U.S. ELECTION ASSISTANCE 

COMMISSION 

OFFICE OF INSPECTOR GENERAL 

FINAL REPORT: 

Administration of Payments Received 

Under the Help America Vote Act by the 

Oregon Secretary of State’s Election 

Division 

MAY 1, 2003 THROUGH AUGUST 1, 2008 

Report No. 

E-HP-OR-07-08 

June 2009 
 

U.S. ELECTION ASSISTANCE COMMISSION
 

OFFICE OF INSPECTOR GENERAL
 

1225 New York Ave. NW - Suite 1100 

Washington, DC 20005
 

June 22, 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 Oregon Secretary of State’s Election Division 

(Assignment Number E-HP-OR-07-08) 

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 Oregon Secretary of State’s Election Division (SOS-ED). 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-ED, Clifton Gunderson concluded that, except for the maintenance 

of comprehensive equipment inventories, our audit concluded that the SOS-ED 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. The 

SOS-ED also complied with section 251 requirements. 

In its March 10, 2009 response to the draft report (Appendix A), the SOS-ED agreed with 

the report’s finding and recommendations, and provided corrective action. 

Please provide us with your written response to the recommendation included in this report 

by August 26, 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 OREGON
 
 

May 1, 2003 Through August 31, 2008
 
 

UNITED STATES ELECTION 

ASSISTANCE COMMISSION 

a1
T

PAGE
 
 

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

 

BACKGROUND .............................................................................................................. 2

 

AUDIT OBJECTIVES...................................................................................................... 2

 

SCOPE AND METHODOLOGY...................................................................................... 3

 

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

 

APPENDICES
 
 

Appendix A: Director, Elections Division, Secretary of State Response To
 
 

Audit Results .......................................................................................... 6

 

Appendix B: Audit Methodology .................................................................................. 8

 

Appendix C: Monetary Impact as of August 31, 2008 .............................................. 10
 
 

ABLE OF CONTENTS 
     

      

  

           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

	 

	 

	 

	 

 

 

	 


 

	 

	 

	 

	 

 

 

	 

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U.S. Election Assistance Commission
 
 

Performance Audit of the Administration of Payments Received Under the
 
 

Help America Vote Act by the State of Oregon
 
 

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 Oregon 

Secretary of State (SOS) for the period May 1, 2003 through August 31, 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 maintenance of comprehensive equipment inventories, 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 August 31, 2008. The exception 

needing SOS’s management attention is as follows: 

•	 The state needs to improve its controls over equipment purchased with HAVA funds 

to ensure that all equipment is listed in the inventory records at both the state and 

county level, and the listed equipment has the correct identifying information. 

11710 Beltsville Drive, Suite 300

Calverton, MD 20705­3106

tel: 301­931­2050

fax:

www.cliftoncpa.com

301­931­1710

	 Offices in 17 states and

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Washington, DC h
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

We have included in this report the SOS managements’ formal response to the draft audit report 

dated March 10, 2009. The SOS officials agreed with the recommendations 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)]. 

AUDIT OBJECTIVES 

The objectives of our audit were to determine whether the Oregon 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; 

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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. 

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

SCOPE AND METHODOLOGY 

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

August 31, 2008. 

Funds received and disbursed from May 1, 2003 (program initiation date) to August 31, 2008 

(64-month period) are shown below: 

FUNDS RECEIVED

TYPE OF

PAYMENT

EAC

PAYMENT

PROGRAM

INCOME

STATE

MATCH

INTEREST

EARNED

TOTAL

AVAILABLE

FUNDS

DISBURSED

DATA

AS OF

Section 101

Section 102

Section 251

$ 4,203,776

1,822,758

27,837,407

$ 0

0

30,000

$ 0

0

970,000

$ 59,198

42,128

2,986,207

$4,262,974

1,864,886

31,823,614

$4,262,974

1,711,406

13,963,586

8/31/2008

8/31/2008

8/31/2008

$33,863,941 $30,000 $970,000 $3,087,533 $37,951,474 $19,937,966 8/31/2008

Notes: 1) The total state matching requirement was $1,465,127, and the state deposited $970,000 into 

the election fund prior to receipt of requirements payments from the EAC. The difference of 

$495,127 was covered by in-kind contributions through payments by the state and counties 

for salaries and benefits of employees working on HAVA qualifying programs. Also, included 

in the Sec. 251 interest earned is $51,545 earned on the state matching funds deposits. 

2) The Sec. 101 interest earned of $59,198 is included in Sec. 101 funds disbursed, and has 

been deducted from the Sec. 251 funds disbursed in the above schedule, because the funds 

were transferred from Sec. 101 to Sec. 251 as all of the Sec. 101 monies were expended. 

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. 

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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 maintenance of comprehensive property inventories, 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: 

Property Management 

During our testing of the existence of HAVA purchased equipment to the inventory 

documentation provided by the Secretary of State staff, we noted that there were discrepancies 

at two state locations and at five of nine counties we visited. These discrepancies were 

comprised of the following: 

•	 State owned equipment - 3 items were listed with the wrong serial number. 

- 3 items were not listed 

- 3 items that were on the inventory were identified as 

incompatible equipment and would not be used 

•	 County owned equipment - 18 printers included in bulk purchases not listed on the 

inventories 

- 10 listed computers, acquired with HAVA funds, were 

transferred to a computer training facility and were 

replaced with computers purchased with county 

funds that were not included on the HAVA 

inventory listing 

- 2 printers not listed on inventories 

- 4 items listed on inventories were not located 

- 3 items listed on inventories, but not being used for 

HAVA purposes 

In accordance with the Uniform Administrative Requirements For Grants And Cooperative 

Agreements With State And Local Governments 41 CFR § 105-71.132(b), a State will use, 

manage, and dispose of equipment acquired under a grant by the State in accordance with 

State laws and procedures. The Oregon SOS’ Business Services Division Desk Manual 

contains extensive procedures for recording and tracking Fixed Assets, including the staff 

positions responsible for various aspects of the process, to ensure that all assets meeting the 

criteria set forth are properly managed and controlled. The policy sets the minimum amount for 

capitalization as $5,000; however, items determined to be “walkable” are required to be 

inventoried if the cost exceeds $500. 

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The counties must conform to federal rules, and the Uniform Administrative Requirements For 

Grants And Cooperative Agreements With State And Local Governments 41 CFR § 105-71.132 

Equipment states that property records must be maintained that include a description of the 

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

title, the acquisition date, and costs of the property, percentage of Federal participation in the 

cost of the property, the locations, use and condition of the property, and any ultimate 

disposition data including the date of disposal and sale price of the property. 

Recommendations: 

We recommend that the Secretary of State’s Office: 

1)	 	 Ensures that the property listings of HAVA funded equipment owned by the state reflect 

accurate information as prescribed by the state fixed asset guidelines. 

2)	 	 Instruct the counties to ensure that the property listings of HAVA funded equipment in their 

possession reflect accurate information as prescribed by 41 CFR 105-71.132. 

3)	 	 Make an assessment of all idle equipment acquired with HAVA funds at both the state and 

county level to determine appropriate disposition thereof. 

SOS’s Response: 

The SOS’ Elections Division Director stated that, in general, they agreed with the finding and 

recommendations and implemented the following actions: 

1.) The Business Services Division had already taken steps to improve the information 

recorded. 

2.) Copies of 41 CFR 105-71.132 were provided to all county election offices and the SOS’ 

HAVA Manager conducted a training session on the subject matter at the February 

2009, Oregon Association of County Clerks. 

3.) The Business Services Division has completed the assessment and counties have been 

instructed on the proper disposition procedures for surplus equipment. 

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

We provided a draft of our report to the appropriate individuals of the Oregon Secretary of State, 

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

prior to finalizing this report. 

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CG performed its work between October 13, 2008 and October 24, 2008. 

Calverton, Maryland 

May 4, 2009 

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OFFICE OF THE SECRETARY OF STATE 	 ELECfIONS DIVISION 

JOHN LINDBACK 

KATE BROWN DIRECfOR 

SECRETARY OF STATE 255 CAPITOL ST NE, SUITE 501 

SALEM, OREGON 97310 

ELECfIONS-(503) 986-1518 

FAX-(503) 373-7414 

March 10, 2009 

Mr. Curtis W. Crider 

Office of the Inspector General 

U.S. Election Assistance Commission 

1225 New York Ave. NW - Suite 1100 

Washington, DC 20005 

Dear Mr. Crider: 

This letter is in response to the Notice of Findings and Recommendation resulting from the 

recent Help America Vote Act audit activities in Oregon. 

As indicted in the January 5, 2009 letter from our HAVA Manager, we agree in general with 

the finding and recommendations. Following are our responses to the specific 

recommendations: 

1. 	 Ensure that the property listings of HAVA funded equipment owned by the state 
 


reflect accurate information as prescribed by the state fixed asset guidelines. 
 


Response: We agree, and our Business Services Division has already taken steps to improve 

the information recorded. 

2. Instruct the counties to ensure that the property listings of HAV A funded equipment 

in their possession reflect accurate information as prescribed in 41 CFR 105-71.132. 

Response: We agree. Copies of 41 CFR 105-71.132 have been provided to all county election 

offices and our HAVA Manager provided a training session on the subject at the February, 

2009, conference of the Oregon Association of County Clerks. 

3. 	 Make an assessment of all idle equipment acquired with HAV A funds at both the state 

and county level to determine disposition thereof. 

Response: We agree, and our Business Services Division has already completed the 

assessment and counties have been instructed on the proper disposition procedures for 

surplus equipment. 

In Appendix C of the report there is a note relating to the anticipated monetary impact of the 

sale of unused equipment. All counties have been instructed in the proper procedures 

relating to the sale of unused or surplus equipment and understand that funds earned are to 

revert to the HAV A Election fund. 

On a final note, we would like to thank the Office of the Inspector General for expediting the 

Oregon audit so that it would occur prior to Secretary Bradbury's departure from office. We 

would also like to thank the auditors assigned to Oregon, Ray Raines and Joe Ansnick of 
Clifton Gunderson, for their patience and professionalism. Their questions and comments 


will benefit us in the ongoing management of Oregon's HAV A program. 
 


Please call on this office if you have any further questions. 
 


Sincerely, 


~~ John Lindback 

Elections Division Director 

cc: Secretary of State Kate Brown 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

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 maintain the level 

of expenses for elections at least equal to the amount expended in fiscal year 2000 and to 

meet the five percent matching requirement for section 251 requirements payments. 

•	 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. 

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

� Observe equipment purchased with HAVA funds for proper accounting and 

safeguarding 

� Test disbursement of HAVA funds for allowability and compliance 

� Test cash receipts from SOS to ensure proper cash management 

� Test procurement of voting equipment for competitive bid process 

� Ensure compliance with HAVA Act. 

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Appendix C 

MONETARY IMPACT AS OF AUGUST 31, 2008
 
 

Description 

Questioned 

Costs 

Additional Funds for 

Program 

$0 $0 

Totals $0 $0 

Note: The only monetary impact anticipated would be the potential recovery of funds through 

the sale of unused equipment, which cannot be determined at this time. 

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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 

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