U.S. ELECTION 

ASSISTANCE 

COMMISSION 

 

 

 

 

 

 

PERFORMANCE AND 

ACCOUNTABILITY REPORT 

 

 

 

 

 

 

 

 

 

September 30, 2008
Election Assistance Commission 

 

MESSAGE FROM THE CHAIR 

The Election Assistance Commission is an independent bipartisan agency whose 

mission is to assist in the effective administration of Federal Elections. This is the 

first time in its 5-year existence that Election Assistance Commission (EAC) is subject 

to the requirement for an audit of its financial statements. EAC must comply with the 

requirement because its annual budget surpassed the $25 million threshold for the 

Accountability of Tax Dollar Act of 2002. 

EAC set the ground work for more effective management, accountability, and control 

of its financial and program operations during fiscal year 2008. This was a direct 

result of three significant events. The first was an assessment by the EAC Inspector 

General that highlighted the need for EAC to implement a strategic plan, improve 

internal controls, clarify the roles and responsibilities of the Commissioners and 

senior management, and establish and or document policies and procedures for all 

program areas. The second was EAC must complete an audit of its fiscal year 2008 

financial statements. The third was feedback from the financial statement auditors 

that EAC had material internal control weaknesses and that the auditors were going 

to disclaim an opinion on the financial statements. 

 

In response to these events, EAC has: 

 Hired key personnel to help implement improvements, including a Chief 

Operating Officer, Budget Officer, and Contracting Officer. 

 Started the search for a Chief Financial Officer. 

 Developed a strategic plan. 

 Issued policy on the roles and responsibilities of Commissioners and the 

Executive Director. 

 Hired a contractor to help write policies and procedures and to document 

internal controls. 

 Hired professionals to help develop performance-based budgets. 

 Contracted with a certified public accounting firm to assist with financial 

management. 

 Initiated efforts to obtain the services of a qualified firm to assist with 

prioritizing, analyzing, and implementing the audit recommendations to aid 

with developing a management plan, assuming budgetary resources are 

available. 

 Started to update documentation of current financial management processes 

and systems. 
Election Assistance Commission 

 Initiated an assessment of training needs for employees to further enhance 

awareness of financial management. 

 Prepare to issue a contract for assistance with the development of a 

comprehensive corrective action plan to address all material weaknesses. 

Notwithstanding its challenges with financial management, fiscal year 2008 was a 

very productive year for EAC. To assist the election community, the EAC established 

the following goals: 

1. Prepare for the 2008 Elections 

2. Update the Voluntary Voting System Guidelines (VVSG) 

3. Operate a Clearinghouse to Furnish New Information and Guidance on 

Improving Administration of Elections 

Some of EAC’s significant accomplishments in response to these goals included: 

 Issuing a report entitled Effective Designs for the Administration of Federal 

Elections. It includes best practices for ballot design and polling place 

signage, as well as a digital library containing hundreds of camera-ready 

images of ballots and polling place materials. 

 Issuing election terminology glossaries in five languages -- Chinese, Japanese, 

Korean, Vietnamese, and Tagalog. 

 Issuing the Voting System Test Laboratory Program Manual and the Voting 

System Testing and Certification Manual. 

 Hosting six roundtables to discuss recommended improvements to the VVSG, 

posting the recommendations for comment, and receiving 3,200 comments. 

 Awarding grants of $2 million each to Pennsylvania, Minnesota, Ohio, Illinois 

and Wisconsin for the collection of Election Day data. 

 Awarding grants totaling $750,000 to 27 colleges and nonprofit organizations 

from 18 states. 

 Awarding ten grants of about $20,000 each to educate secondary school 

students and their parents about the electoral process through mock national 

elections. 

 Issuing a formal report to the Congress on states’ use of approximately $3 

billion of election improvement funds. 

 Posting nearly a thousand documents on www.eac.gov

In closing, EAC recognizes that adjustments are needed to key financial and 

management processes. The Commissioners and the Executive Director also 

recognize the need to modify the management style to ensure a high level of 

accountability. Because this was the first year EAC was subject to the financial 

statement audit requirement and because EAC has not finalized a strategic plan, 

implemented a performance-based budget, or established an internal control review 

structure, it is not able to present all elements required for its Performance and 

Accountability Report (PAR) for fiscal year 2008. However, the financial statements 

which are being submitted, to the best of my knowledge and belief, are accurate and 

reliable. EAC’s goal for fiscal year 2009 is to continue implementing necessary 

financial management improvements. In 2010, EAC hopes to obtain an unqualified 
Election Assistance Commission 

(clean) opinion on its financial statements and produce an informative PAR in 

accordance with requirements. 

Rosemary E. Rodriguez, Chair 

November 17, 2008
Election Assistance Commission 

TABLE OF CONTENTS 

SECTION I - Management Discussion and Analysis...........................................1 

 

I.A Background, Mission and Organization Structure............................................2 

 About EAC ................................................................................................................2 

 Establishment of EAC .............................................................................................2 

 Funding for EAC.......................................................................................................3 

 Organization Structure............................................................................................4 

I.B Performance Goals, Objectives, and Results ...................................................5 

 Goals and Performance Results ............................................................................5 

I.C. Analysis of EAC Financial Statements............................................................11 

I.D. Limitations of the Financial Statements........................................................11 

I.E. Analysis of Controls, Management Systems, and Legal Compliance ..........12 

 Federal Manager’s Financial Integrity Act...........................................................12 

 Annual Assurance Statement on Internal Control ..............................................16 

 Accountability of Tax Dollars Act of 2002 ...........................................................18 

 Federal Information Security Management Act ..................................................18 

 Annual Appropriation Law and the Antideficiency Act........................................18 

 Inspector General Act Amendments of 1988 .....................................................18 

 

SECTION II - Performance Report ..........................................................................19 

II.A Performance Purposes, Objectives, and Results ...........................................20 

SECTION III - Audit Report and Financial Statements.....................................21 

Ill.A Message from the Executive Director ...........................................................22 

III.B. Independent Auditor’s Report .......................................................................23 

III.C Financial Statements .....................................................................................49 

III.D Notes to Financial Statements......................................................................53 

SECTION IV - Other Accompanying Information......................................... 64

IV.A Most Serious Management Challenges Facing EAC ....................................65 

IV.B EAC Response to the Most Serious Management Challenges....................68 

IV.C Improper Payments Act..................................................................................71 

IV.D Summary of Financial Statement Audit and Management Assurances.....72 
Election Assistance Commission 

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SECTION I

Management Discussion and Analysis 
Election Assistance Commission 

2

I.A BACKGROUND, MISSION AND ORGANIZATIONAL STRUCTURE

In October 2002, Congress passed the Help America Vote Act (HAVA). The law recognized 

the need to invest in election infrastructure and set out a comprehensive program of 

funding, guidance, and ongoing research. To foster those programs and to promote and 

enhance voting for United States citizens, HAVA established the Election Assistance 

Commission (EAC). 

About the EAC 

EAC is an independent, bipartisan agency. Four full-time commissioners, appointed by the 

President and confirmed by the U.S. Senate, guide the EAC. Its mission is to assist in the 

effective administration of Federal elections. EAC is statutorily required to: 

 Create a clearinghouse of information for election officials and the public. 

 Distribute and monitor HAVA funds to states for election administration 

improvements. 

 Issue, and periodically review and modify, as necessary, Voluntary Voting System 

Guidelines (VVSG). 

 Accredit voting system test labs and certify voting equipment. 

 Conduct periodic studies of election administration issues. 

 Establish best practices and guidelines on election administration for state and local 

election officials. 

 Design and develop requirements for state instructions to the national voter 

registration form. 

 Provide Congress with a bi-annual report to assess the impact of the National Voter 

Registration Act (NVRA). 

HAVA also set up a Standards Board and the Board of Advisors to counsel EAC. In addition, 

the law established a Technical Guidelines Development Committee (TGDC) to assist EAC in 

the preparation of the VVSG. The VVSG sets the standards against which voting systems are 

tested. The Director of the National Institute of Standards and Technology (NIST) serves as 

the Chair of the TGDC and provides technical support to the Committee. Additionally, HAVA 

specifies that NIST will help EAC test, certify, decertify and recertify voting system hardware 

and software by accredited laboratories. Since fiscal year 2004, EAC’s annual 

appropriations have included funds for NIST support. 

Establishment of EAC 

 

The Senate confirmed all four Commissioners in December 2003 and EAC began operations 

in January 2004, 10 months later than required by HAVA. Its fiscal year 2004 operating 

budget was about $1.7 million. At the close of the fiscal year, EAC had a staff of 18, 

including its statutorily-required General Counsel. 

EAC’s focus in 2004 was to assemble staff, obtain office space, arrange for administrative 

support from the General Services Administration (GSA), establish a website, start 
Election Assistance Commission 

clearinghouse operations, and distribute Federal financial assistance to states. In regard to 

Federal financial assistance, Congress appropriated approximately $3.2 billion in fiscal 

years 2003 and 2004 for payments to states under title I and II of HAVA. States were to use 

the funds principally to upgrade their voting systems, establish a statewide voter registration 

data base, train election officials, and educate voters. As EAC did not begin operations until 

2004, GSA initially distributed HAVA funds to states in fiscal year 2003. 

During fiscal year 2005, EAC appointed its other statutorily-required position, the Executive 

Director, and an interim Inspector General. EAC efforts in subsequent years were on 

upgrading the VVSG, completing required research to promote effective Federal elections 

and to present key data on election practices and voting, instituting a voting system testing 

and certification program, auditing state use of HAVA funds, and providing information on 

improving elections to its stakeholders. Through fiscal year 2008, EAC has grown to 37 fulltime employees, including the four commissioners and their four special assistants. EAC is 

located in Washington, D.C. and has no field offices. 

Funding for EAC 

EAC’s and related appropriations for fiscal year 2003 through fiscal year 2008 follow: 

APPROPRIATIONS FOR ELECTION REFORM PROGRAMS AND PAYMENTS BY FISCAL YEAR 

DESCRIPTION 2003 2004 2005 2006 2007 2008 

TO EAC: 

 EAC operations A$2,000,000 B$1,681,092 $11,022,400 $11,286,000 $11,250,000 $13,280,000

 Transfer NIST 0 0 2,777,600 2,772,000 4,950,000 3,250,000

 Title I Pay. to states 0 0 0 0 0 0

 Title II Pay. to states C C2,330,000,000 0 0 0 115,000,000

 Grants A1,500,000 0 0 0 0 10,000,000

 Help Am. Vote Found.D A1,500,000 0 0 0 0 0

 SUBTOTAL 

Less ReVcLssion 0 8,857,080 0 0 0 0

 TOTAL EAC 5,000,000 2,322,824,012 13,800,000 14,058,000 16,200,000 141,530,000

TO GSA: 

 Title I Pay. to states E649,500,000 0 0 0 0 0

 Admin. of Pay. distrib. 500,000 0 0 0 0 0

 TOTAL GSA 650,000,000 0 0 0 0 0

AFunds were not used and reverted to the U.S. Treasury. 

BConsists of $1,200,000 appropriated to EAC and $481,092 transferred from the Federal Election Commission (FEC) from the balance of 

$800,000 appropriated to FEC for programs and functions that were transferred to EAC. 

CCongress appropriated $830,000,000 to EAC for Title II requirements payments in 2003 and authorized GSA to make payments on EAC’s 

behalf. GSA, however; did not disburse any requirements payments in 2003. In 2004, Congress extended to 2004, GSA’s authority to 

expend the $830,000,000. The $2,330,000,000 includes the $830,000,000 appropriated in 2003 and carried forward to 2004. 

DCongress appropriated funds for the Foundation only in fiscal year 2004, which were not used; thus the Foundation was not established. 

EGSA distributed the funds but EAC is responsible for oversight of the funds. 

3
Election Assistance Commission 

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Organization Structure 

SPECIAL 

ASSISTANTS 

 

 

 

 4 FTEs 

COMMISSIONERS 

 

Rosemary E. Rodriguez, Chair 

Donetta Davidson, Vice Chair 

Gracia Hillman, Commissioner 

Gineen Beach, Commissioner 

ADVISORY 

 COMMITTEES 

110 Standards Board Members 

37 Advisory Board Members 

15 Technical Guidelines 

Development Committee 

Members 

 

OFFICE OF 

 INSPECTOR GENERAL 

 

 2 FTEs 

MEETING/TRAVEL 

COORDINATOR 

 1 FTE 

 

 

 

 

OFFICE OF 

GENERAL COUNSEL 

 4 FTEs 

OFFICE OF 

THE EXECUTIVE DIRECTOR 

 

 

 2 FTEs 

COMMUNICATIONS AND 

CLEARTINGHOUSE 

 

 

 

 3 FTEs 

 

CHIEF OPERATING 

OFFICER 

 1 FTE 

 

 

VOTING SYS. 

TESTING AND 

CERTIFYING 

 

 

 3 FTEs 

HAVA 

PAYMENTS AND 

GRANTS 

 

 

 1 FTE 

ELECT. ADMIN. 

IMPROVEMENT 

PROGRAMS 

 

 

 1 FTE 

RESEARCH 

 

 

 

 

 3 FTEs 

ADMIN. 

 

 

 

 

 6 FTEs 

HUMAN 

RESOURCES 

 

 

 

 1 FTE 
Election Assistance Commission 

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I.B PERFORMANCE GOALS, OBJECTIVES, AND RESULTS

Recognizing that it needed to formalize its planning, reporting and execution activities, EAC 

began to develop its first 5-year strategic plan in March 2008. The plan has been drafted, 

reviewed by the Office of Management and Budget, and presented to EAC’s Board of 

Advisors and Standards Board for comment, as required by HAVA. EAC anticipates finalizing 

the plan by the end of December 2008. 

Goals and Performance Results 

In lieu of a strategic plan, EAC established annual agency goals in its required annual report 

to the Committee on House Administration of the House of Representatives and the 

Committee on Rules and Administration of the Senate. The 2008 goals for the EAC and the 

associated performance results are as follows: 

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Work to provide election officials the resources and information they will need to conduct 

accurate, accessible, and secure elections as the Nation approaches the presidential 

election of 2008. The EAC will focus on its Voting System Testing and Certification Program, 

ensuring that the public and election officials are notified about all program updates. 

 

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To implement the Testing and Certification Program, EAC worked with NIST to accredit 

laboratories to test voting equipment. Based on the tests of equipment and software 

conducted by laboratories, EAC will certify, decertify, or recertify voting systems, as 

appropriate. During 2008, EAC: 

 Accredited one laboratory (Wyle Laboratories, Inc), and recommended a lab (CIBER) 

for the EAC lab accreditation program. 

 Issued the Voting System Test Laboratory Program Manual. The Manual provides the 

procedural requirements of the EAC voting system Laboratory Accreditation Program. 

 Issued the Voting System Testing and Certification Manual. The Manual contains 

comprehensive procedures for the voting system testing and certification program. 

 Added Unisyn to the list of registered voting system manufacturers. 

 Added Unisyn’s OpenElection Voting System and updated versions of two existing

voting systems, the Unity 3.0.1.0 and Unity 3.0.1.1 w. ATS 1.3 and the Assure 1.2 to 

the list of systems applying for certification. 

 Posted its first voting system certification test report. The report is for the Premier 

Assure 1.2. 
Election Assistance Commission 

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 Approved test plans for two voting machines: Premier Solutions Assure 1.2 and EMS 

Voting System v.4.0.0 Test Plan. 

 Issued a contract for a voting system risk assessment. 

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EAC will issue a draft of the VVSG for a 120-day comment period after considering all 

comments submitted on the TGDC recommended VVSG. During the public comment period, 

EAC will conduct public meetings to gather more input from the public, election officials, 

manufacturers, test laboratories, the disability community, advocacy groups, and other 

experts. At the conclusion of the public comment period, EAC will consider all comments and 

work toward a final version, which will be adopted at an EAC public meeting. 

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EAC worked with its advisory committee and NIST to update its 2005 iteration of the VVSG. 

During fiscal year 2008, EAC: 

 Hosted six public roundtable discussions to talk about recommended improvements 

to the VVSG and to introduce a high level of transparency and accountability in the 

update process. The roundtables brought together election officials, voting 

advocates, usability and accessibility experts, voting system test laboratory 

representatives and voting system manufacturers. 

 Received approximately 3,200 comments on recommended improvements to the 

VVSG during a public comment period from November 6, 2007 to May 5, 2008. The 

EAC is currently working with the NIST to address the comments. 

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EAC will complete and distribute a number of HAVA-mandated studies on the following 

topics: the impact of free absentee ballot return postage on voter participation; electronic 

voting and United and Overseas Citizens Absentee Voting Act (UOCAVA) voters; the feasibility 

of various alternative voting methods; the voting experiences of first-time voters who register 

by mail; and the feasibility and advisability of identifying voters by social security numbers. 

The results of these studies will be available at www.eac.gov. 

EAC will issue nine new chapters under its Election Management Guidelines Program to 

promote secure, accurate, and accessible elections: 

 Absentee Voting and Vote by Mail 

 Acceptance Testing 

 Ballot Design 

 Contingency Planning and Change Management 

 Developing an Audit Trail 

 Language Accessibility 
Election Assistance Commission 

7

 Polling Place and Vote Center Management 

 Pre-Election and Parallel Testing 

 Uniformed and Overseas Citizens 

EAC will also issue two more Quick Start Management guides about serving military and 

overseas citizens and developing an audit trail for the verification of votes. These materials 

will be sent to election officials throughout the nation and will also be available under the 

Election Official Center at www.eac.gov. 

EAC plans to produce a glossary of election terms and translate the national voter 

registration form into Chinese, Japanese, Korean, Tagalog, and Vietnamese. The EAC will 

also establish working groups to address the election needs of Native Americans and 

Alaskan natives. The EAC will issue A Voter’s Guide to Federal Elections in multiple 

languages. This publication will inform voters about the Federal election process, and 

provide information about voter registration, polling places, absentee ballots, provisional 

ballots, poll workers, and similar topics. This brochure will be available initially in English, 

Spanish, Chinese, Japanese, Korean, Tagalog, and Vietnamese; the EAC will also examine 

the feasibility of providing this information in audio format to Native American and Alaska 

Native voters. 

 

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EAC distributed through its clearinghouse operations key information developed by its 

programs to EAC stakeholders. EAC’s primary communication tool is its Web site. EAC 

improved its clearinghouse operations and provided the following information during fiscal 

year 2008: 

 Integrated a Real Simple Syndication (RSS) news feed that enables EAC to feature 

the most current EAC tools, resources and events on its homepage. Most importantly, 

RSS allows EAC to automatically alert an unlimited number of subscribers of its feed 

with EAC program and event updates. 

 Posted nearly 1,000 documents and Web pages to our site. These documents and 

pages contain a variety of information, from voting system test plans and 

correspondence to testimony from EAC public meetings and hearings. 

 Sent a monthly newsletter that listed all EAC activities and events to about 1,200 

stakeholders who subscribe to an EAC distribution list. 

 Issued a report entitled UOCAVA Voters and the Electronic Transmission of Voting 

Materials in Four States. The report presents the results of the experiences of four 

states with Internet voting and with electronic transmission of absentee ballots to 

and from UOCAVA voters. 

 Released three case studies describing the unique experiences of states with 

transmitting ballots electronically, sending and accepting ballots electronically, and 

using internet voting. 
Election Assistance Commission 

8

 Issued a report titled Effective Designs for the Administration of Federal Elections. 

The report addresses the design planning process, general best practices, 

implementation insights, limitations and more for the design of ballots and polling 

place materials. The report also includes a digital library containing hundreds of 

camera-ready images of ballots and polling place materials that can be easily and 

affordably customized and used by state and local election officials. 

 Issued a report titled Voter Hotlines. This study evaluates the effectiveness of 

different kinds of, and usages for, voter hotlines. 

 Issued a report titled First-Time Voters. Section 244 of HAVA requires the EAC to 

study and report on the impact of the law on first-time voters who register to vote by 

mail and cast their ballots in person. Through case studies and voter focus groups, 

this research provides insight into the administrative difficulties imposed on election 

officials by this HAVA requirement and voters' perceptions of its efficacy. 

 Issued eight Election Management Guidelines on the following subjects: 

- Acceptance Testing 

- Uniformed and Overseas Citizens 

- Pre-election and Parallel Testing 

- Developing an Audit Trail 

- Contingency Planning and Change Management 

- Ballot Building 

- Absentee Voting and Vote by Mail 

- Polling Place and Vote Center Management 

 Issued six Quick Start Guides on the following topics: 

- absentee voting and vote by mail 

- acceptance testing 

- contingency and disaster planning 

- managing change in an election office 

- media and public relations 

- polling places and vote centers 

 Issued a Voter’s Guide to Federal Elections, a publication designed to provide voters 

with the information they need to successfully participate in Federal elections, from 

the essentials of ballot casting such as voter registration to details on resources 

available to help voters who live overseas or are in the military. 

 Conducted six public meetings that were also webcast including workshops on ballot 

design, contingency planning and voter registration databases. 

 Issued election terminology glossaries in five languages -- Chinese, Japanese, 

Korean, Vietnamese, and Tagalog, the most widely spoken Asian language in the 

United States. 
Election Assistance Commission 

9

 Convened a meeting of Native Americans and Alaska Natives to discuss their needs 

for information to help facilitate elections. 

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In fiscal year 2008, Congress directed EAC to award $10 million in grants to five states. The 

purpose of the grants is to measure the costs of improving the collection of election data at 

the precinct level. Congress also instructed EAC to award grants for training poll workers 

and for conducting mock elections. In addition, EAC performed its ongoing oversight of state 

use of funds that were awarded in fiscal years 2003 and 2004 to improve the 

administration of Federal elections. Relative to these areas, EAC completed the following 

actions: 

 Awarded grants of $2 million each to Pennsylvania, Minnesota, Ohio, Illinois and 

Wisconsin for the collection of data related to the upcoming November 2008 general 

Federal election. 

 Awarded grants totaling $750,000 to 27 colleges and nonprofit organizations from 

18 states. The purpose of the grants is to recruit students to serve as poll workers 

during the November presidential election. Based on the grant proposals, roughly 

8,800 additional college students will serve as poll workers. 

 Awarded grants of about $20,000 each to 10 organizations from nine states to 

educate secondary school students and their parents about the electoral process 

through mock national elections. 

 Issued guidance on the uses of and accounting for HAVA funds as follows: 

- Clarified that states may use HAVA funds to replace voting systems that were 

previously purchased with HAVA funds. 

- Explained the application of the requirement for maintenance of effort when 

using funds authorized by Section 251 of HAVA. 

- Clarified the HAVA provision that exempts the U.S. Territories from the matching 

requirement contained in Section 254 of HAVA. 

- Described how to allocate indirect costs to various HAVA-funded programs. 

- Identified the various voter registration activities that are eligible for HAVA 

funding. 

- Explained the requirements for the disposition of revenue from the sale of 

equipment purchased with HAVA funds. 

 Negotiated indirect cost rates for Illinois and Michigan State election offices. 
Election Assistance Commission 

10

 Issued four management decisions to resolve findings in audit reports covering state 

use of HAVA funds in New Mexico, Delaware, Montana, and South Carolina. 

 Issued a formal report to the Congress on states’ use of the $3.2 billion of election 

improvement funds. The report showed that states have $1.2 billion remaining 

consisting of unspent funds and interest earned on fund deposits. 

 
Election Assistance Commission 

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I.C ANALYSIS OF EAC FINANCIAL STATEMENTS

EAC is not able to show changes in its financial position between fiscal years 2007 and 

2008 because it did not prepare financial statements in fiscal year 2007. Following is its 

financial position for 2008. 

Financial

Condition

2008

(Unaudited)

Assets $133,631,663

Liabilities 913,715

Net Position 132,717,948

Net Costs 15,180,494

Budgetary Resources $145,516,935

Budgetary resources as represented in the 2008 Statement of Budgetary Resources are 

comprised of the following: 

Budgetary Resources

2008

(Unaudited)

Obligations Incurred - Direct $138,174,801

Unobligated Balance - Apportioned 761,585

Unobligated Balance - Not Available 6,580,549

Total Budgetary Resources $145,516,935

In fiscal year 2007, EAC’s total appropriation was $16.2 million, including $4.95 million that 

it transferred to NIST. In comparison, EAC’s budgetary resources for fiscal year 2008 were 

$145,516,935 - a huge increase over 2007. The major difference for fiscal year 2008 was 

the appropriation of $125 million for Federal financial assistance to states. 

I.D LIMITATIONS OF THE FINANCIAL STATEMENTS 

The principal financial statements have been prepared to report the financial position and 

results of operations of the entity, pursuant to the requirements of 31 U.S.C. 3515 (b). 

While the statements have been prepared from the books and records of the entity in 

accordance with GAAP for Federal entities and the formats prescribed by OMB, the 

statements are in addition to the financial reports that are used to monitor and control 

budgetary resources, which are prepared from the same books and records. The 

statements should be read with the realization that they are for a component of the U.S. 

Government, a sovereign entity.
Election Assistance Commission 

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I.E Analysis of Controls, Management Systems, and Legal 

Compliance 

EAC is subject to numerous legislative and regulatory requirements that promote and 

support effective internal controls. Laws that help EAC improve the management of its 

financial operations and programs are highlighted below: 

Federal Manager’s Financial Integrity Act 

 

The Federal Manager’s Financial Integrity Act (FMFIA) requires managers of Federal agencies 

to establish, maintain, and assess internal controls to ensure that agency program and 

financial operations are performed effectively and efficiently. To help ensure that controls 

have been identified and implemented, managers must also conduct annual evaluations of 

the adequacy of internal accounting and administrative controls and annually report on all 

identified material weaknesses. 

During fiscal year 2008, the EAC evaluation was limited to identifying weaknesses disclosed 

in reports issued by the General Accountability Office and by the EAC Office of Inspector 

General, including the weaknesses identified through this year’s financial statement audit. 

Material Weaknesses: 

 

In addition to the weaknesses identified by the independent auditors as represented in 

Table 1 on the next page, the following material weakness was identified by management: 

 

 Lack of effective written policies and procedures in areas covering budget, finance, 

contracting, property, personnel, travel, grants, information technology, election 

administration improvement programs, research, and communications. 

The actions to be taken to address the material weaknesses are provided in the EAC’s 

response to the recommendations in the internal control report. In addition, the Commission 

will focus on consolidating these items in a Continuity of Operations Plan (COOP) and 

Disaster Recovery Plan (DRP) which are currently under development and will include the 

following corrective actions: 

 

Corrective Actions 

Target 

Completion Date

 Develop an EAC Manual containing all necessary administrative and program 

procedures. 

1/31/09 

 Implement a strategic plan 12/31/08 

 Implement the applicable requirements of Office of Management and Budget 

Circular A-123, Management’s Responsibility for Internal Control. 

09/30/09 

 Re-evaluate the current organizational structure and clearly define areas of 

authority and responsibility, and hierarchy for reporting. 

01/15/09 
Election Assistance Commission 

13

 Review and perform a periodic reconciliation of EAC financial activities with 

GSA’s accounting records. 

12/31/08 

 Define areas of authority and responsibility, and hierarchy for reporting 

(including the roles of the Commissioners and the Executive Director). 

09/15/09 

 Hire staff with federal budgeting experience or provide training to appropriate 

staff in the Office Administration. 

09/30/09 

During fiscal year 2009, the EAC hopes to design, implement, and assess internal controls 

in full compliance with Office of Management and Budget Circular A-123, Management’s 

Responsibility for Internal Control, and FFMIA. 

Table presents the material weaknesses identified by management for FY2008: 

TABLE 1 

 EFFECTIVENESS OF INTERNAL CONTROL OVER OPERATIONS (FMFIA § 2) 

Statement of Assurance Qualified 

No. Material Weaknesses 

Beginning 

Balance New Resolved Consolidated 

Ending 

Balance 

1 Lack of Policies & Procedures 0 1 0 0 1 

2 Incomplete Performance and 

Accountability Report (PAR) 0 1 0 0 1 

3 

Insufficient Resources and 

Personnel with Appropriate Federal 

Accounting and Reporting Skills 0 1 0 0 1 

4 Outstanding Accounting Issues 0 1 0 0 1 

5 Lack of an Integrated Financial 

Management System 0 1 0 0 1 

6 Ineffective Financial Statement 

Preparation 0 1 0 0 1 

7 Lack of Reconciliation and Analysis 0 1 0 0 1 

8 Accounting Error Related to Advance 

Payments 0 1 0 0 1 

9 Lack of Support for Grant Accounting 0 1 0 0 1 

10 Weak Funds Control 0 1 0 0 1 

11 

Lack of Federal Managers’ Financial

Integrity Act Compliance and Reporting 

0 1 0 0 1 

 TOTAL WEAKNESSES 0 10 0 0 10 

 
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Entity-Wide Security Program: 

EAC recognizes that effective security management is critical to EAC’s mission. The ability to 

ensure confidentiality, integrity, and availability of its information assets in order to minimize 

risks of inadvertent or deliberate misuse, fraud or destruction is absolutely essential. 

Table 2 identifies the significant deficiencies identified by audit in the Entity-Wide security 

program: 

TABLE 2 

 SIGNIFICANT DEFICIENCIES IN ENTERPRISE-WIDE SECURITY PROGRAM 

No. Significant Deficiency 

Beginning 

Balance New Resolved Consolidated 

Ending 

Balance 

1 

Lack of an internally developed 

agency-wide information security 

program. 0 1 0 0 1 

2 Lack of an inventory of systems and 

applications. 0 1 0 0 1 

3 Lack of an adequate security 

management structure 0 1 0 0 1 

4 

Certification and Accreditation of 

general support systems has not been 

performed. 0 1 0 0 1 

5 

Third party information security 

examinations and inspections are not 

monitored for inclusion within the 

service provider’s Plan of Actions and 

Milestones. 0 1 0 0 1 

TOTAL 0 5 0 0 5 

The Commission realizes the importance of these issues and will work towards resolving 

them in FY2009 by taking the actions presented in the EAC’s response to the auditor’s 

recommendations in the internal control report. 

Contingency Plan: 

The independent auditors also identified deficiencies that could affect EAC’s ability to 

respond to a disruption in business operations as a result of a disaster or other long-term 

emergency. The Commission will develop a Continuity of Operations Plan (COOP) and 

Disaster Recovery Plan (DRP) in order to ensure that, if unexpected events occur, critical 

operations will be able to continue or be promptly resumed without significant interruption. 
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Financial Management System Requirements: 

Table 3 presents the results of management analysis of financial management system 

requirements for FY2008: 

TABLE 3 

 CONFORMANCE WITH FINANCIAL MANAGEMENT SYSTEM REQUIREMENTS 

(FMFIA § 4) 

Statement of Assurance Systems do not fully conform to financial management 

system requirements 

No. Non-Conformance 

Beginning 

Balance New Resolved Consolidated 

Ending 

Balance 

1 Integrated Financial 

Management System 0 1 0 0 1 

 TOTAL 0 1 0 0 1 
Election Assistance Commission 

U.S. ELECTION ASSISTANCE COMMISSION 

1225 New York Ave. NW – Suite 1100 

Washington, DC 20005

 

Annual Assurance Statement on Internal Control 

The management of the Election Assistance Commission (EAC) is responsible for establishing 

and maintaining effective internal control and financial management systems that meet the 

objectives of the Federal Managers’ Financial Integrity Act (FMFIA) and the Office of 

Management and Budget (OMB) Circular A-123, Management’s Responsibility for Internal 

Control. Internal control is an integral component of the Commission’s management that 

provides reasonable assurance that the following objectives are being achieved: effectiveness and 

efficiency of operations, reliability of financial reporting, and compliance with applicable laws 

and regulations. 

 

The EAC did not complete an assessment of the effectiveness of internal control in accordance 

with OMB Circular A-123, Management’s Responsibility for Internal Control. It did, however 

conduct an evaluation of weaknesses disclosed in reports issued by the General Accounting 

Office and by the EAC Office of Inspector General. In addition, management reviewed the 

material weaknesses identified in the auditor’s report on internal control over financial reporting. 

As a result of these reviews, the EAC identified material weaknesses in its internal control over 

the effectiveness and efficiency of operations, reliability of financial reporting, and compliance 

with applicable laws and regulations as of September 30, 2008. These are summarized in Table 1 

of this section. 

The Commission also considers the lack of an integrated financial management system to be a 

non-conformance with Section 4 of the FMFIA. Without an integrated financial management 

system, the Commission cannot easily produce accurate and timely management reports. The 

independent auditors have identified financial accounting and reporting controls as a material 

weakness. The Commission recognizes that additional system integration efforts are needed for 

this weakness to be fully eliminated. The non-conformance is summarized in Table 2 of this 

section. 

Except for the material weaknesses and non-conformance discussed above, the Commission is 

able to provide a qualified statement of assurance that the internal control and financial 

management systems meet the objectives of the FMFIA. 

This is the first time its 5-year operational existence that EAC is subject to the requirement for an 

audit of its financial statements. The EAC’s review was based only on the results of audits of its 

programs and operations which identified materials weaknesses that EAC lacked effective 

written policies and procedures over many program areas and financial management activities. 

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The EAC believes, however, that it has effective controls over its Testing and Certification 

Program through the adoption of manuals for laboratory accreditation and for testing and 

certifying voting systems. The EAC has also drafted a manual covering the payments and grants 

that have been authorized by HAVA. Further, policies and procedures for other programs and 

administrative operations are currently being developed and formalized with the assistance of a 

contractor. 

Throughout the financial statement audit it became apparent that the processes in place need to 

be substantially improved to meet compliance with the high level standard currently set by the 

FMFIA. The EAC is currently in the process of implementing such improvements. 

Rosemary E. Rodriguez 

Chair 

November 17, 2008

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Accountability of Tax Dollars Act of 2002 (Fiscal Year 2008 Financial 

Statement Audit Report Results) 

 

The fiscal year 2008 financial statement audit report identified four material weaknesses 

pertaining to financial accounting and reporting, grant accounting, funds control, and 

implementing and assessing internal controls. In addition, the report identified a significant 

deficiency in information technology security. The corrective action plan to address these 

deficiencies is presented in the EAC response to the draft auditors report on internal 

controls. 

 

Federal Information Security Management Act 

 

EAC is not in compliance with the Federal Information Security Management Act. Actions 

necessary to bring EAC into compliance are identified in the EAC response to the draft 

internal control report. 

 

Annual Appropriation Law and the Antideficiency Act 

 

The EAC has a balance of $618,808 in fund 95 X 1650, Election Reform Payments. The 

fund was the repository of fiscal year 2004 Congressional appropriations of 

$2,321,150,000 (net of a rescission of $8,850,000) for HAVA Title II payments to states. A 

preliminary analysis of the fund transactions indicates a possibility that funds appropriated 

for state payments may have been used for other HAVA grant programs and EAC operations. 

EAC will conduct a review of all related funds and associated transactions to determine 

whether any violation has occurred. The review will be completed by March 30 2009. 

Inspector General Act Amendments of 1988 

 

The Inspector General Act requires management to complete all final actions on audit 

recommendations within 1 year of the date of the Inspector General’s (IG) final audit report. 

The EAC has no final IG audit reports that have been outstanding for over one year. 

The IG also audits HAVA funds administered by recipients of HAVA grants and transmits to 

EAC single audit reports that present findings on HAVA funds. The principal recipients of 

HAVA grant funds are state governments. In fiscal year, 2008, EAC resolved audit reports 

covering state use of HAVA funds in New Mexico, Delaware, Montana, and South Carolina. 

 
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SECTION II

Performance Report 
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II.A PERFORMANCE PURPOSES, OBJECTIVES, AND RESULTS

EAC is not able to present detailed information on performance, in accordance with OMB 

Circular A-136, for fiscal year 2008 because it has not implemented its 5-year strategic plan 

or implemented a performance-based budget. The strategic plan, however has been 

drafted, reviewed by OMB, and sent to EAC’s Board of Advisors and Standards Board for 

review in accordance with the Help America Vote Act. The strategic plan will be completed 

by the end of December 2008. In addition, EAC is preparing a performance-based budget for 

fiscal year 2009. Therefore, EAC will be able to fully comply with the requirements for section 

II of the PAR for fiscal year 2009. EAC’s performance results for fiscal year 2008 are presented 

in section I.B of this report.
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SECTION III

Audit Report and Financial Statements 
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III.A MESSAGE FROM THE EXECUTIVE DIRECTOR

NOVEMBER 13, 2008

I am presenting the EAC’s financial statements for fiscal year 2008. Our financial 

statements are an integral component of the Performance and Accountability Report (PAR), 

as required under the Accountability and Tax Dollars Act of 2002. 

This is the first year in its 5-year operational existence that EAC spent enough money to 

trigger the requirement for preparing financial statements and submitting them for audit. 

Consequently, we did not have the systems, controls, processes, and staff expertise 

necessary to comply with the Office of Management and Budget guidance for financial and 

performance reporting. 

The experience, however, was invaluable in helping us understand the steps we need to 

complete to improve the quality of our financial information and to prepare for future audits. 

We began those steps last fiscal year by engaging contractors to help us write policies and 

procedures, identify improvements to internal controls, and upgrade financial reporting; by 

hiring budgeting and contracting experts; and by starting a search for a chief financial officer 

(CFO). Much more needs to be done. A principal component of our improvement plan is to 

hire an experienced Federal financial manager to serve as the CFO for the EAC, and 

empower the CFO to establish a high-performing financial management unit. 

The auditor’s report presented in this PAR identified material weaknesses in Financial 

Accounting and Reporting, Grant Accounting, Funds Control, and in implementing the 

internal control structure required by the Federal Manager’s Financial Integrity Act. To 

address those weaknesses and a reportable condition in information technology security, 

the auditors presented 25 recommendations. Although we will strive to prepare financial 

and performance data in accordance with requirements for 2009, we do not believe it is 

realistic to forecast that we will implement all 25 recommendations in time to produce a 

PAR that includes an unqualified opinion on our financial statement and the requisite 

performance data until 2010. 

Our detailed actions to correct the material weaknesses are presented in other sections of 

this report. 

Sincerely, 

Thomas R. Wilkey, 

Executive Director 
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III.B INDEPENDENT AUDITOR’S REPORT
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III.C FINANCIAL STATEMENTS

ELECTION ASSISTANCE COMMISSION 

BALANCE SHEET 

As of September 30, 2008 (In Dollars) 

(Unaudited) 

Assets 2008 

Intragovernmental: 

 Fund balance with Treasury (Note 2) $133,466,531 

Total Intragovernmental Assets 133,466,531

 Accounts receivable, net (Note 3) 16,251

 General property and equipment (Note 4) 148,881 

Total assets $133,631,663 

Liabilities (Note 5) 

Intragovernmental: 

 Accounts payable $215,213

 Employer contribution and payroll taxes payable 40,645 

Total Intragovernmental 255,858 

With the public: 

 Accounts payable 244,900

 Accrued payroll and benefits (Note 5) 227,068

 Unfunded leave (Note 5) 185,889 

Total liabilities 913,715 

Net Position 

 Unexpended appropriations 132,803,165

 Cumulative results of operations (85,217) 

Total Net Position 132,717,948

Total liabilities and net position $133,631,663 

The accompanying notes are an integral part of these statements 
Election Assistance Commission 

ELECTION ASSISTANCE COMMISSION 

STATEMENT OF NET COST 

For the Year-ended September 30, 2008 (In Dollars) 

(Unaudited) 

2008 

Program Costs: 

Administering the HAVA $15,180,494

Less: Earned Revenue -- 

 Net cost of operations (Note 8) $15,180,494

The accompanying notes are an integral part of these statements. 

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ELECTION ASSISTANCE COMMISSION 

STATEMENT OF CHANGES IN NET POSITION 

For the Year-ended September 30, 2008 (In Dollars) 

(Unaudited) 

2008 

Consolidated 

Total 

Cumulative Results of Operations: 

 Beginning balance ($156,930)

 Beginning balance, as adjusted (156,930)

Budgetary Financing Sources: 

 Appropriations used 15,106,414

Other Financing Sources (Non-Exchange): 

 Imputed financing from costs absorbed by others 145,793

 

Total Financing Sources: 15,252,207

 Net Cost of Operations (15,180,494)

 Net Change 71,713 

Cumulative Results of Operations (85,217) 

Unexpended Appropriations: 

 Beginning Balance 9,629,579

 Beginning Balance, as adjusted 9,629,579

Budgetary Financing Sources: 

 Appropriations received 141,530,000

 Appropriations transferred in/out (+/-) (3,250,000)

 Appropriations used (15,106,414) 

Total Budgetary Financing Sources 123,173,586

Total Unexpended Appropriations 132,803,165 

 

Net Position 132,717,948 

 

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ELECTION ASSISTANCE COMMISSION 

STATEMENT OF BUDGETARY RESOURCES 

For the Year-ended September 30, 2008 (In Dollars) 

(Unaudited) 

2008 

Budgetary Resources: 

 Unobligated balance brought forward $6,918,986

 Recoveries of prior year obligations 298,458

 Budget authority: 

 Appropriations received 141,530,000

 Spending authority from offsetting collections: 

 Collected 19,491

 Nonexpenditure transfers, net, anticipated and actual (3,250,000) 

Total Budgetary Resources $145,516,935 

Status of Budgetary Resources: 

 Obligations Incurred – Direct (Note 8) $138,174,801

 Unobligated Balance – Apportioned 761,585

 Unobligated balance not available 6,580,549 

Total status of budgetary resources $145,516,935 

Change in Obligated Balance: 

 Unpaid obligations, brought forward $3,431,129

 Obligations incurred, net 138,174,801

 Less: Gross outlays (15,183,075)

 Less: Recoveries of prior year unpaid obligations, actual (298,458)

 Total, unpaid obligated balance, end of period forward 126,124,397

 

Net Outlays: 

 Gross outlays 15,183,075

 Less: Offsetting collections (19,491)

 Net outlays $15,163,584 

The accompanying notes are an integral part of these statements 

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III.D NOTES TO FINANCIAL STATEMENTS (Unaudited)

Note 1 – Summary of Significant Accounting Policies 

Reporting Entity 

EAC is an independent, bipartisan commission charged with developing guidance to meet 

HAVA requirements, adopting voluntary voting system guidelines, and serving as a national 

clearinghouse of information about election administration. EAC also accredits testing 

laboratories and certifies voting systems, as well as audits the use of HAVA funds. 

Other responsibilities include distributing and monitoring HAVA funds provided to States and 

other grantees; and maintaining the national mail voter registration form developed in 

accordance with the National Voter Registration Act of 1993. 

HAVA established the Standards Board and the Board of Advisors to advise EAC. The law 

also established the Technical Guidelines Development Committee to assist EAC in the 

development of voluntary voting system guidelines. 

The four EAC commissioners are appointed by the president and confirmed by the U.S. 

Senate. EAC is required to submit an annual report to Congress as well as testify periodically 

about HAVA progress and related issues. The commission also holds public meetings and 

hearings to inform the public about its progress and activities. 

Basis of Accounting and Presentation 

As required by the Accountability of Tax Dollars Act of 2002 (ATDA), the accompanying 

financial statements present the financial position, net cost of operations, changes in net 

position, and budgetary resources of the EAC. While these financial statements have been 

prepared from the books and records of the EAC in accordance with U.S. generally accepted 

accounting principles (GAAP) and in accordance with the form and content for entity 

financial statements specified by the Office of Management and Budget (OMB) in Circular A136, as revised, Financial Reporting Requirements, as well as the accounting policies of the 

EAC, the statements may differ from other financial reports submitted pursuant to OMB 

directives for the purpose of monitoring and controlling the use of the EAC’s budgetary 

resources. Generally Accepted Accounting Principles for federal entities are the standards 

prescribed by the Federal Accounting Standards Advisory Board (FASAB), which is the official 

body for setting the accounting standards of the federal government. 

Fiscal year 2008 is the first year that EAC is required to file financial statements under the 

ATDA. Accordingly, comparative statements are not presented. 

These financial statements reflect both accrual and budgetary accounting transactions. 

Under the accrual method of accounting, revenues are recognized when earned and 

expenses are recognized when a liability is incurred, without regard to receipt or payment of 

cash. Budgetary accounting is designed to recognize the obligation of funds according to 
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legal requirements. Budgetary accounting is essential for compliance with legal constraints 

and controls over the use of Federal funds. 

Throughout these financial statements, assets, liabilities, revenues, and costs have been 

classified according to the type of entity with which the transactions are associated. 

Intragovernmental assets and liabilities are those from or to other federal entities. 

Intragovernmental earned revenues are collections or accruals of revenue from other 

federal entities and intragovernmental costs are payments or accruals to other federal 

entities. These statements should be read with the understanding that they are for a 

component of the U.S. Government, a sovereign entity. 

Assets 

Assets that an entity is authorized to use in its operations are termed entity assets, while 

assets that are held by an entity and are not available for the entity’s use are termed nonentity assets. All of the EAC’s assets are entity assets and are available to carry out the 

mission of the EAC, as appropriated by Congress. 

Fund Balance with Treasury 

EAC does not maintain cash in commercial bank accounts. The U.S. Treasury processes 

cash receipts and disbursements. Funds with the U.S. Treasury consist of appropriated 

funds. These funds are available to pay current liabilities and finance authorized purchase 

commitments. 

Accounts Receivable 

EAC’s accounts receivable represents claims from associates. These are amounts due from 

current and separated employees resulting from payroll adjustments and/or court ordered 

actions. The direct write-off method is used for uncollectible receivables. 

General Property and Equipment 

General property and equipment (P&E) is reported at acquisition cost. 

The capitalization threshold is established at $10,000 for assets with a useful life of 2 or 

more years. Beginning in fiscal year 2009, a bulk purchase policy will be adopted. Under 

this policy, all items will be capitalized when the individual useful lives are at least two years 

and have an aggregate value of $100,000 or more. 

Acquisitions of P&E that do not meet the capitalization criteria are recorded as operating 

expenses. General P&E consists of items that are used by EAC to support its mission. 

Depreciation on these assets is calculated using the straight-line method with no salvage 

value. Depreciation begins the month after the asset is placed in service. Useful lives are 5 

years for equipment and 5 years for furniture. 
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Maintenance, repairs and minor renovations are expensed as incurred. Expenditures that 

materially increase values, change capacities or extend useful lives are capitalized. 

The headquarters building in which the EAC operates is leased through the General Services 

Administration (GSA) under an occupancy agreement, which manages the lease agreement 

between the Federal government and the commercial entity. EAC is billed on a monthly basis 

by GSA for the leased premises. The cost of the headquarters building is not capitalized. As 

of 2008, no leasehold improvements have been recorded. Starting in fiscal year 2009, any 

costs of any leasehold improvements financed with EAC appropriated funds will be 

capitalized if the total cost exceeds $25,000. Any construction costs will be accumulated as 

“construction in-progress” until completion and then transferred and capitalized as a 

“leasehold improvements” over 7 years or the remainder of the lease, whichever is less. 

Currently, EAC has no internal use software. In future years, any internal use software 

development and acquisition costs of $25,000 will be capitalized as software development 

in progress until the development stage is completed and the software successfully tested. 

At acceptance, software development-in-progress costs will be reclassified as internal use 

software costs and amortized using the straight-line method over an estimated useful life of 

5 years. Purchased commercial software that does not meet the capitalization criteria will be 

expensed. Enhancements which do not add significant new capability or functionality will be 

expensed. 

Liabilities 

 

Liabilities represent amounts that are likely to be paid by the EAC as the result of 

transactions or events that have already occurred; however, no liabilities are paid by the EAC 

without an appropriation. Intragovernmental liabilities arise from transactions with other 

Federal entities. Liabilities classified as not covered by budgetary resources are liabilities for 

which appropriations have not been enacted (e.g., annual leave benefits and actuarial 

liability under the Federal Employees Compensation Act). 

Accounts Payable 

Accounts payable consist of liabilities to commercial vendors and contractors for amounts 

owed for goods, services, and other expenses received but not yet paid at the end of the 

fiscal year. Accounts payable also consist of disbursements in transit recorded by EAC but 

not paid by the U.S. Treasury. 

Accrued Payroll and Benefits 

Accrued payroll and benefits represents salaries, wages and benefits earned by employees, 

but not disbursed as of September 30, 2008. Accrued payroll and benefits are payable to 

employees and are therefore not classified as intragovernmental. 

 
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Annual, Sick and Other Leave 

Annual leave is recorded as a liability when it is earned; the liability is reduced as leave is 

taken. Each quarter, the balance in the leave accrued leave account is adjusted to reflect 

the current leave balances and pay rates. Accrued annual leave is paid from future funding 

sources and accordingly is reflected as a liability not covered by budgetary resources. Sick 

leave and other types of non-vested leave are expensed as taken. 

Federal Employee Benefits 

Liability under the Federal Employees Compensation Act (FECA) is not considered to be 

material to EAC’s financial statements. Accordingly, EAC does not record a liability for 

estimated and actual future payments to be made for workers’ compensation pursuant to 

the Act. 

 

Employee Retirement Plans 

EAC employees participate in either the Civil Service Retirement System (CSRS) or the 

Federal Employees Retirement System (FERS), which became effective on January 1, 1987. 

For employees covered by CSRS, the EAC withheld 7.0 percent of base pay earnings. The 

EAC matches this withholding, and the sum of the withholding and the matching funds is 

transferred to the Civil Service Retirement System. FERS contributions made by employer 

agencies and covered employees are comparable to the U.S. Government’s estimated 

service costs. 

For FERS covered employees, the EAC made contributions of 11.2 percent of basic pay. 

Employees participating in FERS are covered under the Federal Insurance Contribution Act 

(FICA) for which the EAC contributes a matching amount to the Social Security 

Administration. 

Thrift Savings Plan (TSP) 

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for employees 

covered by either CSRS or FERS. The TSP is administered by the Federal Retirement Thrift 

Investment Board on behalf of Federal agencies. For employees belonging to FERS, the EAC 

automatically contributes one percent of base pay to their account and matches contributions 

up to an additional four percent. For employees belonging to CSRS, there is no governmental 

matching contribution. 

The EAC does not report on its financial statements CSRS and FERS assets, accumulated plan 

benefits, or unfunded liabilities, if any, which may be applicable to EAC employees. Reporting 

such amounts is the responsibility of the Office of Personnel Management. The portion of the 

current and estimated future outlays for CSRS not paid by EAC is, in accordance with 

Statement of Federal Financial Accounting Standards (SFFAS) No. 5, Accounting for Liabilities 

of the Federal Government, included in EAC's financial statements as an imputed financing 

source. 
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Commitments and Contingencies 

Commitments are contractual agreements involving financial obligations. EAC is committed for 

goods and services that have been ordered, but have not yet been received. 

A contingency is an existing condition, situation, or set of circumstances involving uncertainty 

as to possible gain or loss. The uncertainty will ultimately be resolved when one or more future 

events occur or fail to occur. A contingency liability is recognized when a past event or 

exchange transaction has occurred, and future outflow or other sacrifice of resources is 

measurable and probable. A contingency is not disclosed when any of the conditions for liability 

recognition are met but the chance of the future event or events’ occurring is remote. A 

contingency is disclosed when any of the conditions for liability recognition are not met and the 

chance of the future confirming event or events occurring is more than remote but less than 

probable. 

Revenues and Other Financing Sources 

 

Annual Appropriation 

 

EAC receives its funding through an annual appropriation as provided by Congress. 

Imputed Financing Sources 

In accordance with OMB Circular A-136, all expenses should be reported by agencies whether 

or not these expenses would be paid by the agency that incurs the expense. The amounts for 

certain expenses of the EAC, which will be paid by other Federal agencies, are recorded in the 

Statement of Net Cost. A corresponding amount is recognized in the “Statement of Changes in 

Net Position” as an “Imputed Financing Source.” These imputed financing sources primarily 

represent unfunded pension costs of EAC employees, as described above. 

Statement of Net Cost 

 

Net cost of operations is the difference between the EAC’s expenditures and its earned 

revenue. All EAC program activities are contained within one program line called 

“Administering the HAVA.” 

Grants 

 

The EAC administers and oversees the grant making process in connection with federal 

grants made to recipient organizations under the HAVA. Grants awarded are recorded as 

obligations and represent uses of budgetary resources. Payments made under the grant 

awards are fully expended and are included in the statement of net costs. The EAC is 

evaluating alternate accounting treatments of grant awards and will change its method of 

accounting if determined to be appropriate. 

 

 

 

 
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Net Position 

Net position is the residual difference between asset and liabilities and is comprised of 

unexpended appropriations and cumulative results of operations. Unexpended 

appropriations represent appropriated spending authority that is unobligated and has not 

been withdrawn by the U.S. Treasury along with obligations that have not been paid. 

Cumulative results of operations represents the excess of financing sources over expenses 

since inception. 

Use of Estimates 

The preparation of the accompanying financial statements in accordance with accounting 

principles generally accepted in the United States requires management to make certain 

estimates and assumptions that directly affect the reported amounts of assets, liabilities, 

revenues, and expenses. Actual results could differ from these estimates. 

Note 2 – Fund Balance with Treasury 

Fund balances with Treasury are contained within five annual funds (FY2004 through 

FY2008) and two no-year funds. The total of fund balances with treasury consisted of the 

following at September 30, 2008: 

FY 2008

Fund Balance with Treasury:

Appropriated Funds 133,466,531 $ 

Status of Fund Balance with Treasury:

Unobligated Balance

Available 761,585 $ 

Unavailable 6,580,549 

Obligated Balance not yet Disbursed 126,124,397 

Total 133,466,531 $ 

Available unobligated balances represent amounts that are apportioned for obligation in the 

current fiscal year. Unavailable unobligated balances represent amounts that are not 

apportioned for obligation during the current fiscal year along with expired appropriations 

that are no longer available to incur new obligations. Obligated balances not yet disbursed 

include undelivered orders unpaid and expended authority-unpaid. 

Note 3 – Accounts Receivable, net 

Accounts receivable, net comprised of claims from associates consists of the following as of 

September 30, 2008: 

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FY 2008

Accounts receivable, net

Claims from associates 16,251 $ 

 

Note 4 – General Property and Equipment, Net 

The general components of capitalized property and equipment, net of accumulated 

depreciation, consisted of the following as of September 30, 2008: 

Asset Class

Service 

Life

(years)

Acquisition 

Value

Accumulated 

Depreciation

Net Book 

Value

Furniture 5 $ 59,143 $ 4,291 $ 54,852

Computers 5 152,124 58,095 94,029

Total $ 211,267 $ 62,386 $ 148,881

Depreciation expense was $37,742 for the period ending September 30, 2008. 

Note 5 – Liabilities Not Covered By Budgetary Resources

Liabilities Not Covered by Budgetary Resources result from the receipt of goods and 

services, or the occurrence of events, for which appropriations, revenues, or other financing 

sources necessary to pay the liabilities have not yet been made available through 

Congressional appropriation. 

Liabilities Not Covered by Budgetary Resources consisted of the following as of September 

30, 2008: 

2008

With the Public:

Unfunded leave $ 185,889

Total liabilities not covered by budgetary resources 185,889

Total liabilities covered by budgetary resources 727,826

Total Liabilities $ 913,715

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Liabilities covered by budgetary resources included in the schedule above consist of the 

following as of September 30, 2008: 

FY 2008

Intragovernmental

Accounts payable 215,213 $ 

Employer contributions and payroll taxes payable 40,645 

Total Intragovernmental 255,858

With the Public:

Accounts payable 244,900 

Accured payroll and benefits 227,068 

Total With the Public 471,968

Total liabilities covered by budgetary resources $ 727,826

 

Note 6 – Commitments and Contingencies

In the opinion of EAC management and legal counsel, EAC is not a party to any legal actions 

which are likely to result in a material liability. Accordingly, no provision for loss is included in 

the financial statements. 

 

Note 7 – Leases

EAC has no capital leases. The EAC has a commitment under an operating lease for its 

headquarters office space which extends to March 2009. Future payments due under the 

lease are $271,110. 

 

Note 8 – Statement of Net Cost 

EAC’s costs are consolidated into one program, “Administering the HAVA.” Total cost of 

operations includes intragovernmental costs which represent goods and/or services 

purchased from a federal entity. The total cost of operations for the fiscal year ended 

September 30, 2008 is as follows: 

FY 2008

Intragovernmental gross costs $ 4,011,148

Intragovernmental net costs 4,011,148

Gross costs with the public 11,169,346

Net costs with the public 11,169,346

Net Cost of Operations $ 15,180,494

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Note 9 – Statement of Budgetary Resources 

The Statement of Budgetary Resources (SBR) compares budgetary resources with the status 

of those resources. For the year-ended September 30, 2008, budgetary resources were 

$145,516,935 and net outlays were $15,163,584. 

Appropriations Received 

EAC received its appropriations under Public Law 110-161 and consist of the following for 

the year-ended September 30, 2008: 

FY 2008

For necessary expenses to carry out the Help America Vote Act of 

2002 16,350,000 $ 

For necessary expenses to carry out programs under the Help 

America Vote Act of 2002 (Public Law 107-252), for 

requirements payments under part 1 of subtitle D of title II of the 

Act 115,000,000 

For necessary expenses to carry out an election data collection 

grants program under section 501 of the Act, which shall remain 

available until expended 10,000,000 

Total appropriations received 141,350,000 

Less amount transferred to NIST (3,250,000) 

Net available to EAC 138,100,000 $ 

Budgetary and proprietary activity from amounts transferred to NIST is not included in EAC’s 

financial statements. 

Apportionment Categories of Obligations Received 

EAC receives apportionments of its resources from OMB. These are “Category B” 

apportionments which are for resources that can be obligated in compliance with legislation 

underlying programs for which the resources were made available. 

For FY 2008, direct obligations incurred amounted to $138,174. 

Comparison to the Budget of the United States Government 

SFFAS No. 7, Accounting for Revenue and Other Financing Sources and Concepts for 

Reconciling Budgetary and Financial Accounting, requires an explanation of material 

differences between budgetary resources available, the status of those resources and 

outlays as presented in the Statement of Budgetary Resources to the related actual 

balances published in the Budget of the United States Government (Budget). The Budget

that will include FY 2008 actual budgetary execution information is scheduled for 

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publication in February 2009, which will be available through OMB’s website at 

http://www.whitehouse.gov/omb. Accordingly, information required for such disclosure is 

not available at the time of publication of these financial statements. 

Unpaid Obligated Balance, net 

Unpaid obligated balance, net consists of undelivered orders and accounts payable. 

Undelivered orders represent obligations for which goods and services have not yet been 

received. Accounts payable includes goods and services which have been received but not 

yet paid for. The total unpaid obligated balance, net as of September 30, 2008 was as 

follows: 

 

FY 2008

Undelivered orders 125,396,571 $ 

Accounts payable 727,826 

Unpaid obligated balance, net 126,124,397 $ 

 

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Note 10: Reconciliation of Net Cost of Operations to Budget 

The purpose of this note is to detail the differences between budgetary and financial 

(proprietary) accounting. This is accomplished by means of a reconciliation of budgetary 

obligations and non-budgetary resources available to the reporting entity with its net cost of 

operations. 

FY 2008

Resources Used to Finance Activities

Budgetary Resources Obligated

Obligations incurred $ 138,174,801

Less: Spending authority from offsetting collections and recoveries (317,949)

Net Obligations 137,856,852

Other Resources

Imputed financing from costs absorbed by others 145,793

Net other resources used to finance activities 145,793

Total Resources Used to Finance Activities 138,002,645

Resources Used to Finance Items not Part of the Net Cost of Operations

Change in budgetary resources obligated for goods, 

services and benefits ordered but not yet provided 122,749,383

Resources that finance the acquisition of assets 63,999

Total Resources Used to Finance Items not Part of 

the Net Cost of Operations 122,813,382

Total Resources Used to Finance the Net Cost of Operations 15,189,263

Components Requiring or Generating Resources in Future Periods:

Increase in annual leave liability 78,180

Total Components of Net Cost of Operations that 

will Require or Generate Resources in Future 

Periods 78,180

Components not Requiring or Generating Resources:

Depreciation and amortization 31,742

Other (118,691)

Total Components of Net Cost of Operations that 

will not Require or Generate Resources (86,949)

(8,769)

Net Cost of Operations $ 15,180,494

Components of the Net Cost of Operations that will not 

Require or Generate Resources in the Current Period

Total Components of Net Cost of Operations that will not 

Require or Generate Resources in the Current Period

The “Other” amount of $118,691 shown in “Components not Requiring or Generating 

Resources” represents the net book value of assets from fiscal years FY2005 through 

FY2007 which were recorded in fiscal year 2008. 

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SECTION IV

Other Accompanying Information 
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IV.A MOST SERIOUS MANAGEMENT CHALLENGES FACING EAC

ACCORDING TO THE INSPECTOR GENERAL

 

U.S. ELECTION ASSISTANCE COMMISSION 

OFFICE OF INSPECTOR GENERAL 

1225 New York Ave. NW - Suite 1100 

Washington, DC 20005 

October 22, 2008

MEMORANDUM 

TO: Chair, U.S. Election Assistance Commission 

FROM: Inspector General 

SUBJECT: Inspector General Statement on the U.S. Election Assistance 

Commission’s Top Management and Performance Challenges 

The Inspector General is required to provide an annual statement summarizing 

the current assessment of the most serious management and performance 

challenges facing the U.S. Election Assistance Commission (Commission). The 

requirement is contained in the Reports Consolidation Act of 2000 (Public Law 106-

531), an amendment to the Chief Financial Officers (CFO) Act of 1990. According to 

the Office of Management and Budget Circular A-136, Financial Reporting 

Requirements, the challenges must be included in the U.S. Election Assistance 

Commission’s Performance and Accountability Report (PAR) for Fiscal Year 2008. 

The management challenges we are reporting this year include the following: 

 Management and accountability, and 

 Financial management. 

The Office of Inspector General (OIG) assessment is based on information 

derived from a combination of several sources; including OIG audit and evaluation 

work, Commission reports, and a general knowledge of the Commission’s programs 

and activities. 

 The attached document provides the OIG’s annual statement on the 

Commission’s top management challenges. Public Law 106-531 permits an agency 

to comment on the Inspector General’s statement. Agency comments, if applicable, 

are to be included in the PAR that is due on November 17, 2008. 

Attachment 

cc: Commissioners Hillman, Davidson and Beach 

 Executive Director 
Election Assistance Commission 

Attachment 

EAC MANAGEMENT AND PERFORMANCE CHALLENGES 

FISCAL YEAR 2008 AND BEYOND 

Management and Accountability: 

Effective management and accountability are integral to any operation and must 

start with senior management. At the EAC, senior management consists of four fulltime commissioners and an executive director. However, confusion over the roles 

and responsibilities of the commissioners and the executive director has resulted in 

a lack of leadership, a failure to hold people accountable, and a decline in staff 

morale. EAC has recently delineated the roles and responsibilities of the 

commissioners and the executive director. 

In February of 2008, the OIG issued a report that identified long-standing and overarching weaknesses related to the operations of the EAC that need to be addressed 

immediately. The assessment disclosed that the EAC needs to establish: 

 Short and long-term strategic plans, performance goals and measurements to 

guide the organization and its staff. 

 An organizational structure that clearly defines areas of responsibility and an 

effective hierarchy for reporting. 

 Appropriate and effective internal controls based on risk assessments. 

 Policies and procedures in all programs areas to document governance and 

accountability structure and practices in place. It is imperative that the 

Commissioners’ define their roles and responsibilities in relationship to the daily 

operations of the EAC and to assume the appropriate leadership role. 

Actions to improve EAC operations are being accomplished; however, a significant 

amount of work still needs to be done. Without effective management and 

accountability, the ability of the EAC to meet its mission is substantially diminished. 

Financial Management: 

 

EAC lacks the ability to effectively manage its financial operations. In fiscal year 

2007, poor control over its budget and expenditures resulted in the organization 

returning about $2.4 million to the U.S. Treasury despite the need for additional staff 

and systems to deliver services and complete statutory tasks. In fiscal year 2008, 

problems persisted. EAC did not set up an operating budget for its divisions or a 

sufficient system to determine the status of its appropriations. Furthermore, it was 

not until a contractor was brought on in July 2008 that the EAC determined how 

much operating money it had spent and how much it had left. 

 

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More recently, the independent auditors, Clifton Gunderson LLP (CG), under 

contract with the OIG, were unable to complete an audit of the EAC’s financial 

statements for fiscal year 2008 due to management’s inability to provide timely 

financial information and material weaknesses in internal controls. In regards to 

controls, management was not able to assure that it had identified, implemented, 

and tested internal controls over its financial or program operations. Congress 

established management’s responsibility for internal controls in the Federal 

Managers Financial Integrity Act of 1982 (FMFIA). The Office of Management and 

Budget (OMB) issued implementing instructions to Federal agencies in Circular No. 

A-123. The Circular requires agencies to issue an annual statement to OMB on 

whether the Agency's financial, management, and automated information security 

system controls conform to government-wide standards. The EAC however, does 

not have a process to make such a determination. 

ACTIONS NEEDED 

To move forward, the Commissioners must put someone in place that has the 

responsibility and authority to manage the daily operations of the agency. 

Simultaneously, the EAC must develop and implement a comprehensive strategy 

that addresses the need for qualified and capable financial management staff; and 

corrects inconsistent and flawed business processes, unreliable financial 

information, and non-existent FMFIA process. 

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IV.B EAC’S RESPONSE TO THE MOST SERIOUS MANAGEMENT

CHALLENGES FACING EAC ACCORDING TO THE INSPECTOR GENERAL
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IV.C IMPROPER PAYMENTS 

The Improper Payments Act requires each Federal agency to assess all programs and 

identify which, if any, may be subject to high risk with respect to improper payments. For 

fiscal year 2008, EAC does not believe, that it has any programs where the erroneous 

payments could exceed 2.5 percent of program payments or $10 million thresholds (set in 

OMB Guidance) to trigger further agency action. 
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IV.D SUMMARY OF FINANCIAL STATEMENT AUDIT AND

MANAGEMENT ASSURANCES

SUMMARY OF FISCAL YEAR 2008 FINANCIAL STATEMENT AUDIT 

Audit Opinion Disclaimer 

Restatement No 

Material Weaknesses 

Beginning 

Balance New Resolved Consolidated 

Ending 

Balance 

 Financial Accounting & Reporting 0 1 0 0 1 

 Support for Grant Accounting 0 1 0 0 1 

 Funds Control 0 1 0 0 1 

 FMFIA Compliance & Reporting 0 1 0 0 1 

 TOTAL WEAKNESSES 0 4 0 0 4 

 SUMMARY OF MANAGEMENT ASSURANCES 

Statement of Assurance 

(FMFIA§ 2) 

Qualified 

Financial Management System 

Assurance (FMFIA§ 4) 

Systems do not fully conform to financial management 

system requirements 

No. Summary 

Beginning 

Balance New Resolved Consolidated 

Ending 

Balance 

1 Material Weaknesses 

(FMFIA§ 2) 0 11 0 0 11 

2 Non-conformances (FMFIA§ 

4) 0 1 0 0 1 

 TOTAL 0 1 0 0 12 

RECONCILIATION OF MATERIAL WEAKNESSES 

The independent auditors identified four material weaknesses, whereas management has 

identified 11. One of the weaknesses identified by the auditors, “Financial Accounting and 

Reporting” contained 7 different subsections. EAC considers these separate subsections to 
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be individual material weaknesses for the sake of clarity and tracking improvement. In 

addition, EAC identified an additional weakness with respect to policies and procedures.

Material Weaknesses 

Per 

Auditors Per EAC Difference 

Financial Accounting & Reporting 1 7 6 

Support for Grant Accounting 1 1 0 

Funds Control 1 1 0 

FMFIA Compliance & Reporting 1 1 0 

Lack of Policies and Procedures 0 1 1

 TOTAL MATERIAL WEAKNESSES 4 11 7 
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