OFFICE OF INSPECTOR GENERAL

U.S. Election Assistance Commission

AUDIT OF THE HELP AMERICA VOTE ACT 

GRANTS AWARDED TO THE STATE OF ARIZONA

Report No. G22AZ0008-22-01

August 9, 2022
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- -

AUDIT OF THE HELP AMERICA VOTE

HIGHLIGHTS ACT GRANTS AWARDED TO THE STATE

OF ARIZONA

Report No. G22AZ0008-22-01 August 9, 2022

What OIG Audited 

The Office of Inspector General, through the

independent public accounting firm of McBride, 

Lock & Associates, LLC, audited funds received by

the State of Arizona under the Help America Vote 

Act (HAVA), including state matching funds and

interest earned, totaling $27.6 million.

Arizona did not spend funds authorized under the 

Coronavirus Aid, Relief, and Economic Security 

(CARES) Act because the state legislature did not 

appropriate them, as required by Arizona statute. 

The objectives of the audit were to determine 

whether the State of Arizona:

(1) used funds for authorized purposes in

accordance with Sections 101 and 251 of HAVA

and other applicable requirements;

(2) properly accounted for and controlled property

purchased with HAVA payments; and

(3) used funds in a manner consistent with the

informational plans provided to EAC.

What OIG Found

The Office of Inspector General found that the

Arizona Secretary of State generally accounted for 

HAVA funds in accordance with applicable

requirements and used them in a manner consistent

with the informational plans that they had

submitted. 

However, there were two exceptions (1) one

software purchase was not tracked as property in 

the state’s financial system; and (2) one of five 

counties sampled did not have complete property

records. During the audit, the office took steps to

add the software to the financial system and place 

the county purchase on an appropriate inventory

listing. 

What OIG Recommended

The Office of Inspector General made three

recommendations to ensure procedures are in place

for equipment to be used and disposed of in

accordance with federal regulations:

U.S. Election Assistance Commission | Office of Inspector General
 

 

 

 

 

 

 

OFFICE OF INSPECTOR GENERAL 

U.S. Election Assistance Commission 

DATE: August 9, 2022 

TO: U.S. Election Assistance Commission, Interim Executive Director, Mark Robbins 

FROM: U.S. Election Assistance Commission, Inspector General, Brianna Schletz 

SUBJECT: Audit of the Help America Vote Act Grants Awarded to the State of Arizona 

(Report No. G22AZ0008-22-01) 

This memorandum transmits the final report on Help America Vote Act grants awarded to the 

state of Arizona. The Office of Inspector General contracted McBride, Lock & Associates, LLC, an 

independent certified public accounting firm, to conduct the audit. The contract required that 

the audit be performed in accordance with U.S. generally accepted government auditing 

standards. We monitored the firm’s work to ensure that it adhered to those standards. 

Please keep us informed of the actions taken on the report’s three recommendations, as we 

will track the status of their implementation. 

We appreciate the assistance you and your staff provided to us during this audit. 

cc: Commissioner Thomas Hicks, Chair 

Commissioner Christy McCormick, Vice Chair 

Commissioner Benjamin W. Hovland 

Commissioner Donald L. Palmer 
 

McBRIDE, LOCK & ASSOCIATES, LLC 

Certified Public Accountants 

Established 1980 

Performance Audit Report 

Administration of Payments Received Under the Help America Vote Act by 

the Arizona Secretary of State 

Prepared for 

The United States Election Assistance Commission (EAC) 

Office of Inspector General 

By 

McBride, Lock & Associates, LLC 

July 2022 

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 Payments Received Under the Help America Vote Act by 

the Arizona Secretary of State 

TABLE OF CONTENTS 

Page 

EXECUTIVE SUMMARY 1 

BACKGROUND 2 

AUDIT OBJECTIVES 4 

SCOPE AND METHODOLOGY 4 

AUDIT RESULTS 6 

APPENDICES: 

Appendix A-1: Response of the Arizona Secretary of State to the Draft Report 

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

to the Draft Report 

Appendix B: Audit Scope and Methodology 

Appendix C-1: Election Security Expenditures by Budget Category and Program 

Category 

Appendix C-2: Section 251 Reissued Expenditures by Spending Category 

Appendix D: Monetary Impact as of September 30, 2020 for Election Security and 

Section 251 Reissued Grants and as of December 31, 2020 for CARES 

Act Grant 
 

 

 

 

 

 

 

 

U.S. Election Assistance Commission 

Performance Audit Report 

Administration of Payments Received Under the Help America Vote Act by 

the Arizona 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 of the 

administration of payments received under the Help America Vote Act (HAVA or the Act) by the 

Arizona Secretary of State’s Office (Office). The payments received by the Office are identified 

as Election Security, Section 251 Reissued, and the CARES Act. The scope of the audit includes: 

Election Security administration from inception on June 7, 2018 through September 30, 2020; 

Section 251 Reissued administration from inception on October 1, 2018 through September 30, 

2020; CARES Act administration from inception on September 15, 2020 through December 31, 

2020, including matching fund expenditures made after December 31, 2020. The objective of the 

audit was to determine whether the Office used payments authorized by Sections 101 and 251 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, except for the matters discussed below, we concluded 

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

requirements mentioned above and for the periods mentioned above. The exceptions are as 

follows: 

1. Our equipment testing sample included one invoice totaling $272,878 of expenditures. The 

invoice was for the development of a Statewide Voter Registration System, which in total 

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exceeds $1 million. The software was not tracked in the state’s financial system as 

property. 

2. The Office’s monitoring of subrecipients did not ensure that property records were 

maintained in compliance with 2 CFR 200. Five out of 15 counties were selected for 

physical observation of equipment. The five counties were Cochise, Coconino, Yavapai, 

Navajo and Yuma. These five counties represented $1,238,171 of the State’s reported 

expenditures. Cochise and Coconino had no purchases in excess of their capitalization 

threshold. The property purchased by Yuma County was not being kept on an inventory 

listing. Six items of equipment purchased with $82,380 of Election Security funds were 

selected for observation from Yavapai and Navajo counties. All items 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 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 

and Title 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; 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. 

• 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. 

The HAVA Election Security, Section 251 Reissued and CARES Act grants also require that states 

must: 

• Maintain funds in a state election fund (as described in Section 104 (d) of HAVA). 

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

Management and Budget (OMB) – (2 C.F.R. § 200). 

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

include a summary of expenditures aligned with budget categories in the grantee’s plan, a 

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list of equipment obtained with the funds, and a description of how the funded activities 

met the goals of the plan. 

• Provide matching funds of the Federal funds within a period stipulated by the award to be 

documented on the annual SF-425 submission 

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

in compliance with HAVA. 

The Awardee – The Arizona Secretary of State 

The HAVA funds were awarded to the Arizona Office of the Secretary of State. The Secretary of 

State serves as the chief election officer in the state of Arizona, which includes oversight of 

campaign finance for statewide and legislative candidates, verifying initiatives and referenda for 

the ballot, and certifying the official results of each election. A statewide or legislative election is 

scheduled for every even-numbered year unless a special election is required. 

Help America Vote Act State of Arizona State Plans 

The Arizona Secretary of State’s HAVA budget narratives were prepared by the Secretary of State. 

Election Security 2018 and 2020 

The main objectives of the 2018 project funded by HAVA, as set forth in the budget letter, were 

for upgrades to the voter registration database and purchases related to cyber security. The state 

had recently purchased a new statewide voter registration database, which would be partially 

funded with the grant. The state also entered into an agreement to undergo an assessment of current 

IT infrastructure. The state planned on creating a new position to be tasked with maintaining and 

understanding the state and county positions on elections security. Additional funds for cyber 

security were to be made as sub-grants to the counties. 

The objectives of the 2020 project funded by HAVA, as set forth in the budget letter, were to 

implement the security assessment results from their Security Plan, communication efforts related 

to elections, sub-grants to the counties for election security, and create a new position focusing on 

maintaining and understanding elections security. 

Section 251 Reissued 

On July 29, 2021, the Office was informed of an interim administrative closeout of the HAVA 

Section 251 grant through September 30, 2018. On that date, the unexpended program 

income/interest was carried forward. The funds were to be spent in accordance with Section 251. 

CARES Act 

The objectives of the 2020 CARES Act project funded by HAVA, as set forth in the budget letter, 

was to use the funds to prevent, prepare for, and respond to coronavirus domestically or 

internationally, for the 2020 Federal election cycle. To address the effects of the coronavirus on 

the elections the state was to identify internal priorities for expenditures of grant funds to address 

Arizona’s immediate election needs, which includes providing subgrants to counties, additional 

county assistance if the State Legislature authorizes all-mail elections for August and November 

to help with the printing, mailing and postage for ballots and providing funding for protection 

masks and equipment and cleaning supplies, solicit input from county stakeholders on state and 

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local preparedness and response levels to ensure voters, volunteers and election workers are safe, 

direct public education initiatives. 

AUDIT OBJECTIVES 

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

1. Used funds for authorized purposes in accordance with Section 101 and Section 251 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 informational plans 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 and Title II payments. 

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

in compliance with HAVA. 

SCOPE AND METHODOLOGY 

We audited the Election Security grant funds received and disbursed by the Office from June 7, 

2018, through September 30, 2020. These funds are related to the appropriation of $380 million 

under the Consolidated Appropriations Act (CAA), 2018 (P.L. 115-151) and $425 million under 

the CAA, 2020 (P.L. 115-141). We audited the Section 251 grant funds reissued to and disbursed 

by the Office from October 1, 2018, through September 30, 2020. We audited the CARES Act 

grant funds received and disbursed by the Office from September 15, 2020, through December 31, 

2020. These funds are related to the $400 million authorized by the U.S. Congress under the 

Coronavirus Aid, Relief and Economic Security Act (P.L. 116-136). The scope of activity audited 

is shown in the following table: 

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Election Section 251 CARES 

Description Security Funds Reissued Funds Act Funds 

Funds Received from EAC $ 15,860,974 $ - $ 7,874,848 

State Matching Funds 2,052,644 - -

Program Income 291,489 1,530,202 16,605 

Total Funds $ 18,205,107 $ 1,530,202 $ 7,891,453 

Less Disbursements (10,536,239) (1,256,202) -

Fund Balance $ 7,668,868 $ 274,000 $ 7,891,453 

Program income in the above table consists entirely of interest earned on the federal funds as 

reported in the program income section of the federal financial reports. 

The Office’s Election Security expenditures detailed by budget and program category, and Section 

251 Expenditures detailed by spending category are included as Appendix C. The Office did not 

have CARES Act Expenditures. Arizona statute requires that grants received by the Secretary of 

State from the federal government be appropriated by the legislature before the funding is spent. 

The legislature never appropriated the CARES funds, so the Office was unable to use them. 

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 

Communicates Externally 

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 informational plans submitted during the audit period. However, the Office did not properly 

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

requirements are described below. 

Finding No. 1 – Property Records 

Our equipment testing sample included one invoice totaling $272,878 of expenditures. The invoice 

was for the development of a Statewide Voter Registration System, which in total exceeds $1 

million. The software was not tracked in the state’s financial system as property. 

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

Awards (Uniform Guidance) at 2 CFR 200.313(b) states that, “A state must use, manage and 

dispose of equipment acquired under a Federal award by the state in accordance with state laws 

and procedures.” SAAM Topic 25, Section 05 states that, “Unless a specific exception exists, all 

agencies must use FAM to record fixed assets, a term which collectively refers to capital assets 

and, whether capitalized or expensed, IT and stewardship resources.” Further, SAAM Topic 25, 

Section 90, sets the capitalization threshold of computer software at $1 million. 

The Office states that the voter registration system should have been recorded in the Fixed Asset 

Module (FAM). However, the expenditures incurred for the Statewide Voter Registration System, 

which were in excess of the capitalization threshold, were not included in the FAM due to the 

expenditures being coded to the incorrect object code. During the audit, the Office added the 

software in the FAM. 

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

disposed of in accordance with federal regulations and state laws and procedures. 

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Recommendation 

1. We recommend the EAC require the Office to implement procedures or training to ensure 

that fixed assets are recorded to the correct object code. 

Secretary of State’s Response: 

The missing asset entry was identified by the office during a pre-audit review of expenditures and 

correcting entries were made in the financial system during the audit. The delay in capitalizing the 

purchase stemmed from a data entry error made on the purchase order (PO) for the software. To 

reduce the risk of this error occurring again, we have implemented new accounting procedures 

requiring that staff complete annual training and review all POs for data entry errors before they 

are marked as approved. 

Auditor’s Response: 

The proposed corrective actions, if implemented, would be sufficient to resolve the findings. 

Finding No. 2 – Subrecipient Monitoring 

The Office’s monitoring of subrecipients did not ensure that property records were maintained in 

compliance with 2 CFR 200. Five out of 15 counties were selected for physical observation of 

equipment. The five counties were Cochise, Coconino, Yavapai, Navajo and Yuma. These five 

counties represented $1,238,171 of the State’s reported expenditures.1 The property purchased by 

Yuma County was not being kept on an inventory listing.2 

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

Awards (Uniform Guidance) at 2 CFR 200.332(d) states that all pass-through entities must: 

“Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for 

authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions 

of the subaward; and that subaward performance goals are achieved.” 2 CFR 200.313(d)(1) 

requires 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.” 

The Office did not perform activity monitoring sufficient to ensure that subrecipients were 

maintaining property records in compliance with Federal statutes and the terms and conditions of 

the subaward. Yuma County did not include their purchase on an inventory listing. Once brought 

to the County’s attention, it was placed on an appropriate inventory listing. 

1 Cochise and Coconino had no purchases in excess of their capitalization threshold. 

2 Six items of equipment purchased with $82,380 of Election Security funds were selected for observation from 

Yavapai and Navajo counties. All items were determined to exist. 

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Proper monitoring of subrecipients ensures that equipment purchased with federal funds is being 

used and disposed of in accordance with federal regulations. 

Recommendation 

We recommend that the EAC require the Office to: 

2. Implement procedures or training to ensure that all subrecipients are properly monitored in 

accordance with federal statutes and the terms and conditions of the subaward. 

3. Ensure all property purchased by subrecipients with federal funds is placed on a compliant 

property record. 

Secretary of State’s Response: 

The office maintains subrecipient equipment lists and has documented procedures and checklists 

to be used in the monitoring of property records. A review of the office’s responsibilities, 

procedures, and schedule for performing physical inventories will be conducted with current grants 

management staff. The one item missing from the county’s inventory list was added during the 

audit. 

Auditor’s Response: 

The proposed corrective actions, if implemented, would be sufficient to resolve the findings. 

The Office responded on July 29, 2022, and generally agreed with the report’s findings and 

recommendations. The EAC responded on July 26, 2021, and agreed with the recommendations 

and will follow up with the Arizona Secretary of State to implement and complete appropriate 

corrective action on the findings. 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 July 7, 2021, 

and July 15, 2022. 

McBride, Lock & Associates, LLC 

Kansas City, Missouri 

July 15, 2022 

8 
 

 

APPENDIX A-1 

Response of the 

Arizona Secretary of State 

to the Draft Report 
 

 

July 29, 2022 

Brianna Schletz, Inspector General 

U.S. Election Assistance Commission 

Office of Inspector General 

633 3rd Street NW, Suite 200 

Washington, DC 20001 

Re: Response to EAC OIG Draft Report: Audit of the HAVA Grants Awarded to the State of Arizona 

Dear Brianna Schletz: 

Thank you for the opportunity to respond to the draft audit report of Help America Vote Act (HAVA) 

grants awarded to the State of Arizona. HAVA grants serve as a great benefit to Election Offices 

throughout the state and we welcomed the review of our Office’s administration of the funds by the 

independent public accounting firm McBride, Lock & Associates, LLC. We are pleased that the two 

findings are minor and were easily resolved during the audit. 

Finding No. 1 – Property Records 

One software purchase was not tracked as property in the state’s financial system. 

Secretary of State’s Response: 

The missing asset entry was identified by the office during a pre-audit review of expenditures and 

correcting entries were made in the financial system during the audit. The delay in capitalizing the 

purchase stemmed from a data entry error made on the purchase order (PO) for the software. To reduce 

the risk of this error occurring again, we have implemented new accounting procedures requiring that 

staff complete annual training and review all POs for data entry errors before they are marked as 

approved. 

Finding No. 2 – Subrecipient Monitoring 

One of five counties sampled did not have complete property records. 

Secretary of State’s Response: 

The office maintains subrecipient equipment lists and has documented procedures and checklists to be 

used in the monitoring of property records. A review of the office’s responsibilities, procedures, and 
 

 

Page | 2 

schedule for performing physical inventories will be conducted with current grants management staff. 

The one item missing from the county’s inventory list was added during the audit. 

Thank you to the McBride, Lock & Associates, LLC audit team for their diligence and professionalism 

throughout the audit and to the Election Assistance Commission (EAC), particularly the grants team, for 

their partnership and support as we work through the audit resolution process. 

Sincerely, 

Sarah Brown 

Chief Financial Officer 
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: Brianna Schletz, Inspector General 

FROM: Kinza Ghaznavi 

Grants Manager 

DATE: July 26, 2022 

RE: Response to Draft Audit Report of Grants Awarded to the Arizona Office 

of the Secretary of State, OIG Report G22AZ0008-22-01 

This is the EAC’s response to the OIG draft audit of HAVA funds awarded to Arizona 

Office of the Secretary of State (the Office) and serves as the EAC’s management 

decision. The scope of the audit included HAVA Section 251, 101 Election Security, and 

101 CARES grants. We are pleased to note that the findings were minimal and are 

following up with the Office on the recommendations. The EAC agrees with the 

recommendations and describes our management decisions related to each one below. 

Finding and Recommendation #1, Property Records: The auditors noted that 

equipment testing identified one software purchase for the Statewide Voter Registration 

System that was not tracked in the state’s financial system as required because the 

expenditure was coded to an incorrect object code. The auditors recommended that the 

EAC require the Office to implement procedures or training to ensure that fixed assets are 

recorded to the correct object code. 

Management Decision: The Office added a step in their fixed asset review 

procedure that requires the accounting specialist responsible for fixed assets to review 

object codes prior to recording them and correct them if needed. Grants office staff 

will review the new procedure to confirm it meets the recommendation and confirmed 

the specialist has already been notified of the new procedures. The Office also 

reported that staff is looking for appropriate on-line fixed asset training and, if such 

training is available, staff will be required to complete it by August 15. However, the 

addition of the new procedure and training for the fixed assets accounting specialist 

adequately addresses the recommendation if additional training is not available. 

Finding and Recommendations #2 and #3, Subrecipient Monitoring: The auditors 

determined that the Office’s monitoring of subrecipients did not ensure that property 

records were maintained in compliance with 2 CFR 200. One of five counties whose 
 

 

 

 

 

 

 

 

 

inventories were reviewed had one item that was not included on the inventory list as 

required. The auditors recommended that the EAC require the Office to: 

2. Implement procedures or training to ensure that all subrecipients are properly 

monitored in accordance with federal statutes and the terms and conditions of the 

subaward. 

3. Ensure all property purchased by subrecipients with federal funds is placed on a 

compliant property record. 

Management Decision: The one subrecipient with the finding related to one item 

that was not in a property record as required has corrected its listing to include the 

missing item. The Office follows state monitoring requirements contained in the 

Arizona Grants Management Manual which includes requirements to review property 

records on site visits. The EAC Grants staff will review the Office’s supporting 

documentation for site visits and desk reviews to confirm the Office follows those 

state monitoring procedures and checks that subrecipients are maintaining appropriate 

inventory records. The EAC Grants staff expects to complete that review after we 

receive additional supporting documentation from the Office, due by August 31. The 

Office is also hiring a replacement subgrant administrator and will train the new staff 

member on requirements under 2 CFR 200, including requirements related to 

maintaining property inventories. The Office staff will also work with the new hire to 

develop a process for documenting property checks and will have training completed 

and a revised procedure in place by the end of August. 

The EAC expects to review the actions and documentation provided by the state by 

September 15, 2022. 

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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: 

13 
 

 

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 Yes 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, Communicate 

Internally and Communicate Externally 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, the internal communication processes used to 

compile the data necessary to meet the state’s reporting objectives and the external communication 

processes used to inform the counties about grant requirements. 

14 
 

 

 

 

 

 

 

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 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 and interest income were properly accounted for and not 

remitted to the State’s general fund. 

15 
 

 

 

 

 

 

 

 

 

 

 

 

Appendix C-1 

ELECTION SECURITY EXPENDITURES BY BUDGET CATEGORY AND PROGRAM CATEGORY 

JUNE 7, 2018 TO SEPTEMBER 30, 2020 

Program Categories 

Budget Categories 

Personnel (Including Fringe) 

Equipment 

Subgrants 

Training 

All Other Costs 

Voting 

Equipment 

$ -

-

-

-

-

Election 

Auditing 

$ -

-

-

-

-

Voter 

Registration 

Systems 

$ 172,951 

-

-

-

2,730,305 

Cyber 

Security 

$ -

-

678,129 

8,096 

-

Communications 

$ -

-

-

-

43,913 

$ 

Other 

9,830 

-

4,840,371 

-

-

Total 

$ 182,781 

-

5,518,500 

8,096 

2,774,218 

Total Direct Costs 

Indirect Costs (if applied) 

$ -

-

$ -

-

$ 2,903,256 

-

$ 686,225 

-

$ 43,913 

-

$ 4,850,201 

-

$ 8,483,595 

-

Total Federal Expenditures 

Non-Federal Match 

Total Program Expenditures 

$ -

1,198,005 

$ 1,198,005 

$ -

-

$ -

$ 2,903,256 

-

$ 2,903,256 

$ 686,225 

132,725 

$ 818,950 

$ 43,913 

721,914 

$ 765,827 

$ 

$ 

4,850,201 

-

4,850,201 

$ 8,483,595 

2,052,644 

$ 10,536,239 

16 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subgrant Spending By Program Categories 

Voter 

Voting Election Registration Cyber 

County Equipment Auditing Systems Security Communications Other Total 

APACHE 

COCHISE 

COCONINO 

GILA 

GRAHAM 

GREENLEE 

LA PAZ 

MARICOPA 

MOHAVE 

NAVAJO 

PIMA 

PINAL 

SANTA CRUZ 

YAVAPAI 

YUMA 

$ 123,915 

13,002 

-

2,800 

39,082 

-

98,072 

-

-

224,072 

6,773 

-

-

49,509 

-

$ -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

$ -

-

-

-

-

-

-

-

-

-

-

-

-

-

9,564 

$ 6,277 

96,746 

111,809 

-

91,148 

79,504 

474 

124,225 

16,406 

30,722 

168,950 

-

41,012 

92,845 

124,473 

$ -

5,517 

-

-

-

-

-

-

-

-

-

-

-

-

16,777 

$ -

78,417 

38,776 

58,630 

36,659 

5,496 

1,455 

2,871,747 

23,344 

27,289 

216,726 

175,000 

92,633 

218,051 

100,603 

$ 130,192 

193,682 

150,585 

61,430 

166,889 

85,000 

100,001 

2,995,972 

39,750 

282,083 

392,449 

175,000 

133,645 

360,405 

251,417 

Total Direct Costs 

Indirect Costs (if applied) 

Total Federal Expenditures 

$ 557,225 

-

$ 557,225 

$ 

$ 

-

-

-

$ 

$ 

9,564 

-

9,564 

$ 984,591 

-

$ 984,591 

$ 

$ 

22,294 

-

22,294 

$ 3,944,826 

-

$ 3,944,826 

$ 5,518,500 

-

$ 5,518,500 

17 
 

 

Appendix C-2 

SECTION 251 EXPENDITURES BY SPENDING CATEGORY 

OCTOBER 1, 2018 TO SEPTEMBER 30, 2020 

Section 251 

Spending Category Funds 

Voter Registration System 1,256,202 

Total Direct Costs $ 1,256,202 

Total Program Expenditures $ 1,256,202 

18 
 

Appendix D 

MONETARY IMPACT AS OF SEPTEMBER 30, 2020 FOR ELECTION 

SECURITY AND SECTION 251 REISSUED GRANTS AND AS OF 

DECEMBER 31, 2020 FOR CARES ACT GRANT 

Additional 

Questioned Unsupported Funds for 

Description Costs Costs Program 

None $ - $ - $ -

Total $ - $ - $ -

19 
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