U.S. ELECTION ASSISTANCE 

COMMISSION 

OFFICE OF INSPECTOR GENERAL

FINAL REPORT: 

REVIEW OF THE ADMINISTRATION OF 

PAYMENTS RECEIVED UNDER THE HELP 

AMERICA VOTE ACT BY THE OFFICE OF 

THE ATTORNEY GENERAL, NEW JERSEY 

DEPARTMENT OF LAW AND PUBLIC 

SAFETY

Report No. 

E-HP-NJ-04-06 

September 2006
September 18, 2006 

Memorandum 

To: Thomas Wilkey 

 Executive Director 

From: Curtis W. Crider 

 Inspector General 

Subject: Review of the Administration of Payments Received Under the Help America 

Vote Act by the Office of the Attorney General, New Jersey Department of 

Law and Public Safety (Assignment No. E-HP-NJ-04-06) 

 This report presents the results of the subject review, which was initiated by the 

Office of Inspector General. The objective of the review was to assess New Jersey’s 

administration of Help America Vote Act (HAVA) funds and compliance with certain 

HAVA requirements. 

We found that New Jersey needs to improve its administrative procedures and/or 

processes for supporting salary allocations, charging fringe benefits, recovering indirect 

costs, and accounting for property. Also, we determined that the state complied with 

HAVA requirements for establishing an election fund, for appropriating sufficient state 

funds to qualify for its allocation of requirements payments, and for maintaining 

expenditures for elections by the New Jersey Office of Attorney General at least equal to 

amounts spent in fiscal year 2000. However, the State needs to obtain support from its 

counties, which according to the State Plan bear the “bulk of fiscal responsibilities” for 

elections, to ensure that they are also keeping up their rates of spending. 

In a May 8, 2006, response to a draft of this report (Attachment 1), the State 

agreed with our findings and indicated that corrective action had already taken place or 

was underway. 

The report also presents information, in the other matters section, on New Jersey 

voter outreach efforts pertaining to two Hip-Hop events that were funded with HAVA 

Title I funds. Theses events were brought to our attention by the Election Assistance 

Commission prior to our review and we present this information for your use in 

determining appropriate uses of HAVA funds. 

 U.S. ELECTION ASSISTANCE COMMISSION

 OFFICE OF INSPECTOR GENERAL

 1225 New York Ave. NW - Suite 1100 

 Washington, DC 20005
Since the Commission did not respond to the draft of this report, the 

recommendations are considered unresolved. Please provide us with your written 

comments to the report findings by October 25, 2006. Specifically, your comments 

should indicate whether you agree or disagree with the results of the review. Your 

response should also indicate the basis and support for any disagreement 

Section 5(a) of the Inspector General Act (5 U.S.C. § App. 1) requires the Office 

of Inspector General (OIG) to list this report in its semiannual report to Congress. 

 If you have any questions regarding this report, please call me (202) 566-3121.
1 

BACKGROUND

 

HELP AMERICA 

VOTE ACT

The Help America Vote Act of 2002 (HAVA) created the U.S. 

Election Assistance Commission (EAC or Commission) to assist states 

and insular areas1

 with the administration of Federal elections and to 

provide funds to states to help implement these improvements. HAVA 

authorizes payments to states under Titles I and II, as follows: 

9 Title I, Section 101 payments are for activities such as 

complying with HAVA requirements for uniform and 

nondiscriminatory election technology and administration 

requirements (Title III), improving the administration of 

elections for Federal office, educating voters, training election 

officials and poll workers, and developing a state plan for 

requirements payments authorized by Title II. 

9 Title I, Section 102 payments are available only for the 

replacement of punchcard and lever action voting systems. 

9 Title II, Section 251 requirements payments are for complying 

with Title III requirements for voting system standards; and 

addressing provisional voting, voting information, statewide 

voter registration lists, and voters who register by mail. 

Title II also requires that states must: 

9 Have appropriated funds “equal to 5 percent of the total amount 

to be spent for such activities [activities for which requirements 

payments are made].” (Section 253(b)(5)). 

9 “Maintain the expenditures of the State for activities funded by 

the [requirements] payment at a level that is not less than the 

level of such expenditures maintained by the State for the fiscal 

year ending prior to November 2000.” (Section 254 (a)(7)). 

9 Establish an election fund for amounts appropriated by the state 

for “for carrying out the activities for which the requirements 

payment is made,” for the Federal requirements payments 

received, for “such other amounts as may be appropriated under 

law,” and for “interest earned on deposits of the fund.” (Section 

254 (b)(1)). 

 

1

 The Commonwealth of Puerto Rico, Guam, American Samoa, and the United States Virgin Islands. 
2 

FUNDING FOR 

NEW JERSEY

FINANCIAL 

MANAGEMENT 

REQUIREMENTS

HAVA funds received and expended by New Jersey are as follows: 

TYPE OF AMOUNT OUTLAYS 

PAYMENT RECEIVED AMOUNT AS OF 

 

101 $8,141,208 $2,856,979 12/31/05 

102 $8,695,609 $8,695,609 12/31/05 

251 $68,067,586 $5,218,518 09/30/05 

 

Totals $84,904,403 $16,771,106 

In New Jersey, HAVA payments are administered by the Office of the 

Attorney General (OAG). To account for the payments, HAVA 

requires states to maintain records that are consistent with sound 

accounting principles, that fully disclose the amount and disposition of 

the payments, that identifies project costs financed with the payments 

and with other sources, and that will facilitate an effective audit. 

In addition, the Commission notified states of other management 

requirements. Specifically, that states must: 

9 Comply with the Uniform Administrative Requirements for 

grants and cooperative agreements with state and local 

governments (also known as the “Common Rule” and 

published in 41CFR105-71). 

9 Expend payments in accordance with cost principles for 

establishing the allowability or unallowability of certain items 

of cost for federal participation issued by the Office of 

Management and Budget in Circular A-87. 

9 Follow the requirements of the Federal Cash Management and 

Improvement Act. 

9 Submit annual financial reports on the use of Title I and Title II 

payments. 

OBJECTIVE The objective of our review was to assess New Jersey’s administration 

of HAVA funds and compliance with certain HAVA requirements. 

Specifically, we focused on fiscal year 2005 and reviewed controls to 

assess their adequacy over the expenditure of HAVA funds and 

compliance with certain HAVA requirements for the following 

activities: 

9 Accumulating financial information reported to EAC on the 

Financial Status Reports (Standard Forms number 269). 

9 Accounting for property. 
3 

9 Purchasing goods and services. 

9 Accounting for salaries. 

9 Charging indirect costs. 

9 Spending by counties. 

We also determined whether New Jersey had complied with the 

requirements in HAVA for: 

9 Establishing and maintaining the election fund. 

9 Appropriating funds equal to five percent of the amount 

necessary for carrying out activities financed with Section 251 

requirements payments. 

9 Sustaining the State’s level of expenditures for elections. 

RESULTS OF REVIEW

SUMMARY We found that the OAG needs to improve its procedures and/or 

processes for supporting salary allocations, charging fringe benefits, 

recovering indirect costs, accounting for property, and tracking county 

election expenditures. In addition, we found that the state complied 

with HAVA requirements for the election fund and for appropriating 

sufficient state funds to qualify for its allocation of requirements 

payments. Finally, we noted that improvements are also needed to 

document that counties, which according to the State Plan bear the 

“bulk of fiscal responsibilities” for elections, are spending an amount 

for elections at least equal to the amounts spent in fiscal year 2000. 

SALARIES OAG paid all or a portion of certain employee salaries with state funds 

appropriated to match its allocation of requirements payments. 

However, the OAG did not keep records adequate to substantiate the 

amount of time theses employees worked on HAVA-related activities. 

In fiscal year 2005, salaries of $ 405,890 were paid with state matching 

funds. 

 

Office of Management and Budget Circular A-87 states that salaries 

and wages of employees used in meeting cost sharing or matching 

requirements of Federal awards must be supported in the same manner 

as those claimed as allowable costs under Federal awards (Attachment 

B 8.h.(7)). Circular A-87 requires salaries and wages to be supported 

in the following manner. 

Where employees are expected to work solely on a single 

Federal award or cost objective [100 percent], charges for 

their salaries and wages will be supported by periodic 

certifications that the employees worked solely on that 
4 

program for the period covered by the certification. These 

certifications will be prepared at least semiannually and will 

be signed by the employee or supervisory official having first 

hand knowledge of the work performed by the employee. 

(Attachment B 8.h.(3)). 

Where employees work on multiple activities or cost 

objectives [less than 100 percent], a distribution of their 

salaries or wages will be supported by personnel activity 

reports or equivalent documentation . . . (Attachment B 8.h. 

(4)). 

The HAVA administrator agreed to implement, as soon as reasonably 

possible, the following recommendations: 

1. Require staff who are assigned fulltime to HAVA projects to 

complete semiannual certifications that they worked only on 

HAVA activities. 

2. Require staff who work on multiple projects during any pay 

period and who will be funded with HAVA or state matching 

funds to complete a personnel activity report that identifies to the 

nearest hour the projects on which he/she worked. The time sheet 

should account for all hours in the pay period, separately identify 

HAVA-related hours, and be signed by the employee and the 

supervisor. 

FRINGE 

BENEFITS

OAG under charged for fringe benefits. The state recorded fringe 

benefit costs of $8,623 to its matching funds in fiscal year 2005. In 

comparison, application of the approved benefit rate of 33.25 percent2

to fiscal year 2005 salary charges of $405,890 results in fringe benefit 

costs of $134,958. 

Salary costs were first recorded elsewhere in the accounting records 

and then charged to the state matching funds through several salary 

adjustments to the accounting records. However, the adjustments did 

not include the proper charges for associated fringe benefits. 

In response to our recommendations, the HAVA Administrator agreed 

to ensure that: 

1. Fringe benefits are charged on the basis of the approved fringe 

benefit rates. 

 

2

 The New Jersey Department of the Treasury negotiated with the U.S. Department of Health and Human 

Services a fringe benefit rate of 25.60 percent plus a rate of 7.65 percent for FICA and Medicare for a total 

of 33.25 percent. The rates are applicable to fiscal year 2005 base salaries. 
5 

2. The accounting records for prior periods are adjusted to 

properly record the fringe benefits associated with the HAVA 

program. 

INDIRECT COSTS OAG incorrectly charged a portion of the salaries of certain staff in its 

Division of Administration and Support Services to its state matching 

funds. This was incorrect because the costs of the Division of Fiscal 

Services are contained in the indirect cost pool which the OAG used to 

compute it’s approved indirect cost rates.3

 Thus, based on how the 

rate was computed, we concluded that the OAG intended to recover the 

costs of the Division of Administration and Support Services through 

application of the approved indirect cost rate and not as a direct charge 

to the HAVA programs. 

OAG did not charge indirect costs to the state matching funds or to the 

HAVA funds. Had it done so, it would have recovered its share of the 

cost of the Division twice - once as a direct charge and again as an 

indirect charge. 

The HAVA Administrator told us that to recover the cost of 

administrative support provided by the Division, he conservatively 

estimated the Division’s support to the HAVA program. 

We believe that indirect costs should be recovered in accordance with 

the approved indirect cost rate. Management agreed, and based on our 

recommendations planned to: 

1. Remove the salaries of Division of Fiscal Services staff from 

the direct charges to the states matching fund. (The state, 

however, decided not to charge indirect costs to its matching 

funds, which is its prerogative.) 

2. Charge to the HAVA 101 and 251 funds the appropriate indirect 

costs based on the approved indirect cost rates. 

PROPERTY

 

Inventories of equipment purchased with HAVA funds did not contain 

all the elements required by Federal and State requirements for the 

management of property. The elements required by the Common Rule 

(41CFR 105-71.132 (d)(1)) and New Jersey Office of Management and 

Budget Circular 91-32 are as follows: 

 

3

 The Department has negotiated indirect cost rates with the U.S. Department of Justice of 3.84 percent for 

fiscal year 2003, 4.69 percent for fiscal year 2004, 2.95 percent for fiscal year 2005, and 2.44 percent for 

fiscal year 2006. The rates are applicable to total direct costs of the HAVA program, less funds passed 

through to counties. 
6 

 REQUIREMENTS 

DESCRIPTION FEDERAL STATE 

 

Description of the property 9 9

Serial or other identification number 9 9

Source of the property 9 

Source of the monies used to acquire 

property 9

Percentage of Federal participation 9 

Who holds title 9 

Acquisition date 9 9

Cost of the property 9 9

Location 9 9

Use and condition 9 

Organizational unit charged with custody 9

Ultimate disposition data 9 

The State maintained several inventories of HAVA property. For 

example, one inventory lists voting machines located in counties; there 

also is a statewide voter registration system inventory of computer 

software, hardware, and peripheral equipment such as label writers, 

barcode readers, and scanners, located in counties, the contractor’s 

hosting and backup facilities, and the OAG’s Division of Elections; 

and another inventory identifies information technology equipment 

such as computers and computers and printers. Generally, all the 

inventories identified the name, serial number, and location of each 

item, but not the other required elements. 

In response to our recommendations, management agreed to ensure 

that all inventory data bases, including inventories that will be 

maintained by counties after the State transfers title of property to 

them, will include the information required by the Common Rule and 

the New Jersey Circular. 

COUNTY 

ELECTION 

EXPENDITURES

New Jersey lacks a mechanism to determine whether counties, in using 

Section 251 requirements payments, were maintaining a level of 

expenditure of county funds at least equal to the level they expended in 

fiscal year 2000. 

HAVA requires (Section 254 (a)(7)) that the State Plan explain “How 

the State, in using the requirements payment, will maintain the 

expenditures of the State for activities funded by the payment at a level 

that is not less than the level of such expenditures maintained by the 

State for the fiscal year ending prior November 2000.” Section Seven 

of New Jersey’s State Plan says that to satisfy this requirement, “all 

counties and the State must maintain at a minimum the level of 

operating expenses for elections that was incurred in fiscal year 2000, 

in addition to any federal funding received.” 
7 

We found that the state was meeting this requirement but that it did not 

have information on county expenditures for elections. During our exit 

conference, New Jersey officials advised that they believed counties 

were more than satisfying this requirement and that that they planned 

to execute written agreements with the counties that would include 

provisions for documenting county compliance. 

OTHER MATTERS 

VOTER 

OUTREACH

The New Jersey “Be Powerful, Be Heard” voter outreach and 

education initiative included two hip-hop summits primarily for high 

school and college students. Prior to the start of our review, EAC 

provided us with a newspaper article which suggested that the use of 

Federal funds to finance the events may not have been appropriate. 

Based on information produced by New Jersey, we learned that it 

worked in conjunction with the Hip-Hop Summit Action Network to 

convene a summit in September 2004 prior to the November general 

election and in September 2005 before the November Gubernatorial 

election. The summits were interactive panel discussions between 

artists such as Reverend Run and Doug E. Fresh and community and 

voter activists about the importance of voting and issues of concern to 

young voters. The summits included questions and answers from the 

audience which consisted principally of high school students. The 

events were also available to high schools and colleges throughout the 

state via web casts. The summits may be viewed online by visiting the 

Office of the Attorney General’s New Jersey HAVA home page at 

www.state.nj.us/lps/elections/hava_intro.html.

According to New Jersey, about 2,000 students attended the first 

summit and voter registration forms and educational materials were 

mailed to the schools before the event. New Jersey estimated that 

approximately 4,000 students attended the second event and voter 

registration packets and educational materials were provided to the 

schools at the event for later classroom use. According to an Office of 

Attorney General official, voter registration tables were set up at the 

summits and that “several hundred” registrations were taken, excluding 

those mailed to the county commissioners of registration. In New 

Jersey, you can register to vote at the age of 17 as long as you will be 

18 years old by the next election. 

Based on financial records maintained by the OAG HAVA unit, New 

Jersey used Section 101 funds of $131,924 to pay for the summits. A 

breakdown of the costs between the two summits follows: 
8 

 COSTS 

DESCRIPTION SUMMIT I SUMMIT II TOTAL 

 

Busing Students $6,155 $19,430 $25,585 

Meals/Refreshments 12,515 26,414 38,929 

Production* 25,143 42,267 67,410 

 

Totals 43,813 88,111 131,924 

*Production covers the cost of activities such as event production, facilities 

rental, web casting, and sign language. 

 

According to HAVA (Section 101 (b)(1)(B) and (C), activities for 

which Section 101 funds may be used for include: 

“Improving the administration of elections for Federal office” 

and 

 “Educating voters [which EAC has concluded4

 includes those 

eligible to vote] concerning voting procedures, voting rights, 

and voting technology.” 

This information is presented for your use in determining the 

appropriate use of HAVA funds. 

RECOMMENDATIONS 

We recommend that the Executive Director, EAC: 

1. Ensure that New Jersey implements the agreed-upon 

recommendations and incorporates into agreements with counties 

an appropriate provision for verifying county compliance with the 

base level expenditure requirement. 

2. Determine whether the voter outreach activities and costs 

associated with the Hip-Hop summits meet the use of funds 

criteria under Section 101 (b) of HAVA. 

 

4

 Letter of March 15, 2006, from the Deputy General Counsel, EAC, to the HAVA Coordinator for the 

State of Washington regarding “Use of HAVA 101 Funds.” 
9 

APPENDIX 1 

SCOPE AND METHODOLOGY 

To accomplish our objective, we reviewed 

9 The prior single audit report and other reviews related to the 

Department’s financial management systems and the HAVA 

program for the last 2 years. 

9 Policies, procedures and regulations for New Jersey’s management 

and accounting systems as they relate to the administration of 

HAVA programs. 

9 An organizational chart of the Division and a list of all full and 

part-time employees of the Division indicating those employees 

whose salary is financed with HAVA funds. 

9 Inventory lists of all equipment purchased with HAVA funds. 

9 Major purchases. 

9 Supporting documents maintained in the accounting system for 

payments made with HAVA funds. 

9 Support for reimbursements to counties. 

9 Certain New Jersey laws that impact the election fund. 

9 Appropriations and expenditure reports for State funds used to 

maintain the level of expenses for elections at least equal to the 

amount expended in fiscal year 2000 and to meet the five percent 

matching requirement for section 251 requirements payments. 

9 Information regarding source/supporting documents kept for 

maintenance of effort and matching contributions. 

We also interviewed appropriate New Jersey employees about the 

organization and operation of the HAVA program. 

We conducted our review in accordance with Government Auditing 

Standards issued by the Comptroller General of the United States. As 

such, we included tests and procedures as considered necessary under 

the circumstances to evaluate the Department’s controls over the 

administration of HAVA payments. Because of inherent limitations, a 

study and evaluation made for the limited purposes of our review 

would not necessarily disclose all weaknesses in administering HAVA 

payments.



OIG’s Mission 

The OIG audit mission is to provide timely, high-quality 

professional products and services that are useful to OIG’s clients. 

OIG seeks to provide value through its work, which is designed to 

enhance the economy, efficiency, and effectiveness in EAC 

operations so they work better and cost less in the context of 

today's declining resources. OIG also seeks to detect and prevent 

fraud, waste, abuse, and mismanagement in these programs and 

operations. Products and services include traditional financial and 

performance audits, contract and grant audits, information systems 

audits, and evaluations. 

Obtaining 

Copies of 

OIG Reports 

Copies of OIG reports can be requested by e-mail. 

(eacoig@eac.gov). 

Mail orders should be sent to: 

U.S. Election Assistance Commission 

Office of Inspector General 

1225 New York Ave. NW - Suite 1100 

Washington, DC 20005 

To order by phone: Voice: (202) 566-3100 

 Fax: (202) 566-3127 

To Report Fraud, 

Waste and Abuse 

Involving the U.S. 

Election Assistance 

Commission or Help 

America Vote Act 

Funds

By Mail: U.S. Election Assistance Commission 

 Office of Inspector General 

 1225 New York Ave. NW - Suite 1100 

 Washington, DC 20005 

E-mail: eacoig@eac.gov