U.S. ELECTION ASSISTANCE 

COMMISSION

OFFICE OF INSPECTOR GENERAL

FINAL REPORT:

ADMINISTRATION OF PAYMENTS RECEIVED 

UNDER THE HELP AMERICA VOTE ACT BY 

THE PUERTO RICO STATE ELECTIONS 

COMMISSION

APRIL 30, 2003THROUGH SEPTEMBER 30, 2015

Report No. 

E-HP-PR-06-16 

August 2017
 

 

 

 

 

 

 

 

 

OFFICE OF THE INSPECTOR GENERAL 

MEMORANDUM 

To:	 Brian Newby 

Executive Director 

From: Patricia L. Layfield 

Inspector General 

Date: August 7, 2017 

Subject: Final Performance Audit Report - Administration of Payments Received 

Under the Help America Vote Act by the Puerto Rico State Elections 

Commission (Assignment Number E-HP-PR-06-16) 

We contracted with the independent certified public accounting firm of McBride, Lock & 

Associates, LLC to audit the administration of payments received under the Help America Vote 

Act (HAVA) by the Puerto Rico State Elections Commission (PRSEC). 

In its audit, McBride, Lock & Associates, LLC concluded that the Office generally accounted for 

and expended the HAVA funds in accordance with applicable requirements for the period from 

April 30, 2003 through September 30, 2015. However the following exceptions were identified: 

1.	 The Office did not have established policies and procedures addressing financial 

management activities including federal financial reporting, equipment management 

and maintenance of expenditures. 

2.	 The Office's equipment management is inadequate in regards to the maintenance of 

property records and the performance of a physical observation of inventory. 

3.	 The Office’s untimely crediting of match funds to the Elections Fund resulted in lost 

interest earnings to the fund. 

4.	 The Office submitted financial reports that were not be supported by underlying 

accounting records. 

5.	 The Office was not able to provide support for the baseline maintenance of expenditure 

calculation. 

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6.	 The Office did not provide adequate documentation to support the allowability of one 

expenditure. 

7.	 The Office expended $83,306 of HAVA funds for purposes that are not allowable under 

the award's terms and conditions or HAVA regulations. 

In the report, McBride, Lock & Associates, LLC included the PRSEC’s responses to the reported 

recommendations, as well as the Firm’s comments on the responses, after each recommendation. The 

PRSEC office generally agreed with the findings and recommendations. The EAC indicated that it would 

work with the PRSEC to resolve the issues in the report. The PRSEC complete response is included as 

Appendix A-1 and the EAC’s complete response is included as Appendix A-2. 

We would appreciate being kept informed of the actions taken on our recommendations as we will track 

the status of their implementation. Please respond in writing to the findings and recommendation 

included in this report by October 20, 2017. Your response should include information on actions taken 

or planned, targeted completion dates, and titles of officials responsible for implementation. 

To fulfill our responsibilities under Government Auditing Standards, the Office of Inspector General: 

 Reviewed McBride, Lock & Associates, LLC's approach and planning of the audit; 

 Evaluated the qualifications and independence of the auditors; 

 Monitored the progress of the audit at key points; 

 Reviewed the audit report, prepared by McBride, Lock & Associates, LLC to ensure compliance 

with Government Auditing Standards; and 

 Coordinated issuance of the audit report. 

McBride, Lock & Associates, LLC is responsible for the attached auditor’s report and the conclusions 

expressed in the report. We do not express any opinion on the conclusions presented in McBride, Lock 

& Associates, LLC's audit report. 

The legislation creating the Office of Inspector General requires that we report to Congress semiannually 

on all audit reports issued, actions taken to implement our recommendations, and recommendations 

that have not been implemented. 

If you have any questions regarding this report, please call me at (301) 734-3104. 

Attachment 

cc: Director of Grants and Payments 

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Performance Audit Report 

Administration of Payments Received Under the Help America Vote Act by 

the Puerto Rico State Elections Commission 

Prepared for 

The United States Election Assistance Commission (EAC) 

Office of Inspector General 

By 

McBride, Lock & Associates, LLC 

June 2017 

McBRIDE, LOCK & ASSOCIATES, LLC 

CERTIFIED PUBLIC ACCOUNTANTS 

KANSAS CITY 
 

 

Performance Audit Report
 

Administration of Payments Received Under the Help America Vote Act by 

the Puerto Rico State Elections Commission 

TABLE OF CONTENTS 

Page 

EXECUTIVE SUMMARY 1 

BACKGROUND 2 

AUDIT OBJECTIVES 4 

SCOPE AND METHODOLOGY 5 

AUDIT RESULTS 5 

APPENDICES: 

Appendix A-1: Response of the Puerto Rico State Elections Commission to the Draft 

Report 

Appendix A-2: Response of the U.S. Election Assistance Commission 

to the Draft Report 

Appendix B: Audit Methodology 

Appendix C: Monetary Impact as of September 30, 2015 
 

 

 

 

 

 

 

 

 

 

U.S. Election Assistance Commission
 

Performance Audit Report
 

Administration of Payments Received Under the Help America Vote Act by 

the Puerto Rico State Elections Commission
 

EXECUTIVE SUMMARY 

McBride, Lock & Associates, LLC was engaged by the United States Election Assistance 

Commission (EAC) Office of the Inspector General to conduct a performance audit of the Puerto 

Rico State Election Commission’s Office (Office) from inception on April 30, 2003 through 

September 30, 2015 to determine whether the Office used payments authorized by Sections 101, 

102, and 251 of the Help America Vote Act of 2002 (the HAVA) in accordance with HAVA and 

applicable requirements; accurately and properly accounted for property purchased with HAVA 

payments and for program income; maintained state expenditures at a level not less than the level 

maintained in the fiscal year ending prior to November 2000; and met HAVA requirements for 

Section 251 funds for an election fund and for a matching contribution. 

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 Government, 41 CFR 105-71, (originally Office of 

Management and Budget Circular A-102, also known as the “Common Rule”). 

•	 Expend payments in accordance with cost principles set forth in Cost Principles for State 

and Local Governments, 2 CFR 225, (originally Office of Management and Budget 

Circular A-87) for establishing the allowability or unallowability of certain items of cost 

for federal participation. 

•	 Follow the requirements of the Federal Cash Management and Improvement Act. 

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

•	 Comply with the provisions of Audits of States, Local Governments and Non-Profit 

Organizations (Office of Management and Budget Circular A-133). 

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. 

Based on the audit procedures performed, except for the matters discussed below, we concluded 

that the Office generally accounted for and expended the Grant funds in accordance with the 

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requirements mentioned above for the period from April 30, 2003 through September 30, 2015. 

The exceptions are as follows: 

1.	 The Office did not have established policies and procedures addressing financial 

management activities including federal financial reporting, equipment management and 

maintenance of expenditures. 

2.	 The Office's equipment management is inadequate in regards to the maintenance of 

property records and the performance of a physical observation of inventory. 

3.	 The Office’s untimely crediting of match funds to the Elections Fund resulted in lost 

interest earnings to the fund. 

4.	 The Office submitted financial reports that were not be supported by underlying 

accounting records. 

5.	 The Office was not able to provide support for the baseline maintenance of expenditure 

calculation. 

6.	 The Office did not provide adequate documentation to support the allowability of one 

expenditure. 

7.	 The Office expended $83,306 of HAVA funds for purposes that are not allowable under 

the award's terms and conditions or HAVA regulations. 

We have included in this report as Appendix A, the Elections Commission’s written response to 

the draft report. Such response has not been subjected to the audit procedures and, accordingly, 

we do not provide any form of assurance on the appropriateness of the response or the 

effectiveness of the corrective actions described therein. 

BACKGROUND 

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

(Commission) to assist States and insular areas (hereinafter referred to as States) with improving 

the administration of federal elections and to provide funds to States to help implement these 

improvements. The Commission administers payments to States authorized by HAVA under 

Titles I and II, as follows: 

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

requirements for uniform and nondiscriminatory election technology and administration 

requirements (Title III), improving the administration of elections for federal office, 

educating voters, training election officials and pool workers, and developing a State plan 

for requirements payments. 

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•	 Title I, Section 102 payments are available only for the replacement of punchcard and 

lever action voting systems. 

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

for voting system equipment; and 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 five percent of the total amount to be spent for 

activities for which requirements payments are made. 

•	 Maintain the expenditures of the State for activities funded by the requirements payment 

at a level that is not less than the expenditures maintained by the State for the fiscal year 

ending prior to November 2000. 

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

activities for which requirements payments are made, for the Federal requirements 

payments received, for other amounts as may be appropriated under law and for interest 

earned on deposits of the fund. 

The Awardee – The Puerto Rico State Elections Commission 

The HAVA funds were awarded to the Puerto Rico State Elections Commission. The Elections 

Commission guides the administration of Puerto Rico’s elections, works to protect the integrity 

of the democratic process and assists in the registration of voters. Elections in Puerto Rico are 

centralized. The Elections Commission works closely with local commissions serving the 110 

precincts across Puerto Rico to ensure the smooth administration of Puerto Rico’s elections. 

Help America Vote Act Commonwealth of Puerto Rico State Plan 

The Commonwealth of Puerto Rico’s advisory committee consisted of 30 individuals 

representing a cross-section of election stakeholders. The committee was selected by the 

Elections Commission. 

The main objectives of the project funded by HAVA, as set forth in the state plan, were to 

modify, revise or maintain the existing voting systems; and modify, administrate and maintain 

the computerized statewide voter registration database. 

The Elections Commission established and is maintaining an election fund for the exclusive 

purpose of carrying out activities of HAVA. The fund is non-lapsing and accrues interest earned. 

Additionally, the Office has managed all expenditures funded by HAVA and has not distributed 

any of the requirements payments to the local units of government. 

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AUDIT OBJECTIVES 

The objectives of our audit were to determine whether the Office: 

1.	 Used payments authorized by Sections 101, 102, and 251 of the Grant in accordance with 

Grant and applicable requirements; 

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

program income; 

3.	 Met HAVA requirements for Section 251 funds for creation of an election fund, 

providing required matching contributions, and meeting the requirements for 

maintenance of a base level of state outlays, commonly referred to as Maintenance of 

Expenditures (MOE). 

In addition to accounting for Grant payments, the Grant 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 Grant funds to 

comply with certain financial management requirements, specifically: 

•	 Comply with the Uniform Administrative Requirements for Grants and Cooperative 

Agreements with State and Local Government, 41 CFR 105-71, (originally Office of 

Management and Budget Circular A-102, also known as the “Common Rule”). 

•	 Expend payments in accordance with cost principles set forth in Cost Principles for State 

and Local Governments, 2 CFR 225, (originally Office of Management and Budget 

Circular A-87) for establishing the allowability or unallowability of certain items of cost 

for federal participation. 

•	 Follow the requirements of the Federal Cash Management and Improvement Act. 

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

•	 Comply with the provisions of Audits of States, Local Governments and Non-Profit 

Organizations (Office of Management and Budget Circular A-133). 

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SCOPE AND METHODOLOGY 

We audited the Grant funds received and disbursed by the Office from April 30, 2003 through 

September 30, 2015 as shown in the following table: 

HAVA HAVA HAVA 

Description Section 101 Section 102 Section 251 Total 

Funds Received from EAC $ 3,151,144 -$ $ 5,868,252 $ 9,019,396

State Matching Funds - - 310,612 310,612 

Program Income 324,096 - 208,118 532,214 

Total Funds $ 3,475,240 -$ $ 6,386,982 $ 9,862,222

Less Disbursements (3,447,825) - (1,554,774) (5,002,599) 

Fund Balance $ 27,415 -$ $ 4,832,208 $ 4,859,623

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. 

Based on the audit procedures performed, except for the matters discussed below, we concluded 

that the Office accounted for and expended the HAVA funds in accordance with the 

requirements mentioned above for the period from April 30, 2003 through September 30, 2015. 

The exceptions to applicable compliance requirements are described below. 

Finding No. 1 – Documentation of Policies and Procedures 

The Office did not have established policies and procedures addressing financial management 

activities including federal financial reporting, equipment management and maintenance of 

expenditures. 

Federal regulations, specifically 41 CFR 105-71.120(b)(3) - Post-Award Requirements/Financial 

Administration, Standards for Financial Management Systems, Internal Control, require that: 

(a) A State must expand and account for grant funds in accordance with State laws and 

procedures for expending and accounting for its own funds, and 

(b) Effective control and accountability must be maintained for all grant and subgrant cash, 

real and personal property, and other assets. 

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A key aspect of maintaining an effective system of internal controls is the documentation of 

related policies and procedures to ensure these criteria are current, approved, communicated, 

incorporated into training materials, and updated when appropriate. 

Key policies and procedures affecting financial reporting, equipment and maintenance of effort 

have not been adquately addressed in policy and procedure documentation. Due to the few 

personnel involved in financial reporting, equipment and maintenance of effort these policies and 

procedures have developed informally over the years. 

Inadequate documented policies and procedures may result in a lack of awareness and 

compliance with management's directives, and could allow noncompliance with grant terms and 

conditions to occur and not be detected. 

The Office has had minimal experience with federal awards including the processes associated 

with federal reporting and grant administration. Accordingly, there had been no specific need for 

documentation of policies and procedures in these areas. Further, much of the training has 

occurred through verbal discussion rather than use of written documentation of policies and 

procedures. 

Recommendation: 

We recommend that the EAC require the Office to implement procedures to ensure that financial 

reporting, equipment and maintenance of effort policies and procedures are documented. 

Additionally, these procedures should be reviewed and updated on a regular basis. 

Elections Commission Response: 

We are going to develop a better policy that comply with the recommendations provided here 

and with the guidelines of the EAC staff. However, the Internal Audit and Purchasing and 

Supplies Offices have the necessary regulations to avoid breaching the Law for the acquisition of 

good and/or services. These offices are governed by different regulations, manuals and/or 

information leaflets that instruct the procedures that must be performed for the purchased and/or 

acquisition of a good or service. 

The aforementioned documents were provided during the two visits of the auditors of the firm 

and were used by the PR Commission in its operations. 

The procedures that the Agency uses for the training are not only verbal, currently the Agency is 

governed by several Regulations among these Regulations No. 11, Basic Rules for the Control 

and Accounting of Fixed Assets, governed by the Department of the Treasury of Puerto Rico, 

whose legal base is with the provisions of Articles 10 and 14 of the Law of Accounting of the 

Government of Puerto Rico, Act No. 230 of July 23, 1974, as amended. 

Among other things, this article states that the custody, care and control of fixed assets will be 

the responsibility of the head of the agency and whose purpose is to establish basic rules related 

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to the receipt, custody, control and accounting of fixed assets acquired by the agencies that have 

their funds under the custody of the Secretary of the Treasure. 

The Comptroller’s Offices information leaflet, entitled: The Government Procurement Process, is 

also part of the guidelines of the Procurement Process, is also part of the guidelines that the 

Procurement and Supply Division uses and instructs staff about who is authorized to perform the 

procurement function, describes the agents or delegates buyer, whose work is previously 

instructed with the training provided by the Department of the Treasury. In addition, this section 

details the law or regulation that must be applied according to the government entity. This 

booklet describes the procedure for making purchased orders, contracts, formal and informal 

auctions, their requirements, and other related procedures. 

It should be noted that for the procedures of Auctions our agency is governed by the Regulations 

of the General Services (ASG) where is a Unique Bid Registry for the acquisitions and/or 

granting of funds for a service or equipment. The Legal Basis of this Regulation in Section 1.2 

provides the following and I quote: 

“This Regulation is adopted and promulgated pursuant to Section 3.002, subsection (1), of Act 

No. 78 of June 1, 2011, as amended, known as Puerto Rico Electoral Law for the 21 St. Century 

(Electoral Code), which empowers the State Election Commission to approve and adopt such 

regulations as may be necessary to implement the provisions of the law under its jurisdiction. 

Currently, we are developing better ways to comply with the HAVA law, one of these 

approaches is the registration of the CEE at the System Award Management (SAM). SAM is a 

grant and contract information system in which contractors and grantees are registered and then 

can use the information therein which also includes searching the “excluded parties list”, we are 

in the process of trying to get all the staff related with the granted of the auction process and 

contracts trained to check any contract, purchased order, grant or other awards using HAVA 

funds against the Excluded Parties List System and maintain the verification with the purchase 

document as the agreement of the PR Commission was noted in the Corrective Plan of 2013. 

We intend to further strengthen and clarify our use of PR commonwealth-wide policies and 

procedures. We will adopt an office manual that cites use of these and clarify our other processes 

in our HAVA operations. With the help of the EAC we will adequate office policies and 

procedures for the management of good and services purchased with HAVA federal funds. 

Auditor’s Response: 

We believe that the adoption of improved policies will improve the consistency of compliance 

with funds from Federal sources. The adoption of the office manual will also assist in ensuring 

the adequacy of policies and procedures in the use of Federal funds and the management of 

goods and services purchased. 

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Finding No. 2 – Inadequate Equipment Management 

The Office’s equipment management is inadequate in regards to the maintenance of property 

records and the performance of a physical observation of inventory. 

The Uniform Administrative Requirements for Grants and Cooperative Agreements with State 

and Local Governments 41 CFR § 105-71.132 (d) (The “Common Rule”) section states that, (1) 

“Property records must be maintained that include a description of the property, a serial number 

or other identification number, the source of property, who holds the title, the acquisition date, 

and cost of the property, percentage of Federal participation in the cost of the property, the 

location, use and condition of the property, and any ultimate disposition data including the date 

of disposal and sale price of the property and (2) A physical inventory of the property must be 

taken and the results reconciled with the property records at least once every two years.” 

The inventory listing as provided did not include the source of property, or use and condition of 

the property. The conduct of a physical inventory was not fully documented. It was also noted 

that policies and procedures were not formalized to indicate what data is necessary for 

population of the inventory system and how the physical inventory would be conducted and 

documented. Finally, it was noted that the inventory listing could not be reconciled into the 

Office’s financial records. 

The Office was not compliant with federal regulations regarding the maintenance of an inventory 

listing identifying all required data, and the conduct of a bi-annual physical inventory. 

The deficiencies in equipment management result from the Office not implementing policies 

meeting the minimum requirements for the safeguarding of Fixed Assets. 

Recommendation: 

We recommend that the EAC address and resolve the following recommendations that the 

Office: 

(a) Create a documented set of policies and procedures which comply with federal 

regulations. 

(b) Create an inventory listing which is fully populated and reconcilable into the Office’s 

financial records. 

(c) Conduct and document a physical inventory on a biannual basis. 

Elections Commission Response: 

At the present, the inventory system used by the CEE Agency is governed by the Regulation No. 

11, Basic Rules for the Control and Accounting of Fixed Assets, acquired by agencies that have 

their funds in the custody of the Secretary of the Treasury. This inventory is digitally maintained, 

considering the following data: 

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1. Property Number 

2. Cost 

3. Property Class 

4. Description and coding 

5. Date of Acquisition 

6. Fund 

However, the Property Manager collect information related to the allocation and location for 

fixed assets. Understand, that we comply with the appointment set regarding the federal 

requirements. Regarding the reconciliation of the property registers, from the date on which Mr. 

Noel Rivera Ocasio was designate as the substitute responsible for Property division, the process 

is carried out once the inventory is completed once a year. 

We will work with the EAC to identify specific necessary data elements or activities that may be 

missing from our use. CEE system for accounting for fixed assets under the HAVA grant and 

remedy such. 

Auditor’s Response: 

The appointment of the designate for the collection of data will provide for the necessary action 

to collect necessary information and provide for the needed reconciliation of the property 

registers. We commend the Commission for taking these actions. 

Finding No. 3 – Interest Earned on the Election Fund 

The Office’s untimely crediting of match funds to the Elections Fund resulted in lost interest 

earnings to the fund. 

HAVA Section 254(b)(1) requires that the following monies be deposited into its election fund: 

(a) Amounts appropriated or otherwise made available by the State for carrying out the 

activities for which the requirements payment is made to the State under this part. 

(b) The requirements payment made to the State under this part. 

(c) Such other amounts as may be appropriated under law. 

(d) Interest earned on deposits of the fund. 

Matching funds were deposited to an “accountable” account, which was unable to earn interest. 

On July 2, 2008, once the Office was made aware that the matching funds must also earn 

interest, the Office transferred the matching funds out of the “accountable” account and into an 

interest earning account. 

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The Election Fund did not earn interest on matching funds until July 2, 2008. The Office 

deposited $122,145 funds prior to July 2, 2008. The Election Fund was reduced by the amount of 

interest earnings not credited prior to July 2, 2008 for matching funds. 

Recommendation: 

We recommend that the EAC require the Office to make a calculation of the interest lost due to 

the untimely deposit of matching funds, and deposit these unrecorded earnings to the Election 

Fund. 

Elections Commission Response: 

Due to the lack of training since the beginning of the granting of HAVA federal funds the staff 

who handled at that time these funds was unaware of this requirement, which resulted the deposit 

of these funds from the beginning into an account which did not generate the required interest. 

This was corrected in July 2008. We currently will work with the EAC to determine the correct 

total interest. 

Auditor’s Response: 

The stated corrective action should result in the appropriate calculation and deposit of interest 

earnings. 

Finding No. 4 – Financial Reporting 

The Office submitted financial reports that could not be supported by underlying accounting 

records. 

The terms and conditions of the HAVA awards require the submission of accurate and complete 

Federal Forms 269 (Financial Status Report) and 425 (Federal Financial Report) which reflect 

the uses of award funds and the interest and program income generated from those funds. HAVA 

Title IX, Section 902. AUDITS AND REPAYMENT OF FUNDS, Part (a) – Recordkeeping 

Requirement states, “Each recipient of a grant or other payment made under this Act shall keep 

such records with respect to the payment as are consistent with sound accounting principles, 

including records which fully disclose the amount and disposition by such recipient of funds, the 

total cost of the project or undertaking for which such funds are used, and the amount of that 

portion of the cost of the project or undertaking supplied by other sources, and such other records 

as will facilitate an effective audit.” 

The analysis of the financial report identified that the cumulative numbers reported were not 

supported in total by the general ledgers provided by the Office. The total expenditures reported 

by the Office for Section 101 and Section 251 were $3,447,825 and $1,554,773, respectively. 

The general ledgers disclosed $3,442,194 and $1,546,730 for Section 101 and Section 251, 

respectively. This provided a net $13,674 over reported expenditures on the financial reports. 

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HAVA activity may not be accurately reported or accounted for which may increase the potential 

of misuse of federal funds. 

The Office did not properly reconcile the financial reports to the accounting system prior to 

submission to EAC. The Office is in the process of explaining the variances and will need to 

amend the federal financial reports. 

Recommendation: 

We recommend that the EAC require the Office perform a reconciliation of the grant activity to 

ensure that all expenditures incurred are fully disclosed in the financial reports. 

Elections Commission Response: 

At this time, we are working to reconcile any differences between the Federal Financial Reports 

and the general ledger. We will discuss our findings with the EAC. 

Auditor’s Response: 

The stated corrective action is responsive to the recommendation. Reconciliation of the cited 

differences and submission of corrected Federal reports will provide resolution of the matter. 

Finding No. 5 – Maintenance of Expenditure 

The Office was unable to provide support for the baseline maintenance of expenditure 

calculation. 

HAVA Section 254(a)(7) requires the State Plan to describe “How the State, in using the 

requirements payment, will maintain the expenditures of the State for activities funded by the 

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

the fiscal year ending prior to November 2000.” 

The State Plan indicated that the Commonwealth of Puerto Rico will continue to fund the 

election system at or above the level required by HAVA. The Office established the maintenance 

of expenditure as $29,039,000. However, the Office was not able to provide support for this 

amount. 

The baseline maintenance of expenditure may not be accurately calculated and may not have 

been maintained on an annual basis. 

The Office did not properly establish their baseline maintenance of expenditure and the baseline 

may not have been exceeded in each fiscal year. 

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Recommendation: 

We recommend the EAC address and resolve the following recommendations that the Office: 

(a) Evaluate the baseline established for the maintenance of expenditure to ensure that those 

expenditures included in the baseline are consistent with the maintenance of expenditure 

policy established by the EAC in June 2010. 

(b) Once established, ensure the maintenance of effort baseline was exceeded in each fiscal 

year as required by HAVA. 

Elections Commission Response: 

We have been working during this audit to identify and provide baseline data for FY1999 for the 

required Maintenance of Effort (MOE) base. We will continue this effort with EAC assistance to 

establish the appropriate baseline to use to measure subsequent Fiscal Year expenditures 

necessary to meet or exceed the baseline MOE. 

Auditor’s Response: 

We appreciate the Commission’s continued efforts in determining the Maintenance of 

Expenditure baseline amount. Once this amount is determined, the EAC and the Commission 

should make appropriate determination that these baseline amounts have been exceeded by 

Commission expenditures in each fiscal year. 

Finding No. 6 – Unsupported Costs 

The Office did not provide adequate documentation to support the allowability of one 

expenditure. 

Office of Management and Budget Circulars and Guidance, Cost Principles for State, Local, and 

Indian Tribal Governments 2 CFR § 225, Appendix A.C.1.j states, “To be allowable under 

Federal awards, costs must meet the following general criteria: (j) Be adequately documented.” 

The Uniform Administrative Requirements for Grants and Cooperative Agreements with State 

and Local Governments 41 CFR § 105-71.120 (b)(7) (The “Common Rule”) section states that, 

“Accounting records must be supported by such source documentation as cancelled checks, paid 

bills, payrolls, time and attendance records, contracts and subgrant award documents, etc.” 

The Office was unable to provide adequate documentation to support one of the 104 transactions 

sampled. For this transaction, the Office was unable to provide the invoice. This transaction was 

recorded in 2005. The Office indicated that the retention period for documentation is ten years, 

therefore the supporting invoice was disposed of. 

The Office expended $54,000 of HAVA funds for this transaction. 

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Recommendation: 

We recommend that the EAC require the Office to transfer to the election fund $54,000 for the 

unsupported cost cited above. 

Elections Commission Response: 

Regulation No. 23 for the Preservation of Fiscal Natural Documents or Necessary for the 

examination and verification of accounts and Audit review, mention in its legal base the 

following: “This Regulation is promulgated in accordance with the authority conferred on the 

Secretary of the Treasury by Article 4 (2) of Act. No. 5, approved on December 8, 1955, as 

amended, which establishes the conservation and Disposal program of Public Documents.” 

In the guide to fix periods of conservation to tax documents mentions that the documents related 

to collection such as the following: 

C-Arbitration statement 

Investigated and settlement by judicial action (Until the term granted to file an appeal 

expires or for 10 years from the date of the declaration of arbitration, whichever is 

greater. 

D- Income Details 

E- State of cost, fines and collection 

F- Collection Invoices 

G- Early settlement or funds 

H- Licensing, franchising and bonding 

I-Receipts 

J-Notifications of payment or collection requirements 

It periods of conservation will be six (6) years or an intervention of the Comptroller, whichever 

comes first. 

The invoices requested by the transaction of Rock Solid Technologies (Correction of Expenses) 

whose sum ascends to $54,000, could not be fully evidence because these invoices are dated 

fiscal year 2004-2005, we were able to submit part of the supporting documents of this 

transaction; but the invoices according to the regulations that govern us could be seized. 

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Auditor’s Response: 

The response provides for no additional documentation to support the Rock Solid Technologies 

expenditure in the amount of $54,000. 

Finding No. 7 – Unallowable Costs 

The Office expended $83,306 of HAVA funds for purposes that are not allowable under the 

award's terms and conditions or HAVA regulations. 

HAVA Section 101(b)(1) states, "A State shall use the funds provided under a payment made 

under this section to carry out one or more of the following activities: (C) Educating voters 

concerning voting procedures, voting rights, and voting technology.” 

The EAC, in its Funding Advisory Opinion FAO-08-005, concluded that, “voter registration 

activities do not qualify for funding under the umbrella of improvements to the administration of 

elections for Federal office.” 

On December 2, 2008 the Acting Director, Division of HAVA Payments and Grants disallowed 

two purchases made by the Office. The Office expended $50,085 of HAVA funds for the 

purchase of three mobile voter registration vans and $33,221 for computer equipment and 

hardware to equip the mobile voter registration vans. 

These expenses are not considered allowable under HAVA Section 101(b)(1). 

Recommendation: 

We recommend that EAC address and resolve the following recommendations that the Office 

transfer into the election fund $83,306 for the unallowable costs cited above. 

Elections Commission Response: 

We are looking for supporting documents, to provide adequate evidence and comply all the 

findings of this federal Audit. We believe that the voter registration equipment was not 

supporting voter registration activities, but provided necessary equipment to enable the PR 

Commission to have an adequate voter registration capability much the same as the HAVA 

required statewide voter registration system. We look forward to work with the EAC to resolve 

the issue presented and discussed in this draft. 

Auditor’s Response: 

We commend the Commission for their continued efforts in searching for the missing 

documentation. Once this documentation is located, the agency and EAC should ensure that such 

documents support the expenditures made with the HAVA funding. 

14
 
 

 

 

 

We provided a draft of our report to the appropriate individuals of the Office of the Puerto Rico 

State Elections Commission. We considered any comments received prior to finalizing this 

report. 

The Office responded on July 21, 2017 and generally agreed with the report’s findings and 

recommendations. The EAC responded on July 24, 2017 and stated they will work with Puerto 

Rico’s Elections Commission to ensure appropriate corrective action. The Office’s complete 

response is included as Appendix A-1 and the EAC’s complete response as Appendix A-2. 

McBride, Lock & Associates, LLC performed the related audit procedures between May 2, 2016 

and May 25, 2017. 

(Original Signed by McBride, Lock & Associates, LLC) 

McBride, Lock & Associates, LLC 

May 25, 2017 

15
 
APPENDIX A-1
 

Response of the 

Puerto Rico Secretary of State 

to the Draft Report
 

APPENDIX A-2 

Response of the 

U.S. Election Assistance Commission
 

to the Draft Report
 
EAC RESPONSE TO THE DRAFT AUDIT: 

OIG Performance Audit Report on the Administration ofPayments 

Received Under the Help America Vote Act by the Puerto Rico State 

Elections Commission, dated June 2017 

July 24, 2017 

MEMORANDUM 

To: 

From: 

Patricia Layfield, Inspector General 

Brian D. Newby, Executive Director t?J)Q 

Subject: Draft Performance Audit Report - "Administration of Payments Received 

under the Help America Vote Act by the Puerto Rico State Elections 

Commission" 

Thank you for this opportunity to review and respond to the draft audit report for the 

Puerto Rico State Elections Commission. 

The Election Assistance Commission {EAC) appreciates the auditor's detailed findings 

and recommendations outlined in the draft audit report and will work with Puerto Rico's 

Elections Commission to ensure appropriate corrective actions are taken in a timely and 

complete manner. 
APPENDIX B
 

Audit Methodology
 
 

 

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 and of 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 Office employees about the organization and operations of the 

HAVA program. 

•	 Reviewed prior single audit reports and other reviews related to the Office’s financial 

management systems and the HAVA program for the period under review. 

•	 Reviewed policies, procedures and regulations for the Office management and 

accounting systems as they relate to the administration of the HAVA program. 

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

•	 Tested major purchases and the supporting documentation. 

•	 Tested randomly sampled payments made with HAVA funds. 

•	 Evaluated compliance with the requirements for accumulating financial information 

reported to the Commission on the financial status reports and progress reports, 

accounting for property, purchasing HAVA related goods and services, and accounting 

for salaries. 

•	 Verified the establishment and maintenance of an election fund. 

•	 Verified the State expenditures met the Maintenance of Expenditures requirement 

•	 Conducted site visits to observe physical security/safeguard of equipment purchased with 

HAVA funds and ensure compliance with federal regulation. 

•	 Verified that the matching requirement was timely met and matching expenditures met 

the prescribed criteria and allowability requirements of HAVA. 

•	 Verified program income was properly accounted for and not remitted to the State’s 

general fund. 

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APPENDIX C
 

Monetary Impact
 

as of September 30, 2015
 
 

Appendix C 

MONETARY IMPACT AS OF SEPTEMBER 30, 2015 

Description 

Questioned 

Costs 

Additional 

Funds for 

Program 

Unsupported Costs 

Unallowable Costs 

$ 54,000 

83,306 

$ -

-

Total $ 137,306 $ -

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