Audit Resolution for Audit No. E-HP-IA-06-08 1

IOWA AUDIT RESOLUTION 

June 14, 2010 

BACKGROUND

The U.S. Election Assistance Commission (EAC) is an independent, bipartisan federal agency 

created by the Help America Vote Act (HAVA). EAC assists and guides state and local 

election officials in improving the administration of elections for federal office. EAC 

distributes HAVA funds to states for the acquisition of voting systems, the establishment of 

statewide voter registration lists, and other activities to improve the administration of 

elections for federal office. EAC monitors state use of HAVA funds to ensure funds 

distributed are being used for authorized purposes. To help fulfill this responsibility, the EAC 

determines the necessary corrective actions to resolve issues identified during Single Audit 

Act and Department of Inspector General (OIG) audits of state administration of HAVA 

funds. The EAC OIG has established a regular audit program to review the use of HAVA 

funds by states. The OIG’s audit plan and audit reports can be found at www.eac.gov. 

The Audit Follow-up Policy approved by the Commissioners authorizes the EAC Executive 

Director to issue the management decision for OIG audits of federal funds to state and local 

governments, to non-profit and for-profit organizations, and for single audits conducted by 

state auditors and independent public accountants (external audits). The Executive Director 

has delegated the evaluation of final audit reports provided by the OIG and single audit 

reports to the Director of the Grants Division of EAC. The Division provides a recommended 

course of action to the Executive Director for resolving questioned costs, administrative 

deficiencies, and other issues identified during an audit. The EAC Executive Director issues 

the EAC Management Decision that addresses the findings of the audit and details corrective 

measures to be taken by the state. 

States may appeal the EAC management decision. The EAC Commissioners serve as the 

appeal authority. A state has 30 days to appeal the EAC management decision. All appeals 

must be made in writing to the Chair of the Commission. The Commission will render a 

decision on the appeal no later than 60 days following receipt of the appeal or, in the case 

where additional information is needed and requested, 60 days from the date that the 

information is received from the state. The appeal decision is final and binding. 

Audit History: 

The following addresses the findings, recommendations and questioned costs in the final audit 

report issued by the EAC Office of Inspector General, Report No. E-HP-IA-06-08, issued 

September 30, 2009. The audit addressed the administration of payments received under 

HAVA by the Iowa Secretary of State and expenditures during the period of April 10, 2003 

through April 30, 2008. The following proposed resolution addresses the 10 categories of 

findings, recommendations and questioned costs in the audit. 

All corrective actions required in this audit resolution are to be completed before December 

10, 2010. 
Audit Resolution for Audit No. E-HP-IA-06-08 2

1. Interest on State Matching Funds 

 

Iowa initially only partially met its 5% matching requirements and later provided additional 

funding for the shortfall and interest thereon. However, due to miscalculation of principal and 

primarily interest, the OIG auditor determined that another $12,182 of principal and interest 

was due. 

EAC Management Decision 

EAC agrees with the finding and recommendation and the Iowa SOS also agreed and 

transferred the amount of $12,382 to the election fund as documented for the auditor. 

 

Corrective action is complete. 

2. Cash Management on Grants to Counties

Prior to spring 2007, Iowa provided grant funds to counties to acquire voting systems. Funds 

were deposited in county accounts; however, interest accrued was neither reported nor 

returned to the Iowa SOS HAVA fund. The OIG recommended: 1) obtaining data on interest 

earned; 2) revising the HAVA Section 251 financial reports to reflect interest earned; and 3) 

informing the counties that the interest earned must either be returned interest or used for 

HAVA activities. 

EAC Management Decision 

EAC agrees with the OIG finding and recommendations. Iowa has prepared a notice to 

counties which owe interest in accord with OMB Circular A-102 requirements. Iowa SOS 

can then make the decision of whether to return the interest to the Iowa HAVA fund or allow 

counties to retain the funds to spend on other defined allowable activities and continue to earn 

interest until fully expended. 

Iowa will report back to EAC their determination of interest earned and reported and decision 

on disposition of earned interest either returning it to the HAVA fund or using it for other 

allowable HAVA expenditures at the county level. Alternatively, counties may identify 

offsetting expenditures not previously counted as match that are allowable under Section 251 

of HAVA. 

3. Property Management 

The OIG auditor found that the Iowa SOS and the counties that had purchased voting or 

voting registration system equipment had not maintained an accurate current inventory of 

such equipment because their capitalization thresholds to determine accountable property 

were based on the acquisition cost and/or current value of each item of equipment of $5,000 

dollars or more. Based on the OMB Common Rule, the OIG auditor recommended that: 

• a physical inventory be conducted of all HAVA equipment at the Secretary of State’s 

Office and with the counties using the criteria that the items of equipment were part of 
Audit Resolution for Audit No. E-HP-IA-06-08 3

a voting system or voter registration system and should be considered in total for 

establishing the threshold for maintenance of inventory and accountable property at 

cost value of $5,000 or more and update results to correct its property records; 

• property management records of the counties have at least the minimum information 

required in the Common Rule; and 

• the Iowa SOS seeks guidance from the EAC on the definition of sensitive property to 

clarify whether voting equipment not meeting the capitalization threshold (accountable 

property) should be tracked and accounted for as set forth in the Federal Management 

Regulation (FMR), the successor regulator to the Federal Property Management 

Regulation. 

EAC Management Decision 

EAC disagrees with the findings and recommendations of the OIG report which is based on 

interpretation of both the OMB Common Rule and the Federal Management Regulation 

(FMR). The OMB Common Rule (41 CFR 105-71.132) clearly defines equipment as 

tangible, nonexpendable, personal property with a value of $5,000 or more per unit and a life 

of 1 or more years. While EAC FAO-08-007 states that equipment should be valued 

collectively as a voting system or in support of a voter registration system, this guidance was 

not issued until 2008 and these equipment purchases occurred prior to that period. The OMB 

Circulars do not address accumulating equipment value to determine the threshold for 

accountable property, but clearly set the value of the individual unit as the standard. 

The OIG report cited and referenced the FMR as the basis for the recommendation that the 

EAC determine if equipment less than the $5,000 capitalization threshold should be 

determined to be ‘sensitive’ equipment and tracked and accounted for. The FMR is a 

regulation applicable to federal agencies and federally owned property. The equipment 

purchased by Iowa SOS and the counties is not federal equipment and is titled to the state or 

county. 

EAC agrees that an inventory of capital equipment would be useful for the Iowa SOS to 

maintain and useful to manage oversight of their grant and voting equipment purchases and 

replacement. SOS has agreed and initiated inventory reconciliation at the state level and with 

the counties with the individual equipment items considered as part of a voting or voter 

registration system. Per OMB uniform administrative requirements [41 CFR 105.71.132], the 

minimum standards for equipment inventory to be updated every two years are: 

• Description of the equipment, identification number, who holds title 

• Acquisition date and source of property 

• Cost and % federal 

• Location 

• Use and condition 

• Ultimate disposal date and sale or trade-in price 

• Safeguards to prevent loss, damage, theft 

Iowa SOS will report to the EAC when final action on inventory is completed. 
Audit Resolution for Audit No. E-HP-IA-06-08 4

4. Accessibility Grants to Counties 

The OIG audit found that Iowa SOS provided HAVA funds to counties to make polling places 

accessible and questioned the total amount of $369,740 because Iowa did not obtain EAC 

approval to spend funds on capital improvements. 

EAC Management Decision 

We do not agree that this set of accessibility grants constituted capital improvements nor that 

prior approval from EAC was needed for these expenditures. The EAC FAQ, issued after 

these expenditures were made and cited as the basis for such determination defines Capital 

Improvement as an improvement to any structure (building) or component erected as a 

permanent fixture on real property (land) that adds to its value and useful life while also 

referring to Attachment B of OMB Circular A-87 now codified as 2 CFR 225 Attachment B. 

Attachment B states that the improvement must materially increase the value or useful life of 

the building. Iowa grants for accessibility provided a maximum of $2,500 to make voting 

sites accessible. This amount of improvement would neither extend the useful life of the 

structure nor add materially to its value. In the same EAC FAQ under question 16, an inquiry 

about using HAVA funds to make polling places accessible to people with disabilities is 

answered with the statement that ‘generally, making polling places accessible is an allowable 

costs under Section 101 or Section 251(b) with no caveat about pre-approval.’ Further, 

Iowa’s State Plan Amendment in 2005 clearly indicated the intent to expend HAVA funds ‘to 

reimburse counties for the costs of making improvements to increase accessibility.’ 

Attachment B to OMB A-87 only requires prior agency approval for capital improvements 

which materially increase the life of the land, building or equipment. 

Finally, the recent HAVA Section 251(b)(2) Certification by Iowa covered the period for 

which these accessibility grants were expended; Iowa SOS has provided a supplemental 

explanation that the maximum level of expenditures under Section 251(b)(2) had not been 

exceeded at the time of these accessibility grants and that the accessibility grants were within 

the statutory guidelines for expenditure of Section 251 funds on Section 101 activities. 

We accept the $369,740 in expenditures to make polling places accessible. 

Reference Category Questioned Allowed Disallowed 

Note Accessibility Grants $369,740 $369,740 0

5. Procurement 

The OIG audit report followed up on findings in the 2006 Single Audit report concerning 

procurements for goods and services awarded by SOS on a sole source basis with several 

vendors. The OIG audit report further concluded that although the Iowa SOS office may not 

have been required to follow the administrative laws and regulations of the State of Iowa for 

purchases, the following sole source awards were not fully documented as to contractor 

selections or reasonableness of contract fees negotiated. SOS maintained documentation as to 

the reasons for use of sole source awards, but not as to why the particular contractors were 

selected. 
Audit Resolution for Audit No. E-HP-IA-06-08 5

As a result, the OIG report questioned all costs associated with sole source procurements by 

Iowa SOS made without full justification and where Iowa SOS did not have procurement 

standards and requirements for full and open competition, special selection considerations, 

cost and pricing analysis and financial Conflict of Interest codes. The contracts and costs 

questioned are as follows: 

• State Public Policy Group (SPPG) $ 763,702 

• Iowa State University (ISU) 276,241 

• Woodbury County Auditor (SEAT) 182,558

TOTAL $1,222,501

The OIG report recommended that the Secretary of State: 

• Resolve the questioned costs with the EAC. 

• Adopt policies and procedures for procurement activities and for the SOS staff 

involved in procurement and contract administration, or allow the Department of 

Administrative Services to provide procurement support 

EAC Management Decision 

EAC agrees with the OIG recommendations. 

• Procurement activities and policies: 

The Iowa Secretary of State has determined that its office will follow the State’s procurement 

requirements and administrative rule and regulations when expending federal funds and will 

avail itself of state contract purchasing and of the services of the Department of 

Administrative Services. The Iowa Secretary of State will follow Iowa Ethics laws 

specifically pertaining to conflict of interest related to procurements and involved staff. SOS 

will report back when implemented. 

. 

• Resolution of questioned costs: 

EAC has reviewed the auditor’s spreadsheet work papers which recorded their review of 

specific costs invoiced, approved by SOS and paid to the contractors. 

Based on this review and our analyses, EAC is resolving questioned costs incurred by the 3 

entities (SPPG, ISU and SEAT) cited under Procurement in the OIG report as follows: 

A. State Public Policy Group (SPPG) 

As noted in the audit and in subsidiary spreadsheets, the total amount of $763,702 in 

HAVA payments to SPPG was questioned. Of the total, $74,764 of these questioned 

costs is addressed separately in the section of the audit on Celebrate Voting, leaving 

the remaining $ 688,938 to be addressed under this finding. 
Audit Resolution for Audit No. E-HP-IA-06-08 6

In the spring of CY 2003, SPPG under contract by the Iowa SOS provided necessary 

staffing and support to the Secretary of State’s Office for its immediate urgent efforts 

in planning the implementation of HAVA requirements. Early-on, this involved 

facilitating the rapid start-up of the planning process and drafting and completing the 

preliminary Iowa State Plan which involved HAVA State Plan Advisory Committee 

meetings, development of an overall work plan for implementation, data bases, etc. 

and public education and outreach including media and public meetings. These 

arrangements were made through sole source contracts to SPPG due to time 

exigencies and were paid from state election funds separate from the match. 

For several years after 2003 until June 2006, Iowa SOS continued contracting with 

SPPG to provide on-going support and staffing to the SOS in implementing the 

HAVA State Plan paying for these activities with section 251 and 101 HAVA funds. 

This effort was continued in subsequent years providing support arranging statewide 

meetings, assisting in developing a new voter registration system, RFPs, strategies to 

replace lever voting machines, project management, statewide surveys, 

implementation activities for the state plan, newsletters, developing poll worker and 

auditor trainings, videos, public education, outreach and a host of related activities. 

A letter from the Iowa Deputy Attorney General who met with former SOS officials 

and contractor staff involved in the development and award of these contracts asserts 

that the SOS office and SPPG ‘negotiated’ amounts for each task in the contracts 

based primarily on estimates of the time that would be involved in accomplishing the 

tasks covered by the contract factoring in the experience and expertise of the SPPG 

personnel needed to be devoted to the tasks.’ The estimates roughed out on paper by 

SPPG were not retained. Staff and their billing rates have also been subsequently 

identified but their actual time - hours/days committed to the project - were not 

recorded as the contract service was fixed price, not requiring detailed reporting of 

time. 

The following is an analysis of the information and documentation provided in the audit and 

subsequent material provided by Iowa SOS addressing either the justification for the sole 

source contracts to SPPG or the basis for the cost or prices established in the SPPG contracts 

awarded by Iowa SOS. 

 (1) The Iowa - SPPG initial contract contains a detailed scope of work indicating the tasks 

and urgency of work begun in 2003: 

‘...SPPG is to provide comprehensive and integrated facilitation, staffing and coordination of 

a time-sensitive planning process. The Office of the Secretary of State is responsible to 

deliver a preliminary plan for Iowa’s implementation of the Help America Vote Act by May 

31, 2003....’

• The contract was signed by SPPG on May 2, 2003 and by the Office of Iowa Secretary 

of State on May 4, 2003. 

• 11 specific tasks are defined and individually priced in the contract at amounts ranging 

from $2,500 (3) to $7,500 (3) for a total of $ 50,000. 
Audit Resolution for Audit No. E-HP-IA-06-08 7

• The contract was questioned in the audit because it was ‘sole-source’ and the sole 

source documentation did not adequately support the determination that SPPG was the 

only entity capable of doing this work. 

• Submitted with the contract is a Sole Source Procurement Justification providing 

rationale justifying the sole source on the basis of urgency, why the particular vendor 

was selected and research conducted with other state agencies on SPPG performance 

and pricing. The document was signed by the Department Contract Authority and the 

(SOS) Agency Head on April 3, 2003 certifying that ‘... the above-described 

procurement was required to be a sole source and that it satisfies the requirements of 

applicable law including the Iowa Department of General Services 401 IAC-Chapter 

12.’ 

This provides a basis and certification by both agency head and agency contracting authority 

of the need and justification for sole-source and rationale for SPPG and that the procurement 

met Iowa General Service’s requirements. There is no explicit statement that no other source 

could do this work in this constrained time-frame and with appropriate qualification as 

indicated by the auditor. However, that is the implication of the written rationale and 

determination appropriately executed for the contract action (a requirement from which Iowa 

SOS has cited its exemption). The sole source discusses background research on SPPG with 

other agencies to determine their performance and work product. 

(2) Additional documents submitted provide some further relevant material on various 

working group meetings and dates and staff involved. The 11 tasks in the contract are each 

fixed priced at modest, reasonable amounts for the work considering the defined efforts to be 

performed. 

• HAVA Training and Education Work Group Meetings and Meeting Summary provide 

information on SPPG staff in attendance and work products developed. 

• HAVA Finance & Budget Work Group Meetings # 1 & #3 also provide evidence of 

SPPG in attendance and presenting material, timelines, etc. 

• Advisory Committee Meeting Agenda also reflect SPPG staff in attendance supporting 

the meeting and committee. 

• The Preliminary State Plan developed by the various working groups and Advisory 

Committee cited the following on page 33: 

“The State Public Policy Group (SPPG) facilitated the open and public meetings in 

compliance with Iowa’s open meetings laws. Meetings were held on February 28, March 

21, April 17, May 8 and May 16. SPPG also facilitated the following work groups: Public 

Policy, Finance and Budget, Training and Education, Technology (Voting Equipment) 

and Technology (Voter Registration System).” 

(3) The contract was extended by amendment to complete the state plan facilitation process 

through the end of calendar year 2003 for an amount of $39,500. The contract was also 

supported by a similar Sole Source Procurement Justification providing the rationale and 

signed by the Department Contract Authority and the (SOS) Agency Head. The contract also 
Audit Resolution for Audit No. E-HP-IA-06-08 8

had a detailed scope of task to be performed including County User Group Meetings, State 

Agency User Group Meetings, List Purchaser Group Meetings and reports on user group 

recommendations and subsequent support for the Advisory Committee Meeting and premeeting of Budget & Finance Work Group. The tasks were individually fixed priced at 

modest amounts. 

Documentation supporting the carrying-out of these tasks and work products was provided to 

support contract performance: 

• County User Group Meetings...

• State Agency User Group Meetings...

• List Purchaser Group Meetings...

• Budget & Finance Work Group... 

• Advisory Committee Meeting...

(4) Iowa SOS also initiated in 2003 a separate sole source HAVA Public Education contract 

to develop and conduct statewide public education and outreach regarding HAVA. 

Recommendation: Based on the above, EAC accepts the invoiced costs for the 2003 SPPG 

contracts of $50,000 and $39,500 for HAVA Facilitation of the State Plan and $50,000 for 

HAVA Public Education as offsets against the questioned costs for SPPG in the OIG audit 

report. The Iowa SOS office went through a process to obtain contractual services on an 

urgent basis providing rationale and justification that demonstrates intent to adhere to state 

contract requirements. The contractor, SPPG, delivered the timely services necessary for the 

Iowa SOS to form committees and working groups, staff them, hold public meetings and 

deliver a strategic state plan to implement HAVA in a very short time frame as acknowledged 

in the state plan itself. The contract worked performed was acknowledged by the Advisory 

Committee in their final report. The EAC accepts the basis for the initial contract awards and 

the reasonableness of $50,000 invoiced for the 11 tasks and $39,500 invoiced for 9 tasks 

under the HAVA Facilitation contracts and the $50,000 invoice for the 11 tasks under the 

Public Education contract. These contracts were awarded and completed by the end of CY 

2003. 

Beginning in CY 2004, Iowa SOS initiated new procurements with SPPG focused on 

implementing the state plan developed in 2003. No sole source determinations were provided 

to EAC to substantiate the urgency of these procurements which continued through 2006 in 

various contract amounts ranging from $46,000 to $243,600. After 2003 the exigent need for 

immediate staffing and support from SPPG decreased In addition, SPPG aside from detailed 

expenses began invoicing professional fees up to $22,145 a month in 2005 decreasing in 2006 

as the contract effort wound down. No documentation for the contract pricing of these 

monthly fees nor after-the-fact records have been provided to substantiate the amount of effort 

or days provided by various SPPG staff at differing levels of expertise and pricing. 

During the audit resolution and corrective action stage, EAC is willing to examine 

source material, other documentation or basis for the professional fees in these SPPG 

contracts. Determining after-the-fact, the basis and the reasonableness of the fixed 

payments established under these continuing contracts may be more difficult than for 

the first three contracts. The amounts of these fees are included in the unallowable 
Audit Resolution for Audit No. E-HP-IA-06-08 9

costs below until such time that adequate documentation provides a reasonable basis 

for reconsidering them. 

EAC does note the extensive effort and support that SPPG provided to the Iowa SOS 

over these years. However, without additional documents to adequately support the 

pricing basis for consideration of professional fees paid to SPPG, EAC has no basis 

for accepting the reasonableness of fees paid to SPPG. SPPG did, however, submit 

invoices for reimbursement detailing expenses incurred in carrying out the contract in 

support of Iowa SOS. After reviewing the payment details and separating the 

professional fees and fixed project amounts, the expenses detailed on the auditor’s 

review spreadsheet total $98,112. These expenses met the OIG auditor’s review 

criteria of: 1) being covered by the contract, 2) not ineligible (unallowable); and, 3) in 

agreement with the amounts invoiced. These expenses were billed separately without 

overhead or fee, reviewed by SOS staff (Financial Analyst and program staff) and 

approved, or additional clarification obtained when necessary. In addition, SPPG 

expenses reviewed and not questioned as unallowable under Celebrate Voting (less 

professional fees) total $ 7,820.53. 

EAC allows these expenses totaling $105,932.53 as appropriately supported charges to 

HAVA funds. 

Regarding professional fees and fixed amount projects such as voter education in the 

total amount of $444,005 EAC recognizes that SPPG provided timely and necessary 

support and staffing for Iowa SOS to effectively initiate HAVA implementation 

efforts. However, without some form of documentation to support the basis for the 

continuing contracts and amounts invoiced, EAC cannot accept the full amounts paid 

to SPPG. Absent identification of additional documentation that allows EAC to 

identify a reasonable basis for the fixed amounts charged for professional fees and/or 

significant fixed project amounts, the State will need to reimburse its HAVA fund up 

to $444,005. EAC will review any additional documentation submitted and decide 

upon any additional costs to be allowed by December 10, 2010. 

Reference Category Questioned Allowed Disallowed 

Note Procurement - SPPG $688,938 $ 245,433 $ 443,505 

B. Iowa State University (ISU) 

The OIG questioned all costs for this contract in the amount of $276,241 based on the 

sole source criteria used to award the contract. However, the auditor reviewed the 

expenses invoiced and paid to ISU using the same criteria as above. Based on this 

detailed review, four invoices did not meet criteria 1. Covered by the contract but 

none were ineligible (unallowable) expenses or unsupported. These amounts of 

$33,950; $31,850; $100; and $76 were incurred for SEAT Training II; SEAT 

Registration Fees; and poll worker training, respectively. The expenses were either 

for services before contract date or not specifically covered in the contract. 

EAC Management Decision 
Audit Resolution for Audit No. E-HP-IA-06-08 10

SOS maintains that this is an interagency contract with ISU as a state entity to provide 

state election official, pollworker and other training and certification. Furthermore, 

these agreements with ISU were often agreements between SEAT and ISU 

cooperatively addressing the training curriculum and courses necessary for election 

official training. The appropriate award vehicle for such training activity probably 

should have been an SOS training grant similar to that provided to SEAT below. As 

cited by the OIG auditor, during the initial period of this contract, it was managed and 

payments were reviewed by an intermediary—an official with the Woodbury County 

Auditor’s Office acting on behalf of SEAT, before reimbursement by Iowa SOS. 

While this initial oversight process may not be typical, it doesn’t negate the 

performance of necessary and appropriate work by ISU. The costs associated with the 

intermediary are addressed in the section below pertaining to the Woodbury County 

Auditor contract. 

After reviewing the auditor’s detailed spreadsheet and application of the auditor’s 

criteria, EAC accepts $210,265 in expenses billed, including $65,976 for tasks not 

covered by the date range in the contract, but ratified by the IA SOS as legitimate 

expenses. 

Reference Category Questioned Allowed Disallowed 

Note Procurement $276,241 $276,241 0 

C. SEAT (Woodbury County Auditor) 

The auditor questioned all costs, $182,558, based on the sole source nature of the 

‘contract’. Under this agreement, Woodbury County paid the travel and expenses of 

precinct election officials being trained through Iowa State University’s program. 

Payments were made directly to the county for reimbursement of county employees 

being trained. 

EAC Management Decision 

The only payment questioned for reasons other than sole source was the payment of an 

administrative fee under a contract to the Woodbury County auditor to administer 

these payments, as well as administer payments for Iowa SOS under the SOS contract 

with Iowa State University (above) for election official training. This intermediary 

arrangement was terminated in 2007 when the SOS assumed direct review and 

payment for these services. A partial amount of $3,575 was paid to the intermediary 

for past services provided and termination. The Deputy Iowa SOS deemed this 

amount reasonable to end services and provide compensation for services rendered to 

date. 

The primary issue raised by the auditors is that of the ‘sole source’ procurement of this 

contract. However, the SEAT Woodbury County Auditor contract has an unusual 

genesis. SEAT was established as a 28E entity under Iowa state law. 

28E Agreement – 
Audit Resolution for Audit No. E-HP-IA-06-08 11

A 28E Agreement is established under Chapter 28E of the Code of Iowa. Relevant 

sections of this chapter are as follows: 

28E.1 Purpose. 

The purpose of this chapter is to permit state and local governments in Iowa to 

make efficient use of their powers by enabling them to provide joint services and 

facilities with other agencies and to cooperate in other ways of mutual advantage. 

This chapter shall be liberally construed to that end. 

28E.4 Agreement with other agencies. 

Any public agency of this state may enter into an agreement with one or more 

public or private agencies for joint or cooperative action pursuant to the provisions 

of this chapter, including the creation of a separate entity to carry out the purpose 

of the agreement. Appropriate action by ordinance, resolution or otherwise 

pursuant to law of the governing bodies involved shall be necessary before any 

such agreement may enter into force. 

Further, as expressly stated in the award document, this particular agreement is a grant 

between Iowa SOS and SEAT (a subgrant under the EAC grant to Iowa SOS) entitled 

“HAVA Election Official and Precinct Election Official Training Grant Program.” As 

such, it is not subject to the procurement regulations but recognizes an already 

established partnership with the Iowa SOS office for developing curriculum, training 

elections officials and other election workers and continuing education. The SEAT 

entity was established to be the key component in the state for the training and 

certification for Iowa election officials and was and is responsible for development 

and maintaining a training and certification plan in accordance with the new HAVA 

requirements. SEAT was designated in the preliminary state plan adopted by Iowa in 

2003 to carryout such activities. 

We accept the grant agreement as an appropriate vehicle to accomplish the necessary 

training of county officials and as the basis for award within the context of the Iowa 

state code. Specific costs of $182,558 incurred under the grant were not questioned by 

the auditor and are accepted as reasonable and allowable. 

Reference Category Questioned Allowed Disallowed 

Note Procurement $182,558 $182,558 0 

6. Celebrate Voting 

The OIG audit questioned $118,224 spent on activities related to a program called “Celebrate 

Voting”. Of this amount, $61, 238 were identified in the independent auditor’s report of 2006 

(OMB A-133 Audit). 

“Celebrate Voting” was envisioned as a celebration of the 40th anniversary of the Voting 

Rights and legacy of voting rights in Iowa. The events occurred with a kick-off on August 

5th and 6th and continued activities at universities, concluding in November in Waterloo and 

Iowa City. HAVA funds were spent on a traveling exhibit that told the story of the long and 
Audit Resolution for Audit No. E-HP-IA-06-08 12

difficult struggle for voter rights. Other expense included speakers, entertainer, supplies, 

medallions for honorees, children’s activities, a gala, travel and space rental. 

The OIG report concluded that the portion of the costs for “Celebrate Voting” identified as 

questioned did not meet the HAVA definition of educating voters on voting rights, voting 

procedures and voting technology. The report recommended that SOS resolve the cost issues 

with the EAC and that all of the expenditures be reviewed by EAC for propriety. 

EAC Management Decision 

EAC agrees with the findings and recommendations of the OIG report. Many of the costs 

identified related to the “Celebrate Voting” activities would not be allowable as HAVA 

activities or in some cases not allowable as costs to a federal grant under OMB Common Rule 

and Cost Circulars (2 CFR §225). In addition, we agree with the OIG recommendation that 

costs related to voter education activities be reviewed and resolved by EAC. 

The independent OMB A-133 audit report issued for the year ending June 30, 2006 

questioned costs in the amount of $61,237.50 as entertainment or other unallowable expenses 

or not allowable as education expenses under HAVA. The EAC agreed in its Management 

Decision of May 4, 2007 requiring the Iowa SOS to repay the HAVA fund in the amount of 

$61,237.50. 

Of the remaining $56,986 in additional costs questioned in the OIG audit report, EAC has 

considered the issue of HAVA support for voter education activities. HAVA Section 101 

funds can be used for “Educating voters concerning voting procedures, voting rights and 

voting technology”. In addition, HAVA Section 254 State Plan requires a description of 

“how the State will provide for programs for voter education...which will assist the State in 

meeting the requirements of title III.” 

We have reviewed the activities and costs questioned by the OIG in conjunction with 

“Celebrate Voting” and agree with most of the activities identified as questioned costs which 

focused on non-voters or activities with no clear identification as education of voters on 

rights, procedures or technology with the exception of the following: 

• The film produced under contract by Full Spectrum on voter rights history and 

development. This would include any ancillary costs for travel and production. After 

viewing the film, EAC has concluded that the purpose was within the context of 

HAVA, primarily fostering voter education on voting rights. 

• The Hot Topics Discussion Guide partially addresses pertinent voter education 

allowable under HAVA: absentee balloting; secrecy; eligibility of elderly, college 

students away, poll workers, transient people and restoration of felons; rights to vote. 

However, other aspects of this guide while addressing interesting questions and 

discussions focused on internet voting, voter turnout reasons and other thoughtprovoking topics are not considered as part of voter education on voting rights, 

procedures and technology allowable under HAVA. 

• The contract with Ron Walters to provide an education component on voter rights with 

the presentation approved by the Iowa SOS may also be allowable if the SOS can 
Audit Resolution for Audit No. E-HP-IA-06-08 13

verify the content of the presentation or outline supporting that it addresses allowable 

voter education. 

In addition to the costs associated with the specific activities identified above as allowable or 

unallowable or a mix of both, the Iowa SOS can elect to review other specific activities and 

expenses related to and questioned for “Celebrate Voting” and provide documentation for any 

items that clearly indicate that they constituted an educational component on voter rights 

excluding ‘get out the vote or voter registration’. EAC will review any such submissions that 

meet the criteria for final determination and resolution. Iowa SOS has already indicated that 

it cannot provide a breakout of the costs of the film addressed above from the filming of the 

gala activities. Unless subsequent documentation is provided by December 10, 2010 for 

consideration of any of the above, these costs will continue to be considered disallowed. 

Reference Category Questioned Allowed Disallowed 

Note Celebrate Voting $118,224 0 $118,224 

7. Marketing Costs 

As identified in the A-133 audit report for FY 2007 and iterated in the OIG audit report, 

marketing costs of $14,000 for 30-second spots for a radio campaign urging voters to get out 

and vote was identified as unallowable. EAC guidance does not allow ‘get out the vote’ 

activities and related costs under HAVA. EAC agrees with the findings and determines that 

$14,000 must be repaid to the state HAVA election fund. 

Reference Category Questioned Allowed Disallowed 

Note Marketing costs $14,000 0 $14,000 

8. Personnel Costs 

The OIG audit report found that $885,573 of employees’ salaries and benefits were charged to 

HAVA. Timesheets were kept for all employees’ time and leave and signed by supervisors. 

However, the SOS failed to make after-the-fact certifications required by the OMB Common 

Rule for states that the employees worked on the HAVA-related activities. The auditors 

reviewed the position descriptions of the employees and based on their review determined that 

they were assigned to HAVA-related activities. 

The OIG report recommended that Iowa SOS either return the questioned costs of $885,573 

or resolve with the EAC the appropriate corrective action regarding the lack of periodic 

certification. 

EAC Management Decision 

EAC agrees with the OIG findings that the Iowa SOS office did not maintain the standards for 

timekeeping for staff charged to HAVA funds and with the OIG recommendation to resolve 

the issue with EAC by appropriate corrective action. 
Audit Resolution for Audit No. E-HP-IA-06-08 14

Iowa SOS obtained individual notarized affidavits for all state employees and contract staff 

charged to HAVA from Charles Krogmeier, First Deputy Secretary of State who served from 

June 2004 through December 2006 and was responsible for supervising and determining 

allocations of employee salaries and benefits to HAVA funds. Essentially, the affidavits 

asserted for most employees that they worked full-time and in the case of a few employees 

part-time on HAVA identifying the specific responsibilities. In the case of several employees 

working full-time on HAVA, it was noted that they were only charged partially to HAVA 

funds, with the State of Iowa paying the remaining payroll costs. According to the Iowa SOS 

as documented in current time-keeping records, the practice of not fully charging HAVA 

funds for employees working full-time on HAVA activities continues today. 

More importantly, the SOS has taken corrective action by implementing a time-keeping 

policy and system that meets and exceeds the requirements of the OMB Circular for state 

employee working and being charged to federal funds. The protocol requires that employees 

record their time on a daily basis, including time spent on HAVA-related work. It is called 

“program management” and each employee logs in daily also listing the work they 

performed. A signature line has been added on the weekly program management report for 

both the employee’s and the supervisor’s signature, verifying the jobs performed by that 

employee. 

These activity reports, not bi-annual certifications, for state HAVA staff not only capture time 

for HAVA activities, but also a description of work performed during the bi-weekly payroll 

reporting period. This resolves the issue of current timekeeping for state employees working 

on and charging costs to HAVA. 

The standard for state employees working solely on a single federal grant is defined in 2 CFR 

§ 225 Appendix B. 8. h., Support for Salaries & wages: 

Charges will be supported by periodic certifications that the 

employees worked solely on that program for the period covered 

by the certification at least semi-annually, signed by the employee 

or supervisory official having first hand knowledge of the work 

performed by the employee. 

The above requirements for state employee certification every 6 month is a minimal bar to 

meet. One of the factors contributing to states not meeting the minimum 6 month general 

time certifications is that most SOS offices have not had federal grants prior to the HAVA 

funding and thus have not been aware of the specific process to meet this minimal OMB 

requirement. 

EAC accepts the corrective action implemented by the Iowa SOS office specifically 

implementing a detailed time tracking system for employees and accepts the affidavit 

certifications and costs for employees charged to HAVA during the period of this audit. 

Reference Category Questioned Allowed Disallowed 

Note 8 Personnel $ 885,573 $ 885,573 0 
Audit Resolution for Audit No. E-HP-IA-06-08 15

9. County equipment Lease Payment 

The OIG auditor questioned $21,000 retained out of a lease of $115,500 when the lease was 

replaced by purchase of compliant voting equipment. Apparently, the lease was initially 

arranged as a contingency so that the county could meet the requirement that it have a 

compliant voting system in place by the deadline of January 1, 2006 while it awaited the 

manufacturer of its voting equipment to obtain certification of their machines. Subsequently, 

the county contracted with the new vendor to buy compliant equipment. During the interim 

period, it turns out the county did not have need for equipment for federal election. The OIG 

auditor questioned the $21,000 stating that the EAC requires costs be allowable, allocable and 

reasonable under OMB Circulars A-87 102, 122 and 133. 

EAC Management Decision 

The Iowa SOS office states that it was required that counties be compliant by January 1, 2006 

and supported the short term lease as a reasonable strategy to be compliant in case of an 

unscheduled election, essentially insuring against noncompliance. There is no inherent 

prohibition in the OMB circulars which would prevent such an expense from being allowable, 

allocable or reasonable. Therefore, the EAC accepts the rationale provided by the SOS for 

such expenditure and finds the costs of $21,000 are not unreasonable or unallowable and are 

allocable to HAVA funds. 

Reference Category Questioned Allowed Disallowed 

Note Lease payment $ 21,000 $ 21,000 0 

10. Financial Reporting 

The OIG audit report found numerous instances of costs inaccurately reported or not included 

on the SF-269s for HAVA funds submitted to the EAC. The report also recommended that 

the Iowa SOS also improve internal controls over the accounting and reporting of HAVA 

financial reports and that an official other than the preparer sign them and spreadsheets of 

HAVA expenditures be updated and reconciled with the accountings system at least monthly. 

Revised financial report should be submitted to the EAC. 

EAC Audit Resolution 

EAC agrees with the finding and recommendation. Iowa SOS will address these issues of 

updated financial reports and supporting data along with improved internal controls as part of 

their corrective action and submit revised reports and implemented controls to the EAC. 

Updated financial reports will also reflect cost determinations in the audit resolutions 

reflected in this document.