Performance Audit and Sunset Review, Arizona State Board of Cosmetology 2013

              A REPORT
TO THE
ARIZONA LEGISLATURE
Debra K. Davenport
Auditor General
Performance Audit and Sunset Review
Arizona State
Board of Cosmetology
Performance Audit Division
September • 2013
REPORT NO. 13-09
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
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.azauditor.gov
Dale Chapman, Director
Ste
Representative John Allen, Vice Chair
Representative Paul Boyer
Representative Andrea Dalessandro
Representative Martin Quezada
Representative Kelly Townsend
Representative Andy Tobin (ex officio)
Senator Chester Crandell, Chair
Senator Judy Burges
Senator
Senator
Senator
Kori Minckler, Manager and Contact Person
Steven Meyeroff, Team Leader
Stephanie Grosvenor
Amir Mach
Rebecca Perrera
Steve Gallardo
Katie Hobbs
Andy Biggs (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
September 19, 2013
Members of the Arizona Legislature
The Honorable Janice K. Brewer, Governor
Mr. Gary Begley, Chair
Arizona State Board of Cosmetology
Ms. Donna Aune, Executive Director
Arizona State Board of Cosmetology
Transmitted herewith is a report of the Auditor General, A Performance Audit and Sunset
Review of the Arizona State Board of Cosmetology. This report is in response to an October
26, 2010, resolution of the Joint Legislative Audit Committee. The performance audit was
conducted as part of the sunset review process prescribed in Arizona Revised Statutes
§41-2951 et seq. 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 State Board of Cosmetology agrees with all of the
findings and plans to implement all of the recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
Sincerely,
Debbie Davenport
Auditor General
Attachment
cc: Arizona State Board of Cosmetology Members
Board should revise its inspection approach
2010
Lo
l
n
pr
u
Board should further improve its licensing processes—We reviewed a random
sample of 27 license applications approved in calendar year 2012 and found that the
Board had not obtained the necessary documentation to determine that 6 applicants
met all statutory and rule licensing requirements. However, the Board reported
that it revised its license application and approval processes in August 2012 and
began obtaining the needed documentation. Our review of a sample of nine license
applications approved in calendar year 2013 found that the Board received all required
documentation. Despite this change, the Board lacks written policies and procedures
regarding its license application process.
Board should track compliance with licensing time frames—The Board does not
track its compliance with statutorily required time frames. Failure to comply with the
time frames may result in the Board having to refund licensing fees and pay a penalty
to the State General Fund. We reviewed a sample of 30 approved license applications
and found that 17 applications did not have enough information to determine whether
the Board issued licenses within the time frames.
Board should report detailed and supported licensing information—In its fiscal
years 2014 and 2015 proposed budget, the Board reported that it had an expected
total of 118,000 licensed individuals and establishments during fiscal year 2013.
Although this total included 57,921 active licenses as of June 2013, it also included
delinquent and inactive licenses, including 25,574 licenses that had been inactive for
more than 10 years and that the Board no longer regulated.
Board should propose statutory changes—The Board can strengthen its license-renewal
requirements by working with its stakeholders to develop and propose
legislation requiring licensees to complete continuing education as a condition of
license renewal. Several other states require continuing education in subjects such as
health/safety, HIV/AIDS, and sanitation and sterilization. In addition, the Board should
propose legislation to change the license-renewal frequency from 1 to 2 years.
The Board should:
• Develop and implement policies and procedures regarding the documentation it
must obtain to ensure applicants meet all licensure requirements and for tracking
compliance with licensing time frames;
• Ensure that the information it reports is sufficiently detailed and supported; and
• Work with its stakeholders to develop and propose legislation to require continuing
education and extend the license-renewal frequency to 2 years.
Our Conclusion
201
Board should improve its licensing functions
September • Report No. 13-09
2013
The Arizona State Board
of Cosmetology (Board)
licenses and regulates
cosmetologists, salons,
and schools. The Board
should continue to ensure
that it issues licenses only to
qualified applicants, comply
with statutorily required
time frames for issuing
licenses, and develop and
propose legislation requiring
continuing education
for license renewal. The
Board should also revise
its inspection approach
to ensure all salons are
appropriately inspected in a
timely manner based on the
risks that the salons pose
to the public. Additionally,
the Board should improve
its complaint resolution
processes by conducting
adequate investigations and
addressing weaknesses in its
decision-making processes.
Finally, the Board should
provide timely and complete
information about licensees
over the phone and on its
Web site.
REPORT HIGHLIGHTS
PERFORMANCE AUDIT
Recommendations
Board should develop a risk-based inspection approach—The Board is required
to conduct initial inspections of salons around the time of licensure and thereafter
on a regular basis, with an internal goal of annual subsequent inspections. However,
we reviewed a random sample of 54 licensed salons and found that 22 salons had
been open for a median time of 2 years without receiving an initial inspection as of
Arizona State
Board of Cosmetology
Board should improve its provision of information to public
REPORT HIGHLIGHTS
PERFORMANCE AUDIT
ember 2010 • Report No. 10-03
A copy of the full report is available at:
www.azauditor.gov
Contact person:
Board should improve its complaint resolution process
201 1 -0
Board inadequately investigated complaints—We reviewed a random sample of 16 complaints and found
that 8 complaint investigations appeared to be inadequate or insufficiently documented. For example, where
unlicensed activity was alleged, the investigator just asked the individual about his/her activities rather than
posing as a potential client to see if the person would schedule an appointment and then going to the salon
to conduct other investigative activities.
Board’s procedures for reviewing and adjudicating complaints are insufficient—First, the Board
prematurely considers a licensee’s disciplinary history, which may influence board members’ decisions on
whether or not a licensee has violated statutes or rules. Second, the Board does not receive investigation
reports for complaints where board staff have recommended that it dismiss a complaint or issue a letter of
concern. Without this information, board members cannot ensure they agree with staff recommendations.
Third, when adjudicating complaints, board members are not stating whether a statutory or rule violation has
occurred as they should do before deciding whether or not to impose discipline.
The Board should:
• Develop and implement policies and procedures for conducting adequate complaint investigations; and
• Improve its procedures for reviewing and adjudicating complaints.
September 2013 13-09
Kori Minckler (602) 553-0333
Arizona State
Board of Cosmetology
May 2013. For the 32 salons that were inspected, it took the Board a median of approximately 218 days to
conduct an initial inspection. Additionally, 21 of the 32 salons that received an initial inspection had been open
long enough to receive a subsequent inspection. However, for 20 of the 21 salons, the Board did not conduct
annual inspections. The lack of an effective process for monitoring the timeliness and frequency of inspections
contributed to this problem. Further, the Board does not use a risk-based approach to focus its inspection on
the riskiest salons—those that pose the greatest health and safety risk to the public.
Salon inspections not always thorough or consistently performed—The Board created a
checklist for its inspectors to use when conducting an inspection. However, the checklist has not
been updated to reflect current statutory or rule requirements, and it includes vague items, such as
“client protection,” which can cover multiple requirements. We also observed inspectors not using
the checklist to guide their inspections and not checking salons for compliance with all requirements.
The Board should develop a risk-based inspection approach and update its inspection checklist, including
clarifying any vague requirements.
Although the Board responds to public requests for information over the phone, it does not provide timely and
complete information in response to these requests. We placed four phone calls to the Board asking about
complaint and disciplinary history information for four licensees. For three of these calls, we were instructed to
leave messages. Board staff returned one call within 48 hours, but did not return the other two phone calls. For
the fourth call, the Board was unable to provide any licensing or complaint history information for the requested
licensee. Additionally, unlike some other Arizona state regulatory boards, the Board does not provide complaint
or disciplinary history information on its Web site.
The Board should ensure that its staff provide complete and accurate information over the phone and provide
complaint and disciplinary history information on its Web site.
Recommendations
Recommendations
Recommendations
TABLE OF CONTENTS
continued
page i
Office of the Auditor General
Introduction 1
L icensin g and permitting 5
Board should take additional steps to ensure applicants meet all
requirements for licensure 5
Board should ensure it complies with statutorily required time frames
for issuing licenses 6
Board should report detailed and supported information about its activities 7
Board’s renewal requirements could be strengthened by requiring
continuing education for its licensees 7
Reco mmendations 9
Inspe cti ons 11
Board’s inspection approach and processes have weaknesses that
do not allow it to fully protect the public 11
Board’s inspection approach lacks systematic coverage and focus 11
Inconsistent inspection procedures put public health at risk 14
Recommendations 16
Complaint resolution 17
Complaint investigation and adjudication processes need strengthening 17
Board responsible for investigating complaints 17
TABLE OF CONTENTS
concluded
25
page ii
State of Arizona
Board complaint investigations inadequate and imposed
discipline inconsistent 18
Board’s procedures for reviewing and adjudicating complaints
are insufficient 20
Board should ensure timely resolution of complaints 21
Recommendations 23
P ublic information
Board should improve its provision of public information 25
Recommendations 26
Sunset factor analysis 27
Appendix A: Methodology a-1
Table
1 Schedule of revenues, expenditures, and changes in fund balance
3
Figure
1 Length of time to resolve complaints
Fiscal years 2009 through 2013 22
Age ncy Response
Fiscal ye ars 2011 through 2013
(Unaudited)
page 1
Office of the Auditor General
Audit scope and objectives
The Office of the Auditor General has conducted a performance audit and sunset review
of the Arizona State Board of Cosmetology (Board) pursuant to an October 26, 2010,
resolution of the Joint Legislative Audit Committee. This audit was conducted as part of the
sunset review process prescribed in Arizona Revised Statutes (A.R.S.) §41-2951 et seq
and addresses the Board’s licensing processes, inspections of licensed salons, complaint
resolution process, and provision of information to the public. It also includes responses to
the statutory sunset factors.
Mission and responsibilities
The Board was established in 1935 to regulate the practice of cosmetology.1 Its mission is
to ensure the health, safety, and welfare of the citizens of Arizona through education and
enforcement of the State’s cosmetology laws and rules by regulating the practice of
cosmetology. The Board’s responsibilities include:
• Issuing licenses to qualified applicants—The Board licenses aestheticians, nail
technicians, cosmetologists, instructors, salons, and schools. Aesthetics and nail
technology involve the practices of skin care and nail care, respectively. Cosmetology
encompasses aesthetics and nail technology, but also includes the practice of hair
care. According to board records, the Board issued more than 5,600 initial licenses
during fiscal year 2013 and had approximately 58,000 active licensees as of June
2013.
• Conducting inspections of licensed facilities—The Board inspects licensed
cosmetology salons and schools to ensure compliance with applicable statutes and
rules, as well as to protect the public from unsafe and unsanitary conditions. According
to board records, the Board conducted 8,943 inspections in fiscal year 2013.
• Investigating and resolving complaints—The Board investigates complaints
against licensees and takes statutorily authorized disciplinary action, as needed. The
Board’s disciplinary options include issuing letters of concern and public reprove,
which could result in the Board notifying the public of a violation, imposing probation,
imposing civil penalties, and/or suspending or revoking licenses. According to board
1 Laws 1935, Ch. 52
Introduction
page 2
State of Arizona
reports and board meeting minutes and agendas, the Board dismissed an estimated 277
complaints and took disciplinary action involving 1,004 complaints in fiscal year 2013.1
• Providing information to the public—The Board maintains a Web site that provides licensee
information regarding individuals, schools, and salons; as well as public meeting agendas, a
newsletter, and substantive policy statements. Board staff also respond to public requests over
the phone regarding the license status and complaint history for its licensees.
• Administering safety and sanitation class—The Board administers an infection protection
and law class twice a month. This class covers Arizona laws pertaining to the practice of
cosmetology, such as licensing requirements and scope of practice for cosmetologists,
aestheticians, and nail technicians. It also covers how to maintain a sanitary salon environment
and prevent infection. This class is required for reciprocity applicants and individuals reactivating
licenses that have been inactive for more than 1 year. In fiscal year 2013, the Board reported
that 2,177 people took this class.
Organization and staffing
The Board consists of seven governor-appointed members, including two cosmetologists, one nail
technician, one instructor, one school owner, one educator who does not represent the cosmetology
or nail technology industry, and one public member. Board members serve 3-year terms. The Board
was appropriated 24.5 full-time equivalent staff positions for fiscal year 2013, of which 17 positions
were filled as of July 2013.
Budget
The Board does not receive any State General Fund appropriations. Rather, its revenues consist
primarily of license fees. A.R.S. §32-505 requires the Board to remit to the State General Fund 100
percent of all collected penalties and 10 percent of all other revenues. As shown in Table 1 (see page
3), the Board’s fiscal year 2013 net revenues totaled approximately $2.8 million and its expenditures
totaled more than $1.8 million. The Board’s fiscal year 2013 ending fund balance was approximately
$3.9 million.
1 The Board was unable to provide auditors with reliable information on the number of complaints it received or opened in fiscal year 2013
(see Sunset Factor 2, page 28, for more information).
page 3
Office of the Auditor General
Table 1: Schedule of revenues, expenditures, and changes in fund balance
Fiscal years 2011 through 2013
(Unaudited)
1 Amount consists primarily of licensing fees.
2 The Board is required by A.R.S. §32-505 to remit 100 percent of all collected penalties and 10 percent of all other revenues to the State General
Fund.
3 Amount primarily consists of transfers to the State General Fund in accordance with Laws 2010, 7th S.S., Ch. 1, §148 and Laws 2011, Ch. 24,
§§108, 129, and 138, to provide support for state agencies.
Source: Auditor General staff analysis of the Arizona Financial Information System (AFIS) Accounting Event Transaction File for fiscal years 2011 and
2012 and the AFIS Management Information System Status of General Ledger-Trial Balance screen for fiscal years 2011 through 2013.
2011 2012 2013
Revenues, net of credit card fees1 $ 3,022,659 $ 3,000,465 $ 3,227,791
Remittances to the State General Fund2 (367,604) (363,053) (385,465)
Net revenues 2,655,055 2,637,412 2,842,326
Expenditures 1,698,410 1,764,797 1,833,234
Transfers3 39,067 24,900 852
Total expenditures and transfers 1,737,477 1,789,697 1,834,086
Net change in fund balance 917,578 847,715 1,008,240
Fund balance, beginning of year 1,109,282 2,026,860 2,874,575
Fund balance, end of year $ 2,026,860 $ 2,874,575 $ 3,882,815
page 4
State of Arizona
page 5
Office of the Auditor General
Licensing
and permitting
Board should take
additional steps to ensure
applicants meet all requirements for licensure
The Arizona State Board of Cosmetology (Board)
issues various licenses to individuals and
facilities in the cosmetology industry. Individuals
can become licensed through examination or by
reciprocity if they have previously been licensed
in another state. Board statutes and rules outline
specific requirements for licensure, which vary
by license type (see textbox).
According to a board official, between 2008 and
2012, Board practices did not ensure that all
applicants met the requirements for licensure.
Specifically, auditors reviewed a random sample
of 27 individual, instructor, and salon license
applications that the Board approved in calendar
year 2012 and 3 school license applications that
were approved in 2004 and 2009, and found
that the Board did not obtain the necessary
documentation to determine that 6 individual
and instructor applicants met all of the statutory
and rule requirements prior to approving and
issuing the license. The required documents the
Board did not obtain were proof of required work experience, proof of graduation from a
licensed school, proof of age/schooling, and proof of right to work in the United States.
This placed the Board at risk for issuing licenses to unqualified applicants.
The Board has since revised its processes to ensure applicants are qualified to receive
licenses, but its actions can be further strengthened. Specifically, the Board reported that
it revised its license application review and approval processes in August 2012 and began
obtaining the needed documentation to determine applicant qualifications prior to issuing
a license. Auditors reviewed a sample of nine license applications the Board approved in
calendar year 2013 as of May 2013 and found that it had received the documentation
needed to determine these applicants met all statutory and rule licensure requirements
prior to issuing the license. Despite the revisions to its licensing processes, the Board lacks
The Board should take additional steps to ensure
applicants meet all requirements for licensure,
track its compliance with statutorily required time
frames for issuing licenses, and propose legislation
to revise its license-renewal requirements to
require licensees to complete continuing
education and change the license-renewal time
frame from annually to every 2 years.
License requirements by license type
• Individuals—Must complete 2 years of high
school or be 23 years of age, graduate from a
school licensed by the Board, and pass an
examination.
• Instructors—Must have a high school diploma or
be 23 years of age, possess a current license,
graduate from an instructor program or have 5
years of work experience, and pass an
examination.
• Salons—Must submit an application with
required documentation, provide partnership/
corporation documentation, comply with board
safety/sanitation requirements, and pass a board
inspection.
• Schools—Must complete an application with
required documentation, furnish a surety bond of
$10,000, and pass a board inspection.
Source: Auditor General staff analysis of board licensure
requirements as reflected in Arizona Revised Statutes
(A.R.S.) §§32-510, 32-511, 32-512, 32-531, 32-541, and
32-551.
written policies and procedures regarding the documentation that board staff should obtain and
review to ensure applicants meet each licensure requirement prior to issuing a license. Developing
and implementing written policies and procedures would help ensure that the Board consistently
and appropriately processes license applications over time. Therefore, the Board should develop
and implement such written policies and procedures and train staff on them.
Board should ensure it complies with statutorily required time
frames for issuing licenses
The Board should track its compliance with statutorily required time frames for issuing licenses.
Specifically, statute requires the Board to establish time frames in rule for issuing licenses. These
time frames are important because they provide information and an assurance to the public about
what to expect in regard to having a license approved or denied, and increase the Board’s
accountability when time frames are not met. If the Board does not meet its time frames for
processing licenses and permits, statute requires it to refund licensing fees to applicants and pay a
penalty of 2.5 percent of the applicant’s fees to the State General Fund for each month that licenses
are not issued or denied within the established time frames.
Although the Board has established license processing time frames in rule, the Board does not track
its compliance with these time frames. Specifically, auditors’ review of the sample of 30 licensing
applications that were approved in calendar year 2012 found that for 17 of the applications, the
Board did not retain sufficient documentation to determine if licensing time frames were met. For
example, board staff did not date-stamp all documents that were received and did not retain all
documents needed to track timeliness, such as notices that an application is deficient and notices
that the applicant is approved to take the examinations, which consist of practical and theoretical
examinations. Additionally, board staff did not use any other type of mechanism, such as a
spreadsheet or database, to track compliance with licensing time frames.
Because it does not track compliance with its established time frames, the Board does not know
whether time frames are being met and when fees should be refunded to an applicant and/or when
penalties should be paid to the State General Fund. It also lacks policies and procedures for
processing license applications within statutorily required time frames and for tracking its compliance
with these time frames. Therefore, the Board should develop and implement policies and procedures
that require its staff to track the Board’s compliance with all licensing time frames and train staff on
them. These policies and procedures should also specify the documentation that staff should retain
to allow the Board to track compliance with its time frames. Board staff could also track compliance
with the licensing time frames using its database if it requested its database vendor to add this
functionality.
page 6
State of Arizona
Board should report detailed and supported information about its
activities
The Board should report more detailed and supported information to the Governor’s Office of
Strategic Planning and Budgeting (OSPB) and the Joint Legislative Budget Committee (JLBC)
regarding its licensing activities. Statute requires selected performance measures, established by the
OSPB in consultation with the JLBC, to be included in state agencies’ budget submissions to the
Governor and Legislature.1 To comply with this requirement, the Board has established performance
measures including its number of licensees and the average number of days it takes to process
license applications.
In its fiscal years 2014 and 2015 budget submission to the Governor, the Board reported that it had
an expected total of 118,000 licensed individuals and establishments during fiscal year 2013.
However, this total did not provide important information regarding the status of these licensees.
Specifically, auditors’ review of board data showed it had a total of 57,921 active licensees as of June
2013. The remaining licenses were either inactive, delinquent, or under probation, including licenses
that had been inactive for more than 10 years. According to a board official, the Board provides
services to both active and inactive licensees. For example, because A.R.S. §§32-518 and 32-537
allow licensees to reactivate their licenses within 10 years of becoming inactive, according to the
Board, it provides services to inactive licensees by helping them to reactivate their license. However,
25,574 of the licenses the Board included in its number had been inactive for more than 10 years
and were still included even though the Board no longer regulated these individuals. In addition, the
Board reported an average of 17 days to process licensure applications in fiscal year 2012, but was
unable to provide auditors with support for how it calculated this number and, as discussed
previously, the Board does not retain documentation or track compliance with licensing time frames.
Performance measures are an essential component of strategic planning and provide a basis for
measuring and reporting activity and progress to external policy makers and the public, and for
adequate board oversight. As a result, the Board should ensure that the information it reports is
sufficiently detailed and supported so it can be used to evaluate the Board’s performance and any
staffing and resource adjustments it may need. For example, when it reports the total number of
individuals and establishments licensed, it should include the number of active licenses and licenses
that have been inactive for less than 10 years separately and not include the number of licenses that
have been inactive for more than 10 years because the Board no longer regulates these individuals.
Board’s renewal requirements could be strengthened by requiring
continuing education for its licensees
The Board’s license renewal requirements could be strengthened by requiring that individual
licensees complete continuing education. Board statutes and rules require licensees to renew
annually on their birthday and pay a $30 renewal fee. Statutes do not require the Board’s licensees
1 Auditor General staff analysis of A.R.S. §35-115(6).
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Office of the Auditor General
to complete any continuing education in order to renew their licenses. Board staff stated that the
Board has not sought a statutory change to require continuing education because it does not have
the resources to review or process the continuing education and it would impose a burden on
licensees. However, occupational hazards from exposure to chemicals and blood-borne illnesses
such as hepatitis B, hepatitis C, and HIV/AIDS place both the licensee and the public at risk for
exposure. Although licensees receive training on workplace safety and sanitation prior to becoming
licensed, continuing education that covers new occupational threats or best practices in workplace
safety and sanitation is not required. Continuing education courses can help licensed professionals
stay current with best practices on health and safety issues in the cosmetology industry, such as
blood contamination risks and proper clean-up procedures.1
A review of the regulatory function in other states shows that some states have such a requirement
for renewing a cosmetology license. Auditors reviewed the continuing education requirements for
five surrounding states’ cosmetology boards—California, Colorado, New Mexico, Nevada, and
Utah—and found that two have a continuing education requirement—Nevada for both individual
and instructor licensees, and New Mexico for instructors. In addition, a review of a continuing
education provider’s Web site found that five other states—Illinois, Georgia, Florida, North Carolina,
and West Virginia—require continuing education for license renewal.2 Auditors reviewed the number
of continuing education hours required by three of these states—Illinois, Georgia, and Florida—and
found that they ranged from 5 to 16 hours every 2 years for individual licenses, while Illinois and
Georgia require an additional 10 hours of continuing education for instructors every 2 years. The
required courses include the following subject matters: health/safety, HIV/AIDS, sanitation and
sterilization, and state and federal laws. Based on a review of the continuing education provider’s
Web site, the cost for 5 to 16 hours of online continuing education courses ranged from $14 to $40.
For example, the continuing education provider offers a 7-hour course to Illinois licensees for $20.
Many other Arizona state regulatory boards also have continuing education requirements. Arizona
statutes authorize continuing education or its functional equivalent for licensees or registrants of at
least 28 Arizona state regulatory boards or agencies upon license renewal. Some of these boards
have also established processes for verifying that licensees meet continuing education requirements—
for example, by requiring licensees to submit proof of course completion—either a certificate or letter
issued by the education provider.
Therefore, the Board should work with its stakeholders to develop a continuing education requirement
that helps to protect the public’s health and safety and then propose legislation requiring its
licensees to complete continuing education courses in health and safety as a condition of license
renewal. Similar to other states, the Board should also consider a legislative proposal that requires
additional hours of continuing education for licensed instructors.
1 Murtagh, M., & Hepworth, J. (2004). Hepatitis C in the workplace: A survey of occupational health and safety knowledge and practice in the
beauty therapy industry. Australian and New Zealand Journal of Public Health, 28, 207-211; Hepworth, J., & Murtagh, M. (2005). Correct
procedures and cutting corners: A qualitative study of women’s occupational health and safety in a beauty therapy industry. Australian and
New Zealand Journal of Public Health, 29, 555-557; Walsh, S.A. (2012). Beyond the polish: An examination of hazardous conditions in nail
salons and potential solutions for the industry in New York City. Journal of Law and Policy, 21, 243-282.
2 Continuing Cosmetology is a continuing education provider approved by several state boards. The following states have issued continuing
education provider licenses to Continuing Cosmetology: Alabama, Florida, Georgia, Illinois, Kentucky, North Carolina, and West Virginia.
Kentucky requires continuing education for licensure reactivation only. Alabama previously required continuing education for instructors, but
according to an Alabama Board of Cosmetology official, this requirement was removed as of September 1, 2013. For more information, see
http://continuingcosmetology.com.
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State of Arizona
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Office of the Auditor General
To help implement the continuing education requirement, the Board should also develop and
propose legislation to change the license renewal frequency to every 2 years. Not only would this
allow licensees sufficient time to complete the continuing education requirements, it could reduce
the number of renewal applications the Board must process each year by requiring half of the
licensees to renew on even-numbered years and the other half on odd-numbered years. Auditors
conducted a review of the cosmetology statutes for five surrounding states—California, Colorado,
New Mexico, Nevada, and Utah—and found that four of the five state cosmetology boards require
their licensees to renew every 2 years, as do 19 professions regulated by Arizona state regulatory
boards or agencies. The Office of the Auditor General’s 1996 performance audit of the Board (see
Report No. 96-15) also recommended that the Legislature consider amending statute to require
biennial licensure.
Recommendations:
1. The Board should develop and implement policies and procedures that direct its staff to obtain
and review all necessary documentation to ensure that applicants meet all statutory and rule
requirements prior to issuing a license. Once the policies and procedures are developed and
implemented, the Board should ensure all appropriate staff are trained on them.
2. The Board should develop and implement policies and procedures that require its staff to track
the Board’s compliance with all licensing time frames. These policies and procedures should
specify the documentation that board staff should retain to allow the Board to track compliance
with its time frames. The Board should also consider using its database to track its compliance
with the licensing time frames and request its database vendor to add this functionality. Once
the policies and procedures are developed and implemented, the Board should ensure all
appropriate staff are trained on them.
3. The Board should ensure that the information it reports is sufficiently detailed and supported
so it can be used to evaluate the Board’s performance and any staffing and resource
adjustments it may need.
4. The Board should work with its stakeholders to develop and propose legislation to:
a. Require licensees to complete continuing education courses in health and safety as a
condition of license renewal and consider requiring additional hours of continuing
education for instructors; and
b. Change the license renewal frequency to every 2 years.
page 10
State of Arizona
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Office of the Auditor General
Board’s inspection approach and processes have
weaknesses that do not allow it to fully protect the public
The Arizona State Board of Cosmetology (Board) lacks an effective inspection approach
to ensure that all cosmetology, aesthetic, and nail technology salons receive an initial
inspection as required by law, as well as subsequent inspections that meet the Board’s
established frequency goals.1 Further, board inspectors do not always conduct thorough
inspections or disclose statutorily required information before beginning the inspection. As
a result, the Board is not adequately protecting the public. Improvements needed include
implementing a risk-based inspection approach and updating and consistently using the
inspection checklist to ensure that licensed salons comply with state regulations.
Board’s inspection approach lacks systematic coverage and
focus
The Board has not conducted initial inspections of some new salons as required by statute,
nor has it conducted subsequent inspections of existing salons as frequently as stated in
its goals. For example, auditors’ review of 54 salons that had applied for licensure found
that 22 salons had not received an initial inspection as required by statute and that the
Board inconsistently performed subsequent inspections of the 32 salons that had received
an initial inspection. The lack of an effective process to determine when licensed salons
should be inspected, such as a risk-based inspection approach, contributed to the Board’s
ineffective approach. Therefore, the Board needs to develop a better approach for
monitoring inspection timeliness and frequency, and it could use its inspection resources
more effectively if it developed a risk-based approach for deciding how frequently to
inspect each facility.
Licensed salon inspections are not completed as determined by statute
or board goals—The Board is statutorily responsible for conducting initial
inspections of salons around the time of licensure and on a regular basis as deemed
necessary. According to the Board, six board staff members conduct salon inspections.
These consist of one full-time inspector; one part-time inspector; three staff who primarily
investigate complaints, but who also spend part of their time conducting inspections;
1 Arizona Revised Statues (A.R.S.) §32-551 also requires the Board to inspect schools.
The Board should revise its inspection approach to
ensure that all salons are appropriately inspected
in a timely manner based on risks that the salons
pose to the public. Inspections
page 12
State of Arizona
and one board manager who spends a small percentage of her time conducting salon inspections.
However, the Board’s inspection approach does not ensure that salons receive their initial
inspection as required by statute, or that any subsequent inspections are performed at the
frequency specified under the Board’s goals. Thus, the Board may not be protecting the public
health and safety by ensuring that newly licensed salons are complying with statute and
regulations and by focusing its limited inspection resources on problematic salons. Specifically:
• Board failed to conduct many initial inspections—Auditors reviewed a random sample of
54 salons that were initially licensed in calendar years 2007 through 2012 and found that 22
of the 54 salons had not received an initial inspection as of May 2013. These salons had been
open for a median time of 2 years without receiving an initial inspection despite the statutory
requirement that the Board conduct initial inspections of salons around the time of licensure.
Board staff were not able to provide specific reasons why these 22 salons had not received
an inspection.1
• When initial inspections were conducted, many were not timely—Although the Board
conducted initial inspections of 32 of the 54 salons, it took board inspectors a median of
approximately 218 days after initial licensure to conduct the initial inspection. Failure to
inspect salons around the time of initial licensure potentially allows licensees to operate out
of compliance with laws and regulations and may put the public at risk for unsafe and
unsanitary salon conditions. In fact, inspectors found health and safety violations at 2 of these
32 salons. Both received an unsatisfactory grade during their initial inspection because of
health and safety violations, including not properly disinfecting and cleaning salon implements,
such as shears, razors, and tweezers, used to perform services on clients.
• Board did not meet internal goal for subsequent inspections—According to board staff,
the internal goal for conducting subsequent salon inspections is once a year. For the 32
salons in auditors’ sample that received an inspection, 21 were open at least 2 years and thus
eligible for a subsequent inspection. However, for 20 of these 21 salons, the Board did not
conduct annual inspections. For example, one salon was open 4½ years and did not receive
an inspection for approximately 18 months after opening. The salon then received three
inspections within approximately 16 months and did not receive another inspection for
approximately 20 months before closing. Another salon was open for 4 years and received
its only inspection approximately 29 months after opening. The one salon that met the
Board’s goal of an annual inspection received inspections more frequently than on an annual
basis. Specifically, this salon received seven inspections during the 5 years it was open, none
of which resulted in safety and sanitation violations.
Board lacks an effective process for monitoring the timeliness and frequency of
inspections—According to board staff, inspectors are responsible for determining which
salons to inspect on a daily basis. To determine which salons to inspect, inspectors use a filing
system, similar to a rolodex, containing inspection cards showing the licensing information for
each salon. According to board staff, when new salons are licensed, licensing staff create an
1 The Board subsequently issued new licenses to 2 of the 22 salons that never received an initial inspection because these 2 salons changed
their names approximately 2 and 11 weeks after they initially opened and had first been licensed. The Board then conducted initial
inspections of these salons approximately 4 and 11 weeks, respectively, after issuing the new licenses.
inspection card, which the compliance manager gives to an inspector to add to their filing system
based on the salon’s geographic location. Board inspectors should be using the inspection cards
to track the inspections they perform. Additionally, after each day’s inspections, inspectors fill out
an inspection log recording the salons that they inspected, which board office staff use to input
inspection information into its database.
However, this approach does not provide the Board with reliable information regarding which
facilities are being inspected and whether inspections are being carried out in a timely manner.
First, the information on inspection cards is not always reliable or up to date. Auditors observed
some inspections and noted that some salon inspection cards for one inspector did not contain
any inspection notes and some had no record of the most recent inspection. According to a board
inspector, if the salon inspection cards are blank or not up to date, it could be that the salon is no
longer operating or the inspector did not record the inspection date on the card. Second, the
inspection process lacks supervisory oversight. Even if the information contained on the inspection
logs is complete and entered accurately into the database, board management reported that it
does not use the database to monitor whether inspectors are meeting the statutory requirement
for initial inspections or board goals for inspection frequency. Given these weaknesses, the Board
is unable to know whether new salons are receiving their initial inspections as statute requires and
whether licensed salons are being inspected with the frequency called for in board goals.
Board does not use a risk-based approach to focus subsequent inspections on
the riskiest salons—The Board’s goal of conducting regular inspections once a year,
although not met under its current procedures, also does not ensure that salons are inspected
based on the health and safety risk they pose to the public. Specifically, salons with previous
health and safety violations or substantiated public complaints, or that perform riskier services
such as nail or skin procedures, may warrant more frequent inspection than those salons that do
not have these risk factors. However, because its inspection approach is not based on risk, the
Board may not effectively use its staff resources to focus inspection activities on the highest-risk
salons to best protect public health and safety.
Texas offers an example of how Arizona could carry out a risk-based approach. The Texas
Cosmetology Commission (Commission) is required to inspect each licensed facility at least once
every 2 years and use a risk-based approach to conduct any additional inspections using five
criteria to determine risk. The five criteria are the type and nature of the school, shop, or other
facility; whether there has been a prior sanitation violation at the school, shop, or facility; the
inspection history of the school, shop, or other facility; any history of complaints involving the
school, shop, or other facility; and any other factor determined by the Commission by rule.
Improved monitoring and inspection frequency approach requires several
steps—To help ensure that the Board conducts initial inspections as required by statute, and to
shift inspections of existing facilities to more of a risk-based approach, several actions are needed.
Specifically, the Board should:
• Establish factors it will use to assess individual salon risk. Potential risk factors could include
prior health and safety violations, substantiated public complaints, whether the salon recently
opened or was delinquent in renewing its license, and types of services performed.
page 13
Office of the Auditor General
page 14
State of Arizona
• Use its database to generate inspection reports that provide inspection history information for
each licensed salon. Not only can this information be used to help ensure all salons receive
a timely initial inspection, it can be used to help the Board prioritize salons for subsequent
inspections based on these salons’ identified risks. The Board should work with its database
contractor to ensure that all required information, such as inspection dates and salon risk
factors, can be entered into the database, and develop management reports that will help
board management assign inspection priorities based on historical inspection information
and a salon’s risk.
• Develop and implement policies and procedures to govern its risk-based inspection approach
and to guide its staff in performing initial inspections as required and regular inspections
based on a salon’s identified risk.
Inconsistent inspection procedures put public health at risk
In addition to identifying problems with when inspections were conducted, auditors also identified
problems with how board inspectors conduct inspections. Auditors observed two board inspectors
conducting eight salon inspections in April 2013. These inspections were not always thorough or
consistently conducted, and inspectors did not always disclose statutorily required information
before beginning the inspection. As with the timeliness and frequency of inspections, these
inadequate procedures can place public health and safety at risk. Therefore, the Board should take
several steps to improve inspection procedures.
Inspection checklist is deficient—To help staff identify and cite violations during inspections,
the Board created an inspection checklist that summarizes specific statute and rule requirements
that inspectors should check for during an inspection. For example, it requires the inspector to
ensure the salon has a first-aid/blood-spill kit available, has clean equipment, and posts the
results of its last inspection in a visible salon location. However, the inspection checklist has sev-eral
deficiencies, as follows:
• It has not been updated to reflect current statute or rule—For example, the inspection
checklist does not list a requirement for the inspectors to check laser services to ensure that
the licensee is complying with statutes and rules governing the procedure. According to
board staff, an inspector should check that all laser equipment is correctly registered with the
Arizona Radiation Regulatory Agency (Agency), that the licensee has received the correct
laser certification from the Agency, and that the licensee has a sign stating these services are
not regulated by the Board.1 These statutory and rule requirements were added in 2008, but
according to board staff, the inspection checklist has not been updated since February 2006.
Further, the checklist contains a requirement for a dishwasher even though this requirement
is no longer reflected in statute or the Board’s current rules.
1 During auditors’ observations, one inspector did look for proper notice of services not regulated by the Board, but did not check the
licensee’s certification or equipment registration because the licensee was performing services and the inspector did not want to interrupt
him/her.
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Office of the Auditor General
• It includes items that are vague—For example, the Board’s checklist includes one item
listed as “client protection.” However, this item is very broad and can cover multiple rule
requirements, such as ensuring that a client’s clothing does not come into direct contact with
shampoo bowls or headrests and that a client receives a pre- and post-analysis that includes
appropriate instructions for followup when receiving a service. Because the checklist is vague
and includes only the term “client protection,” a board inspector may not remember to verify
all of the rule requirements.
Inspection checklist inconsistently followed—The two inspectors auditors observed did
not use the checklist as a guide when conducting an inspection, which prevents the Board from
being assured that inspectors are checking for all compliance requirements during salon inspec-tions.
During auditors’ observations of salon inspections, inspectors did not check salons for a
blood spill kit, running water, or the aesthetic portion of a salon. Additionally, board staff reported
that, to save paper, inspectors fill out the inspection checklist only when they find a violation.
However, board statutes and rules specify more than 80 safety, sanitation, and licensing require-ments
that salons must follow, so using the inspection checklist as a guide would help ensure that
board inspectors verify salon compliance with all statutory and rule requirements.
Statutorily required information not disclosed before beginning inspections—
Upon arriving at a salon, board inspectors are required by statute to perform specific functions
prior to conducting the inspection.1 For example, board inspectors must present photo identifica-tion,
state the purpose of the inspection and the legal authority for conducting the inspection,
disclose any applicable inspection fees, and allow a representative of the regulated salon to
accompany the inspector on the premises. However, auditors observed that one of the two inspec-tors
did not cite legal authority for conducting the inspection or provide the inspection rights to the
salon owner at the beginning of the inspection. Additionally, the other inspector did not cite legal
authority for conducting the inspection. Not complying with this statute could result in all evidence
found during the inspection to be thrown out of any administrative proceeding, which would essen-tially
render the inspection as an inefficient use of time and resources and ineffective at protecting
the public.
Several actions needed to improve inspection procedures—To help ensure inspec-tions
are adequately performed and assess salon compliance with all statutory and rule require-ments,
the Board should take the following three steps:
• First, the Board should update its inspection checklist to include all statute and rule-compliance
requirements, remove any outdated requirements, and clarify any vague
requirements to facilitate an inspector’s review of these requirements.
• Second, the Board should update and, where necessary, develop and implement new
policies and procedures that direct the performance of inspections. Although the Board has
some procedures related to conducting inspections, according to board staff, these
procedures have not been updated since 1996. The revised policies and procedures should
include specific steps for performing inspections, including how board inspectors should use
the checklist.
1 A.R.S. §41-1009
• Finally, the Board should train its staff on the functions it must perform in accordance with the
salon’s rights prior to an inspection and ensure staff comply with these requirements.
Recommendations:
1. To ensure that the Board conducts initial inspections as required by statute, and to shift
inspections of existing facilities to more of a risk-based approach, the Board should:
a. Establish factors it will use to assess individual salon risk. Potential risk factors could
include prior health and safety violations, substantiated public complaints, whether the
salon recently opened or was delinquent in renewing its license, and types of services
performed;
b. Use its database to generate inspection reports that provide inspection history information
for each licensed salon to ensure initial inspections are completed as required. These
inspection reports can also be used to help the Board prioritize salons for subsequent
inspections based on these salons’ identified risks;
c. Work with its database contractor to ensure that all required information, such as
inspection dates and salon risk factors, can be entered into the database, and develop
management reports that will help board management assign inspection priorities based
on historical inspection information and a salon’s risk; and
d. Develop and implement policies and procedures to govern its risk-based inspection
approach and to guide its staff in performing initial inspections as required and regular
inspections based on a salon’s risk.
2. To help ensure inspections are adequately performed and to assess salon compliance with all
statutory and rule requirements, the Board should:
a. Update its inspection checklist to include all statute and rule-compliance requirements,
remove any outdated requirements, and clarify any vague requirements; and
b. Update and, where necessary, develop and implement new policies and procedures that
direct the performance of inspections. The revised policies and procedures should
include specific steps for performing inspections, including how board inspectors should
use the checklist.
3. The Board should develop and implement an inspector training on the inspection rights
outlined in statute and ensure that inspectors comply with them.
page 16
State of Arizona
page 17
Office of the Auditor General
Complaint
resolution
Complaint investigation and adjudication processes need
strengthening
The Arizona State Board of Cosmetology’s (Board) complaint resolution process has three
main weaknesses, each of which can potentially undermine the Board’s ability to make
appropriate complaint decisions and protect the public. First, its complaint investigation
process appears to be inadequate—or at the least, the Board retained insufficient
documentation to determine the work performed. This was the case for 8 of the 16 public
complaints that auditors reviewed in detail. Second, the Board’s decision-making
processes do not ensure that complaints are appropriately resolved. For example, the
Board considers a licensee’s disciplinary history before it makes an independent judgment
about the complaint under review. Finally, the Board did not resolve all the complaints that
auditors reviewed in a timely manner. As a result, the Board should take several steps to
improve its complaint investigation and resolution processes.
Board responsible for investigating complaints
The Board is responsible for investigating complaints against licensed individuals,
instructors, salons, and schools and taking appropriate disciplinary action, as necessary.
Statute authorizes the Board to investigate complaints for various reasons, including
allegations of malpractice or incompetency; repeated failure to correct safety and sanitary
infractions; and commission of an act involving dishonesty, fraud, or deceit. Complaints
may be submitted by the public or opened by the Board as a result of inspection violations.
Based on the results of the investigation, the Board may dismiss complaints or take
disciplinary action as appropriate. Disciplinary options include letters of concern, civil
penalties, probation, suspension, and revocation. The Board may also request the licensee
to come for an informal interview before the Board. According to board reports and board
meeting minutes and agendas, the Board dismissed an estimated 277 complaints and
took disciplinary action involving 1,004 complaints in fiscal year 2013.1
1 The Board was unable to provide auditors with reliable information on the number of complaints it received or opened in fiscal
year 2013 (see Sunset Factor 2, page 28, for more information).
The Board should take several steps to improve its
complaint investigation and adjudication
processes, including developing and implementing
policies and procedures for conducting adequate
complaint investigations and appropriately
documenting these investigations, ensuring it takes
consistent disciplinary action, and improving its
decision-making processes. The Board should also
resolve all complaints in a timely manner.
Board complaint investigations inadequate and imposed discipline
inconsistent
Board staff are responsible for conducting investigations and making dismissal or disciplinary
recommendations to the Board based on disciplinary guidance established by the Board. However,
based on auditors’ review of a random sample of 16 public complaints the Board received in fiscal
years 2009 through 2013, the Board has not ensured that complaints are thoroughly investigated
and that valid complaints of similar severity receive the same degree of discipline.1 Specifically:
Board inadequately investigated complaints or insufficiently documented its
complaint investigations—Eight of the 16 public complaint investigations that auditors
reviewed appeared to be inadequate, or at the least, were insufficiently documented. Specifically,
auditors identified the following weaknesses:
• Insufficient information in the investigation report—Three complaint investigation reports
did not contain sufficient information to determine whether each allegation was properly
investigated. For example, a November 2009 public complaint alleged that a nail technician
did not follow proper blood-spill procedure after cutting the complainant during a manicure
service. The investigation report stated only that the salon was in compliance, but did not
explain any investigative steps taken by the investigator to address the allegations. According
to the investigator, she checked the salon’s implements, such as scissors and combs, for
compliance with safety and sanitation standards and quizzed salon staff on proper blood-spill
procedures. However, this information was not documented in the investigation report. The
Board dismissed this complaint in February 2010.
• Weak investigative evidence obtained—For two other complaints, board investigators
based their investigation on written affidavits rather than obtaining other evidence that would
have been more appropriate given the circumstances. For example, a July 2012 public
complaint alleged that a salon was emitting fumes that were disturbing other businesses.
Although the board investigator visited the salon, the investigation report does not indicate
that the investigator checked the ventilation, which according to rule would include a natural
or mechanical ventilation and an air filtration system, and instead indicates that the investigator
relied on the salon owner’s signed affidavit stating the salon had an adequate ventilation
system. Board staff recommended that the complaint be dismissed, and the Board dismissed
it in October 2012.
• Less rigorous investigative approach substituted for more rigorous approach—The final
three complaints alleged that an individual was carrying out procedures for which he or she
had no license. According to board staff, the best approach for addressing such complaints
is for the investigator to call and attempt, under the guise of being a potential client, to
schedule an appointment with the potentially unlicensed individual prior to going to the
licensed salon to investigate the allegation in other ways. However, for these three complaints,
1 The Board received 1 of the 16 cases in fiscal year 2000. The other 30 complaints auditors reviewed were received between fiscal years
2009 through 2013. In addition to the 16 public complaints, auditors reviewed 15 complaints the Board opened based on violations found
during routine inspections by board staff. These 15 complaints did not require additional investigation.
page 18
State of Arizona
page 19
Office of the Auditor General
the investigator did not take this step; instead, the investigator simply asked questions about
the individual’s activities. For these three complaints, board staff did not substantiate the
unlicensed activity allegations and the Board dismissed one complaint, but took disciplinary
action against the other two salons for safety and sanitation and advertising violations.
These inadequate or insufficiently documented complaint investigations do not protect the public
and may harm licensees. Specifically, by not conducting or documenting thorough complaint
investigations, the Board could inappropriately dismiss complaints or take inappropriate
disciplinary action.
The lack of written investigation policies and procedures and inadequate supervisory review helps
to explain the inadequate complaint investigations. Specifically, the Board has not established
written policies and procedures that direct staff on how to conduct and document complaint
investigations. This would include policies and procedures regarding the investigative steps that
board staff should complete to adequately investigate the various complaint allegations the Board
receives. Additionally, although board supervisors conduct some review of complaint investigation
reports, these reviews did not identify the insufficiently documented complaint investigations that
auditors found.
Therefore, the Board should develop and implement written policies and procedures that direct its
staff on the steps they need to perform to conduct adequate complaint investigations and
appropriately document these investigations. These policies and procedures should specify the
investigative activities that should be conducted, such as contacting and interviewing both the
complainant and licensee, obtaining all relevant documentation, scheduling an appointment with
a potentially unlicensed operator, and performing an inspection if necessary. The policies and
procedures should also provide direction on how to thoroughly document complaint investigations
and prepare investigation reports, including the information that should be included in the report.
Finally, the policies and procedures should require a supervisory review process and outline the
steps the investigative supervisors should take to review complaint investigations. Once these
policies and procedures have been developed and implemented, all applicable staff should be
trained on the complaint investigation policies and procedures.
Recommended action not consistent with board direction and with action taken
on similar complaints—Board staff recommend proposed actions for resolving complaints
to the Board, ranging from dismissal to letters of concern to civil penalties and/or probation. These
recommended actions are reviewed by board supervisory staff before they are forwarded to the
Board for review. To assist in making these recommendations, board staff use a board-developed
guidance document. This guidance document provides a list of some disciplinary actions based
on the severity of the violation and the licensee’s disciplinary history. For example, for minor viola-tions
that are a first offense, such as an advertising violation, the guidance document recommends
that the Board issue a letter of concern. For gross or repeated violations, the guidance document
recommends that the Board impose a maximum fine of $2,000. However, the Board has not
included all of its disciplinary action guidance in this document. Board staff reported that the Board
has provided verbal guidance for some violations or situations that are not included in the guid-ance
document.
page 20
State of Arizona
For 1 of the 16 public complaints reviewed in depth, board staff made a disciplinary
recommendation that was inconsistent with the Board’s verbal guidance. According to board
staff, the Board has verbally instructed staff to recommend a letter of concern for both a first
offense and a second offense that occurs within 3 years of the first offense and involves a licensed
salon not renewing its license on time, as long as the license is less than 10 months delinquent,
and a civil penalty of $250 for a third offense. In this instance, however, board staff identified this
violation but recommended that the Board dismiss the complaint, which it did. This recommendation
was not only inconsistent with the Board’s verbal guidance, it was also inconsistent with the action
taken in four other complaints in the auditors’ sample. In these four instances, the Board issued
either a letter of concern or a civil monetary penalty of $250 for a licensed salon not renewing its
license on time.
Therefore, the Board should revise its guidance document to include the verbal guidance given
to staff to help ensure that board staff and supervisors provide consistent disciplinary
recommendations to the Board.
Board’s procedures for reviewing and adjudicating complaints are
insufficient
The Board’s decision-making processes for complaint resolution have three weaknesses. These
weaknesses include board members’ consideration of a licensee’s disciplinary history prior to
determining whether a violation has occurred, the lack of sufficient information provided to board
members to support dismissing complaints and issuing letters of concern, and board members’ not
stating violations prior to determining disciplinary action. Specifically:
• Board’s premature consideration of disciplinary history may influence board decisions—
Board staff include a licensee’s disciplinary history on investigation reports that board members
receive prior to board meetings. According to board officials, board staff also send board
members e-mails with proposed disciplinary action recommendations that reflect a licensee’s
disciplinary history prior to board meetings. The board members use this information to
determine if a licensee violated a statute or rule, and if so, what disciplinary actions to take.
However, because disciplinary history information is provided to board members before the
Board has decided whether a violation is or is not substantiated, it may influence board
members’ decisions on whether or not the licensee has violated statutes or rules. It is
appropriate to consider a licensee’s disciplinary history when determining the severity of the
disciplinary action, but only after substantiating the complaint allegations. Board members
received training in June 2013 from its Assistant Attorney General on maintaining order at
meetings, which included information about when it is appropriate to consider disciplinary
history. Even so, the Board should also develop and implement written policies and procedures
to ensure that a licensee’s disciplinary history is not provided, either on the investigation reports
or by e-mail, to board members prior to determining that a licensee has violated statutes and
rules and that this information is instead provided to the Board after it makes this determination.
page 21
Office of the Auditor General
• Board members lack sufficient information to dismiss complaints and issue letters of
concern—The Board follows a practice of having its board staff recommend possible actions
that board members could take based on the complaint investigation findings. However, its
procedures for doing so should be improved. Specifically, when staff recommend that a
complaint be dismissed or that the licensee receive a letter of concern, the Board does not
receive the full investigation report. Instead the Board receives a brief summary of the
investigation results. Although board members can request more information for these types of
complaints, auditors observed only one board member asking a question about a complaint
during the May 2013 board meeting, but did not observe any other information requests during
the February, April, and May 2013 board meetings. By contrast, according to an Arizona State
Medical Board official, Arizona State Medical Board staff provide their board members with a full
investigation report for all complaints that go before the board for adjudication, providing these
board members with the information they need to ensure that they agree with staff
recommendations. The Board should similarly develop and implement written policies and
procedures that require its staff to provide board members with investigation reports for all
complaints to ensure board members receive enough information to take appropriate action.
• Board members not stating violations—When adjudicating complaints, the Board should
determine for each complaint allegation whether a statutory or rule violation has occurred.
However, auditors observed that the Board did not systematically address each allegation when
making decisions, nor did it formally determine whether a violation occurred prior to deciding
whether or not to impose discipline. The Attorney General’s Handbook recommendations for
adjudicatory proceedings state that the purpose of an adjudicatory proceeding is to determine
whether alleged acts violate statutes or rules. Therefore, the Board should first determine
whether each allegation constitutes a violation and then take appropriate adjudicative action.
Board should ensure timely resolution of complaints
Although the Board generally adjudicated complaints in a timely manner, auditors found that almost
20 percent of cases reviewed exceeded the standard time frame. The Office of the Auditor General
has found that Arizona regulatory boards should resolve complaints within 180 days of receiving
them, which includes the time to both investigate and adjudicate complaints. Auditors reviewed 31
complaints that the Board received or opened in fiscal years 2000 through 2013 and found that the
Board resolved these complaints in a median time frame of approximately 90 days.1 However, as
shown in Figure 1 (see page 22), 6 of the 31 complaints, or approximately 20 percent, took longer
than 180 days to resolve, with a median time frame of approximately 640 days to resolve.
For 5 of the 6 complaints that took longer than 180 days to resolve, the licensees did not respond to
the Board’s requests for an informal interview.2 The Board schedules informal interviews with
licensees in cases where board staff have recommended that the Board consider imposing a civil
1 This review included both the 16 complaints received from the public and the additional 15 complaints opened as a result of violations found
during routine inspections. Auditors reviewed 32 complaints in total, but decided to not include the 32nd complaint in this analysis because
they were unable to determine when the Board closed it.
2 The sixth complaint took approximately 230 days to adjudicate and was dismissed by the Board.
page 22
State of Arizona
monetary penalty. The informal interview allows the licensee a chance to respond to the complaint
allegations in front of the Board. According to a board official, board staff waited approximately 180
days after the licensee failed to attend the informal interview before sending these complaints to the
Assistant Attorney General to draft motions to deem allegations admitted. Board staff stated that
during this time, the licensee may have contacted the Board to find out the status of his/her
complaint or the action taken by the Board. However, for the 5 complaints, board staff waited a
median time of approximately 410 days to send these complaints to the Assistant Attorney General.
During the audit, according to a board official, the Board decreased the time that its staff wait to send
a complaint to the Assistant Attorney General to 30 days after the licensee fails to attend an informal
interview.
Failure to resolve complaints in a timely manner does not protect public health and safety because
licensees alleged to have violated board statutes and rules can continue to practice while under
investigation, even though they may be unfit to do so. In such instances, a lengthy adjudication
process may delay board actions that protect the public, such as revoking a license.
Therefore, the Board should develop and implement written policies and procedures for monitoring
the complaint resolution process. These policies and procedures should identify the steps board
staff should take when licensees do not attend the informal interview and the time frames for
completing these steps. In addition, although board staff enter complaint-processing information
into its database, such as the date the complaint was received and the date of the informal interview,
the Board does not use the database to monitor complaint timeliness. Therefore, the Board should
use its database to monitor complaints as they proceed through the complaint resolution process
Figure 1: Length of time to resolve complaints
Fiscal years 2009 through 20131
1 The Board received 1 of the 31 complaints reviewed by auditors in fiscal year 2000. The other 30
complaints reviewed were received between fiscal years 2009 through 2013.
Source: Auditor General staff analysis of 1 complaint received by the Board in fiscal year 2000 and 30
complaints received by the Board between fiscal years 2009 through 2013.
Up to 180 days
(25 complaints)
181 days to 1 year
(2 complaints)
Over 1 year to
2 years
(2 complaints)
Over 2 years to
4 years
(2 complaints)
31 complaints
6.45%
80.65%
6.45%
6.45%
page 23
Office of the Auditor General
by developing and implementing a report that provides information to both board management and
members regarding the timeliness of its complaint resolution to help identify and address factors in
the process that may impact timeliness. Once the Board has developed a report, it should use this
information to address factors within its control that cause delays in the complaint resolution process.
Recommendations:
1. The Board should develop and implement written policies and procedures that:
a. Direct its staff on the steps they need to perform to conduct adequate complaint
investigations and appropriately document these investigations;
b. Specify the investigative activities that should be conducted, such as contacting and
interviewing both the complainant and licensee, obtaining all relevant documentation,
scheduling an appointment with a potentially unlicensed operator, and performing an
inspection if necessary;
c. Provide direction on how to thoroughly document complaint investigations and prepare
investigation reports, including the information that should be included in the report; and
d. Require a supervisory review process and outline the steps the investigative supervisors
should take to review complaint investigations.
2. Once these policies and procedures have been developed and implemented, all applicable
staff should be trained on the complaint investigation policies and procedures.
3. The Board should revise its guidance document to include the verbal guidance given to staff
to help ensure that board staff and supervisors provide consistent disciplinary recommendations
to the Board.
4. To improve its procedures for reviewing and adjudicating complaints, the Board should:
a. Develop and implement written policies and procedures to ensure that a licensee’s
disciplinary history is not provided, either on the investigation reports or by e-mail, to board
members prior to determining that a licensee has violated statutes and rules and that this
information is instead provided to the Board after it makes this determination;
b. Develop and implement written policies and procedures that require its staff to provide
board members with investigation reports for all complaints to ensure board members
receive enough information to take appropriate action; and
c. First determine whether each complaint allegation constitutes a violation, and then take
appropriate adjudicative action.
5. To ensure timely resolution of complaints, the Board should:
a. Develop and implement written policies and procedures for monitoring the complaint
resolution process, including policies and procedures that identify the steps board staff
should take when licensees do not attend the informal interview and the time frames for
completing these steps; and
b. Use its database to monitor complaints as they proceed through the complaint resolution
process by developing and implementing a report that provides information to both board
management and members regarding the timeliness of its complaint resolution to help
identify and address factors in the process that may impact timeliness.
page 24
State of Arizona
page 25
Office of the Auditor General
Public
information
Board should improve its provision of public information
The Arizona State Board of Cosmetology (Board) does not provide timely or complete
licensee information to the public. Although the Board responds to public requests over
the phone, it does not provide timely and complete information in response to these
requests. Additionally, although the Board provides some licensee information on its Web
site, it does not provide disciplinary history information about its licensees on the Web site.
Specifically:
• Board does not provide timely and complete information over the phone—
Auditors placed four phone calls to board staff in May and June 2013 to request
licensing, complaint and disciplinary-history information for four licensees. For three of
the four phone calls, auditors were instructed to leave messages for the Board’s
compliance officer. Although the Board returned one call within 48 hours and provided
complete licensing and complaint history information, it did not return the other two
phone calls. According to board staff, the Board should respond to these types of
public information requests within 24 hours. For the fourth call, the Board was not able
to locate the requested licensee in its database and, therefore, was not able to provide
any licensing or complaint history information for this licensee. According to board
staff, the search function in the Board’s database often requires expanding the search
criteria to locate correct licensee information, such as the licensee’s address or
license number. However, auditors were able to locate this particular licensee in the
database without expanding the search criteria.
The public should have access to timely and complete information about licensees
because of the potential impact of this information on public health and to make
informed decisions. However, the Board does not have any written policies and
procedures that would assist staff in effectively and efficiently responding to public
information requests. For example, no secondary person is designated to respond to
the public requests for information or provided with instructions on how to respond to
these requests. Establishing written procedures would help ensure that board staff will
know how to handle such inquiries. Therefore, the Board should develop written
policies and procedures and train board staff on them to ensure that designated staff
can provide complete and accurate information over the phone during business hours
and, if a message is left after hours, that board staff can return the message requesting
information in a timely manner.
• Board does not provide complaint or disciplinary history information on its Web
site—Some Arizona state regulatory boards disclose on their Web sites information
The Board should develop policies and
procedures to help ensure that its staff
provide complete and timely information
requested by phone. Additionally, the Board
should provide complaint and disciplinary
information about its licensees on its Web site.
page 26
State of Arizona
about complaints that have resulted in disciplinary action, but the Board does not do so.1 For
example, the Arizona State Board of Physical Therapy and the Arizona Board of Behavioral
Health Examiners provide licensing, complaint, and disciplinary-history information on their Web
sites. This information includes complaint summaries and board orders for disciplinary action.
Further, the Arizona State Board of Pharmacy provides licensing and disciplinary history
information on its Web site and, as required by statute, directs the public to contact the Board
for complaint summaries.
By including this type of information on its Web site, the public would have immediate access
to licensees’ disciplinary histories, and board staff would likely reduce the time they spend
responding to public information requests. Further, the Board’s database already integrates
with its Web site to provide licensing information and includes a search function that allows the
public to search licensee information. Therefore, the Board should consult with its online
database contractor to provide complaint and disciplinary history information on its Web site.
In addition, the Board should comply with Arizona Revised Statutes (A.R.S.) §32-4404(C) by
posting a statement on its Web site stating that the public may contact the Board to request any
licensee’s public records, including dismissed complaints, nondisciplinary actions, and board
orders.
Recommendations:
1. To help ensure that the Board provides timely and complete complaint and disciplinary action
information to the public, it should:
a. Develop and implement written policies and procedures to ensure that designated staff
can provide complete and accurate information over the phone during business hours,
and if a message is left after hours, that board staff can return the message requesting
information in a timely manner; and
b. Train appropriate staff on the new policies and procedures.
2. The Board should consult with its online database contractor to provide complaint and
disciplinary-history information on its Web site.
3. The Board should comply with A.R.S §32-4404(C) by posting notice on its Web site stating that
the public may contact the Board to request any licensee’s public records, including dismissed
complaints, nondisciplinary actions, and board orders.
1 Like other regulatory boards, the Board is prohibited by statute (A.R.S. §32-4404) from reporting on its Web site complaints that were
dismissed. Statute does not specifically require Arizona regulatory agencies to report on their Web sites complaints that do result in
disciplinary action, but it does not preclude their doing so.
page 27
Office of the Auditor General
Sunset
factor
analysis
In accordance with Arizona Revised Statutes (A.R.S.) §41-2954, the Legislature should
consider the factors included in this report in determining whether the Arizona State Board
of Cosmetology (Board) should be continued or terminated.
1. The objective and purpose in establishing the Board and the extent to which the
objective and purpose are met by private enterprises in other states.
The Board was created in 1935, and its mission is to protect the public’s health,
welfare, and safety through education and enforcement of the State’s cosmetology
laws and rules. The Board’s responsibilities include licensing qualified individuals,
salons, and schools; conducting inspections of salons and schools; investigating and
resolving complaints and disciplining violators when necessary; and providing
information to the public. In addition, statute requires the Board to propose minimum
school curriculum requirements for cosmetologists, aestheticians, nail technicians,
and instructors and to administer or select a national professional organization to
administer the licensing examinations for aestheticians, cosmetologists, and instructors.
Auditors did not identify any states that met the objective and purpose of the Board
through private enterprises. According to the National-Interstate Council of State
Boards of Cosmetology, all 50 states regulate the practice of cosmetology through a
state agency or regulatory board as of December 2012.
2. The extent to which the Board has met its statutory objective and purpose and
the efficiency with which it has operated.
The Board needs to take several actions to better fulfill its statutory objective and
purpose and operate efficiently. Specifically, as discussed in the report, the Board
should take additional steps to continue to ensure applicants meet all requirements for
licensure, complies with its time frames for issuing licenses, and reports detailed and
supported information to oversight bodies (see pages 5 through 9); revise its inspection
approach and processes to ensure that all salons are adequately inspected in a timely
manner based on the risks they pose to the public (see pages 11 through 16); improve
its complaint investigation process, take consistent disciplinary action against
licensees when violations are found, and resolve complaints in a timely manner (see
The analysis of the sunset factors includes several additional
recommendations not discussed earlier in this report. These
recommendations address using the Board’s database to
better manage operations, ensuring that salons are not
operating without renewing their licenses, and strengthening
controls over payroll processing and cash receipts (see
Sunset Factor 2, pages 27 through 29); complying with the
State’s open meeting law (see Sunset Factor 5, pages 29
through 30); and seeking two changes through legislation—
lowering the age requirement for licensure and ensuring that
its process for approving licenses by examinations is
consistent with statute (see Sunset Factor 9, pages 31
through 32).
page 28
State of Arizona
pages 17 through 24); and provide complete and timely information to the public by telephone
and on its Web site (see pages 25 through 26). Further, auditors identified four additional areas
in which the Board should improve its operations:
• Board should use the functionality of its database—The Board’s database has many
capabilities that the Board did not know were available for its use. According to a
representative from the company that designed and maintains the Board’s database, the
database has the functionality to generate reports regarding how many complaints the
Board received or opened, the status of these complaints, and how many inspections it
conducted. For example, the Board could not provide auditors with reliable information on
the number of complaints it received or opened in fiscal year 2013. The Board can also
use its database to track and monitor the processing of licenses to ensure it meets
required time frames (see page 6). The Board should discuss the capabilities of its
database with its online database contractor and use it to better meet its objective and
purpose.
• Board should do more to ensure salons do not operate without renewing their
license—Statute requires salons to renew their license annually based on the date they
were initially licensed to continue to operate. However, the Board does not have a policy
or practice for determining whether salons that fail to renew their license are still operating
without a license. At the February 2013 board meeting, board members expressed
concerns that salons were continuing to operate without renewing their licenses. According
to board licensing data, 962 salons were overdue for renewing their licenses as of June
2013. As indicated in the Inspections section on page 13, the Board could include whether
a salon was delinquent in renewing its license as a risk factor for determining whether to
inspect a salon. This would help the Board target salons with delinquent licenses and bring
them in to compliance with the licensing requirements.
• Board should strengthen internal controls and separate responsibilities over
processing payroll—According to an Office of the Auditor General August 2013
procedural review, the Board lacks internal controls over the payroll process, including
separating payroll responsibilities, documenting an employee’s pay rate, and maintaining
personnel records.1 Specifically, the individual responsible for processing payroll had the
authority to input employee information and change employee pay rates in the State of
Arizona’s automated payroll system without approval from another employee. In addition,
the Board did not document that proper amounts were being paid to all employees. The
Board should strengthen controls over payroll processing by separating its personnel and
payroll duties, ensuring the same employee cannot update personnel information and
process payroll, and maintaining appropriate personnel records to support employee pay
rates.
• Board should strengthen cash receipts policies and procedures—The August 2013
procedural review also found that the Board does not have up-to-date cash-receipt
policies and procedures detailing its process for collecting, recording, and depositing
1 Procedural review of the Arizona State Board of Cosmetology as of March 1, 2013, issued August 13, 2013.
page 29
Office of the Auditor General
receipts in accordance with the State of Arizona Accounting Manual. The Board last updated
these policies and procedures in 2002, resulting in inconsistencies in how various receipts
were collected and processed by the Board. Specifically, fines, forfeitures, and penalties
receipts were collected, recorded, deposited, and reconciled by the same employee,
without a supervisory review of the deposit or reconciliation performed. Further, the Board
did not perform daily reconciliations between its internal records and online credit card
payments, or monthly reconciliations between its internal accounting system, bank
deposits, and the State’s accounting system. The Board should strengthen controls over
cash receipts and comply with the State of Arizona Accounting Manual by updating and
maintaining detailed written cash receipt policies and procedures and appropriately
separating cash receipt responsibilities.
3. The extent to which the Board serves the entire State rather than specific interests.
The Board serves cosmetology professionals, its clients, and the public throughout the State by
ensuring that cosmetologists, nail technologists, and aestheticians are qualified to practice
cosmetology. In addition, it licenses cosmetology, nail technology, and aesthetics instructors;
salons; and schools in all parts of the State. The Board also receives and investigates complaints
filed by the public against licensees and conducts inspections of salons and schools. Further,
the Board provides the public with information on its Web site regarding new laws and rules
pertaining to the cosmetology industry.
4. The extent to which rules adopted by the Board are consistent with the legislative
mandate.
General Counsel for the Auditor General has analyzed the Board’s rule-making statutes and
believes that the Board has fully established rules required by and that are consistent with
statute.
5. The extent to which the Board has encouraged input from the public before adopting its
rules and the extent to which it has informed the public as to its actions and their expected
impact on the public.
Auditors found that the Board has encouraged input from the public before adopting its rules.
Specifically, in January 2008, the Board proposed rule changes to clarify and simplify infection-protection
procedures and sought public input by providing a contact person to answer
questions about the proposed rule change, and offered an oral proceeding before adopting the
rules.
Auditors assessed the Board’s compliance with various provisions of the State’s open meeting
law for its February, April, and May 2013 board meetings and found that although the Board
adhered to some requirements, it needed to improve its compliance with some provisions of the
open meeting law. Specifically, the Board posted board meeting notices and agendas in
compliance with statute at the physical locations where the Board’s Web site states they will be
posted. However, the Board did not post the meeting agenda on its Web site at least 24 hours
in advance for its April 2013 board meeting. Additionally, the Board made audio recordings of
page 30
State of Arizona
meetings available within 3 business days following the board meetings and posted most of its
written meeting minutes on its Web site when they were drafted and finalized. However, auditors’
review of fiscal year 2013 board meeting minutes determined that the Board had not posted its
August 17, 2012, and November 16, 2012, board meeting minutes on its Web site. The Board’s
written board meeting minutes also did not provide a sufficient general description of the
matters considered as required by statute.1 For example, in most instances, the written minutes
state that the licensee “spoke to the issue” instead of describing the discussion. The minutes
also do not explain the reasons why the Board changes the discipline or civil penalty from the
board staff-recommended amount. During the audit, the Board started to provide more
descriptive meeting minutes, beginning with the minutes from its June 2013 meeting. Therefore,
the Board should fully comply with the State’s open meeting law by posting its agendas on its
Web site at least 24 hours in advance of its meetings, posting all of its board meeting minutes
on its Web site, and by continuing to ensure that its written minutes are more descriptive.
6. The extent to which the Board has been able to investigate and resolve complaints that
are within its jurisdiction.
The Board has statutory authority to investigate and resolve complaints within its jurisdiction
and has disciplinary options available to address statute and/or rule violations, such as issuing
a letter of concern, imposing a civil penalty and/or probation, or revoking a license. However,
as discussed in the Complaint Resolution section of the report, auditors found that the Board
should improve its complaint resolution process by developing and implementing written
policies and procedures for conducting adequate complaint investigations and ensuring that
investigation reports receive supervisory reviews; revising the guidance document board staff
uses for making disciplinary recommendations to the Board; improving its decision-making
processes; and resolving complaints in a timely manner (see pages 17 through 24 for more
information).
7. The extent to which the Attorney General or any other applicable agency of state
government has the authority to prosecute actions under the enabling legislation.
A.R.S. §32-575 states that the Board may apply for an injunction to prevent someone from
violating the cosmetology laws through the Attorney General or a county attorney. On all other
matters, the Attorney General serves as the Board’s legal advisor and provides legal services
as the Board requires, according to A.R.S. §41-192(A).
8. The extent to which the Board has addressed deficiencies in its enabling statutes that
prevent it from fulfilling its statutory mandate.
The Board reported that it has sought statutory changes to address deficiencies in its statutes.
These include the following:
• Laws 2011, Ch. 199, amended multiple board statutes to delegate authority to the Board’s
executive director to issue licenses to applicants who meet the requirements for licensure
without having the Board review and approve the license. It also requires reciprocity license
1 Auditor General staff analysis of A.R.S. §38-431.01.
page 31
Office of the Auditor General
applicants to complete an infection-protection and law review class. Prior to this change,
applicants for reciprocity were not required to take any additional education for licensure.
This amendment also removed the statutory term limit of two consecutive terms for board
members.
• Laws 2012, Ch. 99, amended multiple board statutes to exempt from licensure persons
who provide tanning services by air brushing, tanning beds, or spray tanning. The Board
did not regulate these services prior to this amendment; the change was to explicitly
exempt these services in statute. This statutory revision also allows the Board to hire
individuals to provide investigative, professional, and clerical assistance. Lastly, this
statutory revision allows the Board to collect attorney fees from licensees for disciplinary
actions and to use the monies collected for training and education, disciplinary
investigations, and costs related to administrative hearings.
• Laws 2012, Ch. 30, amended A.R.S. §32-506 to exempt from licensure persons who
practice “threading.” This is defined as the process of removing hair by twisting a single
strand of cotton thread around the hair and excludes the use of any chemicals, wax,
implements, instruments, or tools to remove hair.
• Laws 2012, Ch. 183, amended A.R.S. §§32-541 and 32-574 to eliminate the requirement
that a salon’s designated manager had to be licensed. Prior to this change, a designated
salon manager had to be a licensee.
• Laws 2013, Ch. 5, amended A.R.S. §32-513 to consolidate the infection protection and law
review classes into one required class for reciprocity applicants.
9. The extent to which changes are necessary in the laws of the Board to adequately comply
with the factors listed in this sunset law.
Consistent with the recommendation made in the Office of the Auditor General’s 1983
performance audit of the Board (see Report No. 83-5), this audit found that the Board should
propose legislation to lower the age requirement for licensure to be in line with other state
cosmetology and Arizona regulatory boards. Statute requires all applicants for initial licensure to
have completed 2 years of high school or be 23 years of age. The Board was unable to explain
the reasons for this specific age requirement. Auditors conducted a review of the cosmetology
statutes for the five surrounding states—California, Colorado, Nevada, New Mexico, and Utah—
and found that the highest age requirement was 18 years old. Further, a review of 30 Arizona
state regulatory boards and agencies found that the age requirement for licensure by these
entities ranged from 16 to 21 years of age. The Board’s higher age requirement is an unnecessary
barrier to licensure for individuals without 2 years of high school education.
The Board should also propose legislation to ensure that its process for approving license
applicants to take examinations is consistent with statute. The Board allows applicants who fail
licensing examinations to retake the examination by reapplying with the testing company without
having to reapply to the Board. However, according to statute, applicants who want to retake
the examination must reapply to the Board.1 Although the Board’s process is more efficient
because it reduces the amount of paperwork it receives and does not require applicants to
resubmit applications before retaking the examinations, this process does not comply with
statute. Based on auditors’ review of licensing requirements, requiring the applicant to reapply
would not provide the Board with any new or updated information that it would need to consider
prior to authorizing an applicant to retake the examinations. If statute is revised to change this
requirement, the Board will need to ensure that it makes corresponding rule changes to reflect
its process. However, until then, the Board should adjust its process to be in compliance with
statute and rule.
Finally, as discussed in the Licensing section of the report (see pages 5 through 9), the Board
should work with its stakeholders to develop and propose legislation to require the completion
of continuing education as a condition of license renewal and to change its renewal frequency
from 1 to 2 years.
10. The extent to which the termination of the Board would significantly affect the public
health, safety, or welfare.
Terminating the Board would affect the public’s health, safety, and welfare if its regulatory
responsibilities were not transferred to another entity. The Board protects the public by ensuring
that cosmetologists, nail technicians, and aestheticians are qualified to practice cosmetology,
by ensuring instructors, schools, and salons meet the required qualifications outlined in rule, by
receiving and investigating complaints against licensees alleging incompetence or unprofessional
conduct, and by taking appropriate disciplinary action against licensees when allegations have
been substantiated. According to literature, cosmetology services can expose both licensees
and clients to hazardous chemicals as well as multiple diseases and infections, including staph
infections, hepatitis, and bacterial infections.2 These conditions can enter the body through
freshly shaved skin, cuts, or abrasions. Individuals who are not properly educated in the proper
sanitation procedures and safety standards for cosmetology practices increase the risk of
exposing clients to infection.
The Board also provides information to the public about the licensing status and disciplinary
history of licensees. These functions help protect the public from potential harm. For example,
auditors reviewed complaints investigated by the Board alleging actions by licensees that
posed a threat to the public, including unsanitary work stations and employing unlicensed
individuals.
11. The extent to which the level of regulation exercised by the Board compares to other
states and is appropriate and whether less or more stringent levels of regulation would
be appropriate.
The audit found that the level of regulation exercised by the Board is not similar to that in other
states in several areas. Auditors conducted a review of the cosmetology statutes for the five
1 A.R.S. §32-515
2 Sniezek, P.J., Grahahm, B.S., Busch, H.B., Lederman, E.R., Lim, M.L., Poggemyer, K., et al. (2003). Rapidly growing mycobacterial infections
after pedicures. Archives of Dermatology, 139, 629-634; Walsh, S.A. (2012). Beyond the polish: An examination of hazardous conditions in
nail salons and potential solutions for the industry in New York City. Journal of Law and Policy, 21, 243-282.
page 32
State of Arizona
page 33
Office of the Auditor General
surrounding states—California, Colorado, Nevada, New Mexico, and Utah—for requirements in
the following areas: continuing education, inspections, school hours, age, education, reciprocity,
delinquent fees, and license renewal frequency. Auditors also conducted a review of 30 Arizona
state regulatory boards and agencies for age requirements, education, and renewal frequency.
Auditors found that there were some areas of regulation where the Board was more restrictive
than in other states and other Arizona state boards. Specifically:
• As stated in Sunset Factor 9 (see pages 31 through 32), the Board requires that applicants
for initial licensure be at least 23 years old or have completed 2 years of high school. A
review of surrounding states found that the highest age requirement was 18 years old.
Further, auditors’ review of the 30 Arizona state regulatory boards and agencies found that
the age requirement ranged from 16 to 21 years of age. A higher age requirement is an
unnecessary barrier to licensure for individuals without 2 years of high school education.
• Applicants for licensure must graduate from a cosmetology school that is currently licensed
by the Board. Some other states give applicants the option of graduating from a
cosmetology school or completing an apprenticeship program to obtain a license. These
programs generally consist of working a prescribed number of hours under the supervision
of a licensed professional for a prescribed period of time, and some states also require a
small number of schooling hours as well. For example, Utah’s apprenticeship program
requires applicants to complete 2,500 hours of training in not less than 15 months, and
California requires 2-year, 3,200-hour apprenticeship training and 220 hours of classroom
instruction for its program.
• The Board is required to conduct inspections of all salons applying for licensure as part of
the licensing process and routine inspections of all licensed salons on a regular basis as it
deems necessary. The routine salon inspections are conducted to check for compliance
with sanitation and licensing laws. However, the Colorado and Nevada cosmetology
agencies conduct inspections of salons when investigating a complaint, and the Nevada
cosmetology agency also conducts an inspection prior to issuing a license. These states
do not conduct routine inspections of licensed salons unless there is a reason to believe
they may be out of compliance.
However, auditors identified one area where the Board was less restrictive than in some other
states. Specifically, auditors found that Arizona statute does not require licensees to complete
any continuing education hours as a condition for renewing their license. Literature recommends
continuing education in the cosmetology industry to ensure licensees are trained on hazardous
chemicals and their proper use, blood-spill risks, and proper clean-up procedures.1 A review of
licensing requirements for some other state cosmetology agencies found that seven states have
a continuing education requirement as part of their license renewal process.2 Therefore, the
Board should propose legislation to require its licensees to complete continuing education for
1 Murtagh, M., & Hepworth, J. (2004). Hepatitis C in the workplace: A survey of occupational health and safety knowledge and practice in the
beauty therapy industry. Australian and New Zealand Journal of Public Health, 28, 207-211; Hepworth, J., & Murtagh, M. (2005). Correct
procedures and cutting corners: A qualitative study of women’s occupational health and safety in a beauty therapy industry. Australian and
New Zealand Journal of Public Health, 29, 555-557; Walsh, S.A. (2012). Beyond the polish: An examination of hazardous conditions in nail
salons and potential solutions for the industry in New York City. Journal of Law and Policy, 21, 243-282.
2 Florida, Georgia, Illinois, Nevada, New Mexico, North Carolina, and West Virginia.
renewal of their licenses to ensure licensees are properly trained (see pages 7 through 9 for
more information).
12. The extent to which the Board has used private contractors in the performance of its
duties as compared to other states and how more effective use of private contractors
could be accomplished.
The Board contracts for some administrative services and one regulatory function. Specifically,
the Board contracts with the Arizona Department of Administration’s Central Services Bureau
for its accounting services and with a private company for its information technology services.
The Board is responsible for testing applicants for licensure and contracts with Professional
Credentialing Services to administer the different licensing exams created by the National-
Interstate Council of State Boards of Cosmetology (NIC). According to the NIC, 35 states
contract for the administration of one or more of their licensing examinations, and 30 states use
examinations developed by the NIC.
Auditors contacted the five surrounding states—California, Colorado, New Mexico, Nevada,
and Utah—and found that these states’ cosmetology agencies contract for their licensing
examinations and do not contract for any other regulatory functions.
The audit did not identify any additional areas where the Board should consider using private
contractors.
page 34
State of Arizona
page a-1
Office of the Auditor General
Methodology
Auditors conducted this performance audit of the Arizona State Board of Cosmetology
(Board) 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.
Auditors used various methods to study the issues in this report. These methods included
reviewing board statutes, rules, records, and policies and procedures; reviewing licensing
requirements in other state cosmetology boards and other Arizona state regulatory boards
and agencies; reviewing budget information; interviewing board members, staff, and various
stakeholders; reviewing literature on public health risks and the need for continuing education;
and reviewing information from the Board’s Web site.
In addition, auditors used the following specific methods to meet its audit objectives:
• To determine whether the Board issued initial licenses to qualified applicants in a timely
manner, auditors reviewed a random sample of 27 individual, instructor, and salon
license applications that the Board approved in calendar year 2012, 3 school license
applications approved in 2004 and 2009, and 9 license applications the Board approved
in calendar year 2013 as of May 2013.1 In addition, auditors reviewed the Board’s
license application materials and compared them to statutes and rules. Further, auditors
reviewed the Board’s license renewal requirements, and five other states’ license
renewal requirements, and the license renewal requirements for 28 other Arizona state
regulatory boards and agencies.2
• To determine whether the Board adequately conducts salon inspections to protect the
public from unsanitary conditions, auditors observed eight salon inspections performed
by board inspectors in April 2013 and reviewed inspection histories of a random sample
of 54 salons that the Board licensed between January 2007 and December 2012. In
addition, auditors reviewed the Board’s salon inspection checklist and compared it with
statutes and rules.
1 Auditors reviewed 39 licensing applications the Board approved from different licensing categories, including individual, instructor,
salon, and school licenses.
2 Auditors reviewed the license renewal requirements from the five surrounding states: California, Colorado, New Mexico, Nevada,
and Utah.
Appendix A
This appendix provides information on the methods
auditors used to meet the audit objectives. The
Auditor General and staff express appreciation to
the Arizona State Board of Cosmetology, its
Executive Director, and its staff for their
cooperation and assistance throughout the audit.
• To determine whether the Board processes complaints in an appropriate and timely manner,
auditors reviewed a sample of 32 complaints that the Board received between fiscal years 2000
through 2013.1 Auditors also observed board meetings in February, April, and May 2013; and
conducted an interview with an Arizona State Medical Board official.
• To assess whether the Board shares appropriate licensee information with the public, auditors
placed four anonymous phone calls to board staff in May and June 2013 to request licensing
information and complaint history for four licensees and compared the information provided to
information in the Board’s database. Auditors also reviewed licensing information about specific
licensees on the Board’s Web site and assessed whether the information provided was
consistent with statutory requirements.
• To obtain information used in the Introduction section of the report, auditors reviewed fiscal year
2013 board records regarding the number of licenses issued in fiscal year 2013, safety and
sanitation classes administered, the number of inspections conducted, and the number of
complaints received or opened and disciplinary actions taken by the Board. In addition, auditors
compiled and analyzed unaudited information from the Arizona Financial Information System
(AFIS) Accounting Event Transaction File for fiscal years 2011 and 2012 and the AFIS
Management Information System Status of General Ledger—Trial Balance screen for fiscal
years 2011 through 2013.
• To obtain information used in the sunset factors, auditors reviewed the Board’s license renewal
application requirements and the licensure requirements for 28 Arizona state regulatory boards
or agencies, and the licensure and inspection requirements of the 5 surrounding states—
California, Colorado, Nevada, New Mexico, and Utah—and interviewed representatives from
professional organizations.2 In addition, auditors reviewed literature on the health risks and
need for continuing education in the cosmetology industry. Further, to assess the Board’s
compliance with the State’s open meeting law, auditors attended the February, April, and May
2013 board meetings and reviewed the associated public meeting notices, agendas, and
meeting minutes. Finally, to obtain information regarding other states’ use of private contractors,
auditors contacted the five surrounding states previously mentioned.
• Auditors’ work on internal controls included observing and interviewing board staff to learn
about their policies and procedures and, where applicable, testing the Board’s compliance with
its statutes and rules for licensing, inspections, complaint handling, providing information to the
public, and compliance with the State’s open meeting law. Auditors also reviewed the Office of
the Auditor General’s August 2013 procedural review of the Board’s internal controls related to
processing payroll and cash receipts.3 Auditors’ conclusions on these internal controls are
reported in the report chapters and sunset factors.
1 Auditors reviewed 32 complaints in total but decided to not include the 32nd complaint in this analysis because they were unable to
determine when the Board closed it. All analysis was done on 31 complaints. The Board received 1 of the 31 complaints in fiscal year 2000.
The other 30 complaints auditors reviewed were received by the Board between fiscal years 2009 through 2013.
2 Auditors interviewed representatives from the American Association of Cosmetology Schools and the Professional Beauty Association.
3 Procedural review of the Arizona State Board of Cosmetology as of March 1, 2013, issued August 13, 2013.
page a-2
State of Arizona
AGENCY RESPONSE
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Ms. Debra K Davenport CPA September 12, 2013
Auditor General
Office of the Auditor General
2910 North 44th Street, Suite 410
Phoenix Arizona 85018
Re: Auditor General’s Report for the Arizona State Board of Cosmetology
Dear Ms. Davenport:
The Arizona State Board of Cosmetology (BOC) would like to thank you for the opportunity to respond to the
preliminary report draft performance and sunset review audit, dated September 5, 2013. The BOC, overall, is in
agreement with the findings of the Auditor General, and each recommendation is addressed as required.
Licensing and Permitting:
Recommendation 1: The Board should develop and implement policies and procedures that direct its staff to
obtain and review all necessary documentation to ensure that applicants meet all statutory and rule
requirements prior to issuing a license. Once the policies and procedures are developed and implemented, the
Board should ensure all appropriate staff is trained on them.
The finding of the Auditor General is agreed to and the audit recommendation will be implemented.
In 2008, the BOC contracted with PCS (Professional Credential Services) to administer both the written and practical
exams, and at that time, the former Executive Director delegated the responsibility to the applicant’s school and
PCS to ensure that documentation was complete for all applicants. The audit report recognizes that the BOC has
since revised its license application review and approval process and effective August 2012, has required staff to
obtain all required documentation to determine an applicant’s qualifications for licensure.
The BOC will develop and implement written policies and procedures, and direct staff to obtain and review all
necessary documentation to ensure applicants meet all statutory and rule requirements prior to issuing a license. In
addition, the BOC will provide training on these policies and procedures and this will be accomplished within the
next 12 months.
Recommendation 2: The Board should develop and implement policies and procedures that require its staff to
track the Board’s compliance with all licensing time frames. These policies and procedures should specify the
documentation that board staff should retain to allow the Board to track compliance with its time frames. The
Board should also consider using its database to track its compliance with the licensing time frames and request
its data base vendor to add this functionality. Once the policies and procedures are developed and
implemented, the Board should ensure all appropriate staff are trained on them.
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The finding of the Auditor General is agreed to and the audit recommendation will be implemented.
The BOC will develop and implement written policies and procedures, and direct staff to obtain and review all
necessary documentation to ensure time frame compliance that meet all statutory and rule requirements prior to
issuing a license. In addition, the BOC will provide training on these policies and procedures.
Again, as the audit recognizes in Recommendation 1, since August 2012, the application process has been revised.
All required documents are being retained and candidates are approved according to statute and rule. The BOC is
already working with PCS for documentation notification of all candidates that fail the exam so the time frames can
be tracked appropriately.
The BOC computer system is known as VERSA/IRON DATA. The BOC has had difficulty in retrieving data from
VERSA/IRON DATA and has attempted on numerous occasions to resolve these issues with little to no success. In
2010, BOC attempted to change its database vendor but was not allowed to do so by State Procurement. Presently,
the BOC is researching a possible system upgrade of the current system or a new system. The BOC will work with
the database vendor to add “alerts” and tracking of time frames.
Recommendation 3: The Board should ensure that the information it reports is sufficiently detailed and
supported so it can be used to evaluate the Board’s performance and any staffing and resource adjustments it
may need.
The finding of the Auditor General is agreed to and the audit recommendation will be implemented.
The BOC’s Strategic Plan and proposed Budget for FY 2013, the BOC reported that it “provides services” to
approximately 118,000 licenses; this number is correct. The audit report shows approximately 58,000 active
licenses with approximately 5,600 initial licenses issued in FY 13. This number is far less than the number reported
on the BOC’s Strategic Plan because the number does not include the delinquent and inactive license count, and
those numbers change on a daily basis. The delinquent and inactive licenses are numbers the BOC counts because
staff provides services to all licensees no matter what status they are in, by reactivating an inactive license,
renewing a delinquent license or certifying information for a licensee that is requesting a history of their license for
another state or country, even if that license is over 10 years inactive. Therefore, the BOC is accurate when it states
that it provides services in FY 2013 to 118,000 licenses. Going forward, the BOC will ensure that all reported
information is reported in a clear and detailed manner.
The BOC has had difficulty in retrieving data from VERSA/IRON DATA and has attempted on numerous occasions to
resolve these issues with little to no success. The BOC is researching a possible system upgrade of the current
system or a new system.
Recommendation 4: The Board should work with its stakeholders to develop and propose legislation to:
a. Require licensees to complete continuing education courses in health and safety as a condition of
license renewal and consider requiring additional hours of continuing education for instructors; and
b. Change the license renewal frequency to every 2 years.
4 (a): The finding of the Auditor General is agreed to and the audit recommendation will be implemented.
The BOC agrees that requiring continuing education (CE) will help to protect the public. The BOC will refer this issue
to its Legislative Committee that will study how best to implement CE requirements and make a recommendation
to the full Board. The BOC has a concern with the lack of staff and the additional work required to monitor CE for
the number of licenses issued. The BOC is also concerned about the burden this places on its licensees because this
is an industry where time away from work means less income. The BOC already offers an Infection Protection and
Law Review Class. In fact the audit recognizes that in FY 2013, 2,177 individuals took the class. This class has been
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offered for approximately 25 years which illustrates the BOC’s long running support of consumer protection
through CE.
4(b): The finding of the Auditor General is agreed to and the audit recommendation will be implemented.
The BOC will pursue license renewal frequency to 2 years instead of annually. This proposal will also be referred to
the Legislative Committee, and the BOC will likely seek appropriate legislation in FY 2016.
Inspections:
Recommendation 1: To ensure that the Board conducts initial inspections as required by statute, and to shift
inspections of existing facilities to more of a risk‐based approach, the Board should:
a. Establish factors it will use to assess individual salon risk. Potential risk factors could include prior
health and safety violations, substantiated public complaints, whether the salon recently opened
or was delinquent in renewing its license, and types of services performed;
b. Use its data base to generate inspection reports that provide inspection history information of each
licensed salon to ensure initial inspections are completed as required. These inspection reports can
also be used to help the Board prioritize salons for subsequent inspections based on these salons’
identified risks;
c. Work with its database contractor to ensure that all required information, such as inspection dates
and salon risk factors, can be entered into the data base, and develop management reports that
will help board management assign inspection priorities based on historical inspection information
and a salon’s risk; and
d. Develop and implement policies and procedures to govern its risk‐based inspection approach and
to guide its staff in performing initial inspections as required and regular inspections based on a
salon’s risk.
1 (a‐d): The finding of the Auditor General is agreed to and the audit recommendation will be implemented.
The BOC will develop and implement written policies and procedures, and direct staff to obtain and review all
necessary documentation to ensure a more risked‐based approach is taken in deciding inspection procedures. In
addition, the BOC will provide training on these policies and procedures.
The BOC in FY 2013 had approximately 7,865 licensed salons and 75 licensed schools. The BOC is allocated 24.5 full‐time
employees and at this time has only 17, (which is allowed by the “State Human Resource Head Count” derived
from July 1, 2011 headcount plus 5%). The BOC has indicated in its Strategic Plan the desperate need for more full‐time
staff. Although the BOC had a goal to inspect salons on an annual basis during the audit, it now has an
ongoing goal of inspecting salons every 2 years. However, this goal is impossible to meet due to staff deficiencies.
The BOC Compliance Department will also work to conduct a more risk‐based approach to deciding inspections.
Recommendation 2: To help ensure inspections are adequately performed and to assess salon compliance with
all statutory and rule requirements, the Board should:
a. Update its inspection checklist to include all statute and rule compliance requirements, remove any
outdated requirements, and clarify any vague requirements; and
b. Update and, where necessary, develop and implement new policies and procedures that direct the
performance of inspections. The revised policies and procedures should include specific steps for
performing inspections including how board inspectors should use the checklist.
2 (a‐b): The finding of the Auditor General is agreed to and the audit recommendation will be implemented.
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The inspection checklist is currently being updated, changing vague requirements, and removing outdated
information, and the BOC will train inspectors and investigators on the new updated form, within the next 6
months. The BOC has written procedures on inspections and will use them as a guideline to develop and implement
new policies and procedures.
The BOC will develop and implement written policies and procedures, and direct staff to use the inspection checklist
for all inspection and investigation procedures. In addition, the BOC will provide training on these policies and
procedures and this will be accomplished within the next 3 months.
Recommendation 3: The Board should develop and implement an inspector training on the inspections rights
outlined in statute and ensure that inspectors comply with them.
The finding of the Auditor General is agreed to and the audit recommendation will be implemented.
Training will be complete within the next 3 months.
Inspection rights have always been important to the BOC. Inspectors are instructed to read to salon representatives
all inspections rights when entering the establishment and such rights are also explained on the back of the
inspection report. When signing the inspection sheet, the