U.S. ELECTION ASSISTANCE 

COMMISSION 

OFFICE OF INSPECTOR GENERAL

FINAL REPORT: 

ADMINISTRATION OF PAYMENTS 

RECEIVED UNDER THE HELP 

AMERICA VOTE ACT BY THE STATE 

OF MISSOURI SECRETARY OF 

STATE 

MAY 1,2003 THROUGH FEBRUARY 28,2007

Report No. 

E-HP-MO-04-07 

October 2007
U.S. ELECTION ASSISTANCE COMMISSION

OFFICE OF INSPECTOR GENERAL

1225 New York Ave. NW - Suite 1100 

Washington, DC 20005

October 26, 2007 

Memorandum 

To: Thomas Wilkey 

 Executive Director 

From: Curtis W. Crider 

 Inspector General 

Subject: Final Audit Report - Administration of Payments Received Under the Help America 

Vote Act by the State of Missouri Secretary of State 

 (Assignment Number E-HP-MO-04-07) 

 We contracted with the independent certified public accounting firm of Clifton 

Gunderson LLP (Clifton Gunderson) to audit the administration of payments received under the 

Help America Vote Act (HAVA) by the State of Missouri Secretary of State (Secretary of State). 

The contract required that the audit be done in accordance with U.S. generally accepted 

government auditing standards. Clifton Gunderson is responsible for the attached auditor’s 

report and the conclusions expressed therein. 

 In its audit of the Secretary of State, Clifton Gunderson concluded that, except for the 

state’s non-recognition of program income, and issues at the county level regarding HAVA 

related activities involving equipment controls and use, program income accounting and 

recognition, procurement and disbursement procedures, and cash management controls, our audit 

concluded that the Secretary of State generally accounted for and expended HAVA funds in 

accordance with the HAVA requirements and complied with the financial management 

requirements established by the U.S. Election Assistance Commission. The Secretary of State 

also complied with section 251 requirements. 

In an October 17, 2007 response to the draft report (Appendix A), the Secretary of State 

agreed with the report’s findings and recommendations, and detailed the procedures either that 

had been implemented or that were planned to address the concerns.

 Please provide us with your written response to the recommendations included in this 

report by December 28, 2007. Your response should contain information on actions taken or 

planned, including target dates and titles of EAC officials responsible for implementing the 

recommendations. 

 The legislation, as amended, creating the Office of Inspector General (5 U.S.C. § App.3) 

requires semiannual reporting to Congress on all audit reports issued, actions taken to implement 

audit recommendations, and recommendations that have not been implemented. Therefore, this 

report will be included in our next semiannual report to Congress. 

 If you have any questions regarding this report, please call me at (202) 566-3125. 
PERFORMANCE AUDIT REPORT 

ADMINISTRATION OF PAYMENTS 

RECEIVED UNDER THE HELP 

AMERICA VOTE ACT BY THE MISSOURI 

SECRETARY OF STATE 

May 1, 2003 Through February 28, 2007 

UNITED STATES ELECTION 

ASSISTANCE COMMISSION 
TABLE OF CONTENTS

PAGE 

EXECUTIVE SUMMARY...........................................................................................................................1

BACKGROUND.............................................................................................................................................2 

AUDIT OBJECTIVES..................................................................................................................................2 

SCOPE AND METHODOLOGY.............................................................................................................3 

AUDIT RESULTS..........................................................................................................................................4 

APPENDICES 

Appendix A: Secretary Of State’s Response To Audit Results ..........................................................7 

Appendix B: Audit Methodology..............................................................................................................11 

Appendix C: Monetary Impact as of February 28, 2007.....................................................................13 
A1

1 h 

Offices in 15 states and Washington, DC

U.S. Elections Assistance Commission 

Performance Audit of the Administration of Payments Received Under the 

Help America Vote Act by the State of Missouri 

EXECUTIVE SUMMARY

Clifton Gunderson LLP was engaged by the U.S. Election Assistance Commission (EAC or the 

Commission) Office of Inspector General to conduct a performance audit of the Missouri Secretary 

of State (SOS) for the period May 1, 2003 through February 28, 2007 to determine whether the SOS 

used payments authorized by Sections 101, 102, and 251 of the Help America Vote Act of 2002 

(HAVA or the Act) in accordance with HAVA and applicable requirements; accurately and properly 

accounted for property purchased with HAVA payments and for program income, and met HAVA 

requirements for Section 251 funds for an election fund, for a matching contribution, and for 

maintenance of a base level of state outlays. In addition, the Commission requires states to comply 

with certain financial management requirements, specifically: 

• Comply with the Uniform Administrative Requirements For Grants And Cooperative Agreements With 

State And Local Governments (also known as the “Common Rule”) as published in the Code of 

Federal Regulations 41 CFR 105-71. 

• Expend payments in accordance with cost principles for establishing the allowance or 

disallowance of certain items of cost for federal participation issued by the Office of 

Management and Budget (OMB) in Circular A-87. 

• Submit detailed annual financial reports on the use of Title I and Title II payments. 

We conducted this performance audit in accordance with Generally Accepted Government Auditing 

Standards. Those standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and conclusions based on our 

audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on the audit objectives. Because of inherent limitations, a study and 

evaluation made for the limited purposes of our review would not necessarily disclose all weaknesses 

in administering HAVA payments. 

Except for the state’s non-recognition of program income and issues at the county level regarding 

HAVA related activities, which are discussed below, our audit concluded that SOS generally 

accounted for and expended HAVA funds in accordance with the requirements mentioned above. 

This includes compliance with section 251 requirements for an election fund. The exceptions noted 

above in two areas needing SOS’s management attention are as follows: 

• As of February 28, 2007, program income was not properly reported on the Financial Status 

report. 

11710 Beltsville Drive, Suite 300

Calverton, Maryland 20705

tel: 301-931-2050 

fax: 301-931-1710 

www.cliftoncpa.com
2 

• The State’s oversight and monitoring of its subgrantees should be enhanced to ensure 

compliance with HAVA grant requirements relating to equipment controls and use; program 

income accounting and recognition; procurement and disbursement procedures; and cash 

management controls. 

We have included in this report the SOS’s formal response to the findings and recommendations 

dated July 27, 2007. The SOS agreed with the recommendations and has implemented corrective 

action. 

BACKGROUND

The Help America Vote Act of 2002 created the U.S. Election Assistance Commission to assist 

states and insular areas with the improvement of the administration of Federal elections and to 

provide funds to states to help implement these improvements. HAVA authorizes payments to states 

under Titles I and II, as follows: 

• Title I, Section 101 payments are for activities such as complying with Title III of HAVA for 

uniform and nondiscriminatory election technology and administration requirements, 

improving the administration of elections for Federal office, educating voters, training 

election officials and poll workers, and developing a state plan for requirements payments. 

• Title I, Section 102 payments are available only for the replacement of punch card and lever 

action voting systems. 

• Title II, Section 251 requirements payments are for complying with Title III requirements for 

voting system equipment; and for addressing provisional voting, voting information, 

statewide voter registration lists, and voters who register by mail. 

Title II also requires that states must: 

• Have appropriated funds “equal to 5 percent of the total amount to be spent for such 

activities [activities for which requirements payments are made].” (Section 253)(5)). 

• “Maintain the expenditures of the State for activities funded by the [requirements] payment at 

a level that is not less than the level of such expenditures maintained by the State for the fiscal 

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

• Establish an election fund for amounts appropriated by the state “for carrying out the 

activities for which the requirements payment is made,” for the Federal requirements 

payments received, for “such other amounts as may be appropriated under law,” and for 

“interest earned on deposits of the fund.” (Section 254 )(1)). 

AUDIT OBJECTIVES

The objectives of our audit were to determine whether the State of Missouri: 

1. Used payments authorized by Sections 101, 102, and 251 of the Help America Vote Act 
3 

(HAVA) in accordance with HAVA and applicable requirements; 

2. Accurately and properly accounted for property purchased with HAVA payments and for 

program income; 

3. Met HAVA requirements for Section 251 funds for an election fund, for a matching 

contribution, and for maintenance of a base level of state outlays. 

In addition, to account for HAVA payments, the Act requires states to maintain records that are 

consistent with sound accounting principles, that fully disclose the amount and disposition of the 

payments, that identify the project costs financed with the payments and other sources, and that will 

facilitate an effective audit. The Commission requires states receiving HAVA funds to comply with 

certain financial management requirements, specifically: 

4. Comply with the Uniform Administrative Requirements For Grants And Cooperative Agreements With 

State and Local Governments (also known as the “Common Rule”) as published in the Code of 

Federal Regulations at 41 CFR 105-71. 

5. Expend payments in accordance with cost principles for establishing the allowance or 

disallowance of certain items of cost for federal participation issued by the Office of 

Management and Budget (OMB) in Circular A-87. 

6. Submit detailed annual financial reports on the use of Title I and Title II payments.1

SCOPE AND METHODOLOGY

We audited the HAVA funds received and disbursed by the SOS from May 1, 2003 through 

February 28, 2007. 

Funds received and disbursed from May 1, 2003 (program initiation date) to February 28, 2007 (46-

month period) are shown below: 

FUNDS RECEIVED 

TYPE OF 

PAYMENT

EAC 

PAYMENT

STATE 

MATCH 

INTEREST

EARNED

TOTAL 

AVAILABLE

FUNDS 

DISBURSED

DATA 

AS OF

101 $ 5,875,170 $0 $460,648 $6,335,818 $ 2,479,356 2/28/07 

102 11,472,841 0 646,781 12,119,622 12,119,622 2/28/07 

251 44,914,650 2,363,929 3,049,485 50,328,064 38,033,366 2/28/07 

$62,262,661 $2,363,929 $4,156,914 $68,783,504 $52,632,344

 

1 EAC requires states to submit annual reports on the expenditure of HAVA Sections 101, 102, and 

251 funds. For Sections 101 and 102, reports are due on September 30 for the activities of the 

previous calendar year. For Section 251, reports are due by March 31 for the activities of the 

previous fiscal year ending on September 30. 
4 

Our audit methodology is set forth in Appendix B. 

AUDIT RESULTS

We conducted this performance audit in accordance with Generally Accepted Government Auditing 

Standards. Those standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and conclusions based on our 

audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on the audit objectives. Because of inherent limitations, a study and 

evaluation made for the limited purposes of our review would not necessarily disclose all weaknesses 

in administering HAVA payments. 

Except for the state program income and monitoring of subgrantees, our audit concluded that SOS 

generally accounted for and expended HAVA funds in accordance with the requirements mentioned 

above. This includes compliance with section 251 requirements for an election fund and for 

maintenance of a base level of state outlays. The exceptions in two areas needing SOS’s management 

attention are described below: 

I. Reporting of Program Income 

As of February 28, 2007, program income earned by the SOS from the sale of voter’s registration 

lists, totaling $4,318, was not properly reported on the Financial Status Report, Form SF 269. The 

State did not begin selling voter registration lists from the Missouri Centralized Voter Registration 

database until late fiscal year 2006. According to the Uniform Administrative Requirements for 

Grants and Cooperative Agreements with State and Local Governments (41 CFR 105-71.125) 

program income is defined as gross income received from a grant-supported activity during the 

grant period and includes items such as fees from the sale of commodities or items fabricated under 

a grant agreement. Program income shall be deducted from outlays which may be both Federal and 

non-Federal or as authorized by the Federal agency. 

Recommendations: 

1. We recommend the Secretary of State identify the costs associated with the program income and 

identify the net income to be reported on the Financial Status Report, Form SF 269. We also 

recommend that funds be identified and expended for uses and activities authorized by the 

HAVA Act. 

2. Ensure that the Financial Status Report, SF 269 contains complete and accurate information 

prior to filing, as identified on EAC’s website at http://www.eac.gov/docs/Model 269 Title II 

final.pdf. 

SOS’s Response: 

The Secretary of State issued a revised FSR dated June 1, 2007 to properly account for program 

income earned from the sale of voter’s registration lists. 
5 

II. Oversight and Monitoring of Subgrantees 

The Secretary of State implemented monitoring procedures of its subgrantees as part of its 

corrective action plan to the Fiscal Year 2005 Single Audit; however, we identified several issues at

the local election authorities’ (LEAs) offices we visited that could have been prevented or minimized 

with enhanced monitoring, as follows: 

1. Equipment used for non-HAVA related functions at LEAs 

Equipment purchased with HAVA funds, such as monitors and laptops for Missouri Centralized 

Voter Registration (MCVR) access, is also being used for operations of the County Clerks’ 

offices. We reviewed the survey results of LEAs not visited, and noted that equipment for 

MCVR database is being used for non-HAVA related operations at LEAs. There is no evidence 

that equipment costs were allocated between the general operations of the LEA and the HAVA 

related activities 

2. Program income not properly accounted for and reported.

Program income generated at the LEAs from the sale of voter registration lists from the MCVR 

database is not properly reported, recorded, or used for the HAVA program. Program income is 

deposited in LEA’s general fund for three of the six LEAs visited and is not used for HAVA 

activities. 

3. Competitive bid procedures not adequate or non compliant. 

Many of the LEAs opted to negotiate their own contract for voting equipment. However, none 

of the LEAs determined whether vendors were suspended or debarred from conducting 

business with the federal government. 

In addition, one of the six LEAs visited listed the specific brand name of equipment it wanted in 

its advertisement and request for proposal (RFP), and RFPs were written by the vendor that was 

awarded the contract for two of the six LEAs visited. 

Written policies and procedures are not present at all LEAs to ensure competitive bids are 

obtained. 

4. Cash management not performed properly at all LEAs. 

Cash advances were made to the LEAs until fiscal year 2006. We noted that cash balances were 

on hand at all LEA’s for periods in excess of three days. Most of the LEAs calculated interest 

on HAVA cash balances; however, we noted that although interest is calculated on HAVA 

balances, the interest was not deposited into the HAVA account for two LEAs. In addition, one 

LEA did not begin calculating interest from inception of receiving the funds and balances 

remain for most LEAs on the unspent interest. 

5. Disbursements not appropriate or not supported at two LEAs. 

Two disbursements, totaling $183, for two of the six local election authorities (LEAs) visited did 

not have adequate documentation or evidence to support costs claimed against the HAVA grant 

program. 

The Uniform Administrative Requirements for Grants and Cooperative Agreements with State and Local 

Governments 41CFR § 105-71.140 states that Grantees are responsible for managing the day-to-day 
6 

operations of grant and subgrant supported activities. Grantees must monitor grant and subgrant 

supported activities to assure compliance with applicable Federal requirements and that performance 

goals are being achieved. 

Recommendations: 

We recommend the EAC direct the Secretary of State to continue its efforts in monitoring the LEAs 

on a risk based approach. In addition, the Secretary should ensure appropriate corrective action is 

implemented at the LEAs visited during this audit. 

SOS’s Response: 

The Secretary of State provided additional guidance to the LEAs dated June 2007 to address the 

issues noted above, and the procedures that either have been implemented or proposed are outlined 

in their response at Appendix A. 

**************************************** 

We provided a draft of our report to the appropriate individuals of the State of Missouri Secretary of

State, and the United States Election Assistance Commission. We considered any comments 

received prior to finalizing this report. 

CG performed its work between March 19, 2007 and Ju

a1

ly 20, 2007. 

Calverton, Maryland 




11 

Appendix B 

AUDIT METHODOLOGY 

Our audit methodology included: 

• Assessing audit risk and significance within the context of the audit objectives. 

• Obtaining an understanding of internal control that is significant to the administration of the 

HAVA funds. 

• Understanding relevant information systems controls as applicable. 

• Identifying sources of evidence and the amount and type of evidence required. 

• Determining whether other auditors have conducted, or are conducting, audits of the program 

that could be relevant to the audit objectives. 

To implement our audit methodology, below are some of the audit procedures we performed: 

• Interviewed appropriate SOS employees about the organization and operations of the HAVA 

program. 

• Reviewed prior single audit report and other reviews related to the state’s financial management 

systems and the HAVA program for the last 2 years. 

• Reviewed policies, procedures and regulations for the SOS’s management and accounting 

systems as they relate to the administration of HAVA programs. 

• Analyzed the inventory lists of equipment purchased with HAVA funds. 

• Tested major purchases and supporting documentation. 

• Tested randomly sampled payments made with the HAVA funds. 

• Verified support for reimbursements to local governments (counties, cities, and municipalities). 

• Reviewed certain state laws that impacted the election fund. 

• Examined appropriations and expenditure reports for state funds used to maintain the level of 

expenses for elections at least equal to the amount expended in fiscal year 2000 and to meet the 

five percent matching requirement for section 251 requirements payments. 

• Reviewed/examined information regarding source/supporting documents kept for maintenance 

of effort and matching contributions. 
12 

• Evaluated compliance with the requirements for accumulating financial information reported to 

the Commission on the Financial Status Reports, Form SF 269, accounting for property, 

purchasing HAVA related goods and services, and accounting for salaries. 

• Verified the establishment and maintenance of an election fund. 

• Verified whether the state has sustained the state’s level of expenditures for Elections. 

• Conducted site visits of selected local election authorities (LEAs) to perform the following: 

 Observe equipment purchased with HAVA funds for proper accounting and 

safeguarding 

 Test disbursement of HAVA funds for allowability and compliance 

 Test cash receipts from SOS to ensure proper cash management 

 Test procurement of voting equipment for competitive bid process 

 Ensure compliance with HAVA Act. 
13 

Appendix C 

MONETARY IMPACT AS OF FEBRUARY 28, 2007 

Description 

Questioned 

Costs 

Additional Funds for 

Program 

 

Program Income not reported $0 $4,318

Oversight & Monitoring 

• Program Income 0 4,968

• Unallowable Costs 183 0

Totals $183 $9,286
OIG’s Mission 

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

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

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

enhance the economy, efficiency, and effectiveness in EAC 

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

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

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

operations. Products and services include traditional financial and 

performance audits, contract and grant audits, information systems 

audits, and evaluations. 

Obtaining 

Copies of 

OIG Reports 

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

(eacoig@eac.gov). 

Mail orders should be sent to: 

U.S. Election Assistance Commission 

Office of Inspector General 

1225 New York Ave. NW - Suite 1100 

Washington, DC 20005 

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

 Fax: (202) 566-0957 

To Report Fraud, 

Waste and Abuse 

Involving the U.S. 

Election Assistance 

By Mail: U.S. Election Assistance Commission 

 Office of Inspector General 

 1225 New York Ave. NW - Suite 1100 

 Washington, DC 20005

Commission or Help 

America Vote Act 

Funds

E-mail: eacoig@eac.gov

OIG Hotline: 866-552-0004 (toll free) 

FAX: 202-566-0957