company prior to purchasing property with Heritage
Fund monies. The land acquisition process can
take a long time. For example, monies were held in
escrow from December 2009 until March 2011 for
the purchase of one property.
At June 30, 2011, the Department held approxi-mately
$5.3 million in escrow with a title company
for a potential land acquisition. However, the
Department recorded the monies as a capital
expenditure on the State’s accounting system
instead of cash on deposit. The Department also
lacks written policies and procedures for spending
and monitoring land acquisition monies held in
escrow. Because expenditures of the monies held in
escrow are not processed through the State’s
accounting system, such policies and procedures
are important to safeguard these monies.
Recommendations:
The Department should:
• Implement policies and procedures for allo-cating
administrative and shared costs to the
Heritage Fund.
• Implement procedures to monitor all Heritage
Fund-supported contracts.
• Appropriately record and/or report financial
transactions pertaining to escrow accounts for
land acquisitions.
• Implement policies and procedures for spend-ing
and monitoring land acquisition monies held
in escrow.
Department should improve management of Heritage Fund properties
Commission has purchased several Heritage
Fund properties—Statute requires that at least 24
percent of the Heritage Fund monies be used to
purchase sensitive habitat for endangered or
threatened wildlife. As of June 30, 2011, the
Commission had spent nearly $31 million in
Heritage Fund monies to purchase 24 properties
comprising more than 14,000 acres. For example,
the nearly 200-acre Horseshoe Ranch was
purchased in March 2011 to protect and restore
habitat that supports endangered species such as
the yellow-billed cuckoo bird and the Gila chub fish.
Some management plans not completed—
Although department policy requires management
plans for each Heritage Fund property, this policy
does not set time frames for completing these
plans. In addition, as of October 2011, the
Department had not yet completed plans for three
properties.
Management plan implementation and
effectiveness not monitored—The Department
also does not have policies to monitor the
implementation and effectiveness of its
management plans. Although the Department
indicated that it may be difficult to assess the
impact of specific land purchases on wildlife species
because species restoration can take many years
and because of circumstances such as flooding
and disease, staff may already collect data that may
be helpful in assessing the impact of its property
management.
Management plans not updated—As of October
2011, management plans for 16 of the 24 Heritage
Fund properties had not been updated for 8 to 15
years. Periodically reevaluating and updating
management plans could help the Department
consider changing property conditions. The
Department’s Lands Council has requested that all
management plans be updated by April 2012.
Recommendations:
The Department should:
• Complete management plans for all Heritage
Fund properties.
• Establish time frames for finalizing management
plans for future properties.
• Monitor the implementation and effectiveness of
management plans.
• Update management plans by April 2012.
TABLE OF CONTENTS
continued
Introduction 1
Finding 1: Department should strengthen policies and
procedures to ensure appropriate use of all
Heritage Fund monies 7
Department has established policies and procedures to help ensure
Heritage Fund monies spent for statutory purposes 7
Department should establish policies and procedures for allocating
administrative and shared costs and monitoring Heritage Fund contracts 9
Department should report accurate financial information and establish
policies and procedures to manage land acquisition monies in escrow 11
Recommendations 12
Finding 2: Department should improve management of
Heritage Fund properties 13
Department manages several Heritage Fund properties 13
Actions needed to improve management of Heritage Fund properties 15
Recommendations 19
Appendix A: Heritage Fund land acquisitions a-i
Appendix B: Methodology b-i
Agency Response
page i
Office of the Auditor General
TABLE OF CONTENTS
concluded
Tables
1 Schedule of Revenues, Expenditures, and Changes in Fund Balance, by Program
Fiscal Years 2010 and 2011
(Unaudited) 6
2 Heritage Fund Land Acquisitions
Fiscal Years 1993 through 2011
(Unaudited) a-i
Figure
1 Statutory Allocation of Heritage Fund Monies
Since November 1990 1
Photos:
1 Sonoran pronghorn released into the wild 2
2 Department staff presentation to a fourth-grade class 4
3 Upper Verde River Wildlife Area 14
4 Horseshoe Ranch 14
5 Beaver damage in the Upper Verde River Wildlife Area 18
6 Beaver damage in the Upper Verde River Wildlife Area 18
page ii
State of Arizona
Arizona Game and Fish Commission
Heritage Fund
The Heritage Fund was created through a November 1990 ballot initiative to
provide monies to the Commission for preserving, protecting, and enhancing
Arizona’s natural and scenic environment. According to statute, the Commission
may receive up to $10 million of lottery revenues annually. A.R.S. §17-298
requires the Commission’s Heritage Fund monies to be divided in specific
percentages between five general program areas, including a specific
designation for land acquisition within one of the program areas (see Figure
1). These program areas are integrated throughout the Department, which
administers the Heritage Fund under the direction of the Commission, and are
discussed in more detail in the next section. Interest earned on Heritage Fund
monies may be used for these programs or for the costs of administering the
Heritage Fund. In addition, A.R.S. §17-298 requires that the Commission
submit an annual report to the Legislature that includes a summary of projects,
activities, and expenditures related to the five program areas.
page 1
Scope and Objectives
INTRODUCTION
The Office of the Auditor
General has conducted a
performance audit of the
programs and expenditures
of the Arizona Game and
Fish Commission
(Commission) Heritage
Fund pursuant to Arizona
Revised Statutes (A.R.S.)
§17-298.01. This
performance audit
addresses (1) the Arizona
Game and Fish
Department’s (Department)
policies and procedures for
ensuring that Heritage
Fund expenditures were for
purposes allowed by
statute; and (2) the
Department’s management
of properties acquired with
Heritage Fund monies.
Office of the Auditor General
Figure 1: Statutory Allocation of Heritage Fund Monies
Since November 1990
1 A.R.S. §17-298 requires that at least 40 percent of these monies, or 24 percent of the total, be used
to acquire sensitive habitat.
Source: Auditor General staff review of A.R.S. §17-298.
1 2
Identification,
inventory,
protection,
acquisition,
and
management
of sensitive
habitat
60%1
Heritage Fund programs
A.R.S. §17-298 establishes the following five Heritage Fund program areas:
Identification, inventory, acquisition, protection, and management of
sensitive habitat (IIAPM)—According to statute, 60 percent of the Heritage
Fund monies are designated for the identification, inventory, acquisition, protec-tion,
and management, including maintenance and operations, of sensitive habi-tat.
At least 40 percent of the IIAPM monies, or 24 percent of the total, are dedi-cated
to acquiring sensitive habitat for endangered, threatened,
and candidate species (see textbox).1 As shown in Table 1 (see
page 6), a significant portion of IIAPM monies are used to
acquire land and fund employees. For example, in fiscal year
2011, nearly $1.6 million in Heritage Fund monies were used to
acquire the Horseshoe Ranch property (see Finding 2, pages 13
through 19, for additional information on Heritage Fund land
acquisitions). The Department also spent approximately $1.6
million in fiscal year 2011 for IIAPM personnel who carry out a
variety of conservation activities, such as implementing man-agement
plans, surveying wildlife, and implementing projects
that promote and restore wildlife and their habitats. According to
the Department’s 2010 Heritage Fund report, IIAPM activities
included:
• Restoration efforts for endangered Sonoran pronghorn—
The Department continued its restoration efforts for the
endangered Sonoran pronghorn through population monitoring
and captive breeding programs (see Photo 1). According to the
Department, the total U.S. population of Sonoran pronghorn has
grown from 21 pronghorn before the Department instituted its
management program to at least 137 pronghorn as of fiscal year
2010.
• Recovery efforts for endangered California condor—The
Department has continued its efforts to monitor and manage
released and wild-hatched California condors. For example,
IIAPM monies were used to educate hunters about potential
lead poisoning of condors that can result from hunters using
lead ammunition when hunting animals that condors could
potentially eat and to provide free, non-lead ammunition to
hunters within the condor’s range to reduce incidents of lead
poisoning. The Department reported that its efforts have resulted
in an increase in the number of free-flying condors from 59 in
June 2007 to 73 in July 2010.
1 The Department reported that it determines the status of Arizona wildlife using the U.S. Fish & Wildlife Service’s lists of
endangered, threatened, and candidate species.
page 2
State of Arizona
Endangered species—A species or subspecies
of native Arizona wildlife whose population has
been reduced due to any cause whatsoever to
such levels that it is in imminent danger of
elimination from its range in Arizona, or has been
eliminated from its range in Arizona.
Threatened species—A species or subspecies
of native Arizona wildlife that, although not
presently in imminent danger of being eliminated
from its range in Arizona, is likely to become an
endangered species in the foreseeable future.
Candidate species—A species or subspecies of
native Arizona wildlife for which habitat or
population threats are known or suspected but
for which substantial population declines from
historic levels have not been documented.
Source: A.R.S. §17-296.
Photo 1: Sonoran pronghorn released
into the wild
Source: Courtesy of the Arizona Game and Fish Department.
page 3
Office of the Auditor General
• Collaborative fence construction project on riparian land—The Department
collaborated with a private landowner and the Natural Resources Conservation
Service to construct fencing that protects more than 250 acres of riparian
habitat and three miles of streams on the Babacomari River, which are used by
several native Arizona fish species, from overuse by cattle.
• Heritage Data Management System—The Department used IIAPM monies to
support the ongoing development and maintenance of a Heritage Data
Management System. This system contains information on the location and
status of sensitive plant and animal species that is available to the public for
various purposes such as assessing proposed land and water development,
management, and conservation projects.
Urban wildlife and habitat—Statute requires that 15 percent of the Heritage Fund
monies be used to address issues related to wildlife within or close to urban areas
that receive significant impact from human use. As shown in Table 1 (see page 6),
the majority of urban wildlife expenditures are used to pay for employees. These
employees work to minimize human-wildlife conflict in urban areas through activities
such as public education, law enforcement, and helping local authorities handle
wildlife encounters in urban areas. For example, the Department reported that in
fiscal year 2010 it worked with Navajo County officials to develop and enact a
county ordinance to address food provision to nuisance wildlife such as bears, coy-otes,
and javelina. The Department also reported that it conducted wildlife-viewing
programs including five bat-watching workshops in central Phoenix attended by
more than 600 people. Additionally, it collaborated with numerous community part-ners
on annual nature festivals and workshops such as the Tres Rios Nature Festival,
Payson Wildlife Fair, Verde Valley Birding and Nature Festival, and Yuma Birding
Festival. Urban wildlife staff also enforce laws related to urban fishing and hunting
and illegal pets such as venomous vipers.
Habitat evaluation and protection—Statute requires that 15 percent of the
Heritage Fund monies be used for habitat evaluation and protection. Habitat evalu-ation
includes assessing the status, condition, and ecological value of habitat and
recommending management, conservation, or other protection measures, such as
making recommendations to developers whose projects might affect the habitats.
In fiscal years 2010 and 2011, the Department annually used nearly $900,000 of the
habitat evaluation and protection monies to meet matching requirements for federal
grant monies for habitat projects. In addition, the Department reported that staff
performed a variety of habitat evaluation and protection activities in fiscal year 2010,
including:
• Reviewing and/or commenting on 253 commercial and residential development
plans;
page 4
State of Arizona
• Continuing work with the Arizona Department of Transportation and Federal
Highway Administration to identify wildlife movement corridors and to review
highway projects to develop mitigation measures to limit impacts to wildlife;
• Developing wind and solar energy guidelines to mitigate the impact of these
energy sources on wildlife such as bats and birds; and
• Developing policies, initiatives, and/or plans to address invasive species such
as the quagga mussel.
Environmental education—Statute requires that 5 percent of
the Heritage Fund monies be spent on environmental education that
enhances public awareness of basic ecological principles and the
importance of safeguarding natural resources. As shown in Table 1
(see page 6), the Department primarily spends environmental edu-cation
monies to pay for employees. These employees conduct
state-wide public outreach and wildlife education at fairs, festivals,
schools, and other forums. For example, the Department reported
that in fiscal year 2010, it provided wildlife education and hands-on
learning experiences to more than 100,000 people at over 90 events,
workshops, expos, and fairs. The Department also reported that it
conducted wildlife education presentations to almost 8,200 fourth-grade
students in 281 classrooms across Arizona (see Photo 2).
Environmental education monies are also used for the Department’s
Adobe Mountain Wildlife Center, which provides immediate triage
and care for sick, injured, or orphaned wildlife.
Public access—According to statute, 5 percent of the Heritage Fund monies are
designated for public access or for providing entry to publicly held lands for rec-reational
use. According to the Department, these monies are used to identify and
open land or water areas that are closed to the public or that do not have sufficient
access in order to provide opportunities for the public to enjoy wildlife and wildlife-related
recreation. As shown in Table 1 (see page 6), the majority of the
Department's public access expenditures are used to pay for employees. These
employees work to strengthen landowner relations and negotiate agreements with
landowners and government entities to allow the public to cross or use private
lands for recreation (see textbox, page 5).
Heritage Fund budget and staffing
The Department received the full $10 million from lottery revenues for its Heritage
Fund programs in both fiscal years 2010 and 2011 and allocated these monies to
the five programs as required by statute. As shown in Table 1 (see page 6), Heritage
Fund expenditures totaled approximately $7.5 million in fiscal year 2010 and nearly
Photo 2: Department staff presentation
to a fourth-grade class
Source: Courtesy of the Arizona Game and Fish
Department.
page 5
Office of the Auditor General
$9.8 million in fiscal year 2011. The largest Heritage Fund expenditures are for land
acquisition and personnel. For example, in fiscal year 2011, the Department spent
approximately $4.3 million on land acquisition and approximately $3.8 million on
personal services and related benefits. Further, the Department was required to
transfer a total of nearly $1.5 million in Heritage Fund monies during fiscal years 2010
and 2011 to the State General Fund in accordance with laws.
As of October 2011, the Department reported funding 61 full-time equivalent positions
with Heritage Fund monies, of which 8.5 positions were vacant. In addition, the
Department uses Heritage Fund monies to match federal funding. For fiscal year 2011,
the Department reported that it received nearly $4.9 million in federal funding through
matched Heritage Fund monies. As of June 30, 2011, the Heritage Fund’s fund
balance totaled more than $3.2 million. In addition, the Department had approximately
$5.3 million on deposit with a title company for a planned land acquisition.
Example public access agreements
Fiscal year 2010
Babbitt Ranches—The Department entered into an agreement with Babbitt Ranches near Flagstaff
that guaranteed recreational access to nearly 1.5 million acres of land. In exchange for this access,
the Department reported that it contributed $50,000 to clean out 50 dirt tanks to improve water
availability for wildlife on more than 500,000 acres of rangeland. This funding was matched by
$125,000 in Arizona Department of Agriculture grant funding and a $125,000 landowner contribution.
Yellow Pine Ranch—The Department entered into an agreement with Yellow Pine Ranch near
Kingman to provide funding to upgrade a windmill to a solar pumping system that will provide year-round
water to wildlife and ensure recreational access to 45,000 acres of land managed by the
Bureau of Land Management. The Department reported that its funding was matched by a $3,000
landowner contribution and in-kind efforts in exchange for 2 years of hunter access to the ranch.
Source: Auditor General staff review of the Arizona Game and Fish Department Heritage Fund 2010 Report to the Arizona
Legislature.
page 6
State of Arizona Table 1: Schedule of Revenues, Expenditures, and Changes in Fund Balance, by Program
Fiscal Years 2010 and 2011
(Unaudited)
1 Represents the administrative activities paid by the Heritage Fund, including department administrative costs allocated to the Heritage Fund.
2 Primarily consists of lottery proceeds except for administration revenues. Administration revenues and miscellaneous revenues for the other programs include interest earnings, donations,
charges for publications and reproductions, and proceeds from the sale of assets.
3 Transfers for the IIAPM land acquisition program include $1,339,900 and $140,400 transferred in fiscal years 2010 and 2011, respectively, to the State General Fund to provide adequate
support to state agencies in accordance with Laws 2008, Ch. 285, §46; Laws 2009, Ch. 11, §110, and 5th S.S., Ch. 1, §2; and Laws 2010, 7th S.S., Ch. 1, §148, and Ch. 3, § 7. The
remaining transfers were primarily to other department programs to meet matching requirements of federal grants.
4 The IIAPM land acquisition program and total ending fund balance excludes approximately $5.3 million that the Department had on deposit with a title company for a planned land
acquisition. See Finding 1, page 11, for additional information.
Source: Auditor General staff analysis of the Arizona Financial Information System (AFIS) Accounting Event Transaction File, the AFIS Management Information System Status of General
Ledger-Trial Balance screen, and department-provided financial information for fiscal years 2010 and 2011.
Fiscal
Year
Environmental
Education
Public
Access
Urban
Wildlife
Habitat
Evaluation
Land
Acquisition General Administration1 Total
Fund balance (deficit), July 1, 2009 $ 213,944 $ 70,552 $ 602,259 $ 156,001 $ 2,014,059 $ 666,912 $ (55,668) $ 3,668,059
2010 Revenues2 500,003 500,000 1,513,330 1,500,000 2,430,628 3,601,538 78,254 10,123,753
Expenditures:
Personal services and related benefits 338,202 227,441 722,356 1 8,913 1,848,476 685,976 3,841,364
Professional services, aid, travel, and other 5 6,289 7 2,817 220,545 1 5,628 549,622 136,367 1,051,268
Land, buildings, furniture, and equipment 1 1,671 1 ,942 6,484 2,531,201 44,907 2,260 2,598,465
Total expenditures 406,162 302,200 949,385 - 2,565,742 2,443,005 824,603 7,491,097
Transfers:
Transfers to other funds3 (890,000) (1,339,900) ( 17,958) (2,247,858)
Transfers to the administration program (40,400) (40,400) ( 121,200) (121,200) (193,920) ( 290,880) 808,000
Total transfers (40,400) (40,400) ( 121,200) (1,011,200) (1,533,820) ( 308,838) 808,000 (2,247,858)
Net change in fund balance 5 3,441 157,400 442,745 488,800 (1,668,934) 849,695 61,651 384,798
Fund balance, June 30, 2010 267,385 227,952 1,045,004 644,801 345,125 1,516,607 5,983 4,052,857
2011 Revenues2 500,000 500,005 1,520,626 1,500,583 2,400,000 3,621,266 50,807 10,093,287
Expenditures:
Personal services and related benefits 303,137 226,571 870,963 117,039 1 8,601 1,594,114 625,093 3,755,518
Professional services, aid, travel, and other 7 5,734 116,137 194,356 6 ,943 2,865 697,576 131,337 1,224,948
Land, buildings, furniture, and equipment 1 6,696 3 3,449 115,825 4,257,801 365,510 4,714 4,793,995
Total expenditures 395,567 376,157 1,181,144 123,982 4,279,267 2,657,200 761,144 9,774,461
Transfers:
Transfers to other funds3 (890,974) (140,400) ( 127,076) (1,158,450)
Transfers to the administration program (36,250) (36,250) ( 108,750) (108,750) (174,000) ( 261,000) 725,000
Total transfers (36,250) (36,250) ( 108,750) (999,724) (314,400) ( 388,076) 725,000 (1,158,450)
Net change in fund balance 6 8,183 8 7,598 230,732 376,877 (2,193,667) 575,990 14,663 ( 839,624)
Fund balance (deficit), June 30, 20114 $ 335,568 $ 315,550 $ 1,275,736 $ 1,021,678 $ (1,848,542) $ 2,092,597 $ 20,646 $ 3,213,233
IIAPM Program
Department should strengthen policies and
procedures to ensure appropriate use of all
Heritage Fund monies
FINDING 1
page 7
Department has established policies and procedures
to help ensure Heritage Fund monies spent for
statutory purposes
The Department has established policies and procedures to help ensure that
Heritage Fund monies are spent for statutory purposes. Auditors reviewed 76
expenditures and the job duties of 9 department employees paid with Heritage
Fund monies and found these monies were used for purposes allowed by
statute.
Department policies and procedures help guide the expendi-ture
of Heritage Fund monies—As discussed in the Introduction
(see pages 1 through 6), Arizona Revised Statutes (A.R.S.) §17-298 restricts
the use of Heritage Fund monies to five specific program areas (see text-box).
To help ensure that monies are spent according to statutory require-ments,
the Department has established written policies and procedures that
define allowable costs from the Heritage Fund. It has also established pro-cedures
for ensuring expenditures are appropriate such as requiring sup-porting
documentation for expenditures, matching invoices to receiving
reports and purchase orders, and supervisory review for appropriateness.
For example:
Statute restricts use of
Heritage Fund monies to
five specific program areas.
The Arizona Game and Fish
Department (Department)
has established and
generally follows policies
and procedures to ensure
these monies are spent
according to statute, and
Heritage Fund expenditures
reviewed by auditors were
for purposes allowed by
statute. However, the
Department should develop
and implement additional
policies and procedures to
ensure that all Heritage
Fund monies are spent
appropriately. Specifically,
the Department should
ensure that administrative
and shared costs are
appropriately allocated to
the Heritage Fund and
among the Heritage Fund
program areas and ensure
that contracts paid with
Heritage Fund monies are
monitored to ensure the
appropriate expenditure of
these monies. Finally, the
Department should report
accurate financial
information and establish
policies and procedures to
monitor land acquisition
monies in escrow.
Office of the Auditor General
Heritage Fund program areas and statutory percentage
allocations
• Identification, inventory, acquisition, protection, and
management of sensitive habitat (IIAPM)—60 percent
• Urban wildlife and habitat—15 percent
• Habitat evaluation and protection—15 percent
• Environmental education—5 percent
• Public access—5 percent
Source: A.R.S. §17-298.
page 8
State of Arizona
• Department has policies and procedures to ensure only appropriate
payroll costs are paid with Heritage Fund monies—The Department uses
a biennial budgeting process to determine from which fund to pay department
employees in accordance with priorities and fund restrictions. Through this
process, the Department determines which employee positions can be
appropriately paid from the Heritage Fund. In addition, department employees
use time codes to report time spent on Heritage Fund program area activities
to ensure their salaries and other personnel costs are paid from the appropriate
Heritage Fund program area. Further, the Department has established policies
and procedures to ensure payroll transactions are appropriate such as
requiring supervisors to approve timesheets.
• Department has established policies and procedures for awarding
Heritage Fund grants—The Department uses some Heritage Fund monies
for grants to organizations such as the three state universities, federal
agencies, local governments, and school districts for Heritage Fund-related
projects. For example, the Department awarded $10,000 in environmental
education monies to the City of Flagstaff to produce standards-based lesson
plans and activities for schools that visit Frances Short Pond located in
Flagstaff. The lesson plans include topics such as water use in Flagstaff and
aquatic plants and insects. The Department has established administrative
rules and policies and procedures that it follows for awarding and monitoring
the grants. Specifically, the Department awards grants by establishing goals
and objectives for each Heritage Fund program area and then determining
the eligibility of each applicant and project using a scoring system based on
the established goals and objectives. The Department monitors grants
through required financial and performance reports. The use of close-out
reports helps ensure the grant was spent according to each project’s
approved objectives.
Heritage Fund expenditures reviewed were for purposes allowed by
statute—Auditors reviewed 76 Heritage Fund expenditures from fiscal years
2010 and 2011 through April 2011 to assess whether these expenditures were for
purposes allowed by statute.1 In addition, auditors reviewed the job duties of nine
department employees funded with Heritage Fund monies to assess whether
these positions performed work related to purposes allowed by statute. Overall,
auditors determined that these expenditures were for purposes allowed by statute.
For example, in fiscal year 2010, the Department used $5,000 of IIAPM monies
toward the purchase of two used snowmobiles to provide staff with access during
winter to a monitoring and feeding site for captive-reared California condors.
Similarly, in fiscal year 2010, the Department awarded Arizona State University an
$8,148 grant using environmental education monies to publish a children’s book
that educates children about the endangered Chiricahua leopard frog. In addition,
1 Auditors selected expenditures from each of the five Heritage Fund program areas and Heritage Fund expenditures in
the following areas for review: administration, grants, contracts, and a land acquisition. See Appendix B, pages b-i
through b-ii, for additional information on how auditors selected these expenditures.
The Department uses
a biennial budgeting
process to determine
which employees can
be paid from the
Heritage Fund.
page 9
Office of the Auditor General
one department employee funded with Heritage Fund IIAPM monies in fiscal year
2011 was responsible for surveying, monitoring, and reporting on bat roosts and
marsh birds living in one of the Department’s six regions. Further, auditors tested 37
of the 76 expenditures for compliance with department policies and procedures for
expending these monies and found that the Department generally followed its poli-cies
and procedures.
Department should establish policies and procedures for
allocating administrative and shared costs and monitoring
Heritage Fund contracts
Although the expenditures auditors reviewed were for purposes allowed by statute, the
Department could not support expenditure amounts allocated to the Heritage Fund for
administrative and shared costs. Additionally, the Department does not formally
document monitoring of contracts paid with Heritage Fund monies. As a result, to
further ensure that Heritage Fund monies are appropriately spent, the Department
should develop and implement policies and procedures for allocating administrative
and shared costs to the Heritage Fund and for monitoring contracts paid with Heritage
Fund monies.
Policies and procedures needed for allocating administrative and
shared costs—The Department allocates both administrative and shared costs
to the Heritage Fund. Specifically:
• Administrative costs—The Department used Heritage Fund monies to pay
more than $761,000 in department administrative costs in fiscal year 2011. As
shown in Table 1 (see page 6), the Department spent approximately $625,000,
or 82 percent, of this amount for personal services and related benefits.
Specifically, the Department used Heritage Fund monies to pay for 12
department administrative positions.1 For fiscal year 2012, the Department
reported that it budgeted Heritage Fund monies to fund 10.5 of its 92.5
administrative full-time equivalent positions.
• Shared costs—In addition, the Department allocates some costs among
multiple department funds or multiple Heritage Fund program areas. For
example, in fiscal year 2010, the Department used Heritage Fund monies to pay
$15,389 of the $82,227 paid to the publisher of its Arizona Wildlife Views
magazine.2 Although the 2010 magazines featured articles on all of the Heritage
Fund program areas, the Department used only public access and urban
wildlife monies to pay the $15,389.
1 According to the Department, one of these positions was no longer paid for by Heritage Fund monies as of October 2010,
and one position was vacant as of January 2011.
2 The balance of the publisher costs was paid from other department funds.
Auditors found that the
Department generally
complied with its policies
and procedures for the
expenditures tested.
page 10
State of Arizona
Although it may be appropriate to allocate administrative and shared costs to the
Heritage Fund, the Department could not support the amounts allocated to the
Heritage Fund or among its program areas for the expenditures auditors reviewed.
As a result, the administrative costs and shared costs allocated to the Heritage
Fund or among its program areas may be too large or too small. Allocating too
much of these costs to the Heritage Fund or among its program areas may result
in spending that is not consistent with the statutory purposes for each program
area.
Further, the Department should reevaluate its method for paying administrative
costs allocated to the Heritage Fund. The Department uses monies from each of
the five Heritage Fund program areas to help pay for these administrative costs
using the statutory percentages for these program areas. For example, since
statute requires that 60 percent of the total Heritage Fund revenues be allocated
to the IIAPM program area, the IIAPM program area contributed 60 percent of the
amount needed to pay the administrative costs. Table 1 (see page 6) shows the
amounts used from each of the Heritage Fund program areas as transfers to the
Administration program. However, to ensure compliance with statute, the amounts
used from each program area toward administrative costs should be in proportion
to the benefit that each program area receives. For example, if the IIAPM program
area pays for 60 percent of the amount needed for the administrative costs
allocated to the Heritage Fund, it should receive 60 percent of the benefit. If not,
then the IIAPM program area could be subsidizing administrative costs incurred
by other program areas, which may lead to spending that is inconsistent with
statutory requirements for each program area.
Therefore, to ensure statutory compliance, the Department should develop and
implement policies and procedures for allocating administrative and shared costs
to the Heritage Fund and among the Heritage Fund program areas. In developing
these policies and procedures, the Department could consider cost allocation
principles provided by the U.S. Office of Management and Budget.1 For example,
administrative costs such as processing payroll or administering benefits could be
allocated based on the percentage of department employees that are paid from
the Heritage Fund. Other costs, such as telephone costs, could be allocated
based on the percentage of department telephones used by Heritage Fund
employees. In addition, the Department should review and consider revising its
method for determining the amounts that the five program areas should pay for
administrative costs to better reflect the benefit that each program area receives.
It should also document this method in its policies and procedures.
Department should monitor contracts paid from Heritage Fund—The
Department should ensure that it monitors contracts paid with Heritage Fund mon-ies.
Auditors reviewed several contracts in which the Department provided
Heritage Fund monies to private landowners or another state agency. For exam-ple,
in one contract, the Department provided $6,700 to a private landowner to
1 See Office of Management and Budget Circular A-87.
The Department could
not support expenditure
amounts allocated to the
Heritage Fund for
administrative and
shared costs.
page 11
Office of the Auditor General
restore nearly 670 acres of grassland habitat to improve range conditions and water
supply for wildlife. In another contract, the Department agreed to fund one full-time
equivalent position at the Arizona Department of Water Resources for Heritage
Fund-related work. Department policy requires that it monitor contract performance
to identify actual or potential deviations from the agreed terms, conditions, and
scope. Further, some of the contracts auditors reviewed also require the Department
to monitor project progress and effectiveness. However, although department staff
reported that some monitoring activities occur, the Department does not have formal
procedures for documenting contract monitoring activities, and auditors found no
evidence that the Department monitored these contracts. In order to ensure that
Heritage Fund monies are used in accordance with contract terms, the Department
should develop and implement procedures for ensuring that all contracts paid with
Heritage Fund monies are monitored and the monitoring activities are appropriately
documented.
Department should report accurate financial information
and establish policies and procedures to manage land
acquisition monies in escrow
The Department deposits money into an escrow account held with a title company
prior to purchasing a property. The monies are held in the account during the land
acquisition process, which can take a long time to complete. For example, the
Department created an account with a title company to purchase the Horseshoe
Ranch property in December 2009, and the land was not acquired until March 2011.
However, the Department should report accurate financial information and improve its
policies and procedures for land acquisition accounts. Specifically:
• Financial reporting—The Arizona General Accounting Office (GAO) relies on
financial information that it receives from the Department in order to prepare
Arizona’s state-wide financial statements, and decision-makers rely on this
information to help make financial decisions for the State. Consequently, it is
important that the Department provide accurate and complete financial information
to the GAO. However, auditors noted that the Department did not properly record
information regarding monies held in escrow on the State’s financial accounting
system or alternatively report this information to the GAO for fiscal years 2010 and
2011. For example, the Department held approximately $5.3 million at June 30,
2011, in an account with a title company for a potential land acquisition. The
monies were recorded as a capital expenditure on the State’s accounting system
instead of cash on deposit, and the Department did not notify the GAO of the
monies. As a result, the monies were not properly reported in Arizona's June 30,
2011, state-wide financial statements.
The Department did
not properly record
information regarding
monies held in escrow
on the state’s financial
accounting system.
page 12
State of Arizona
• Land acquisition escrow account policies and procedures—The Department
has also not established written policies and procedures for spending or
monitoring land acquisition monies held in escrow. Because the expenditure of
these monies is not processed through the State’s accounting system, the
expenditures are not subject to the State’s or Department’s established
accounting policies and procedures such as ensuring expenditures are properly
authorized. In addition, although department staff reported that they monitor the
escrow account, the Department does not have formal procedures for
documenting its monitoring activities, and auditors found no evidence that the
Department monitored the land acquisition monies. Although auditors did not
identify any inappropriate expenditures based on a review of two escrow
accounts, written policies and procedures would help to properly safeguard
monies held in escrow.
To help ensure that the Department’s financial information is accurately reported in
the State’s financial information system and appropriately reflected in Arizona’s state-wide
financial statements, the Department should appropriately record and/or report
to the GAO financial transactions pertaining to escrow accounts for land acquisitions.
In addition, the Department should develop and implement written policies and
procedures for spending and monitoring land acquisition monies held in escrow.
Recommendations:
1.1 The Department should develop and implement policies and procedures for
allocating administrative and shared costs to the Heritage Fund and among the
Heritage Fund program areas.
1.2 The Department should review and consider revising its method for determining
the amounts used from the five Heritage Fund program areas for paying
administrative costs to better reflect the benefit that each program area
receives. It should also document this method in its policies and procedures.
1.3 The Department should develop and implement procedures for monitoring all
contracts paid with Heritage Fund monies and appropriately documenting its
monitoring activities to ensure that Heritage Fund monies are used in
accordance with contract terms.
1.4 The Department should appropriately record and/or report to the Arizona
General Accounting Office financial transactions pertaining to escrow accounts
for land acquisitions.
1.5 The Department should develop and implement written policies and procedures
for spending and monitoring land acquisition monies held in escrow.
Department should improve management
of Heritage Fund properties
FINDING 2
page 13
Department manages several Heritage Fund
properties
As of June 30, 2011, the Commission had purchased 24 properties with
Heritage Fund monies. These properties are managed by department regional
staff with oversight provided by the Department’s Lands Council.
Commission has purchased several Heritage Fund proper-ties—
The Commission uses a significant portion of its Heritage Fund mon-ies
to acquire land to conserve wildlife habitat in Arizona. As discussed in
the Introduction (see pages 1 through 6), Arizona Revised Statutes (A.R.S.)
§17-298(B) requires at least 24 percent of the Heritage Fund monies to be
spent on the acquisition of sensitive habitat used by endangered, threat-ened,
and candidate species (see Introduction, page 2, textbox). As of June
30, 2011, the Commission had used nearly $31 million in Heritage Fund
monies to purchase 24 properties throughout the State, consisting of more
than 14,000 acres of land (see Table
2 in Appendix A, page a-i, for a
listing of these properties). Several
of the properties include riparian
habitat, which is targeted because
of its importance to Arizona wildlife
and fisheries (see textbox).
Examples of properties that the
Commission has purchased
include:
• Upper Verde River Wildlife Area—The Commission purchased about
800 acres of land near Chino Valley, Arizona, in June 1996 and another
293 acres of nearby land in February 2008 that form the Upper Verde
River Wildlife Area (see Photo 3, page 14). According to department
records, this land was purchased to protect riparian habitat along the
Verde River. The objectives for acquiring this property include improving
riparian habitat suitability for various species such as the spikedace and
razorback sucker fishes; protecting and enhancing other habitat on the
property; managing human access to protect sensitive habitat; and
promoting public education.
As required by statute, the
Arizona Game and Fish
Commission (Commission)
acquires land with Heritage
Fund monies as part of its
efforts to promote wildlife
conservation goals, but the
Arizona Game and Fish
Department (Department)
should improve its
management of these
properties. As of June 30,
2011, the Commission had
used nearly $31 million in
Heritage Fund monies to
purchase more than 14,000
acres of land in Arizona.
These properties are
managed regionally
through property
management plans with
oversight provided by the
Department’s Lands
Council. However, actions
are needed to improve the
Department’s management
of these properties.
Specifically, the
Department should
establish policies and
procedures to ensure that
management plans are
completed for all properties
and that the
implementation and
effectiveness of these plans
are monitored. Additionally,
the Department should
ensure that the
management plans are
periodically reevaluated
and updated as needed.
Office of the Auditor General
Riparian Habitat—Distinct vegetation
and land shape that occur typically
along land bordering lakes, rivers,
and streams.
Source: Auditor General staff review of Arizona
Game and Fish Department Operating
Manual.
page 14
State of Arizona
• Horseshoe Ranch—In March 2011, the Commission purchased the
Horseshoe Ranch property, which consists of nearly 200 acres of land located
within the Agua Fria National Monument (see Photo 4). According to
department records, this land
was purchased to protect
and restore riparian and
grassland habitats that
support endangered species
such as the yellow-billed
cuckoo bird and the Gila
chub and Gila topminnow
fishes. The purchase of this
property included water rights
and grazing rights to nearby
federal grazing lands that will
allow the Department to
protect instream flow to Silver
Creek and control livestock
grazing along Silver Creek.1
Heritage Fund properties managed regionally—The Heritage Fund prop-erties
are managed regionally with oversight provided by the Department’s Lands
Council. Staff within each of the Department’s six regions are responsible for
developing and implementing management plans for Heritage Fund properties in
their respective regions. These management plans outline the conservation goals
and objectives for which the land was acquired and include specific activities for
meeting the objectives (see textbox, page 15). Management of these properties is
1 The Assistant Attorney General for the Department has informally opined that Heritage Fund monies cannot be used
to purchase grazing permits. Other department funds and stakeholder contributions were used to pay for the
Horseshoe Ranch grazing permit.
Source: Arizona Office of the Auditor General.
Photo 4: Horseshoe Ranch
Photo 3: Upper Verde River Wildlife Area
Source: Arizona Office of the Auditor General.
Department staff are
responsible for developing
and implementing
management plans for
Heritage Fund properties.
overseen by the Department’s Lands Council, an internal leadership and advisory
body created in 2010 to provide strategic oversight and direction to the planning,
evaluation, development, and resourcing of all department properties including
Heritage Fund properties. Lands Council membership includes the Department’s
regional supervisors and management from the Department’s operational divisions
and the director’s office.
Actions needed to improve management of Heritage
Fund properties
The Department’s 2006 State Wildlife Action Plan adopts a management approach
that requires monitoring the effectiveness of conservation actions, such as land
acquisition and habitat restoration projects, and implementing new actions as needed.
This management approach includes (1) setting management goals; (2) implementing
management actions; (3) monitoring and analyzing responses of species and habitats
to management; and (4) revising management actions, goals, or monitoring strategies
page 15
Office of the Auditor General
Example objectives and associated activities from the Upper Verde River
Wildlife Area management plan
Objective: Conduct periodic biological inventory and monitoring to evaluate long-range
habitat and species management.
• Conduct inventories of each wildlife species group.
• Coordinate and conduct native fish inventories.
• Survey and inventory all habitats on the property to identify species presence, habitat
condition, and management potential.
Objective: Implement access management which provides for the protection of biological,
physical, and cultural resources.
• Develop a pipe fence to restrict motorized access into the riparian areas.
• Develop a parking area for 10 vehicles.
• Develop designated camping areas.
Objective: Improve habitats on the wildlife area.
• Identify or control invasive, non-native species.
• Install cattle guards on main road to prevent livestock trespass.
• Monitor for potential contaminants from upstream sources.
Source: Auditor General staff review of the Upper Verde River Wildlife Area management plan.
page 16
State of Arizona
as necessary. However, the Department has not managed its Heritage Fund
properties consistent with this approach and should develop and implement policies
and procedures to ensure management plans are completed, monitored, and
periodically reevaluated and revised as needed.
Some management plans not completed—Department policy requires
that management plans be developed for Heritage Fund properties, but does not
specify a time frame for when they should be completed. As of October 2011, the
Department did not have a management plan for one property, had an incomplete
plan for a second property, and was developing the plan for a third property.
Specifically, the Department did not have a management plan for the Buck Springs
property, which was purchased in March 2009. According to the Department, this
property did not have a management plan because it was purchased primarily to
obtain a grazing permit that allowed the Department to restrict cattle grazing on
other land. In addition, the Department had a draft management plan for the
Cibola Valley Conservation and Wildlife Area purchased in September 2007.
Although the plan had not been finalized, department documentation indicated
that the Department had begun implementing the activities included in the draft
plan. Lastly, the Department was in the process of completing the management
plan for the Horseshoe Ranch property purchased in March 2011. According to
the Department, the management plan for Horseshoe Ranch is still in progress
because the Department is piloting a new Commission-directed planning process
for developing management plans that involves many stakeholders.
In addition, many of the Heritage Fund properties purchased by the Commission
are adjacent to or near an existing Heritage Fund or other commission property
but were acquired at a later date (see Table 2 in Appendix A, page a-i). The
Department indicated that it typically uses the management plan for the initially
purchased property for any additional adjacent or nearby properties. According to
the Department, preexisting management plans were being used to manage at
least six of the Heritage Fund properties that were purchased at a later date.
However, none of these management plans specifically address these six
properties and in three cases, the properties were purchased several years after
the plans were developed. Although it seems reasonable that existing management
plans could cover adjacent or nearby properties purchased at a later date, without
updating the plans to specifically address the additional properties, it is not clear
that the existing management plans will address the goals or objectives of
purchasing the additional properties.
Since developing management plans is the first step in managing its Heritage
Fund properties, the Department should complete these plans for the Buck
Springs and Cibola Valley Conservation and Wildlife Area properties, and continue
its effort to complete the management plan for the Horseshoe Ranch property. For
future properties, it should also establish a time frame for finalizing management
plans and develop policies and procedures for ensuring this time frame is met.
These policies and procedures should include guidance on whether staff should
Many of the Heritage Fund
properties are adjacent to
or near an existing
Heritage Fund or other
commission property.
page 17
Office of the Auditor General
develop a new management plan or update an existing plan when the Commission
purchases additional properties that are adjacent to or near an existing Heritage
Fund property.
Management plan implementation and effectiveness not monitored—
As stated in the State Wildlife Action Plan, the Department should monitor the imple-mentation
and effectiveness of its management plans. However, the Department
does not have policies and procedures for monitoring the implementation of its
management plans. Although the Department does not have such policies and
procedures, the Department's Lands Council decided in September 2011 that all
management plans should include an activity matrix by April 2012, which could
potentially be used to track the status of management plan activities. For example,
department regional staff have previously used an activity matrix to track the status
of management plan activities for at least one property auditors reviewed.
In addition, the Department has not established policies and procedures for
monitoring the effectiveness of its management plans and, thus, cannot ensure that
it is achieving the conservation goals that served as the basis for acquiring the
properties. According to department staff, assessing the impact of specific land
acquisitions is difficult because restoration of species can take many years and
wildlife numbers are influenced by circumstances outside of the Department’s
control. These circumstances include flooding, population migration, or species
illness. Despite these potential difficulties, department staff may already be collecting
some data that could be used to assess the impact of Heritage Fund property
management. For example, many of the Department’s management plans specify
that staff should conduct periodic wildlife inventories that may indicate trends in the
species’ use of the property as a habitat.
Therefore, the Department should develop and implement policies and procedures
for monitoring the implementation and effectiveness of its management plans. For
example, the Department's policies and procedures might require including criteria
in its management plans for monitoring the properties. Further, positive impacts that
result from department efforts could be reported to the Legislature through the
Department’s annual Heritage Fund report.
Management plans not updated—As stated in the State Wildlife Action Plan,
management plans should be evaluated and revised as needed based on monitor-ing
results. According to department land acquisition guidelines developed in 2009,
management plans should be reevaluated relative to property goals and objectives
every 6 years. However, the Department has not updated its management plans for
the Heritage Fund properties it manages in several years, suggesting that the
Department may not be reevaluating the plans. As of October 2011, management
plans for 16 of the 24 Heritage Fund properties had not been updated in between 8
and 15 years. As discussed earlier, three of the eight remaining properties, Buck
Springs, Cibola Valley Conservation and Wildlife Area, and Horseshoe Ranch, either
did not have a management plan or a completed plan. The other five properties are
As of October 2011,
several management
plans had not been
updated in between 8
and 15 years.
page 18
State of Arizona
managed by the Arizona State Parks Board and the Yuma Crossing National
Heritage Area. The Department does not require any sort of reporting for the four
properties managed by the Arizona State Parks Board to ensure that the original
purposes for the acquisition have been met.
Further, periodically reevaluating management plans helps to ensure that they
address changing property conditions. According to the Department, property
conditions could be affected by wildlife, invasive species, human activities, and
natural events. For example, auditors observed several fallen trees in the Upper
Verde River Wildlife Area’s riparian habitat because of beaver activity (see Photos
5 and 6). Department staff indicated that although the presence of beavers could
be an integral part of a riparian habitat, they would need to monitor the beaver
activity to determine whether the beavers’ presence negatively impacted the ripar-ian
area and wildlife for which the property was initially acquired. The Department
should document additional actions needed to manage Heritage Fund properties
in response to changing conditions in its management plans.
In September 2011, the Department's Lands Council approved a new management
plan template and requested that all management plans be reviewed to determine
if they all are still appropriate and be updated using the new template by April 13,
2012. The updated management plans will then be presented to department
executive staff for approval. The Department should implement these actions for
updating the management plans. In addition, although department guidelines
recommend that management plans be reevaluated every 6 years, the Department
should establish policies and procedures for ensuring that management plans are
periodically reevaluated and revised as needed in accordance with its guidelines.
Lastly, the Department should develop and implement policies and/or procedures
to establish oversight of properties managed by other organizations to ensure the
goals and objectives for the properties are accomplished.
The Department’s Lands
Council requested that
all management plans
be reviewed and
updated by April 2012.
Source: Arizona Office of the Auditor General.
Photo 5: Beaver damage in the
Upper Verde River
Wildlife Area
Source: Arizona Office of the Auditor General.
Photo 6: Beaver damage in the
Upper Verde River
Wildlife Area
page 19
Office of the Auditor General
Recommendations:
2.1 The Department should complete the management plans for the Buck Springs
and Cibola Valley Conservation and Wildlife Area properties, and continue its
efforts to complete the management plan for the Horseshoe Ranch property.
2.2 The Department should establish a time frame for finalizing management plans
for future properties and develop policies and procedures for ensuring this time
frame is met. These policies and procedures should include guidance on
whether staff should develop a new management plan or update an existing plan
when the Commission purchases additional properties that are adjacent to or
near an existing Heritage Fund property.
2.3 The Department should develop and implement policies and procedures for
monitoring the implementation and effectiveness of its management plans. For
example, the Department’s policies and procedures might require including
criteria in its management plans for monitoring the properties
2.4 The Department should implement its plans for updating its existing management
plans by April 13, 2012.
2.5 The Department should establish policies and procedures for ensuring that
management plans are periodically reevaluated and revised as needed in
accordance with its land acquisition guidelines.
2.6 The Department should develop and implement policies and/or procedures to
establish oversight of properties managed by other organizations to ensure the
goals and objectives for the properties are accomplished.
page a-i
Table 2: Heritage Fund Land Acquisitions
Fiscal Years 1993 through 2011
(Unaudited)
Funding Source
Property
Acquisition
Date Acres
Purchase
Price
Heritage
Fund Federal3 Other3
Wenima Wildlife Area February 1993 205 $ 894,500 $ 795,500 $ 99,000
Wenima Wildlife Area March 1995 152 555,120 555,120
Sipes White Mountain Wildlife Area October 1993 1,362 3,795,301 2,995,301 $ 500,000 300,000
Arlington Wildlife Area June 2008 158 2,600,000 2,600,000
Arlington Wildlife Area December 2009 171 1,469,184 1,469,184
Upper Verde River Wildlife Area June 1996 809 4,688,325 4,688,325
Upper Verde River Wildlife Area February 2008 293 4,675,108 4,675,108
Whitewater Draw Wildlife Area January 1997 1,448 896,339 246,339 400,000 250,000
Quigley Wildlife Area September 1997 61 266,461 133,231 133,230
Picacho Reservoir February 1998 49 50,199 50,199
Robbins Butte Wildlife Area November 1998 610 2,132 2,132
Grasslands Wildlife Area June 1999 1,713 1,824,300 1,824,300
Grasslands Wildlife Area August 2000 1,137 2,292,640 2,292,640
Grasslands Wildlife Area August 2002 10 61,500 61,500
Becker Lake Wildlife Area January 2002 292 1,610,000 1,610,000
Becker Lake Wildlife Area August 2003 1 10,000 10,000
Coal Mine Springs and Canyon1 December 2004 2,629 2,345,422 1,500,000 750,000 95,422
Coal Mine Springs and Canyon1 July 2006 874 2,250,000 1,500,000 750,000
Coal Mine Springs and Canyon1 February 2008 795 2,250,000 1,500,000 750,000
Coal Mine Springs and Canyon1 July 2009 9 19,800 19,800
Cibola Valley Conservation and Wildlife Area September 2007 1,309 59,450 59,450
Headstream & McVey2 November 2007 21 125,000 125,000
Buck Springs March 2009 40 680,000 568,436 111,564
Horseshoe Ranch March 2011 199 3,300,000 1,590,000 1,000,000 710,000
Total
14,346 $ 36,720,781 $ 30,871,565 $ 4,150,000 $ 1,699,216
1 The Coal Mine Springs and Canyon properties were purchased in phases and are managed by the Arizona State Parks Board as part of its Sonoita Creek State Natural Area.
2 The Headstream & McVey property is part of a federally designated National Heritage Area that is managed by the Yuma Crossing National Heritage Area.
3 In addition to using Heritage Fund monies, the Department reported that other funding sources were used to purchase some properties including U.S. Fish and Wildlife Service
grant monies; other department funds such as the Waterfowl Conservation Fund; and monies contributed by conservation and stakeholder groups such as the National Wild Turkey
Association, Arizona Elk Society, and Rocky Mountain Elk Foundation.
Source: Auditor General staff analysis of unaudited department information and property management plans.
APPENDIX A Heritage Fund land acquisitions
APPENDIX B Methodology
page b-i
Auditors used various methods to study the issues in this report. These
methods included reviewing Heritage Fund statutes and rules and the
Department’s policies and procedures, strategic plan, Arizona Game and Fish
Department Heritage Fund 2010 Report to the Arizona Legislature, State Wildlife
Action Plan, and other department documentation and information. In addition,
auditors compiled and analyzed financial information from the Arizona
Financial Information System (AFIS) Accounting Event Transaction File and the
AFIS Management Information System Status of General Ledger-Trial Balance
screen for fiscal years 2010 and 2011. Further, auditors interviewed department
officials and staff.
Auditors also used the following specific methods to address the audit’s
objectives:
• To determine whether the Department spent Heritage Fund monies for
purposes allowed by statute, auditors reviewed Heritage Fund expenditure
and transfer transactions for fiscal years 2010 and 2011 through April
2011 and selected 70 of the 38,971 transactions for further review.
Transactions were selected from each of the five Heritage Fund program
and administration areas and from various expenditure categories based
on vendor name and transaction description. Auditors then obtained and
reviewed additional information, such as invoices and purchase orders,
related to these transactions. Auditors also selected 1 of the 3 land
acquisitions during fiscal years 2010 and 2011, 2 of the 16 grants awarded
in fiscal years 2010 and 2011 and open as of June 2011, 1 of the 17
grants closed during fiscal year 2011, and 2 of the 6 contracts awarded
during fiscal years 2010 and 2011 as other aid to individuals using
Heritage Fund monies. The land acquisition, grants, and contracts were
reviewed for statutory appropriateness.
• To determine whether the Department’s Heritage Fund personnel costs
complied with statute, auditors reviewed Human Resources Information
System data for employees who were either fully or partially funded by
Heritage Fund monies in fiscal year 2011 through April 2011, and selected
9 of 116 department employees, including employees from each of the 5
Heritage Fund program areas and administration, for further review.
Auditors interviewed these employees, reviewed documentation
supporting position duties, and observed some of the selected employees
to determine whether these positions performed work for purposes
allowed by statute.
This appendix provides
information on the methods
auditors used to meet the
audit objectives.
This performance audit was
conducted in accordance
with generally accepted
government auditing
standards. Those
standards require that we
plan and perform the audit
to obtain sufficient,
appropriate evidence to
provide a reasonable basis
for our findings and
conclusions based on our
audit objectives. We
believe that the evidence
obtained provides a
reasonable basis for our
findings and conclusions
based on our audit
objectives.
The Auditor General and
staff express appreciation
to the Arizona Game and
Fish Department’s
(Department) Director and
his staff for their
cooperation and assistance
throughout the audit.
Office of the Auditor General
page b-ii
State of Arizona
• To assess the Department’s management of Heritage Fund properties, auditors
reviewed the Department’s management plans for these properties, attended
the Department’s September 2011 Lands Council meeting, and conducted site
visits at two Heritage Fund properties—the Upper Verde River Wildlife Area
purchased in June 1996 and the Horseshoe Ranch property purchased in
March 2011. In addition, auditors reconciled the Department’s listing of land
acquisitions to a listing of Heritage Fund land acquisitions obtained from the
Arizona General Accounting Office (GAO).
• Auditors’ work on internal controls focused on reviewing department policies
and procedures for expenditures and transfers, land acquisitions, contracts,
biennual budgeting process, and Heritage Fund grants. Auditors also tested the
Department’s compliance with its policies and procedures for 37 of the 70
expenditure and transfer transactions reviewed for statutory compliance; the 1
land acquisition, 3 grants, and 2 contracts reviewed for statutory compliance;
and some May 2011 payroll records. Further, auditors reviewed an April 2010
letter prepared by the GAO reporting on its review of certain department internal
controls and accounting procedures.1 Auditors’ conclusions on these internal
controls are reported in Findings 1 and 2 of the report.
1 The GAO specifically reviewed agency level controls, bidding and procurement card, disbursements, inventories, and
capital and noncapital assets.
AGENCY RESPONSE
Department Response to the
Audit Report by the Auditor General’s Office
of the Arizona Game and Fish Commission – Heritage Fund
Agency Response To Findings and Recommendations
FINDING 1: “The Department should strengthen policies and procedures to ensure
appropriate use of all Heritage Fund monies.”
Recommendation 1.1: “The Department should develop and implement policies and
procedures for allocating administrative and shared costs to the Heritage Fund and among the
Heritage Fund program areas.” The finding of the Auditor General is agreed to and the audit
recommendation will be implemented.
Recommendation 1.2: “The Department should review and consider revising its
method for determining the amounts used from the five Heritage Fund program areas for
paying administrative costs to better reflect the benefit that each program area receives. It
should also document this method in its policies and procedures.” The finding of the Auditor
General is agreed to and the audit recommendation will be implemented.
Recommendation 1.3: “The Department should develop and implement procedures
for monitoring all contracts paid with Heritage fund monies and appropriately documenting
its monitoring activities to ensure that Heritage Fund monies are used in accordance with
contract terms.” The finding of the Auditor General is agreed to and the audit recommendation
will be implemented. All future Heritage Fund contract agreements will include stipulation
guidelines that spell out both timeline and content requirements for the documentation and
monitoring activities associated with implementation, administration and management of each
contract.
Recommendation 1.4: “The Department should appropriately record and/or report to
the Arizona General Accounting Office financial transactions pertaining to escrow accounts
for land acquisitions.” The finding of the Auditor General is agreed to and the audit
recommendation will be implemented. The Department handled the movement of the funds to
escrow as the only means possible for us to do so. The Department contacted the General
Accounting Office to clarify how to ensure the general ledger reflected that funds were “on-deposit”
versus reflecting that a capital expenditure had been made when funds were moved into
escrow. We learned from the GAO that there is no current method for doing so. The General
Accounting Office is now creating a method for the Department to accomplish this. The
Department will update written policies and procedures to reflect any new guidelines established
and implemented by the General Accounting Office relative to this recommendation.
Recommendation 1.5: “The Department should develop and implement written
policies and procedures for spending and monitoring land acquisition monies held in escrow.”
The finding of the Auditor General is agreed to and the audit recommendation will be
implemented. Procedures for disbursements including identification of the authorized personnel
as well as requesting monthly statements for reconciliation will be requested upon opening of an
escrow account. The current Department Acquisition Guidelines will be updated to reflect this
new procedure.
FINDING 2: “The Department should improve management of Heritage Fund Properties.’
Recommendation 2.1: “The Department should complete management plans for the
Buck Springs, Cibola Valley Conservation and Wildlife Area and Horseshoe Ranch
properties.” The finding of the Auditor General is agreed to and the audit recommendation will
be implemented. With regard to Buck Springs and Cibola Valley Conservation and Wildlife
Area, we concur with the finding. The Lands Council has initiated management plan revisions
and Regions will be rewriting management plans for all properties. Management plans will be
completed for Buck Springs and Cibola Valley Conservation and Wildlife Area. With regard to
Horseshoe Ranch Management Plan, which is in a Commission directed community based
management planning pilot process; this may have a more protracted timeline. What we learn
from this pilot process could provide feedback to modify our processes as they apply to future
management plans and management plan revisions.
Recommendation 2.2: “The Department should establish a time frame for finalizing
management plans for future properties and develop policies and procedures for ensuring this
time frame is met. These policies and procedures should include guidance on whether staff
should develop a new management plan or update an existing plan when the Commission
purchases additional properties that are adjacent to or near an existing Heritage Fund
property.” The finding of the Auditor General is agreed to and the audit recommendation will be
implemented. Lands Council has already started the process of updating existing management
plans. At the next Lands Council meeting, a scheduled agenda item will be to discuss the current
management plan revision process. The Council will discuss management plan timeframes and
any procedural changes needed to ensure new acquisitions are either incorporated into existing
management plans or new management plans are developed and implemented. The Department’s
Acquisition Guidelines will be updated to reflect this new procedure.
Recommendation 2.3: “The Department should develop and implement policies and
procedures for monitoring the implementation and effectiveness of its management plans.”
The finding of the Auditor General is agreed to and the audit recommendation will be
implemented. Management Plan evaluation criterion is specific to each property and the
beneficiary species/habitat. The Department proposes that the evaluation criteria to monitor
implementation and effectiveness of each management plan be written into the operational
portion of the management plan. The criteria could then be tailored to each specific property and
species/habitat.
Recommendation 2.4: “The Department should implement its plans for updating its
existing management plans by April 13, 2012.” The finding of the Auditor General is agreed to
and the audit recommendation will be implemented. By April 2012, the Department will
develop and implement an overall plan and timeline that specifies a target date when each
existing management plan will be updated. Lands Council has already recommended
management plan revisions and this is currently being implemented on a Regional level.
Recommendation 2.5: “The Department should establish policies and procedures for
ensuring that management plans are periodically reevaluated and revised as needed in
accordance with its land acquisition guidelines.” The finding of the Auditor General is agreed
to and the audit recommendation will be implemented. The operation plan and accompanying 2-
year matrix within each management plan would address all the activities on the property. The
operational plan would be revised following the process already recommended by the Lands
Council. The Department’s Acquisition Guidelines will be updated to reflect this procedure.
Recommendation 2.6: “the Department should develop and implement policies and
procedures to establish oversight of properties managed by other organizations to ensure the
goals and objectives for the properties are accomplished.” The finding of the Auditor General
is agreed to and a different method of dealing with the finding will be implemented. Arizona
State Parks and other organizations that we work with to manage some of the Department’s
properties have planning processes of their own; with their own review and revision interval. We
work directly with those land managers as they develop management plans and revise them. We
believe that it would be inappropriate for the Department to, by modification of our agreements,
force those managers to modify their planning processes. The Department will develop a
procedure to ensure direct involvement by Department Personnel in any updates of any
management plans for properties managed by other entities as they are revised to ensure that the
Commission’s objectives for the property are reflected, accomplished, and monitored.
Performance Audit Division reports issued within the last 24 months
Future Performance Audit Division reports
Arizona Health Care Cost Containment System—Coordination of Benefits
11-03 Arizona Department of Veterans’
Services—Fiduciary Program
11-04 Arizona Medical Board
11-05 Pinal County Transportation
Excise Tax
11-06 Arizona Department of Veterans’
Services—Veteran Home
11-07 Department of Corrections—
Oversight of Security Operations
11-08 Department of Corrections—
Sunset Factors
11-09 Arizona Department of Veterans’
Services—Veterans’ Donations
and Military Family Relief Funds
11-10 Arizona Department of Veterans’
Services and Arizona Veterans’
Service Advisory Commission—
Sunset Factors
11-11 Arizona Board of Regents—
Tuition Setting for Arizona
Universities
11-12 Arizona Board of Regents—
Sunset Factors
11-13 Department of Fire, Building and
Life Safety
10-01 Office of Pest Management—
Restructuring
10-02 Department of Public Safety—
Photo Enforcement Program
10-03 Arizona State Lottery
Commission and Arizona State
Lottery
10-04 Department of Agriculture—
Food Safety and Quality
Assurance Inspection Programs
10-05 Arizona Department of Housing
10-06 Board of Chiropractic Examiners
10-07 Arizona Department of
Agriculture—Sunset Factors
10-08 Department of Corrections—
Prison Population Growth
10-L1 Office of Pest Management—
Regulation
10-09 Arizona Sports and Tourism
Authority
11-01 Department of Public Safety—
Followup on Specific
Recommendations from
Previous Audits and Sunset
Factors
11-02 Arizona State Board of Nursing