U.S. ELECTION ASSISTANCE 

COMMISSION 

OFFICE OF INSPECTOR GENERAL

ADMINISTRATION OF PAYMENTS 

RECEIVED UNDER THE HELP AMERICA 

VOTE ACT BY THE SOUTH CAROLINA 

ELECTION COMMISSION

Report No. 

E-HP-SC-11-06 

January 2007
 U.S. ELECTION ASSISTANCE COMMISSION

 OFFICE OF INSPECTOR GENERAL

 1225 New York Ave. NW - Suite 1100 

 Washington, DC 20005

January 11, 2007 

Memorandum 

To: Thomas Wilkey 

 Executive Director 

From: Curtis W. Crider 

 Inspector General 

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

America Vote Act by the South Carolina Election Commission (Assignment 

Number E-HP-SC-11-06) 

 This report presents the results of the subject audit. The objectives of the audit 

were to determine whether South Carolina (1) expended Help America Vote Act 

(HAVA) payments in accordance with the Act and related administrative requirements 

and (2) complied with the HAVA requirements for replacing punch card or lever voting 

machines, for appropriating a 5 percent match for requirements payments, for 

establishing an election fund, and for maintaining state expenditures for elections at a 

level not less than expended in fiscal year 2000. 

 

 The report concluded that South Carolina generally complied with requirements 

and identified the following areas needing management attention: 

9 South Carolina did not obtain required prior approval from EAC for the 

acquisition of a vehicle with a capitalized cost of $92,506. As a result, we 

classified the $92,506 as a questioned cost 

9 Counties did not keep records that sufficiently accounted for equipment 

purchased with HAVA funds. 

9 South Carolina miscalculated the matching fund requirement, and did not 

deposit into the State election fund interest earned on the matching funds 

which it had appropriated. Consequently, South Carolina understated its 

matching fund requirement by $85,319 and owes the election fund interest 

estimated at $29,475. 

9 South Carolina was unable to provide supporting documentation to show that 

it had met its maintenance of effort requirement for activities funded by 
Section 251 payments at a level not less than expended in the state fiscal year 

ending June 30, 2000. 

 In its December 22, 2006 response to the draft report (Appendix 3), South 

Carolina agreed with the audit findings and indicated that corrective action was in 

process. In particular, South Carolina advised that it had requested approval from the 

EAC for the vehicle purchase, informed counties of the steps needed to comply with 

property accountability requirements, sought further guidance from EAC on which funds 

should be deposited into an interest bearing account, and started to quantify its 

maintenance of effort costs. 

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

this report by March 9, 2007. Your response should contain information on actions taken 

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

implementing the recommendations 

 Section 5(a) of the Inspector General Act (5 U.S.C. § App.1) requires the Office 

of Inspector General to list this report in its semiannual report to Congress. 

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

The Help America Vote Act of 2002 (HAVA or the Act) created the 

U.S. Election Assistance Commission (EAC) to assist states and 

insular areas with the improvement of the administration of Federal 

elections and to provide funds to states to help implement these 

improvements. HAVA authorizes payments to states under Titles I and 

II, as follows: 

HELP AMERICA 

VOTE ACT

9 Title I, Section 101 payments are for activities such as 

complying with Title III of HAVA for uniform and 

nondiscriminatory election technology and administration 

requirements, improving the administration of elections for 

Federal office, educating voters, training election officials and 

poll workers, and developing a state plan for requirements 

payments. 

9 Title I, Section 102 payments are available only for the 

replacement of punchcard and lever action voting systems. 

9 Title II, Section 251 requirements payments are for complying 

with Title III requirements for voting system equipment; and 

for addressing provisional voting, voting information, statewide 

voter registration lists, and voters who register by mail. 

Title II also requires that states must: 

9 Have appropriated funds “equal to 5 percent of the total amount 

to be spent for such activities [activities for which requirements 

payments are made].” (Section 253(b)(5)). 

9 “Maintain the expenditures of the State for activities funded by 

the [requirements] payment at a level that is not less than the 

level of such expenditures maintained by the State for the fiscal 

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

Establish an election fund for amounts appropriated by the state 

“for carrying out the activities for which the requirements payment 

is made,” for the Federal requirements payments received, for 

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

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

1
HAVA funds received and expended by South Carolina are as follows: FUNDING FOR 

SOUTH 

CAROLINA

TYPE OF AMOUNT OUTLAYS 

FINANCIAL 

MANAGEMENT 

REQUIREMENTS

PAYMENT RECEIVED AMOUNT AS OF1

101 $4,652,412 $1,520,877 12/31/05 

102 2,167,518 1,998,330 12/31/05 

251 32,421,280 31,646,471 09/30/05 

Totals $39,241,210 $35,165,678 

Within South Carolina, HAVA programs are administered by the State 

Election Commission. To account for the HAVA payments, the Act 

requires recipients to maintain records that are consistent with sound 

accounting principles, that fully disclose the amount and disposition of 

the payments, that identify project costs financed with the payments 

and with other sources, and that will facilitate an effective audit. 

In addition, EAC notified states of other management requirements. 

Specifically, that states must: 

9 Comply with the Uniform Administrative Requirements for 

Grants and Cooperative Agreements with State and Local 

Governments (also known as the “Common Rule”). 

9 Expend payments in accordance with Cost Principles for State, 

Local and Indian Tribal Governments. These Principles 

establish the allowability or unallowability of certain items of 

cost for federal participation and were issued by the Office of 

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

9 Submit annual financial reports on the use of Title I and Title II 

payments. 

The objectives of our audit were to determine whether South Carolina 

(1) expended HAVA payments in accordance with the Act and related 

administrative requirements and (2) complied with the HAVA 

requirements for replacing punch card or lever voting machines, for 

establishing an election fund, for appropriating a 5 percent match for 

requirements payments, and for maintaining state expenditures for 

elections at a level not less than expended in fiscal year 2000. 

OBJECTIVE 

 

1

 EAC requires states to submit annual reports on the expenditure of HAVA Sections 101, 102, and 251 

funds. For Sections 101 and 102, reports are due on February 28 for the activities of the previous calendar 

year. For Section 251, reports are due by March 30 for the activities of the previous fiscal year ending on 

September 30. 

2
Specifically, we audited claimed expenditures from July 1, 2003 

through December 31, 2005, and reviewed controls to assess their 

adequacy over the expenditure of HAVA funds. We also evaluated 

compliance with certain administrative requirements for the following 

activities: 

9 Accumulating financial information reported to EAC on the 

Financial Status Reports (Standard Forms number 269). 

9 Accounting for property. 

9 Purchasing goods and services. 

9 Accounting for salaries. 

9 Charging indirect costs. 

9 Spending by counties. 

We also determined whether South Carolina had complied with the 

requirements in HAVA applicable to Section 251 requirements 

payments for: 

9 Establishing and maintaining the election fund. 

9 Appropriating funds equal to five percent of the amount 

necessary for carrying out activities financed with Section 251 

requirements payments. 

9 Sustaining the State’s level of expenditures for elections. 

RESULTS OF AUDIT

We concluded that South Carolina generally administered funds in 

accordance with financial management requirements. However, it did 

not obtain required prior approval from EAC for the acquisition of a 

vehicle with a capitalized cost of $92,506 or make sure that counties 

kept required property records of equipment purchased with HAVAfunds. As a result, we classified the $92,506 as a questioned cost and 

determined that county property records did not contain all required 

management information. 

SUMMARY

Regarding the compliance requirements associated with Section 251 

payments, we found that South Carolina properly established a State 

election fund. On the other hand, we found that it miscalculated the 

matching fund requirement, and did not deposit into the State election 

fund interest earned on the matching funds which it had appropriated. 

Consequently, South Carolina understated its matching fund 

requirement by $85,319 and owes the election fund interest estimated 

at $29,475. Finally, we were not able to determine whether South 

Carolina satisfied the maintenance of effort requirement because it did 

3
not identify its base-year level of effort or subsequent years spending 

of state funds pertaining to Section 251-type activities. 

South Carolina used HAVA funds to purchase and outfit a bus to serve 

as a mobile training unit to educate voters on the new voting system 

and regulations. South Carolina capitalized the bus as a $92,506 item 

in its equipment inventory. The $92,506 consists of the purchase price 

of $63,900 plus outfitting costs of $28,606. We questioned the costs of 

$92,506 because South Carolina did not obtain prior approval from 

EAC, as required by OMB Circular A-87, before purchasing the bus. 

Specifically, Attachment B to Circular A-87, Part 15, requires that 

agencies receive advance approval for the purchase of general purpose 

equipment or special purpose equipment with a unit cost of $5,000 or 

more. 

QUESTIONED 

EQUIPMENT 

COSTS

During our audit, the State Election Commission requested from EAC 

approval for the bus purchase. 

Recommendation: 

1. We recommend that EAC resolve the questioned costs of 

$92,506. 

South Carolina Response: 

South Carolina stated that it is awaiting a response from EAC to a 

September 1, 2006 request for retroactive approval of the vehicle 

purchase. 

The standards specify that 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; 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. Although the counties 

maintained a list of voting machines with serial numbers, they did not 

keep other required information necessary to adequately manage 

property. State Election Commission officials told us that they were 

not aware of the Federal requirements, and thus did not pass them on to 

the counties. 

PROPERTY

 

Recommendation: 

2. We recommend that the EAC ensure that the South Carolina 

State Election Commission requires all counties to comply with 

the Federal equipment management requirements. 

4
South Carolina Response:

South Carolina advised that it has informed the counties of the 

requirements for property records and that it requested county directors 

to certify that the county is in compliance with the federal 

requirements. 

OIG Comments: 

The State procedures should also include a means to verify the 

accuracy of the certifications. This could be done on a test basis. 

South Carolina (a) understated its matching contribution by 

approximately $85,319 and (b) did not deposit its matching funds into 

the State’s election fund, resulting in lost interest of $29,475. 

MATCHING

As a condition to receiving requirements payments, Section 253 (b)(5) 

of HAVA requires states to have: 

. . . appropriated funds for carrying out the activities for 

which the requirements payment is made in an amount 

equal to 5 percent of the total amount to be spent for 

such activities (taking into account the requirements 

payment and the amount spent by the State) . . . 

South Carolina understated its matching funds because it miscalculated 

its matching requirement. In doing so, it applied the 5 percent to only 

the Federal payment of $32,421,280. This resulted in South Carolina 

appropriating $1.6 million. The correct calculation is to first divide the 

Federal payment by 95 percent to determine the total federal and state 

funds of $34,127,663. Then, to arrive at the state match, deduct the 

Federal payment ($32,421,280) from the total funds. This results in a 

state matching requirement of $1,706,383, or $85,319 more that the 

state actually appropriated. 

HAVA, in Section 254 (b)(1), also requires states to deposit the funds 

appropriated to match the requirements payment into a state election 

fund, described as follows: 

. . . a fund which is established in the treasury of the 

State government, which is used in accordance with 

paragraph (2), and which consists of the following 

amounts: 

(A)Amounts appropriated or otherwise made 

available by the State for carrying out the 

5
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. 

We found that South Carolina did not, however, deposit the $1.6 

million that it had appropriated into its election fund. This occurred 

because state officials were not aware of the requirement to deposit 

matching funds into the state election fund. As a result, South Carolina 

lost interest that it would have earned had it deposited its full matching 

fund requirement into the state fund. We estimated that the election 

fund earned interest at an annual rate of approximately 3 percent. 

Using the 3 percent interest rate, we computed lost interest to be about 

$29,475. 

Recommendation: 

3. We recommend that the EAC require the South Carolina State 

Election Commission to deposit state funds of $114,794 

($85,319 under match plus interest of $29,475) into the state 

election fund. 

South Carolina Response: 

South Carolina replied that appropriated funds are available to provide 

the full match and the forgone interest. The response also said that the 

Assistant Treasurer for South Carolina requested clarification on the 

HAVA requirement for depositing state matching funds and related 

interest into the election fund. To respond to the Assistant Treasurer’s 

request, South Carolina requested guidance for EAC on November 9, 

2006 and stated that it would “proceed with the matter based on the 

response we receive.” 

South Carolina’s State Plan did not identify the amount of state funds 

expended in the base year (State fiscal year 2000) for activities funded 

by Section 251 requirements payments. In addition, the Plan did not 

indicate how the State would maintain its expenditures at or above that 

base-year level in subsequent fiscal years. 

MAINTENANCE 

OF EFFORT

 

HAVA Section 254 (a)(7) specifies that a state plan must describe how 

the state, in using Section 251 requirements payments, will “maintain 

6
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.” 

South Carolina’s State Plan says that “in using any requirements 

payment, South Carolina will maintain expenditure of the State for 

activities funded by the payment at a level equal or greater than the 

level of such expenditures in State Fiscal Year 2000.” However, we 

found that South Carolina did not have a process to identify state 

expenditures for Section 251-type activities. 

As a result, South Carolina had not determined the appropriate state 

expenditures in the base year or the qualifying expenditures in 

subsequent years. As such, we could not verify that South Carolina 

complied with the maintenance of effort requirement. 

Recommendations:

We recommend that EAC: 

4. Require South Carolina to identify its base year expenditures for 

activities related to HAVA Section 251 requirements payments, 

and the annual expenditures for these activities for subsequent 

fiscal years. 

5. Identify any appropriate actions to be taken based on the 

information submitted by South Carolina. 

South Carolina Response: 

South Carolina replied that its understanding of the maintenance of 

effort “was that we were not to use federal funds to pay for any items 

that were not previously funded with the federal funds. Special care 

has been taken to ensure that no HAVA funds have been used to fund 

prior commitments or any items not specifically relevant to HAVA.” 

The response also said that South Carolina was “in the process of 

determining the actual dollar amount and will submit that figure to 

your office when it has been determined.” 

7
APPENDIX 1 

SCOPE AND METHODOLOGY 

To accomplish our objective, we reviewed: 

9 The prior single audit report and other reviews related to the State’s 

financial management systems and the HAVA program for the last 

2 years. 

9 Policies, procedures and regulations for the State’s management 

and accounting systems as they relate to the administration of 

HAVA programs. 

9 Inventory lists of equipment purchased with HAVA funds. 

9 Major purchases. 

9 Supporting documents maintained in the accounting system for 

payments made with HAVA funds. 

9 Certain South Carolina laws that impacted the election fund. 

9 Appropriations and expenditure reports for State funds used to 

maintain the level of expenses for elections at least equal to the 

amount expended in fiscal year 2000 and to meet the five percent 

matching requirement for section 251 requirements payments. 

9 Information regarding source/supporting documents kept for 

maintenance of effort and matching contributions. 

We also interviewed appropriate Election Commission employees 

about the organization and operation of the HAVA program. 

We conducted our review in accordance with Government Auditing 

Standards issued by the Comptroller General of the United States. As 

such, we included tests and procedures as considered necessary under 

the circumstances to evaluate the Division’s controls over the 

administration of HAVA payments. Because of inherent limitations, a 

study and evaluation made for the limited purposes of our review 

would not necessarily disclose all weaknesses in administering HAVA 

payments. 

8
APPENDIX 2 

MONETARY IMPACT 

Questioned 

Description Costs 

Additional Funds 

for Program 

Bus $92,506

Matching: 

 Under match $ 85,319 

 Interest 29,475 

Totals $92,506 $114,794 

9



OIG’s Mission 

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

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

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

enhance the economy, efficiency, and effectiveness in EAC 

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

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

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

operations. Products and services include traditional financial and 

performance audits, contract and grant audits, information systems 

audits, and evaluations. 

Obtaining 

Copies of 

OIG Reports 

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

(eacoig@eac.gov). 

Mail orders should be sent to: 

U.S. Election Assistance Commission 

Office of Inspector General 

1225 New York Ave. NW - Suite 1100 

Washington, DC 20005 

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

 Fax: (202) 566-0957 

To Report Fraud, 

Waste and Abuse 

Involving the U.S. 

Election Assistance 

By Mail: U.S. Election Assistance Commission 

 Office of Inspector General 

 1225 New York Ave. NW - Suite 1100 

 Washington, DC 20005

Commission or Help 

America Vote Act 

Funds

E-mail: eacoig@eac.gov

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

FAX: 202-566-0957