U.S. ELECTION ASSISTANCE 

COMMISSION 

OFFICE OF INSPECTOR GENERAL 

FINAL REPORT: 

ADMINISTRATION OF PAYMENTS 

RECEIVED UNDER THE HELP 

AMERICA VOTE ACT BY THE 

RHODE ISLAND AND PROVIDENCE 

PLANTATIONS SECRETARY 

OF STATE’S ELECTION DIVISION 

MAY 1, 2003 THROUGH JUNE 30, 2008 

Report No. 

E-HP-RI-05-07 

September 2009 
 


 


 


 

	 

	 

	 

U.S. ELECTION ASSISTANCE COMMISSION
 

OFFICE OF INSPECTOR GENERAL
 

1225 New York Ave. NW - Suite 1100 

Washington, DC 20005
 

September 30, 2009 

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 Rhode Island Secretary of State’s Election Division 

(Assignment Number E-HP-RI-05-07) 

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 Rhode Island Secretary of State (SOS). 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 SOS, Clifton Gunderson concluded that, except for the issues discussed 

below, the SOS 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 (EAC) during the period May 1, 2003 through June 30, 2008. The 

SOS also complied with section 251 requirements. The exceptions noted in the audit were: 

	 Financial Status Reports filed with the EAC did not contain all of the required 

information. 

	 HAVA receipts and disbursements, prior to June 2006, were co-mingled in the 

state’s accounting system, and were not individually coded to Section 101 and 251, 

as required by HAVA. 

 The SOS did not have adequate documentation to support personnel expenditures of 

$189,852. 

 Fourteen of the 39 cities and towns election boards (localities) in the State told us 

they use HAVA funded equipment for non-HAVA related activities. 

 The State did not contribute its matching requirement to the Section 251 HAVA fund 

on a timely basis resulting in lost interest. 

In its June 11, 2009 response to the findings and recommendations (Appendix A), the SOS 

agreed with all of the recommendations, except for the lack of documentation of personnel charges, 

and provided corrective action. 
Please provide us with your written response to the recommendation included in this report 

by December 1, 2009. Your response should contain information on actions taken or planned, 

including target dates and titles of EAC officials responsible for implementing the recommendation. 

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 RHODE ISLAND AND PROVIDENCE
 


PLANTATIONS
 


May 1, 2003 Through June 30, 2008
 


UNITED STATES ELECTION
 


ASSISTANCE COMMISSION
 


a1
TABLE OF CONTENTS 

PAGE
 


EXECUTIVE SUMMARY ............................................................................................................1



BACKGROUND 

APPENDICES
 


..........................................................................................................................2



AUDIT OBJECTIVES .................................................................................................................3



SCOPE AND METHODOLOGY .................................................................................................4



AUDIT RESULTS .......................................................................................................................4



Appendix A: Secretary of State Response To
 


Audit Results .....................................................................................................11
 


Appendix B: Audit Methodology............................................................................................15
 


Appendix C: Monetary Impact as of June 30, 2008...............................................................16
 

	 

	 

	 

	 

U.S. Election Assistance Commission
 


Performance Audit of the Administration of Payments Received Under the
 


Help America Vote Act by the State of Rhode Island and Providence Plantations
 


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 State of Rhode 

Island and Providence Plantations Secretary of State (SOS) for the period May 1, 2003 through 

June 30, 2008 to determine whether the SOS 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. We did not include a determination of whether the 

SOS and its subgrantees met the requirements for maintenance of a base level of state outlays 

because the Commission is reviewing its guidance on the applicability of the maintenance of a 

base level of state outlays to the SOS’s subgrantees. 

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. 

•	 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 issues discussed below, our audit concluded that SOS generally accounted for 

and expended HAVA funds in accordance with the requirements mentioned above for the period 

from May 1, 2003 through June 30, 2008. The exceptions needing SOS’s management 

attention are as follows: 

•	 Financial Status Reports, SF 269s, filed with the Election Assistance Commission, to 

report the sources and uses of HAVA funds, did not include all of the required 

information. 

1

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

•	 HAVA receipts and expenditures were commingled in the state’s accounting system 

through June 2006, and were not individually coded as Section 101 and 251 funds as 

required by HAVA. 

•	 The SOS did not have adequate documentation to support the expenditure of $189,852 

of HAVA funds for the allocated salaries of three employees. 

•	 Fourteen of the 39 cities and towns election boards (localities) in the State told us they 

use HAVA funded equipment for non-HAVA related activities. 

•	 The State did not contribute its matching requirement to the Section 251 HAVA fund on 

a timely basis resulting in lost interest. 

We have included in this report the SOS managements’ formal response to our findings and 

recommendations received on June 11, 2009. The SOS officials agreed with all of the 

recommendations, except the lack of adequate documentation related to personnel charges, and 

provided corrective action. 

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: 

•	 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)]. 

2

AUDIT OBJECTIVES 

The objectives of our audit were to determine whether the Rhode Island Secretary of State: 

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 SOS met the requirement for 

maintenance of a base level of state outlays, because the Commission is reviewing its 

guidance on the applicability of the maintenance of a base level of state outlays to 

subgrantees of the SOS. 

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. 

1 

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

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. 

3

SCOPE AND METHODOLOGY 

We audited the HAVA funds received and disbursed by the SOS from May 1, 2003 through 

June 30, 2008. 

Funds received and disbursed from May 1, 2003 (program initiation date) to June 30, 2008 (62­

month period) are shown below: 

FUNDS RECEIVED 

TYPE OF 

PAYMENT 

EAC 

PAYMENT 

PROGRAM 

INCOME 

STATE 

MATCH 

(See Note) 

INTEREST 

EARNED 

TOTAL 

AVAILABLE 

FUNDS 

DISBURSED 

DATA 

AS OF 

Section 101 $ 5,000,000 $0 $0 $ 140,004 $5,140,004 $5,119,575 6/30/2008 

Section 102 0 0 0 0 0 0 

Section 251 11,596,803 0 0 482,241 12,079,044 11,959,381 6/30/2008 

$16 596 803 $0 $0 $622 245 $17 219 048 $17 078 956 6/30/2008 

Note:	 	 The total state matching requirement was $610,358, and state officials determined that this 

total would be met by in-kind contributions through payments by the state for expenditures 

qualifying as Title III category payments. The state matching funds were not all expended by 

the dates that the requirements payments were received from the EAC, and the date on 

which the required matching total was achieved has not been accurately determined. The 

allowability of certain expenditures assigned to the state match is also in question, and there 

will have to be a determination of the amount of interest lost to HAVA by not having the 

matching funds available on a timely basis. A finding has been proposed under the Audit 

Results detailed below. 

Our audit methodology is set forth in Appendix B. 

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 issues discussed below, our audit concluded that SOS generally accounted for 

and expended HAVA funds in accordance with the requirements mentioned above. This 

includes compliance with section 251 requirements for an election fund. The SOS has taken 

action on or is working to resolve the exceptions described below as set forth in Appendix A: 

Finding 1: Financial Reporting 

The Financial Status Reports, SF 269, filed with the Election Assistance Commission to report 

the sources and uses of HAVA funds, did not include all of the required information on line 12 of 

the form. Interest earned, maintenance of effort, and state matching funds financial data were 

4

not reported on Forms SF 269 for any reporting period through December 2006. Line 12 on the 

Forms SF 269 filed for Title II, Section 251, and Title I, Section 101, for the periods ended 

September 30, 2007 and December 31, 2008, respectively, only included interest earned for the 

current period. 

HAVA, Section 254(b)(1), Requirements for Election Fund states that, “For purposes of 

subsection (a)(5), a fund described in this subsection with respect to a State is 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: (D) Interest earned on deposits of 

the fund.” Since interest is included in the fund balance, it should also be reported with the 

federal funds authorized on the SF 269, line 10h, and explained in Line 12, Remarks. 

Further, beginning with the September and December 2006 SF 269s, information on the state’s 

maintenance of effort and state matching compliance was required to be included as set forth in 

guidance provided in the fall of 2006 on the EAC’s website at http://www.eac.gov/election/havareporting: 

Recommendation: 

Ensure that the Financial Status Report, SF 269 contains complete and accurate information 

prior to filing, as identified on EAC’s website. 

SOS’s Response: 

The SOS concurred with the recommendation. Any information not contained on SF 269 forms 

that have been filed with the EAC during the reporting periods was made available during the 

audit. Revised forms were subsequently filed. 

Auditor Response: 

We verified that revised SF 269s were filed by the state in September 2008. 

Finding 2: Financial Records 

HAVA receipts and expenditures were commingled in the state’s accounting system through 

June 30, 2006, and were not individually coded as Section 101 and 251 funds. 

In preparing the Financial Status Report, SF 269, it was necessary for the staff to evaluate the 

entries in the accounting records for allocation to the appropriate fund, utilizing Excel 

worksheets to accumulate HAVA data for tracking purposes. Beginning in July 2006, the state 

implemented a new accounting system that provided coding to classify expenditures in 

appropriate categories. However, as of June 30, 2008, the accounting data utilized by the 

election office to account for HAVA financial activity did not reconcile to the election fund 

balances provided by the Department of Administration from the state’s accounting system. 

Thus, the integrity of the Financial Status Reports, Form 269, filed with the EAC is in question. 

HAVA Sec. 902. AUDITS AND REPAYMENT OF FUNDS. (a) Recordkeeping Requirement.-­

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 

5

of the project or undertaking supplied by other sources, and such other records as will facilitate 

an effective audit. 

Part 41 CFR 105-71.120, Standards for financial management systems, (a) requires that: 

“Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type 

contractors, must be sufficient to­

(1) Permit preparation of reports required by this part and the statutes authorizing the 

grant, and 

(2) Permit the tracing of funds to a level of expenditures adequate to establish that such 

funds have not been used in violation of the restrictions and prohibitions of applicable 

statutes.” 

Recommendation: 

The SOS should implement procedures to ensure that the HAVA data downloaded from the 

state’s accounting system is reconciled to the election fund balances prior to the preparation of 

Financial Status Reports, SF 269. 

SOS Response: 

The SOS concurred with the recommendation. Going forward we will use cost centers, where 

applicable, to code transactions for allocation to specific programs. 

Finding 3: Personnel Charges 

HAVA funds are used to pay the full salary for one Rhode Island Secretary of State (SOS) 

employee and 12 percent of the salary for two other SOS employees. Although the employee 

funded in full stated that he worked 100% on HAVA technology applications, the SOS’s officials 

stated that there was no one who worked solely on HAVA activities. Since Fiscal Year 2004, 

through April 2007, a total of $189,852 in HAVA funds have been used to pay for the salaries of 

the three employees which we will include as questioned costs, since there was no documented 

support for time spent on HAVA activities. 

The two employees who work less than full time have 12 percent of their salaries paid by HAVA. 

These two employees are the Director and Deputy Director of Elections and Civics. The 12 

percent allocated to HAVA was based on an undocumented estimate. The time spent on HAVA 

activities was not supported by personnel activity reports or equivalent documentation as 

required by Federal guidelines. We reviewed activity logs and related documentation for 

randomly selected pay periods during the time these employees were paid with HAVA funds. 

Based on this review and discussion with these individuals it appears they work on HAVA 

activities more than the 12 percent allocated to HAVA. 

OMB Circular A-87, Attachment B, Section 8 (h)(4) states that where employees work on 

multiple activities or cost objectives, a distribution of their salaries or wages will be supported by 

personnel activity reports or equivalent documentation which meets the standards in subsection 

(5) unless a statistical sampling system or other substitute system has been approved by the 

cognizant Federal agency. Subsection 5 requires that activity reports or equivalent 

documentation must meet the following standards: 

6

a) They must reflect an after-the-fact distribution of the actual activity of each employee. 

b) They must account for the total activity for which each employee is compensated. 

c) They must be prepared at least monthly and must coincide with one or more pay 

periods, and 

d) They must be signed by the employee. 

Subsequent to our initial fieldwork, the SOS implemented time sheets that accurately document 

the time devoted to HAVA activities, and we did not find any discrepancies in our follow-up 

review. 

Recommendation: 

The SOS should coordinate resolution of the $189,852 in questioned costs with the EAC. 

SOS Response: 

The SOS disputed the question raised in the recommendation, and stated that, although not as 

transparent as the new time-sheet system, documentation acquired from employee time logs 

and calendar notations favorably resolved these questioned costs. 

Auditor’s Response: 

The SOS will need to work with the EAC to determine if the notations and other information 

available are sufficient to justify the charges to HAVA. 

Finding 4: Property Usage 

The Secretary of State used HAVA funds to purchase computer equipment for each county to 

be used to access the state’s Centralized Voter Registration System (CVRS). The state owns 

the equipment but has given control of the equipment to the localities. There were no policies or 

procedures to ensure that the costs are allocated between HAVA approved activities and other 

usage. 

We conducted a survey of the thirty-nine localities in Rhode Island, in which we asked if 

computer equipment purchased with HAVA funds to operate the state’s CVRS was used for 

non-HAVA purposes. Fourteen of the localities responded that they use the equipment for other 

than CVRS access 

We applied the following criteria to assess localities use of HAVA funded equipment: 

OMB Circular A-133, Part 7 – Guidance for Auditing Programs not Included in this Compliance 

Supplement 

B. Allowable Costs/Cost Principles 

1.b.2	 	 A cost is allowable for Federal reimbursement only to the extent of 

benefits received by Federal Awards and its conformance with the 

general policies and principles stated in A-87, Attachment A. 

7

OMB Circular A-87 

3. Application 

b.	 	 All subawards are subject to those Federal cost principles applicable to 

the particular organization concerned. 

OMB Circular A-87, Attachment A, 

3. Allocable costs. 

a.	 	 A cost is allocable to a particular cost objective if the goods or services 

involved are chargeable or assignable to such cost objective in 

accordance with relative benefits received. 

EAC Guidelines 

De Minimis Uses of Equipment 

2.	 	 May HAVA funds be used to support de minimis uses of equipment by the State 

for non-HAVA related purposes? 

No. The State can allocate only that portion of the equipment purchase cost that 

will go to benefit the state’s HAVA program. Alternatively, the expenses may 

qualify as an indirect cost in which case the state may submit an indirect cost 

rate proposal in which it identifies and supplies information regarding direct and 

indirect costs of operation. 

Although the SOS did advise localities that the CVRS equipment could only be 

used for HAVA activities, the localities did not adhere to this policy. As a result, 

federal funds were used to purchase computer equipment that may not have 

been used exclusively for HAVA approved activity, resulting in lost funds in the 

HAVA program. 

Recommendation: 

We recommend that the SOS coordinate with the EAC to determine the percentage of nonHAVA use of the CVRS equipment and to allocate the cost of equipment purchased with federal 

funds to HAVA and non-HAVA related activities. 

SOS Response: 

The SOS concurred with the recommendation and will continue to educate municipalities on the 

prohibited use of HAVA equipment for non-federal purposes. 

Finding 5: Principal and Interest on State Match 

Rhode Island established an election fund to hold Help America Vote Act (HAVA) funds in 

accordance with the requirements of HAVA Section 254. In addition to federal funds received by 

Rhode Island, HAVA requires that the election fund also hold the five percent State matching 

funds that enabled Rhode Island to qualify for the federal HAVA Section 251 funds. 

8

Furthermore, interest earned from the investment of the monies must also be deposited into the 

election fund. The timely deposit of interest earnings produces a compounding effect that adds 

additional funds to the program. 

Rhode Island received HAVA Section 251 funds from the federal government on October 1, 

2004, and January 21, 2005, requiring matching funds as of those dates of $218,421 and 

$291,937, respectively, for a total of $610.358. Rhode Island did not deposit matching funds into 

the election fund, but applied in-kind payments from its general fund, in excess of the amounts 

required to meet its Maintenance of Efforts (MOE), to the matching requirement beginning in 

fiscal year 2005, prior to receipt of Section 251 payments. However, the amounts required to 

meet the matching requirement were not expended in total by the date of receipt of the Section 

251 funds. Also, it is not clear that all of the in-kind payments applied to the matching 

requirement qualify for that treatment. In addition, the amount of lost interest earnings, which is 

dependent of the timing of qualifying in-kind payments, has not been deposited to the election 

fund. 

HAVA Section 254 (b) (1) requires that the following monies be deposited into the state’s 

election fund: 

A.	 	Amounts appropriated or otherwise made available by the State for 

carrying out the activities for which the requirements payment is 

made to the State under this part (the State matching requirement 

of five percent of the federal HAVA Section 251 funds). 

B.	 	The requirements payment made to the State (the federal HAVA 

Section 251 funds). 

C.	 	Such other amounts as may be appropriated under law. 

D.	 	Interest earned on deposits of the fund. 

The SOS did not comply with the requirement to make funds available for state matching 

requirements and was unaware that interest earnings would have to be deposited to the credit 

of the HAVA program on the matching shortfall. 

Although the state made in-kind disbursements to benefit the HAVA program prior to the receipt 

of the requirements payments, the full $610,358 matching requirement was not set aside timely, 

and, as a result, there was lost interest earnings on the shortfall. Also, the expense allocated to 

state match included, for example, estimated personnel and benefit charges, costs of 

promotional items related to voter registration, and payments for educational materials and 

awards for high school students, which may not qualify under HAVA rules. 

Recommendation: 

We recommend that the SOS: 

1.	 	Work with the EAC to determine the in-kind payments that qualify for meeting the state 

matching requirements. 

2.	 	Compute the amount of compounded interest earnings due the election fund on the 

shortfall of state matching funds up to the date at which time the full matching 

requirement was met, giving credit for the payments preceding the receipt of Section 251 

funds. 

9

3.	 	Compute the amount of additional interest due on the earnings determined in 2. above 

until the date on which the lost funds are deposited to the election fund. 

SOS Response: 

The SOS concurred with the recommendations and will work with the EAC to resolve the issue 

of additional interest due on the state matching funds. They also noted however, that the 

Secretary of State’s Office must operate through the State’s accounting system in order to 

access any funds. The State’s Budget Office has chosen not to deposit the State’s matching 

funds to the credit of the HAVA program in spite of notice of the requirement by the Secretary of 

State’s Office. Furthermore, all post-appropriation fund transfers are controlled by the State’s 

Budget Office. 

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

We provided a draft of our report to the appropriate individuals of the Rhode Island Secretary of 

State, and the United States Election Assistance Commission. We considered any comments 

received prior to finalizing this report. 

CG performed its initial fieldwork between May 15, 2007 and June 1, 2007; however, a question 

arose regarding the appropriate treatment of HAVA payments for leases of equipment. 

Guidance was issued by the EAC in early 2008 and follow-up fieldwork was performed between 

August 18, 2008 and August 28, 2008. 

Calverton, Maryland
 


September 14, 2009
 


10
 

RESPONSES TO THE ELECTIONS ASSISTANCE COMMISSION 

DRAFT NOTICE OF FINDINGS & RECOMMENDATIONS (NFR) 

NFR #1- Audit Area: Financial Management System - SF 268 Reporting 

Condition Reported: The Financial Status Reports, SF 269, filed with the Election 

Assistance Commission to report the sources and uses of HAVA funds did not 

include all of the required information on line 12 of the form. Interest earned, 

maintenance of effort, and state matching funds financial data were not 

reported on Forms SF 269 for any reporting period through December 2006. Line 

12 on the Forms SF 269 filed for Title II, Section 251, and Title I, Section 101, for 

the periods ended September 30, 2007 and December 31, 2008, respectively, 

only included interest earned for the current period. 

CORRECTIVE ACTION RECOMMENDED: 

Ensure that the Financial Status Report, SF 269 contains complete and accurate 

information prior to filing, as identified on EAC's website at: 

http://www.eac.gov/election/HAVA%20Funds/docs/modelreportingform2.pdf/attac 

hment download/file 

AUDITEE RESPONSE: We concur with the recommendations. Any information 

not contained on SF269 forms that have been filed with the EAC during the' 

reporting periods was made available during the audit. Revised forms were 

subsequently filed. 

NFR # 2 - Audit Area: Financial Management System - Financial Reports 

Condition Reported: HAVA receipts and expenditures were comingled in the 

state's accounting system through June 30, 2006, and were not individually 

coded as Section 101 and 251 funds. 

In preparing the Financial Status Report, SF 269, it was necessary for the staff to 

evaluate the entries in the accounting records for allocation to the appropriate 

fund, utilizing Excel worksheets to accumulate HAVA data for tracking purposes. 

Beginning in July 2006, the state implemented a new accounting system that 

provided coding to classify expenditures in appropriate categories. 
However, as of June 30, 2008, the accounting data utilized by the election office to account for 

HAVA financial activity did not reconcile to the election fund balances provided by the 

Department of Administration from the state's accounting system. Thus, the integrity of the 

Financial Status Reports, Form 269, filed with the EAC is in question. 

CORRECTIVE ACTION RECOMMENDED: 

Implement procedures to ensure that the HAVA data downloaded from the state's accounting 

system is reconciled to the election fund balances prior to the preparation of Financial Status 

Reports, SF 269. 

AUDITEE RESPONSE: We concur. Going forward we will use cost centers where applicable, to 

code transactions for allocation to specific programs. 

# 3 - Audit Area: Personnel 

Condition Reported: HAVA funds are used to pay the full sa~ary for one Rhode Island 

Secretary of State (SOS) employee and 12 percent of the salary for two other SOS employees. 

Although the employee funded in full stated that he worked 100% on HAVA technology 

applications, the SOS's officials stated that there was no one who worked solely on HAVA 

activities. Since Fiscal Year 2004, through April 2007, a total of $189,852 in HAVA funds have 

been used to pay for the salaries of the three employees which we will include as questioned 

costs, since there was no documented support for time spent on HAVA activities. 

The two employees who work less than full time have 12 percent of their salaries paid by 

HAVA. These two employees are the Director and Deputy Director of Elections and Civics. The 

12 percent allocated to HAVA was based on an undocumented estimate. The time spent on 

HAVA activities was not supported by personnel activity reports or equivalent documentation 

as required by Federal guidelines. We reviewed activity logs and related documentation for 

randomly selected pay periods during the time these employees were paid with HAVA funds. 

Based on this review and discussion with these individuals it appears they work on HAVA 

activities more than the 12 percent allocated to HAVA 

CORRECTIVE ACTION RECOMMENDED: 

We recommend the EAC require the state to: 

1) Develop time recording procedures compliant with Federal guidelines 

employee time charges to HA VA are accurate, and require full time emplo

semi-annual certifications that they worked full time on HA VA activities. 

to 

yee

assure that 

s to prepare 

2) Resolve the questioned costs of $189, 852. 
AUDITEE RESPONSE: We concur with recommendation #1 and implemented a time-sheet system 

for allocating employee time charges to HAVA correctly. 

We dispute the question raised in recommendation #2. Although not as transparent as the new 

time-sheet system, documentation acquired from employee time logs and calendar notations 

favorably resolved these questioned costs. 

NFR # 4 - Audit Area - Property Usage 

Condition Reported: The Secretary of State used HAVA funds to purchase computer equipment 

for each county to be used to access the state's Centralized Voter Registration System (CVRS). 

The state owns the equipment but has given control of the equipment to the counties. There 

were no policies or procedures to ensure that the costs are allocated between HAVA approved 

activities and other usage. 

We conducted a survey of the thirty-nine counties in Rhode Island, in which we asked if 

computer equipment purchased with HAVA funds to operate the state's CVRS was used for 

non-HAVA purposes. Fourteen of the counties responded that they use the equipment for 

other than CVRS access. 

CORRECTIVE ACTION RECOMMENDED: 

We recommend that the Secretary of State coordinate with the EAC to determine the 

percentage of non-HAVA use of the CVRS equipment and to allocate the cost of equipment 

purchased with Federal Funds to HA VA and non-HA VA related activities. 

AUDITEE RESPONSE: We concur with this recommendation and will continue to educate 

municipalities on the prohibited use of HAVA equipment for non-federal purposes. 

NFR #5 - Audit Area - Principle and interest on State Match 

Condition Reported: Rhode Island established an election fund to hold Help America Vote Act 

(HAVA) funds in accordance with the requirements of HAVA Section 254. In addition to federal 

funds received by Rhode Island, HAVA requires that the election fund also hold the five percent 

State matching funds that enabled Rhode Island to qualify for the federal HAVA Section 251 

funds. Furthermore, interest earned from the investment of the monies must also be deposited 

into the election fund. The timely deposit of interest earnings produces a compounding effect 

that adds additional funds to the program. 
Rhode Island received HAVA Section 251 funds from the federal government on October 1, 

2004, and January 21, 2005, requiring matching funds as of those dates of $218,421 and 

$291,937, respectively, for a total of $610.358. Rhode Island did not deposit matching funds 

into the election fund, but applied in-kind payments from its general fund, in excess of the 

amounts required to meet its Maintenance of Efforts (MOE), to the matching requirement 

beginning in fiscal year 2005, prior to receipt of Section 251 payments. However, the amounts 

required to meet the matching requirement were not expended in total by the date of receipt 

of the Section 251 funds. Also, it is not clear that all of the in-kind payments applied the 

matching requirement qualify for that treatment. In addition, the amount of lost interest 

earnings, which is dependent of the timing of qualifying in-kind payments, has not been 

deposited to the election fund. 

CORRECTIVE ACTION RECOMMENDED: 

We recommend that the SOS: 

1. 	 Work with the EAC to determine the in-kind payments that qualify for meeting the state 

matching requirements. 

2. 	 Compute the amount of compounded interest earnings due the election fund on the 

shortfall of state matching funds up to the date at which the full matching requirement of 

was met, giving credit for the payments preceding the receipt of Section 251 funds. 

3. 	 Compute the amount of additional interest due on the earnings determined in 2 above 

until the date on which the lost funds are deposited to the election fund. 

AUDITEE RESPONSE: We concur with the recommendations and will work with the EAC to 

resolve the issue of additional interest due on the state matching funds. We wish to note 

however, that t~e Secretary of State's Office must operate through the State's accounting 

system in order to access any funds. The State's Budget Office has chosen not to deposit the 

State's matching funds to the credit of the HAVA program in spite of notice of the requirement 

by 	the Secretary of State's Office. Furthermore, all post-appropriation fund transfers are 

controlled by the State's Budget Office. 
	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

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 SOS 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 SOS’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, Form SF-269, accounting for property, 

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

•	 Verified the establishment and maintenance of an election fund.Solicited responses from all 

of the state’s cities and towns designated as election boards to assess the procedures for 

using and safeguarding Centralized Voter Registration System equipment acquired with 

HAVA funds. 

15
 
Appendix C 

MONETARY IMPACT AS OF JUNE 30, 2008
 


Description 

Questioned 

Costs 

Additional Funds for 

Program 

Personnel Costs $189,852 $0 

Totals $189,852 $0 

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

failure of the state to provide matching funds on a timely basis, which will provide 

additional funds for the HAVA program. 

16
 

 

 

 

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 

Commission or Help 

America Vote Act 

Funds 

By Mail: U.S. Election Assistance Commission 

Office of Inspector General 

 1225 New York Ave. NW - Suite 1100 

 Washington, DC 20005 

E-mail: eacoig@eac.gov 

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

FAX: 202-566-0957