UNITED STATES 

ELECTION ASSISTANCE COMMISSION 

OFFICE OF INSPECTOR GENERAL 

Administration of Payments Received 

Under the Help America Vote Act by 

the Arkansas Secretary of State

Report No. E-HP-AR-08-20
 

 

 

 

 

 

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OFFICE OF THE INSPECTOR GENERAL 

US ELECTION ASSISTANCE COMMISSION 

633 3RD STREET, NW, SUITE 200 

WASHINGTON, DC 20001 

Memorandum 

To: Mona Harrington 

Executive Director 

From: Patricia L. Layfield 

Patricia L. Layfield 

Inspector General 

Date: February 2, 2021 

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

Help America Vote Act by the Arkansas Secretary of State (Assignment Number EHP-AR-08-20) 

The Office of Inspector General (OIG) engaged McBride, Lock & Associates, LLC (MLA), an 

independent certified public accounting firm, to audit the administration of payments received 

under the Help America Vote Act (HAVA) by the Arkansas Secretary of State (ARSOS). The audit 

scope covered the grant funds received and disbursed by the ARSOS, from June 11, 2018 

through September 30, 2019. The $4.5 million in funds paid to the ARSOS represented 

Arkansas’ share of the appropriation of $380 million under the Consolidated Appropriations Act 

of 2018 (P.L. 115-151). ARSOS expended approximately $4.6 million of the HAVA funds 

(including state matching funds and program income) during the period covered by the audit. 

Results of Audit 

Based on the audit procedures performed, MLA concluded that the Office accounted for HAVA 

funds in accordance with applicable requirements and used the funds in a manner consistent 

with the budget plan for the period from June 5, 2018 through September 30, 2019. However, 

the Office did not expend HAVA funds in accordance with the requirements mentioned above or 

properly account for property purchased with HAVA payments. The exceptions are as follows: 

1. The Office was not able to timely provide bid evaluation documentation for the seven 

invoices selected for disbursement testing. The seven invoices totaled $1,757,984. The 

seven invoices were selected from a population of 21 disbursements totaling 

Find us here: EAC OIG Website 

Toll free: 1- 866-552-0004 | e-mail: eacoig@eac.gov 
 

 

 

 

 

 

 

 

 

 

 

 

$4,382,852 for the purchase of election systems. All disbursements were purchased 

from the same contract, therefore all $4,382,852 is considered unsupported. The Office 

indicated during fieldwork that the documentation no longer existed. 

2. MLA’s sample of disbursements included the purchase of 87 digital scanners. None of 

the digital scanners, which had a per unit cost in excess of $5,000 were tracked in the 

Arkansas Administrative Statewide Information System (AASIS). The digital scanners had 

a base cost of $5,635 per unit, for a total pre-discount price of $490,245. 67 of the 87 

digital scanners were selected to be viewed and were determined to exist. 

The Office stated in their response that they contacted the former Chief Deputy Secretary of 

State and were able to obtain bid evaluation scoring sheets for all three (3) election system 

vendors whose bids were considered, together with a summary sheet documenting the highest 

scorer. They provided a compilation of the spreadsheets and copies of the scoring sheets to the 

auditors as attachments to their response to the draft report. However, the information, which 

was requested in January 2020, was not provided until December 2020 in spite of repeated 

requests. The auditors were not able to perform audit procedures on the information during the 

course of the audit and were thus not able to conclude on the sufficiency and appropriateness 

of the information provided. We are referring the issue to the EAC for adjudication of the 

questioned costs as part of its audit follow-up process. 

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 concerning the status of 

your audit follow-up on the findings and recommendation included in this report by March 15, 

2021. Your response should include information on actions taken or planned, targeted 

completion dates, and titles of officials responsible for implementation. 

Evaluation of MLA’s Audit Performance 

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

General: 

• Reviewed MLA'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 MLA’s audit report and selected work products, to ensure compliance with 

Government Auditing Standards; and 

• Coordinated issuance of the audit report. 

MLA is responsible for the attached auditor’s report and the findings and conclusions 

expressed in the report. The work the EAC OIG performed in evaluating MLA’s conduct of the 

audit was not sufficient to support an opinion on the effectiveness of internal control or 

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compliance with laws and regulations, thus EAC OIG does not express any opinion on the 

NMSOS’ internal controls or compliance. 

The Inspector General Act of 1978, as amended, requires semiannual reporting to Congress on 

all reports issued, actions taken to implement recommendations, and recommendations that 

have not been implemented. Therefore, we will report the issuance of this audit report in our 

next semiannual report to Congress. The distribution of this report is not restricted and copies 

are available for public inspection. Pursuant to the IG Empowerment Act of 2016, the EAC OIG 

will post this audit report on the OIG website within 3 days of its issuance to EAC management. 

The OIG will also post the report to Oversight.gov. 

If you have any questions regarding this report, please call me at (202) 853-2760. 

cc: Commissioner Benjamin W. Hovland, Chair 

Commissioner Donald L. Palmer, Vice-Chair 

Commissioner Thomas Hicks 

Commissioner Christy McCormick 

Bill Huffman, Chief Deputy Secretary of State, Office of New Mexico Secretary of State 

Dwight Southerland, Deputy Secretary of State, Chief of Staff, Office of Arkansas 

Secretary of State 

Kurt Naumann, Director of Government Affairs, Office of Arkansas Secretary of State 

Attachment 

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McBRIDE, LOCK & ASSOCIATES, LLC 

Certified Public Accountants 

Established 1980 

Performance Audit Report 

Administration of Election Security Payments Received Under the Help 

America Vote Act by the Arkansas Secretary of State 

Prepared for 

The United States Election Assistance Commission (EAC) 

Office of Inspector General 

By 

McBride, Lock & Associates, LLC 

November 2020 

4151 N. Mulberry Drive, Suite 275 p. 816-221-4559 admin@mcbridelock.com 

Kansas City, Missouri 64116 f. 816-221-4563 www.mcbridelock.com 
 

----

Performance Audit Report 

Administration of Election Security Payments Received Under the Help 

America Vote Act by the Arkansas Secretary of State 

TABLE OF CONTENTS 

Page 

EXECUTIVE SUMMARY 1 

BACKGROUND 2 

AUDIT OBJECTIVES 3 

SCOPE AND METHODOLOGY 4 

AUDIT RESULTS 5 

APPENDICES: 

Appendix A-1: Response of the Arkansas Secretary of State to the 

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

to the Draft Report 

Appendix B: Audit Scope and Methodology 

Appendix C: Expenditures by Budget Category and Program Cat

Appendix D: Monetary Impact as of September 30, 2019 

Draft Report 

ion 

egory 
 

 

 

 

 

 

 

 

 

U.S. Election Assistance Commission 

Performance Audit Report 

Administration of Election Security Payments Received Under the Help 

America Vote Act by the Arkansas Secretary of State 

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 election 

security funds the Arkansas Secretary of State’s Office (Office) received between June 5, 2018 

and September 30, 2019. The objective of the audit was to determine whether the Office used 

payments authorized by Sections 101 of the Help America Vote Act of 2002 (the HAVA) in 

accordance with HAVA and applicable requirements; properly accounted for and controlled the 

funds and property purchased with HAVA payments; and, used the funds in a manner consistent 

with the budget plan provided to EAC. 

In addition, the Commission requires states to comply with certain financial management 

requirements, specifically: 

• Expend payments in accordance with Federal cost principles established by the Office of 

Management and Budget (OMB) – (2 CFR 200). 

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

• Maintain documents and records subject to audit to determine whether payments were used 

in compliance with HAVA. 

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, we concluded that the Office accounted for HAVA funds 

in accordance with the requirements mentioned above, and used the funds in a manner consistent 

with the budget plan for the period from June 5, 2018 through September 30, 2019. However, the 

Office did not expend HAVA funds in accordance with the requirements mentioned above or 

account for property purchased with HAVA payments. The exceptions are as follows: 

1. The Office was not able to timely provide bid evaluation documentation for the seven 

invoices selected for disbursement testing. The seven invoices totaled $1,757,984. The 

seven invoices were selected from a population of 21 disbursements totaling $4,382,852. 

All disbursements were purchased from the same contract, therefore all $4,382,852 is 

considered unsupported. The Office indicated during fieldwork that the documentation no 

longer existed. 

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2. Our sample of disbursements included the purchase of 87 digital scanners. None of the 

digital scanners, which had a per unit cost in excess of $5,000 were tracked in the Arkansas 

Administrative Statewide Information System (AASIS). The digital scanners had a base 

cost of $5,635 per unit, for a total pre-discount price of $490,245. 67 of the 87 digital 

scanners were selected to be viewed and were determined to exist. 

We have included in this report as Appendix A, the Secretary of State’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 grants to States authorized by HAVA under Title I, 

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; developing a state plan for requirements payments; 

improving, acquiring, leasing, modifying, or replacing voting systems, and methods for 

casting and counting votes; improving the accessibility and quantity of polling places; and 

establishing toll-free telephone hotlines that voters may use. 

The 2018 HAVA Election Security Grant also requires that states must: 

• Provide matching funds equal to 5 percent of the total federal funds within two years of the 

award to be spent for activities for which Election Security Grants are made. 

• Maintain all federal funds and state cash matching funds in the state election fund, as 

described in Section 104 (d) of HAVA, along with interest earned on the award’s funds. 

States may also track eligible funds/activities from their state and local general operating 

budgets to meet the match obligations. State and local funds used for match must be 

different from funds used to meet Maintenance of Effort or state match associated with 

HAVA Requirement Payments. 

The Awardee – The Arkansas Secretary of State 

The HAVA funds were awarded to the Arkansas Secretary of State. The Arkansas Secretary of 

State Elections Division maintains the state’s election records, and assists county officials with 

conducting federal, state and district elections. 

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The division helps to ensure compliance with federal election laws such as the National Voter 

Registration Act and the Help America Vote Act, plays a central role in establishing and 

maintaining Arkansas’s uniform statewide voter registration system, and continues to help oversee 

training on the state’s electronic voting systems. 

Help America Vote Act State of Arkansas State Plan 

The State of Arkansas’s HAVA budget narrative was prepared by the Chief Deputy Secretary of 

State. The main objectives of the project funded by HAVA, as set forth in the budget letter, were 

to replace the old equipment with the new integrated election equipment system. The state decided 

to place emphasis on ensuring the three counties in the state which lacked any ballot or paper trail 

were upgraded to the new system. Each of those three counties was offered a proposal by the 

Secretary of State to provide 100% funding of their equipment to ensure the county could afford 

to have their equipment replaced. The remaining HAVA funding was offered to the remaining 

counties who had as yet not upgraded their equipment. In total, equipment was purchased for 21 

counties with federal funds, plus state funds were used to purchase equipment for another County 

which was used to meet the State’s 5% matching requirement. 

AUDIT OBJECTIVES 

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

1. Used funds for authorized purposes in accordance with Section 101 of HAVA and other 

applicable requirements; 

2. Properly accounted for and controlled property purchased with HAVA payments; and 

3. Used the funds in a manner consistent with the budget plan provided to EAC. 

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: 

• Expend payments in accordance with Federal cost principles established by the Office of 

Management and Budget (OMB) – (2 CFR 200). 

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

• Maintain documents and records subject to audit to determine whether payments were used 

in compliance with HAVA. 

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SCOPE AND METHODOLOGY 

We audited the Grant funds received and disbursed by the Office, from June 5, 2018 through 

September 30, 2019. These funds are related to the appropriation of $380 million under the 

Consolidated Appropriations Act (CAA), 2018 (P.L. 115-151). The scope of activity audited is 

shown in the following table: 

Election 

Description Security Funds 

Funds Received from EAC $ 4,475,015 

State Matching Funds 223,751 

Program Income 31,614 

Total Funds $ 4,730,380 

Less Disbursements (4,606,603) 

Fund Balance $ 123,777 

The Office’s expenditures detailed by budget and program category are included as Appendix C. 

In planning and performing our audit, we identified the following internal control components and 

underlying internal control principles as significant to the audit objective: 

Objective Component Principle 

1 Control Activities Selects and develops control activities 

Selects and develops general controls over technology 

Deploys through policies and procedures 

Information and Communication Uses Relevant Information 

Communicates Internally 

2 Control Activities Selects and develops control activities 

Selects and develops general controls over technology 

Deploys through policies and procedures 

Information and Communication Communicates Externally 

3 Control Activities Selects and develops control activities 

Selects and develops general controls over technology 

Deploys through policies and procedures 

We assessed the design, implementation, and operating effectiveness of these internal controls and 

identified deficiencies that we believe could affect the Office’s ability to use funds for authorized 

purposes, and properly account for and control property. The internal control deficiencies we found 

are discussed in the Audit Results section of this report. 

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Additionally, for the components and principles which we determined to be significant, we 

assessed the internal controls and compliance with laws and regulations necessary to satisfy the 

audit objective. 

However, because our review was limited to these internal control components and underlying 

principles, it may not have disclosed all internal control deficiencies that may have existed at the 

time of this audit. 

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, we concluded that the Office accounted for HAVA funds 

in accordance with the requirements mentioned above, and used the funds in a manner consistent 

with the budget plan for the period from June 5, 2018 through September 30, 2019. However, the 

Office did not expend HAVA funds in accordance with the requirements mentioned above or 

account for property purchased with HAVA payments. The exceptions to applicable compliance 

requirements are described below. 

Finding No. 1 – Unsupported Costs 

The Office was not able to timely provide bid evaluation documentation for the seven invoices 

selected for disbursement testing. The seven invoices totaled $1,757,984. The seven invoices were 

selected from a population of 21 disbursements totaling $4,382,852. All disbursements were 

purchased from the same contract, therefore all $4,382,852 is considered unsupported. The Office 

indicated during fieldwork that the documentation no longer existed. 

The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal 

Awards (Uniform Guidance) 2 CFR 200.403 states, “Except where otherwise authorized by statute, 

costs must meet the following general criteria in order to be allowable under Federal Awards: (g) 

Be adequately documented.” 

Further, Uniform Guidance 2 CFR 200.333 states that, “Financial records, supporting documents, 

statistical records, and all other non-Federal entity records pertinent to a Federal award must be 

retained for a period of three years from the date of submission of the final expenditure report.” 

The Office made all purchases via a contract for which they could not provide documentation of 

the bid evaluation during audit fieldwork. The contract, awarded to ES&S in 2015, was supported 

with a Request for Proposal, the responsive bids, and the Question and Answers. However, the 

Office was unable to timely provide the bid evaluation documentation to determine how ES&S 

was selected rather than the other responsive bids. 

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Adequately documenting the procurement of all contractual services and goods through full and 

open competition helps prevent misuse of federal funds and ensures that responsive bidders are 

selected for goods and services needed for HAVA purposes. 

Recommendation 

1. We recommend that the EAC determine whether to require the Office to transfer to the 

election fund $4,382,852 for the unsupported cost cited above by reviewing the adequacy 

of the bid evaluation documentation provided by the Office in December 2020. 

Secretary of State Response: 

As stated in the draft audit report, the Secretary of State's Office was unable to provide auditors 

with bid evaluation documentation regarding the selection of Election Systems & Software 

(ES&S) for the purchase of election equipment totaling $4,382,852. 

After subsequently contacting the former Chief Deputy Secretary of State, we were able to obtain 

bid evaluation scoring sheets for all three (3) vendors (Unisyn, ES&S, and Hart Intercivic) and a 

summary sheet documenting ES&S as the highest scorer. A compilation of these spreadsheets is 

attached for your reference. 

Auditor’s Response: 

We appreciate the Secretary of State’s Office providing the documentation of the evaluation of the 

responsive bids received for election equipment, which was initially requested in January 2020. 

Since this information was not provided until December 2020 in response to the issuance of the 

draft performance audit report, we were not able to perform audit procedures and therefore we are 

not able to conclude on the sufficiency and appropriateness of the information provided. 

Finding No. 2 – Property Records 

Our sample of disbursements included the purchase of 87 digital scanners. None of the digital 

scanners, which had a per unit cost in excess of $5,000 were tracked in the Arkansas 

Administrative Statewide Information System (AASIS). The digital scanners had a base cost of 

$5,635 per unit, for a total pre-discount price of $490,245. 67 of the 87 digital scanners were 

selected to be viewed and were determined to exist. 

The Uniform Guidance at 2 CFR 200.313(d)(1) states that, “Property records must be maintained 

that include a description of the property, a serial number or other identification number, the source 

of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of 

the property, percentage of Federal participation in the project costs for the Federal award under 

which the property was acquired, the location, use and condition of the property, and any ultimate 

disposition data including the date of disposal and sale price of the property.” 2 CFR 200.33 defines 

equipment as “tangible personal property (including information technology systems) having a 

useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser 

of the capitalization level established by the non-Federal entity for financial statement purposes, 

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or $5,000.” The Office has adopted a policy in which it will follow the Department of Finance and 

Administration (“DFA”) guidelines with respect to Inventory Policy and Tracking. The DFA 

Capital Asset Guidelines state that All On-line User Agencies and Service Bureau Agencies are 

required to record their asset inventory in the AASIS system based on established tracking and 

capitalization thresholds found herein. Equipment’s capitalization threshold is detailed as $5,000. 

The Office applied the entire vendor discount to the single line item of the purchase in excess of 

$5,000 so that the Office would not need to track the equipment in AASIS. The discount was 

received for equipment that was traded in at the time of the purchase. When the discount is 

allocated across all items, along with the sales tax on the purchase price, the per unit cost is in 

excess of $5,000 for all purchases reviewed by the audit. 

Proper tracking of property purchased with federal funds ensures that the equipment is being used 

and disposed of in accordance with federal regulations. 

Recommendation 

We recommend that the EAC require the Office to: 

2. Implement a policy to allocate vendor discounts and sales tax across the entire purchase, 

not just against a single line-item 

3. Include all items with per unit costs in excess of $5,000 and purchased with federal funds, 

in the AASIS system in accordance with State policy. 

Secretary of State Response: 

The Secretary of State, as a constitutional office, is permitted to establish internal fiscal policies 

that may reasonably differ from the Financial Management Guide published for state agencies by 

the Arkansas Department of Finance and Administration. The practice of applying vendor 

discounts and sales tax against certain capital purchases has been vetted with the Department of 

Finance and Administration and has been discussed with Arkansas Legislative Audit during 

required annual audits with no findings or recommendations to do otherwise issued. 

Therefore, it is our position that this method of valuation is valid policy and that the application of 

vendor discounts and state taxes to the purchase of the digital scanners should be acceptable. 

As previously stated, the Secretary of State may establish fiscal policies that differ from state 

guidelines. Because of this, we are not mandated to use AASIS, but do record inventory in another 

application named FasGov. We have attached screen shots from FasGov that show the recording 

and tracking of all 87 voting machines purchased with federal funds for each of the counties in 

question. 

These machines were purchased and tagged with Secretary of State tag numbers. All tag numbers 

and serial numbers were recorded in FasGov prior to transferring ownership to the counties in 

question. At the time of transfer, a list of all tag and serial numbers was provided to the respective 

county judge who was required to sign documentation indicating receipt of transferred equipment. 

7 
 

 

Upon transfer, counties take full ownership of the equipment and assume responsibility for 

maintaining and tracking equipment. However, the recording of items with tag and serial numbers 

enables our office to conduct an inventory of HAVA purchased equipment at any time. 

Auditor’s Response: 

The practice of assigning vendor discounts to only certain items on multi-item purchases is not a 

best practice. We would recommend that EAC ensure that this internal policy has been formalized 

by the Office and accepted as appropriate by the authorizing bodies. 

The Secretary of State’s office may establish policies that differ from state guidelines. The 

“Secretary of State Capital Asset Memo” states that the Office “follows DF&A’s policies for 

capital outlay...The Accounting Department records the capitalized fixed asset in AASIS,” it was 

our expectation that the items would be recorded in AASIS. 

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

Secretary of State. We considered any comments received prior to finalizing this report. 

The Office responded on December 14, 2020 and generally disagreed with the report’s findings 

and recommendations. The EAC responded on December 17, 2020 and stated they will work with 

the Arkansas Secretary of State’s office to ensure appropriate correction actions are taken. 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 December 6, 

2019 and November 16, 2020. 

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

McBride, Lock & Associates, LLC 

Kansas City, Missouri 

November 16, 2020 

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APPENDIX A-1 

Response of the Arkansas 

Secretary of State to the Draft Report 
JOHN THURSTON 

ARKANSAS SECRETARY OF STATE 

Decen1berl4,2020 

Patricia L. Layfield 

Inspector General 

U.S. Election Assistance Commission 

633 3rd Street, NW, Suite 200 

vVashington, DC 20001 

Re: Response to Draft Performance Audit Report - Administration of Payments Received Under the 

Help America Vote Act by the Arkansas Secretary of State 

Dear Ms. Layfield, 

Thank you for providing us the opportunity to respond to recommendations delineated in the abovereferenced audit report. Please find below our responses to each of the three (3) audit recommendations 

with supporting documentation attached as indicated. 

Recommendation 1: 'v\/e recommend that the EAC require the Office to transfer to the election fund 

$4,382,852 for the unsupported cost cited above. 

Response 1: As stated in the draft audit report, the Secretary of State's Office was unable to provide 

auditors with bid evaluation documentation regarding the selection of Election Systems & Software 

(ES&S) for the purchase of election equipment totaling $4,382,852. 

After subsequently contacting the former Chief Deputy Secretary of State, we were able to obtain bid 

evaluation scoring sheets for all three (3) vendors (Unisyn, ES&S, and Hart lntercivic) and a summary 

sheet documenting ES&S as the highest scorer. A compilation of these s preadsheets is attached for you r 

reference. 

Recommendation 2: Implement a policy to allocate vendor discounts and sales tax across the entire 

purchase, not just against a single line-item. 

Response 2: The Secretary of State, as a constitutional office, is permitted to establish internal fiscal 

policies that may reasonably differ from the Fi11e111cial Management Guide pubhshed for state agencies by the 

Arkansas Department of Finance and Administration. The practice of applying vendor discounts and 

sales tax against certain capital purchases has been vetted with the Department of Finance and 

Admin istration and has been discussed with Arkansas Legislative Audit during requ ired annual audits 

with no findings or recommendations to do otherwise issued. 

Therefore, it is our position that this method of valuation is valid policy and that the application of 

vendor discounts and state taxes to the purchase of the d igital sca nners should be acceptable. 

State Capitol • Suit e 256 • 500 \.Voodlane Street • Little Rock, Arkansas 72201-1094 

501-682-1010 • Fax 501-682-3510 

e-mail: arsos@sos.arkansas.gov • www.sos.arkansas.gov 
Recommendation 3: Include all items with per unit costs in excess of S5,000 and purchased with federal 

funds, in the AASIS system in accordance ,vith State policy. 

Response 3: As previously stated, the Sec retary of State may establish fiscal policies that differ from state 

guidelines. Because of this, we are not mandated to use AAS[S, but do record inventory in another 

application named FasGov. 'vVe have attached screen shots from FasGov that show the recording and 

tracking of all 87 voting machines purchased with federal funds for each of the counties in question. 

These machines were purchased and tagged with Secretary of State tag numbers. All tag numbers and 

serial numbers were recorded in FasGov prior to transferring ownership to the counties in question. At 

the time of transfer, a list of all tag and serial numbers was provided to the respective county judge who 

was required to sign documentation indicating receipt of transferred equipment. 

Upon transfer, counties take full ownership of the equipment and assume responsibility for maintaining 

and tracking equipment. However, the recording of items with tag and serial numbers enables our office 

to conduct an inventory of HA VA-purchased equipment at any time. 

Should you have any questions regarding our response or need additional information, feel free to contact 

me. Thank you again for allowing us to respond. 

Sincerely, 

Bi~ 

Chief Deputy 

Attachments 

Cc: Aaron Rhodenbaugh 

Kinza Ghaz navi 
APPENDIX A-2 

Response of the 

U.S. Election Assistance Commission 

to the Draft Report 
 

 

 

 

U.S. ELECTION ASSISTANCE COMMISSION 

633 3rd Street, NW Suite 200 

Washington, DC 20001 

TO: Patricia Layfield 

Inspector General 

FROM: Mona Harrington 

Executive Director 

DATE: December 17, 2020 

RE: Response to the Draft Performance Audit Report, Administration of 

Payments Received under the Help America Vote Act by the Arkansas 

Secretary of State 

Thank you for the opportunity to respond to the draft performance audit report of EAC’s 

grant funds to Arkansas. 

We appreciate the auditor’s detailed findings and recommendations and will work with 

the Arkansas Secretary of State’s office to ensure appropriate correction actions are taken 

in a timely manner. 
 

 

 

Appendix B 

AUDIT SCOPE AND 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. 

As part of our audit, we gained an overall understanding of the internal control environment at the 

Office. Based on this understanding, we identified certain internal controls that we considered to 

be significant (or key controls) to achieving each objective. All components of internal control are 

relevant, but not all may be significant. Significance is defined as the relative importance of a 

matter within the context in which it is being considered, and is a matter of professional judgment. 

We made the following determination as to the significance of the underlying internal control 

principles: 

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Objective 

1 2 3 

Control Environment 

1. Demonstrates Commitment to integrity and ethical values No No No 

2. Exercises oversight responsibility No No No 

3. Establishes structure, authority, and responsibility No No No 

4. Demonstrates commitment to competence No No No 

5. Enforces accountability. No No No 

Risk Assessment 

6. Specifies suitable objectives No No No 

7. Identifies and analyzes risk No No No 

8. Assesses fraud risk No No No 

9. Identifies and analyzes significant change No No No 

Control Activities 

10. Selects and develops control activities Yes Yes Yes 

11. Selects and develops general controls over technology Yes Yes Yes 

12. Deploys through policies and procedures Yes Yes Yes 

Information and Communication 

13. Uses relevant information Yes No No 

14. Communicates internally Yes No No 

15. Communicates externally No Yes No 

Monitoring 

16. Conducts ongoing and/or separate evaluations No No No 

17. Evaluates and communicates deficiencies No No No 

The significance was determined as follows: 

Objective 1: Control Activities and its underlying principles were deemed to be significant to our 

determination of the awardee’s compliance with the objective. The Control Activities component 

includes the design and implementation of specific tasks performed by individuals within the entity 

to fulfill their duties and responsibilities and to respond to identified risks. These principles address 

the design and implementation of activities related to management review, segregation of duties 

(including restriction of access with the information system), and documentation of internal 

controls and transactions. We determined these principles to be the most significant to the state’s 

proper use of funds and compliance with award requirements. 

The Information and Communication principles of Use Relevant Information and Communicate 

Internally were deemed to be significant to our determination of the awardee’s compliance with 

the federal financial reporting portion of this objective. These principles address the relevance of 

the information and the internal communication processes used to compile the data necessary to 

meet the state’s reporting objectives. 

13 
 

 

 

 

 

 

 

 

 

Objective 2: Control Activities and its underlying principles were deemed to be significant to our 

determination of the awardee’s compliance with the objective. The Control Activities component 

includes the design and implementation of specific tasks performed by individuals within the entity 

to fulfill their duties and responsibilities and to respond to identified risks. These principles address 

the design and implementation of activities related to management review, segregation of duties 

(including restriction of access with the information system), and documentation of internal 

controls and transactions. We determined these principles to be the most significant to the state’s 

proper accounting and control over equipment purchased with HAVA funds. 

The Information and Communication principle of Communicate Externally was deemed to be 

significant to our determination of the awardee’s compliance with the objective because the state 

communicated with and relied on information from the equipment vendor and the counties where 

the equipment is located as part of the control system for accounting and controlling equipment 

purchased with HAVA funds. 

Objective 3: Control Activities and its underlying principles were deemed to be significant to our 

determination of the awardee’s compliance with the objective. The Control Activities component 

includes the design and implementation of specific tasks performed by individuals within the entity 

to fulfill their duties and responsibilities and to respond to identified risks. These principles address 

the design and implementation of activities related to management review, segregation of duties 

(including restriction of access with the information system), and documentation of internal 

controls and transactions. We determined these principles to be the most significant to the state’s 

use of funds in a manner consistent with the plans provided to EAC. 

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 State’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. 

• 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 using funds in a manner 

consistent with the budget plan provided to EAC. 

• Verified the establishment and maintenance of an election fund. 

• Observed the physical security/safeguards of selected equipment purchased with HAVA 

funds and ensure compliance with federal regulation. 

• Verified whether the matching requirement was met and, if so, that 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 

EXPENDITURES BY BUDGET CATEGORY AND PROGRAM CATEGORY 

JUNE 5, 2018 TO SEPTEMBER 30, 2019 

Program Categories 

Voter 

Voting Election Registration Cyber 

Budget Categories Equipment Auditing Systems Security Communications Other Total 

Personnel (Including Fringe) $ - $ - $ - $ - $ - $ - $ -

Equipment 4,382,852 - - - - - 4,382,852 

Subgrants - - - - - - -

Training - - - - - - -

All Other Costs - - - - - - -

Total Direct Costs $ 4,382,852 $ - $ - $ - $ - $ - $ 4,382,852 

Indirect Costs (if applied) - - - - - - -

Total Federal Expenditures $ 4,382,852 $ - $ - $ - $ - $ - $ 4,382,852 

Non-Federal Match 223,751 - - - - - 223,751 

Total Program Expenditures $ 4,606,603 $ - $ - $ - $ - $ - $ 4,606,603 

15 
Appendix D 

MONETARY IMPACT AS OF SEPTEMBER 30, 2019 

Additional 

Questioned Unsupported Funds for 

Description Costs Costs Program 

Purchase of Equipment $ 4,382,852 $ 4,382,852 $ -

Total $ 4,382,852 $ 4,382,852 $ -

16 
 

 

 

 

 

 

 

 

 

 

Prevent fraud, waste, and abuse; promote economy and efficiency in EAC programs; and support the mission of the EAC by reporting on current performance and accountability and by fostering sound program 

management to help ensure effective government operations.

Retrieve OIG reports on the OIG website, https://www.eac.gov/inspectorgeneral/ 

Request copies by e-mail to: eacoig@eac.gov 

Send mail orders to: 

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Washington, DC 20001 

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Obtain Copies 

of OIG Reports 

Report Fraud, 

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Involving the EAC 

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Washington, DC 20001 

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On-line 

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