U.S. ELECTION ASSISTANCE 

COMMISSION 

OFFICE OF INSPECTOR GENERAL 

FINAL REPORT: 

Administration of Payments Received 

Under the Help America Vote Act by the 

Utah Office of Lieutenant Governor 

APRIL 29, 2003 THROUGH JULY 31, 2010 

Report No. 

E-HP-UT-09-10 

March 2011 
 

 

 

 

 

 

 

 

 

 

 

U.S. ELECTION ASSISTANCE COMMISSION
 

OFFICE OF INSPECTOR GENERAL
 

1201 New York Ave. NW - Suite 300
 

Washington, DC 20005
 

March 31, 2011 

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 Utah Office of Lieutenant Governor 

(Assignment Number E-HP-UT-09-10) 

We contracted with the independent certified public accounting firm of Clifton 

Gunderson LLP (Clifton Gunderson) to audit the administration of payments received under the 

Help America Vote Act (HAVA) by the Utah Office of Lieutenant Governor (OLG). The 

contract required that the audit be done in accordance with U.S. generally accepted government 

auditing standards. Clifton Gunderson is responsible for the attached auditor’s report and the 

conclusions expressed therein. 

In its audit of the OLG, Clifton Gunderson concluded that the OLG generally accounted 

for and expended HAVA funds in accordance with the HAVA requirements and complied with 

the financial management requirements established by the U.S. Election Assistance Commission. 

However, the audit disclosed that the OLG failed to maintain adequate property records for 

HAVA funded equipment, submitted financial reports to the EAC that included errors, retained 

interest earnings on HAVA and state matching funds in the general fund, and did not deposit 

program income into the election fund. 

In its December 16, 2010, response to the draft report (Appendix A-1), the OLG agreed 

with the report’s findings and recommendations, which they confirmed in a February 28, 2011, 

email response to the draft report. 

On March 14, 2011, the EAC response (Appendix A-2) indicated general agreement with 

the report findings and recommendations, and stated that they would work with the state to 

ensure corrective action, including the implementation of required federal record retention 

policies. We would appreciate being kept informed of the actions taken on our recommendations 

as we will track the status of their implementation. Please respond in writing to the finding and 

recommendation included in this report by May 31, 2011. Your response should include 

information on actions taken or planned, targeted completion dates, and titles of officials 

responsible for implementation. 
 

The legislation, as amended, creating the Office of Inspector General (5 U.S.C. § App.3) 

requires semiannual reporting to Congress on all audit reports issued, actions taken to implement 

audit recommendations, and recommendations that have not been implemented. Therefore, this 

report will be included in our next semiannual report to Congress. 

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

 

 

 

 

 

 

 

PERFORMANCE AUDIT REPORT
 

ADMINISTRATION OF PAYMENTS RECEIVED
 

UNDER THE
 

HELP AMERICA VOTE ACT
 

BY THE
 

STATE OF UTAH
 

April 29, 2003 Through July 31, 2010
 

UNITED STATES ELECTION
 

ASSISTANCE COMMISSION
 

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TABLE OF CONTENTS 

PAGE
 

EXECUTIVE SUMMARY 1

BACKGROUND 2

AUDIT OBJECTIVES 3

SCOPE AND METHODOLOGY 4

AUDIT RESULTS 5

APPENDICES
 

Appendix A-1: Office of the Lieutenant Governor Response to Audit Results 10

Appendix A-2: U. S. Election Assistance Commission Response to Draft Report 13

Appendix B: Audit Methodology 14

Appendix C: Monetary Impact as of July 31, 2010 16
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Election Assistance Commission
 

Performance Audit of the Administration of Payments Received Under the
 

Help America Vote Act by the State of Utah
 

EXECUTIVE SUMMARY 

Clifton Gunderson LLP was engaged by the U.S. Election Assistance Commission (EAC or the 

Commission) Office of Inspector General to conduct a performance audit of the Utah Office of 

the Lieutenant Governor (OLG) for the period April 29, 2003 through July 31, 2010 to determine 

whether the OLG used payments authorized by Sections 101, 102, and 251 of the Help America 

Vote Act of 2002 (HAVA or the Act) in accordance with HAVA and applicable requirements; 

accurately and properly accounted for property purchased with HAVA payments and for 

program income, and met HAVA requirements for Section 251 funds for an election fund and for 

a matching contribution except for the requirements for maintenance of a base level of state 

outlays, commonly referred to as Maintenance of Expenditures (MOE). On June 28, 2010, the 

Commission issued a revised definitive policy on the requirements for the MOE. The policy 

included a provision that the states will have 12 months from the date of the revised policy to 

voluntarily submit a revised MOE plan to the EAC. Accordingly, our scope of audit did not 

include a determination of whether the OLG and its subgrantees met the requirements for MOE. 

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

requirements, specifically: 

•	 Comply with the Uniform Administrative Requirements for Grants and Cooperative 

Agreements with State and Local Governments (also known as the “Common Rule”) as 

published in the Code of Federal Regulations 41 CFR 105-71. 

•	 Expend payments in accordance with cost principles for establishing the allowance or 

disallowance of certain items of cost for federal participation issued by the Office of 

Management and Budget (OMB) in Circular A-87, Cost Principles for State, Local, and 

Indian Tribal Governments. 

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

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. 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. 

Except for the maintenance of adequate property records for HAVA funded equipment, financial 

accounting and reporting errors, interest on HAVA and state matching funds, and the failure to 

deposit program income into the election fund as discussed below, our audit concluded that the 

OLG generally accounted for and expended HAVA funds in accordance with the requirements 

mentioned above for the period from April 29, 2003 through July 31, 2010. The exceptions 

needing OLG’s management attention are as follows: 

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•	 Inventory listings of voting equipment did not conform to the requirements of 41 C.F.R. 

105-71.132 (d) (1), (the Common Rule) at the seven counties we visited. The listings did 

not include required elements such as use and condition of the property, or the federal, 

state, or county percentage of ownership. 

•	 Amounts reported to EAC on financial status reports did not reconcile to the state’s 

financial accounting system or the state treasury reports. A report of HAVA funds 

received and expended by the OLG through July 31, 2010 showed a balance that was 

$1,958 higher than the amount in the election fund deposited in the state treasury. 

•	 Utah state policy requires state agencies which deposit funds into the state’s Public 

Treasury Investment Fund (PTIF) to set aside in the state’s general fund a minimum of 

$50,000 or 10 percent of the amount deposited. Interest on the $50,000 of HAVA funds 

deposited in the general fund has been retained as a management fee by the PTIF 

instead of being transferred into the election fund. 

•	 The state used in-kind expenditures to satisfy its state matching requirements for the 

2003 and 2004 requirements payments. However, the in-kind expenditures were not 

made prior to receipt of the requirements payments. As a result there is lost interest to 

the election fund because of the delayed payments. In addition the state did not have 

support for some of the in-kind payments. The state received a requirements payment 

on August 26, 2009. The required matching payment of $70,975 was not transferred into 

the election fund until December 1, 2009, resulting in lost interest to the election fund. 

•	 Program income generated from the sale of HAVA funded T-shirts was not deposited 

into the election fund as required by federal regulations. 

We have included in this report as Appendix A-1 the OLG managements’ December 16, 2010, 

formal response to our findings and recommendations (NFRs). In a February 28, 2011 email 

response to the draft report, OLG management stated they had no additional comments. 

Although we have included management’s written responses to our NFRs, such responses have 

not been subjected to the audit procedures and, accordingly, we do not provide any form of 

assurance on the appropriateness of the responses or the effectiveness of the corrective actions 

described therein. 

OLG officials generally agreed with the findings and recommendations and provided corrective 

action; however, they noted the following: 

•	 They followed state guidelines regarding the retention of documentation, which was 

destroyed subsequent to audits conducted by the State Auditor. 

•	 They followed state guidelines regarding the requirement to maintain $50,000 in the 

PTIF. 

The draft report, including the OLG response, was provided to the Executive Director of the 

EAC for review and comment. The EAC responded on March 14, 2011, and generally 

concurred with the report’s findings and recommendations. The EAC stated that they will work 

with the OLG to ensure appropriate corrective action, including the implementation of required 

federal record retention policies. The EAC’s complete response is included as Appendix A-2. 

BACKGROUND 

HAVA created the Commission 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: 

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•	 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. 

Title II also requires that states must: 

•	 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)]. 

•	 “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)]. 

AUDIT OBJECTIVES 

The objectives of our audit were to determine whether the Utah Office of the Lieutenant 

Governor: 

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

HAVA and applicable requirements; 

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

program income; 

3.		 Met HAVA requirements for Section 251 funds for an election fund and for a matching 

contribution. We did not determine whether the OLG met the requirement for 

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

Expenditures (MOE). On June 28, 2010, the Commission issued a revised definitive 

policy on the requirements for the MOE. The policy included a provision that the states 

will have 12 months from the date of the revised policy to voluntarily submit a revised 

MOE plan to the EAC. Accordingly, our scope of audit did not include a determination of 

whether the OLG and its subgrantees met the requirements for MOE. 

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In addition, to accounting for HAVA payments, the Act 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 HAVA funds to 

comply with certain financial management requirements, specifically: 

1.		 Comply with the Uniform Administrative Requirements for Grants and Cooperative 

Agreements with State and Local Governments (also known as the “Common Rule”) as 

published in the Code of Federal Regulations at 41 CFR 105-71. 

2.		 Expend payments in accordance with cost principles for establishing the allowance or 

disallowance of certain items of cost for federal participation issued by the OMB. 

3.		 Submit detailed annual financial reports on the use of Title I and Title II payments.1 

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

Through December 31, 2008, for Sections 101 and 102, reports were due on February 28 for the activities of the 

previous calendar year, and, for Section 251, reports were due by March 30 for the activities of the previous fiscal 

year ending on September 30. Beginning in calendar year 2009, all reports will be effective as of September 30, 

20XX for the fiscal year ended that date and will be due by December 31, 20XX. 

SCOPE AND METHODOLOGY 

We audited the HAVA funds received and disbursed by the OLG from April 29, 2003 through 

July 31, 2010 (87-month period) as shown in the following table: 

FUNDS RECEIVED

TYPE OF

PAYMENT

EAC

PAYMENT

PROGRAM

INCOME

STATE

MATCH

INTEREST

EARNED

TOTAL

AVAILABLE

FUNDS

DISBURSED

DATA

AS OF

Section 101 $ 3,090,943 $ 0 $ 0 $ 555,725 $ 3,646,668 $2,723,911 7/31/2010

Section 102 5,726,844 0 0 536,464 6,263,308 6,263,308 7/31/2010

Section 251 17,986,710 0 946,669 2

2Utah’s state match contribution consisted of a combination of in-kind expenditures totaling $866,669 for voting 

systems and other HAVA related expenditures as well as an $80,000 cash contribution for its 2008 and 2009 

requirements payment. The in-kind expenditures have been included with the expenditures in the Funds Disbursed 

column. 

631,640 19,565,019 19,089,658 7/31/2010

Total $26,804,497 $ 0 $ 946,669 $1,723,829 $29,474,995 $28,076,877 7/31/2010

Our audit methodology is set forth in Appendix B. 

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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. 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. 

Except for the maintenance of adequate property records, financial accounting and reporting 

errors, interest on HAVA and state matching funds, and failure to deposit program income, our 

audit concluded that the OLG generally accounted for and expended HAVA funds in accordance 

with the requirements mentioned above. The OLG has taken action on or is working to resolve 

the exceptions described below as set forth in Appendix A: 

I.	 Property Records for HAVA Funded Equipment 

The equipment listings from the seven counties we visited did not conform to the requirements 

of 41 C.F.R. 105-71.132 (d)(1), (the Common Rule). We noted that the listings included a 

description of the equipment, serial number and the location, but did not include the federal, 

state, or county percentage of ownership, source of the property, who holds title, use and 

condition of the property, acquisition date, cost, and percentage of federal participation in the 

cost. 

The Uniform Administrative Requirements for Grants and Cooperative Agreements with State 

and Local Governments 41 CFR § 105-71.132(d)(1), referred to as the Common Rule, states 

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.” 

OLG election officials informed us that they were not aware of the detailed recordkeeping 

requirements of the Common Rule. 

Recommendation: 

1.		 We recommend that EAC require that the OLG ensure that the property records at counties 

include the minimum information required by the Common Rule. 

OLG’s Response: 

OLG management concurred with the finding and stated that they would work with the counties 

to implement the recommendation. 

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II.	 Financial Accounting and Reporting Errors 

Amounts reported on the financial status reports (FSRs), Forms SF269 and SF425, did not 

reconcile to the state’s financial accounting system or the state treasury reports. 

During our review of the annual FSRs the following exceptions were noted: 

•	 Expenditures reported for Section 101 as of September, 30 2009 totaled $2,671,131, 

compared to actual expenditures of $2,854,365, resulting in an unexplained difference 

not reported on the SF-425 by $183,234. 

•	 Our recalculation of the state’s matching funds indicated that the amount reported was 

understated by $53,740. 

•	 Interest earnings do not agree to detailed worksheets nor to statements from the PTIF 

for the period ended September 30, 2009. Based on the state treasury statements, the 

interest reported on the SF-425s is understated by $8,154.62 

We also reviewed the state prepared reconciliation of all HAVA funds received and expended 

from the inception of the program through 7/31/10. The ending balance on this reconciliation 

for Section 101 funds was $1,958 higher than the balance in the treasurer’s report. 

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

Requirement states that: 

“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.” 

In addition, the EAC has provided guidance on the preparation of the annual reports on its 

website at: http://www.eac.gov/payments_and_grants/reporting.aspx 

Recommendations: 

We recommend that: 

2. EAC work with the OLG to determine whether it is necessary to file revised annual reports. 

3.		 OLG officials develop procedures to ensure that the HAVA accounting records and reports 

are accurate. 

OLG’s Response: 

OLG officials expressed reservations regarding the finding, because accounting records had 

been destroyed pursuant to state retention schedules after state auditors had completed audits 

and issues had been resolved. They stated that measures had been implemented which are 

intended to improve the record keeping system and to maintain the appropriate documentation. 

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III.	 Interest 

Utah deposited its HAVA funds into the state’s PTIF. State policy requires users of the PTIF to 

maintain a minimum uninvested cash balance of $50,000, or ten percent of the investing fund’s 

cash and investment balance. Interest earned on this uninvested cash balance is retained by 

the PTIF as a fee for the use of the PTIF. This policy is inconsistent with provisions of the Help 

America Vote Act which requires that interest on HAVA funds be deposited in the election fund. 

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

D.		Interest earned on deposits of the fund. 

Recommendation: 

4.		 We recommend that the EAC work with the OLG to determine whether the fee paid to PTIF, 

equal to the interest on the $50,000, is an allowable HAVA expenditure. If not, the 

cumulative interest should be allocated and credited to the HAVA election fund. 

OLG’s Response: 

OLG officials stated that they were complying with state policy, because it is a requirement to 

maintain deposits in PTIF. 

IV. State Matching Funds 

The OLG asserted that it used in-kind expenditures to meet part of its state matching funds 

requirement; however, the state did not expend the amounts necessary to support this 

requirement prior to receiving 2003 and 2004 Section 251 funds. The state certified on July 6, 

2004 and August 4, 2009 that it was in compliance with the requirements of Section 253(b) of 

the Help America Vote Act even though they had not deposited or expended sufficient funds to 

meet the state matching requirement by these dates. 

•	 When Utah received the 2003 and 2004 Section 251 payments on December 27, 2004, 

the state should have already deposited the required matching funds of $866,694. 

However, the state expended only $130,162 of in-kind expenditures by December 27, 

2004. Because not all of the in-kind expenditures were made prior to receipt of Section 

251 funds, the cumulative match payments were below the required amount from 

December 27, 2004 through 2005. During 2006 the state made additional in-kind 

expenditures which exceeded the state match required by $86,935. The state believes 

that this amount exceeds the interest due the election fund from the delayed in-kind 

expenditures. 

•	 The state received an additional Section 251 payment on August 26, 2009. However, at 

the time of receipt, the state had not deposited the required $70,975 match payment in 

the election fund. The matching funds were deposited on December 1, 2009, causing 

the election fund to lose three months of interest. 

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In addition, we were not able to test the full balance of in-kind expenditures. The state claimed 

that they had made a total of $953,624 of in-kind payments, used primarily for payment for 

voting equipment, state salaries, payroll expenses for HAVA related activities, and consulting 

services for development of the state-wide voter registration system. We tested a sample of inkind expenditures totaling $835,042 of which $658,934 were tested without exception. The 

state was unable to provide to us the support for $176,108 of claimed in-kind expenditures, 

because records had been destroyed in accordance to the state’s records retention policy. 

HAVA Section 253(b)(5) requires, as a condition for receiving requirements payments, 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 (taking into account the requirements payment and the amount 

spent by the State) and, in the case of a State that uses a requirements payment as a 

reimbursement under section 251(c)(2), an additional amount equal to the amount of 

such reimbursement.” 

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

“D. Interest earned on deposits of the fund." 

HAVA Section 902. AUDITS AND REPAYMENT OF FUNDS, Part (a) Recordkeeping 

Requirement states that: 

“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 portions of the cost of the project or undertaking supplied by other 

sources, and such other records as will facilitate an effective audit.” 

Further, EAC’s website section for Frequently Asked Questions answers the following question 

regarding record retention requirements: 

Question 40: When does the grant period end and the record keeping requirement start 

for HAVA funds? 

EAC’s response: The record keeping requirement begins upon the close of the grant 

period, when the last and closing report is filed. The grant period closes when the state 

(or political subdivisions of the state on its behalf) has expended all federal, state and 

interest funds contained in the election fund. 

Recommendations: 

We recommend the EAC work with the state: 

5.		 to determine the amount of interest earnings that were not transferred to the election fund, 

because matching funds in-kind payments were not expended timely. 

6.		 to resolve the issue of missing documentation on in-kind expenditures. 

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OLG’s Response: 

OLG officials believe that the excess matching funds of $86,935 will be adequate to offset any 

interest earnings that might be due, and they also believe they complied with state guidelines 

regarding the destruction of supporting documentation. 

V.	 Program Income 

The state of Utah used HAVA funds to purchase T-shirts with the word “VOTE” on the front and 

an internet address, leaveyourprint.com, on the back. The internet address linked to the Office 

of the Lieutenant Governor’s website, which provided information about voting. The T-shirts 

were given to individuals who came to voter education events such as demonstrations of the 

state’s HAVA funded voting machines. The election office also sold 1,010 of these T-shirts to 

counties for $5 per shirt or a total of $5,050. The income from these sales was deposited into 

the state’s general fund rather than the HAVA election fund as required by the Common Rule. 

The Uniform Administrative Requirements for Grants and Cooperative Agreements with State 

and Local Governments, 41CFR § 105-71.125, states that program income means gross 

income received by the subgrantee directly generated by a grant supported activity, or earned 

only as a result of the grant agreement during the grant period. Costs incident to the generation 

of program income may be deducted from gross income to determine net program income. 

The EAC Advisory 07-002 – Program Income and Set-off of Cost Incident to Program Income 

authorizes states to dedicate program income to the HAVA grant and use the income for 

purposes and under conditions of the grant. 

The Uniform Administrative Requirements for Grants and Cooperative Agreements with State 

and Local Governments, 41CFR § 105-71.141 states that each grantee will report program 

outlays and program income on a cash or accrual basis as prescribed by the awarding agency. 

Recommendation: 

7.		 We recommend that EAC work with the state to determine the net program income from the 

sale of T-shirts, and require the state to transfer that amount into the election fund, plus any 

interest earnings that would have accrued on the funds. 

OLG’s Response: 

OLG officials agreed with the finding and will implement the recommendation. 

**************************************** 

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

Lieutenant Governor, and the Commission. We considered any comments received prior to 

finalizing this report. 

The EAC responded on March 14, 2011 and generally concurred with the report’s findings and 

recommendations, and stated that they would work with the OLG to ensure appropriate 

corrective action, including the implementation of required federal record retention policies. 

CG performed its work between August 9, 2010 and August 27, 2010. 

a1

Calverton, Maryland 

October 15, 2010 

9
	
Appendix A
 

STATE OF UTAH 

OFFICE O F T I·IE LIE UTE NANT GO V ER NOR 

GR EG B ELL 

LIEUTENANT GOVERNOR 

December 16, 2010 

Curtis Crider 

Office of Inspector General 

Election Assistance Commission 

ccrider@eac.gov 

Dear Mr. Crider, 

Thank you for extending our response deadline an additional week. 

Enclosed you will find Utah's responses to the Notification of Findings and 

Recommendation. 

Please let me know if you have any questions. 

~r~ Director of Elections 

Enclosure 

10

UTAH STATE CAPITOL, SUITE 220 • P.O. B ox 142 325 • SALT LAKE CITV, UTAH 84114-2325 

T EL : (801) 538-1041 • F Ax: (801) 538 - 1133 
11
 

UTAH'S RESPONSES TO THE NOTICE OF FINDING AND 

RECOMMENDA TIONS 

December 16,2010 

NFR #l-Property Management 

The Office of the Lieutenant Govemor (OLG) agrees with this NFR. Having now been 

made aware of the requirement to record celtain information about property, the OLG 

will work with each Utah county to properly develop and maintain an inventory listing of 

all applicable equipment in accordance with 41 C.F.R. 105-71.132 (d)(I). 

NFR #2-Financial Accounting and Reporting Errors 

[nitial testing of financial accounting and reporting was for 2009 and 20 I O. The auditors 

then deemed it necessary to go back to 2003, the inception of the grant. There is some 

uneasiness regarding the findings due to records having been destroyed per state retention 

schedules and after an audit perfonned by the State Auditor for this period. 

Each year the Financial Manager and the Deputy Chief of Staff for the OLG verified the 

reports submitted to the EAC. All differences where reconciled and corrected or new 

reports where submitted. [n 2006, the State Auditor found no errors or undocumented 

items in their HAVA election fund audit. After six years many of the records had been 

destroyed per state retention schedules. 

In regards to the recommended action, the OLG has implemented measures intended to 

improve the record keeping system and will follow tllis system in the future as well as 

keeping copies of all documentation with the grant reports. 

NFR #3-Interest on Deposits of Federal Funds 

Utah initially invested all federal funds from the three HA VA grants into one investment 

account. When the OLG discovered that interest needed to incur on each grant 

separately, the funds were trans felTed from one investment account into three separate 

investment accounts. This included the separate grant principle and the percentage of 

interest earned in direct relationship to the principle. 

The OLG followed Utah State policy, which requires all users of the Public Treasury 

Investment Fund to maintain a balance of$50,000. If the OLG did not follow this policy, 

there would be no other mechanism available to the OLG to eam interest. State law does 

not allow state agencies to open or utilize separate bank accounts. 
12
 2 

T 1e Effect #2. The $467, 182 reported in this effect contin 

interest in the general fun l ransferred to the HA VA 

election fund. The interest eal11ed . ays . d along with the 

$467,182, into e ection fund. We do not believe there was a os . 

. gs uring this timeframe. 

NFR #4 State Matching Funds 

A State Single Audit made the OLG aware of the requirement of depositing matching 

money into the HAVA investment fund. After being made aware of the issue the OLG 

insured from that point forward matching funds would be deposited with the investment. 

This was done for the additional $1 ,599,503 received as soon as pennission was received 

by the State Legislature to transfer the matching funds. 

The State Single Audit did not make a Notice of Finding on this issue since all matching 

requirements had previously been made- most of them as an in-kind match. The OLG, 

followed state policy on retention and destroyed much of the past paperwork on the 

match. At this time the state has exceed state match requirements by $86,935. OLG does 

not dispute that interest was lost, but suggest that the $86,935 of exceed state match 

money, be used towards the lost interest. 

One of the purposes of the Single Audit was for other Federal Auditors to rely on the 

Single Audit auditors. With this in mind, after the audit was complete the past paperwork 

was destroyed if it met the state's retention schedule. 

NFR #5- Program Interest 

The OLG purchased t-shirts that were given to individuals, free of charge, during a 

variety of voter education events. Subsequently many county clerks asked to purchase tshi11s for staff and poll workers. OLG charged $5 per t-shirt. In June and July of2006, 

951 t-shirts were sold and 59 more were sold since that time, for a total of 1,0 10 shirts 

($5,050). 

The original intent was not to sell any t-shi11s, but rather give them out free of charge, 

consequently the OLG did not identify the requirement to deposit the money generated 

from the sale into the HAY A election fund. 

OLG agrees with this finding and wi ll agree to pay $5,050 into the HA VA election fund . 

In addition, the loss interest, calculated £i'om the present back to the sale, will also be 

paid. 
EAC RESPONSE TO THE DRAFT AUDIT: 

OIG Performance Audit Report on the Administration of 

Payments Received Under the Help America Vote Act by the 

State of Utah, for the Period April 29, 2003 Through July 31, 

2010. 

March 14,2011 

MEMORANDUM 

To: 	 Curtis Crider 

Inspector General 

Fr~~ \... ---- -.,. /' ll\.... )Thomas R. Wilkey 

Executive Director 

Subject: 	 Draft Performance Audit Report - "Administration of Payments 

Received Under the Help America Vote Act by the State of Utah". 

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

Utah. 

The Election Assistance Commission (EAC) generally concurs with the results of 

the review and recommendations. The EAC will work with the Office of 

Lieutenant Governor for the State of Utah (OLG) to ensure appropriate corrective 

action including the implementation of required federal record retention policies. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix B 

AUDIT METHODOLOGY 

Our audit methodology included: 

•	 Assessing audit risk and significance within the context of the audit objectives. 

•	 Obtaining an understanding of internal control that is significant to the administration of the 

HAVA funds. 

•	 Understanding relevant information systems controls as applicable. 

•	 Identifying sources of evidence and the amount and type of evidence required. 

•	 Determining whether other auditors have conducted, or are conducting, audits of the 

program that could be relevant to the audit objectives. 

To implement our audit methodology, below are some of the audit procedures we performed: 

•	 Interviewed appropriate OLG employees about the organization and operations of the HAVA 

program. 

•	 Reviewed prior single audit report and other reviews related to the state’s financial 

management systems and the HAVA program for the last 2 years. 

•	 Reviewed policies, procedures and regulations for the OLG’s management and accounting 

systems as they relate to the administration of HAVA programs. 

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

•	 Tested major purchases and supporting documentation. 

•	 Tested randomly sampled payments made with the HAVA funds. 

•	 Verified support for reimbursements to local governments (counties, cities, and 

municipalities). 

•	 Reviewed certain state laws that impacted the election fund. 

•	 Examined appropriations and expenditure reports for state funds used to meet the five 

percent matching requirement for section 251 requirements payments. 

•	 Evaluated compliance with the requirements for accumulating financial information reported 

to the Commission on the Financial Status Reports, Forms SF-269 and 425, accounting for 

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

•	 Verified the establishment and maintenance of an election fund. 

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•	 Conducted site visits of selected counties/towns to perform the following: 

� Observe equipment purchased with HAVA funds for proper accounting and 

safeguarding 

� Ensure compliance with HAVA Act. 

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Appendix C 

MONETARY IMPACT AS OF JULY 31, 2010
 

Description 

Questioned 

Costs 

Additional Funds for 

Program 

Unsupported in-kind expenditures for 

state matching funds $176,108 $0 

Underreported expenditures on SF425 186,234 0 

Underreported state matching funds on 

SF425 53,740 0 

Estimated Interest earnings not reported 

on SF425 (Note) 

Note:		 There is an undetermined amount of interest earnings due the election fund on late 

payments of state matching funds, HAVA funds that remain in the general fund, and 

program income that has not been transferred to the election fund. 

0 8,155 

Total $416,082 $8,155 

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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 

1201 New York Ave. NW - Suite 300 

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 

Commission or Help 

America Vote Act 

Funds 

By Mail: U.S. Election Assistance Commission 

Office of Inspector General 

 1201 New York Ave. NW - Suite 300 

 Washington, DC 20005 

E-mail: eacoig@eac.gov 

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

FAX: 202-566-0957