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EAC MANAGEMENT DECISION:

Resolution of the OIG Audit Report on the Administration of 

Payments Received Under the Help America Vote Act by the 

Massachusetts Secretary of the Commonwealth for the Period 

May 2003 Through September 30, 2012 Report No. E-HPMA-06-12

January 16, 2014 

BACKGROUND

The EAC is an independent, bipartisan agency created by the Help America Vote Act 

(HAVA). EAC assists and guides state and local election officials in improving the 

administration of elections for Federal office. EAC distributes HAVA funds to States for 

the acquisition of voting systems, and supports the establishment of statewide voter 

registration lists, and other activities to improve the administration of elections for 

Federal office. EAC monitors State use of HAVA funds to ensure funds distributed are 

being used for authorized purposes. To help fulfill this responsibility, the EAC 

determines the necessary corrective actions to resolve issues identified during Single 

Audit Act and Office of Inspector General (OIG) audits of state administration of HAVA 

funds. The EAC OIG has established a regular audit program to review the use of 

HAVA funds by States. The OIG’s audit plan and audit reports can be found at 

www.eac.gov. 

The EAC Audit Follow-up Policy authorizes the EAC Executive Director to issue the 

management decision for OIG audits of Federal funds to state and local governments, to 

non-profit and for-profit organizations, and for single audits conducted by state auditors 

and independent public accountants (external audits). The Executive Director has 

delegated the evaluation of final audit reports provided by the OIG and single audit 

reports to the Director of the HAVA Grants Division of EAC. The Division provides a 

recommended course of action to the Executive Director for resolving questioned costs, 

administrative deficiencies, and other issues identified during an audit. The EAC 

Executive Director issues the EAC Management Decision that addresses the findings of 

the audit and details corrective measures to be taken by the State.

States may appeal the EAC management decisions. The EAC Commissioners serve as 

the appeal authority. A State has 30 days to appeal the EAC management decision. All 

appeals must be made in writing to the Chair of the Commission. The Commission will 

render a decision on the appeal no later than 60 days following receipt of the appeal or, in 

the case where additional information is needed and requested, 60 days from the date that 

the information is received from the State. The appeal decision is final and binding. 

Please note with four Commissioner vacancies, the Commission presently lacks a quorum 

to conduct appeals. The 30 day period to file an appeal remains in place. However, the 

60 day period for a decision will toll until a Commission quorum is reestablished. 
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AUDIT HISTORY 

The OIG issued an audit report on the administration of payments received under the 

Help America Vote Act (HAVA) by the Secretary of the Commonweath of 

Massachusetts’ (Office) on November 21, 2013. Based on the audit procedures 

performed, except for the matters discussed below, the auditors concluded that the Office

generally accounted for and expended the Grant funds in accordance with grant and audit 

requirements for the period from May 2003 through September 30, 2012. 

Finding 1 – Financial Reporting

The auditors found that the Office submitted financial reports that could not be supported 

by underlying accounting records. 

Additionally, the terms and conditions of the HAVA awards require the submission of 

accurate and complete Federal Forms 269 (Financial Status Report) and 425 (Federal 

Financial Report) which reflect the uses of award funds and the interest and program 

income generated from those funds. HAVA Title IX, Section 902. AUDITS AND 

REPAYMENT OF FUNDS, Part (a) – Recordkeeping Requirement states, “Each 

recipient of a grant or other payment made under this Act shall keep such records with 

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

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

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

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

other records as will facilitate an effective audit.” 

Recommendation: 

The auditors recommend that the EAC require the Office to implement controls to ensure 

that grant activity is reconciled periodically to ensure that the Federal financial reports 

reflect actual activity of the election fund.

Secretary of the Commonwealth’s Response: 

The Division has implemented the necessary internal controls to ensure that accurate 

future financial reporting on cumulative reports by individual grant is supported by 

underlying accounting records. Further, the Division has established enhanced oversight 

to properly track expenditures and account for grant funds to ensure compliance with 

HAVA. The Division will regularly monitor HAVA grant activity, which will be 

reconciled quarterly. Also, the Division has submitted revised financial reports to 

address the concerns noted in the finding. 
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EAC Response:

The submission of the revised FSRs and the implementation of internal controls 

regarding financial reporting, as noted by the auditors, are responsive and adequate to 

resolve the finding. EAC considers this matter closed.

Finding 2 – Interest Earned on Federal Funds

The auditors found that the Office untimely credited interest earnings to the Elections 

Fund. 

Cash management requirements as set forth in 41 CFR § 105-71.121 (f) address the effect 

of interest income on grant payments, and states that “grantees and subgrantees shall 

disburse program income, rebates, refunds, contract settlements, audit recoveries and 

interest earned on such funds before requesting additional cash payments.” 

Recommendation:

The auditors recommend that the EAC require the Office to calculate the amount of 

interest to transfer to the election fund for the untimely crediting of interest earnings. This 

calculation should consider the period from the inception of the HAVA grant funds 

through the date of transfer and include any compound interest. The amount determined 

should be transferred into the election fund. 

Secretary of Commonwealth’s Response:

The Division, in conjunction with the Massachusetts State Treasurer and State 

Comptroller, established the Election Fund as an interest bearing account. The Division 

acknowledges that for a brief period of time, the interest earned on the account was not 

properly credited back to the Election Fund. 

The Division has now calculated the remaining amount of interest as $153,169 and the 

compound interest as $23,286 to be transferred into the Election Fund. These figures 

include the period from the inception of the HAVA grant funds through June 30, 2013. 

The Deposit of these funds into the Election Fund will properly allocate the interest 

earned on HAVA grant funds and remedy any untimely crediting of interest earnings.

The Division is currently working with the Massachusetts State Treasurer and State 

Comptroller to complete this transfer and properly allocate and credit the appropriate 

interest to the Election Fund. 

EAC Response:

As noted by the auditors and confirmed by EAC, corrective action is responsive to the 

concerns of the auditors. EAC considers this matter closed.
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Finding 3 – Inadequate Equipment Management

The auditors found that the Office’s property records are inadequate.

The Uniform Administrative Requirements for Grants and Cooperative Agreements with 

State and Local Governments 41 CFR § 105-71.132 (d) (the “Common Rule”) section 

states that, (1) “Property records must be maintained that include a description of the 

property, a serial number or other identification number, the source of property, who 

holds the title, the acquisition date, and cost of the property, percentage of Federal 

participation in the cost of the property, the location, use and condition of the property, 

and any ultimate disposition data including the data of disposal and sale price of the 

property and (2) A physical inventory of the property must be taken and the results 

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

Recommendation: 

The auditors recommend that the EAC address and resolve the following 

recommendations that the Secretary of the Commonwealth of Massachusetts’ Office:

(a) Implement procedures to ensure that an inventory listing is created and maintained for 

equipment purchased with HAVA funds that complies with the Common Rule. 

(b) An analysis should also be performed to ensure that all purchases have been 

ultimately recorded through those inventory records. 

(c) Conduct a physical inventory at least once every two years and formally document the 

performance and any reconciliation efforts.

Secretary of Commonwealth’s Response: 

The Division has undertaken comprehensive measures to ensure that all inventory of 

equipment, including workstations, voting systems, memory cards, and hardware 

maintained off-site purchased with HAVA funds is catalogued, updated, and maintained 

pursuant to the Uniform Administrative Requirements for Grants and Cooperative 

Agreements with State and Local Governments (OMB Circular A-102), 41 CFR § 105-

71.132(d) (the Common Rule). Specifically, inventory listings have been amended to 

ensure inclusion of all of the following information required by the Common Rule: 

description of property; serial number or other identifying number; source of property; 

titleholder of property; date of acquisition; property costs; percentage of Federal 

participation in the cost of the property; location of the property; use and condition of 

property; and disposition data and sale price of property. 

The Division currently conducts ongoing inventory evaluations that exceed the 

requirements under HAVA, and will conduct a comprehensive physical inventory and 

reconcile results with the property records at least once every two years. In addition, all 

municipalities within the Commonwealth have been informed of their obligations under 
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HAVA regarding equipment inventory management and recordkeeping for equipment 

that has been paid for in any part using HAVA funds. 

EAC Response:

Consistent with the auditor’s response, EAC accepts the corrective action plan. EAC 

considers this matter closed. 

Finding 4: HAVA Section 251 State Match 

The auditors found that the Office did not deposit into the election fund the required state 

match for all Section 251 requirements payments. 

As a condition to receiving Section 251 requirements payments the State has to certify 

that it is in compliance with section 253(b) of the Act. Section 253(b)(5) states that “The 

State has 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...”

Recommendation:

The auditors recommend that the EAC address and resolve the following 

recommendations that the Massachusetts Secretary of the Commonwealth’s Office:

(a) Deposit adequate matching funds into the election fund to satisfy the $2,666,577 in 

questioned costs. This amount may consider the analysis provided by the Office as a 

reduction of $1,811,088 of the required $2,666,577. 

(b) Calculate the amount of interest to transfer to the election fund for the untimely 

deposit of matching funds. This calculation should consider the period from the date the 

requirements payments were received through the date the matching requirement was met

and include any compound interest through the date of the transfer. The amount 

determined should be transferred into the election fund. 

Secretary of the Commonwealth’s Response: 

The Division acknowledges that $57,005,182 in Section 251 funds was received as of 

September 30, 2012 and resulted in a state matching requirement of $3,000,273 pursuant 

to HAVA, 42 U.S.C. § 15401/4 (establishing the 5% matching requirement). The 

Division has reviewed its HAVA obligations and accounted for all but $185,102 of the 

questioned costs of $2,666,577. 

During the audit process, the Division provided MLA with documentation of $1,811,088 

in matching state expenditures made with state monies, which would have qualified to be 

paid for using HAVA funds, similar to the accepted state match practice used in many 

other states. The finding states that during fieldwork, the Division identified $344,426 of 
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the $1,811,088 that “was not reimbursed to the municipalities for replacement of punch 

card or lever voting machines.” The Division would like to clarify that 100% of the 

monies received under Section 102, which were specifically for replacement of punch 

card and lever machines, were provided to municipalities for reimbursement in addition 

to a percentage of Section 101 funds. While HAVA authorized an appropriation of 

$4,000 for each precinct that used punch card or lever voting machines during the 2000 

Presidential Election for replacement of such equipment, the actual appropriation was 

$3,192 per precinct. The amounts available to Massachusetts under Section 102 

($1,519,497) did not cover full reimbursement to the cities and towns. Accordingly, after 

consultation with MLA, the Division utilized the additional amounts paid by the 

municipalities as state matching funds.The Division will make documentation available 

for the EAC supporting this position. 

Further, on July 12, 2013, $716,511 was deposited into the Election Fund. Of this total 

amount, $432,020 was allocated to the interest on the state match, which satisfies the 

state matching interest requirement. The remaining $284,491 was allocated to the state 

match.

The Division has incurred additional matching expenses of $385,896 for programming 

and related costs for the AutoMARK Voter Assist Terminals, accessible voting 

equipment required by HAVA, associated with the Special U.S. Senate Primary held on 

April 30, 2013 and General Election held on June 25, 2013. This reduces the remaining 

obligation of $570,998 to $185,102. The Division has also incurred additional expenses 

associated with the statewide database of registered voters required by HAVA, which 

qualify as state matching expenses. Of those costs, $185,102 has been paid for with state 

funds, which fulfills the state match requirements. The Division can provide this 

documentation to both the OIG and EAC, if necessary.

Accordingly, the Division has fully expended State matching funds as required by 

HAVA. The Division has established procedures to maintain proper compliance with the 

5% state matching requirement under HAVA for any future requests for requirements 

payments that may be available.

EAC Response:

The Commonwealth has provided documentation to EAC that they have met the required 

matching requirements and maintained that match as outlined in HAVA. EAC considers 

this matter closed.

Finding 5 – Improper Use of HAVA Award Funds

The auditors found that the Office expended HAVA funds for purposes that are not 

allowable under the award’s terms and conditions or HAVA regulations. 
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HAVA authorizes payments to states under Titles I and II as follows:

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

HAVA for uniform and nondiscriminatory election technology and administration 

requirements, improving the administration of elections for Federal office, educating 

voters, training election officials and poll workers, and developing a state plan for 

requirements payments. 

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

lever action voting systems.

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

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

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

In December 2009 the Office paid for the creation of two broadcast television Public 

Service Announcement’s (PSA) to promote voting in the Special Federal Election cycle 

for Massachusetts’ United States Senator. The subject of these PSAs was to inform the 

public that it was time for a Special Federal Election and that absentee ballots were 

available. The subject matter indicates “get out the vote” activities instead of educating 

the voters as allowed by Section 101 of HAVA. 

The Office expended $18,965 for the creation of the PSAs and also expended $98,272 for 

the distribution of the PSAs to the local television networks. The total of $117,237 was 

spent using Section 251 funds without a certification filed with the EAC as provided for 

in section 251(b)(2) of HAVA. The Office subsequently filed the EAC certification on 

July 8, 2013 which was subsequent to the fieldwork. The audit noted approximately 

$427,407 was provided to the marketing firm that distributed the advertising using 

Section 251 funds during the period under review. 

In its Funding Advisory Opinion FAO-08-005, the EAC states, “Neither Section 101 nor 

251 funds can be used for “get out the vote” activities. In those cases where it is not clear 

whether a registration activity is educational or a get out the vote effort (i.e. encouraging 

citizens to vote on Election Day), the State should contact EAC for a determination on 

the basis of the specific circumstances.”

The Funding Advisory Opinion further notes that, “Section 251 funds may be used for 

instructing individuals how to vote in the same manner as Section 101 funds if a State has 

submitted to the Election Assistance Commission one of the two certification provided 

for in section 251(b)(2) of HAVA.” 

The Office also developed an information booklet for voters that included a mail-in voter 

registration card. The booklet provided the public information on the impact of the Help 

America Vote Act of 2002, how to register to vote, voting procedures and voting rights 

by absentee ballots. The cost of this booklet was allocated to both HAVA funds and State 

funds. The cost of printing the mail-in voter registration cards was $78,636. 
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In its above-referenced Funding Advisory Opinion, the EAC noted that, “Neither Section 

101 nor 251 funds may be used to print, copy, or revise State voter registration forms. 

Providing voter registration forms is an activity that States have been carrying out for 

years, is not a requirement imposed by HAVA, is not educational (even if there are 

instructions on the form), is not an improvement to the administration of elections for 

Federal office and must continue to be funded by the State.” 

The cost associated with the 2009 PSA ads and the mail-in voter registration cards are not 

allowable charges to the HAVA award. Accordingly, costs of $195,873 charged to the 

award are questioned costs. 

Recommendation:

The auditors recommend that the EAC address and resolve the following 

recommendations that the Massachusetts Secretary of the Commonwealth’s Office:

(a) Transfer to the election fund $195,873 for the questioned costs cited above. 

(b) Determine if advertising costs paid for with Section 251 funds are allowable due to 

the untimely certification as provided by Section 251(b)(2) of HAVA. 

Secretary of Commonwealth’s Response: 

The Division understands that HAVA authorizes payments to the Commonwealth and 

other states as noted above.

The finding questions the use of HAVA funds for Public Service Announcements (PSAs) 

and the printing of voter registration forms provided as part of an informational booklet 

sent to voters. Yet the EAC’s website for Frequently Asked Questions (FAQ) relative to 

HAVA funds states that voter education is allowable. In FAQ #23, the question asks 

whether a state or local government may use HAVA funds to produce and run radio and 

TV spots about registration deadlines, rights and responsibilities, absentee voting, 

information about grievance procedures, provisional ballots and ID requirements. The 

answer provided is generally, yes. The Division believes that these activities serve to 

educate voters and are therefore eligible to be paid for using HAVA funds. 

Specifically, in December 2009, the Division used Section 251 funds for the creation of 

two broadcast television PSAs to inform the public of an upcoming Special Election for 

U.S. Senate and the procedure for obtaining absentee ballots. The purpose of the PSAs 

was to inform voters of their rights to participate in this Federal election and educate 

voters about the absentee ballot process in Massachusetts. The special election was held 

on January 19, 2010, in the middle of the winter, during a time when Federal elections do 

not normally take place. This was the first time a special election of this kind was held in 

Massachusetts. Accordingly, timely notification to voters of their rights to participate in 

this Federal special election was important and necessary. In addition, providing 

information on absentee ballot procedures was imperative given that Massachusetts law 
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does not permit early voting or “no-excuse” absentee voting. Consequently, unless 

otherwise qualified, all voters must vote at the polls on Election Day. Due to the potential 

for inclement winter weather, which has been shown to have a direct impact on the ability 

of many voters to go to the polls and participate, it was essential to educate voters prior to 

the special election of how to qualify and obtain an absentee ballot. 

The Division acknowledges that Section 251 funds were used for the PSAs in question. 

EAC advisory opinion (09-001), the EAC states that “Certifications filed under Section

251(b)(2) are applicable to periods prior to the submission of the certifications.” On July 

10, 2013, the Division certified to the EAC that the Commonwealth met the requirements 

of Title III of HAVA as of January 1, 2008. A copy of the certification was also provided 

to MLA. Therefore, the Division believes that the PSA costs paid for with Section 251 

funds are permitted. If, however, the EAC determines that the certification of Section 251 

funds was not timely, the Division respectfully suggests that in the alternative, Section 

101 funds could have been used and are available for this purpose. Accordingly, if 

necessary, the financial reports for both Section 101 and Section 251 funds could be 

amended to designate the expenditure from Section 101 funds and document a credit to 

the Section 251 funds. 

The Division printed and distributed an educational information booklet for voters that 

included a mail-in voter registration form paid for in part with Section 101 HAVA funds. 

As noted in the finding, the booklet provided the public information on the impact of the 

Help America Vote Act of 2002 including new voter identification requirements for firsttime voters, how to register to vote, voting procedures and voting rights by absentee 

ballots.

This expense was incurred in 2004, four years prior to the first guidance issued by the 

EAC on the issue of using HAVA funds for printing voter registration forms. Although, 

FAO 08-005 states that Section 101 funds may not be used to print voter registration 

forms, it also states: “[E]ducating voters on voting procedures would include providing 

instructions on how to register to vote...” It further states that “Section 101 funds may be 

used at any time to instruct individuals on how to register to vote.” The voter registration 

forms in question contained additional information regarding how to register to vote and 

the applicable deadlines for registering to vote in order to be eligible to vote in the 2004 

Presidential election. The form also contained information regarding the new 

identification requirements for first-time voters under HAVA. This additional 

information supplemented the standard instructions that appear on all voter registration 

forms and clearly was a voter education effort allowable under HAVA.

The Division believes that the questioned costs for the PSAs and printing of mail-in voter 

registration cards are activities eligible to be paid for using HAVA funds. The Division 

looks forward to working with the EAC by providing them with documentation and 

justification to support these expenditures. 
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EAC Response:

The Commonwealth is forwarding the scripts for the PSA ads for review and the 

materials included with the mail-in voter registration cards. As indicated in our Advisory 

Opinion, EAC will continue to make decisions regarding voter registration and “get out 

the vote” activities based on the specific circumstances. EAC will determine whether 

money was spent appropriately and ensure appropriate corrective action.