U.S. ELECTION ASSISTANCE 

COMMISSION 

OFFICE OF INSPECTOR GENERAL 

FINAL REPORT: 

Administration of Payments Received 

Under the Help America Vote Act by the 

Alabama Secretary of State 

APRIL 30, 2003 THROUGH JANUARY 31, 2010 

Report No. 

E-HP-AL-06-10 

January 2011 
 

 

 

 

 

 

 

U.S. ELECTION ASSISTANCE COMMISSION
 

OFFICE OF INSPECTOR GENERAL
 

1201 New York Ave. NW - Suite 300
 

Washington, DC 20005
 

January 28, 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 Alabama Secretary of State (Assignment Number E-HP-AL-06-10) 

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 Alabama 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 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. 

However, the audit disclosed that the SOS did not maintain personnel certifications, failed to 

maintain adequate property records or security over HAVA funded equipment, did not properly 

approve expenditures for sub-awards to counties, incurred questioned costs by using HAVA funds 

for non-qualifying promotional activities, and failed to deposit state and county program income 

from the sale of voter registration lists to the HAVA fund. 

In its June 30, 2010 response (Appendix A-1), the SOS agreed with the report’s findings and 

recommendations, except for depositing the program income to the election fund, and provided 

corrective action. 

On October 29, 2010, 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 resolve 

the disagreement. 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 March 28, 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 ALABAMA
 

April 30, 2003 Through January 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 4

APPENDICES
 

Appendix A-1: Secretary of State Responses to Audit Results 11

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

Appendix B: Audit Methodology 14

Appendix C: Monetary Impact as of January 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 Alabama
 

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 Alabama 

Secretary of State (SOS) for the period April 30, 2003 through January 31, 2010 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 program income and property purchased with HAVA 

payments; 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. Since there was no definitive guidance during the audit 

period, Maintenance of Effort was not included in the scope of our audit procedures. On June 

28, 2010, the Commission issued its revised guidance on the Maintenance of Expenditures 

(MOE) requirement, which includes a provision that the states will have 12 months from the date 

of the policy tRYROXQWDULO\ submit aQDPHQGHG MOE plan to the EAC. 

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 lack of personnel certifications, lack of approval of expenditures for sub-awards to 

counties, failure to maintain adequate property records, lack of security over HAVA funded 

equipment, questionable use of HAVA funds for promotional activities, and failure of the state 

and counties to deposit program income related to the sale of voter registration lists to the 

HAVA fund, as discussed below, our audit concluded that the SOS generally accounted for and 

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

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from April 30, 2003 through January 31, 2010. The exceptions needing SOS’s management 

attention are as follows: 

•	 The SOS lacked appropriate documentation or semi-annual certifications to support 

personnel costs charged to HAVA totaling $62,695.92. 

•	 Controls over sub-awards granted to counties did not ensure that expenditures were 

allowable in accordance with the guidelines established by the SOS for five of the 47 

counties selected for testing. 

•	 Property records were not maintained in accordance with federal regulations and the 

equipment was not properly secured. Controls over equipment purchased with HAVA 

funds at the counties did not ensure retention of physical possession of all equipment. 

•	 Controls over expenditures were not adequate to ensure expenditures were allowable in 

accordance with Section 101 HAVA funds. 

•	 The SOS has not deposited program income generated by the state and the counties 

from the sale of voter registration lists into the HAVA election fund. 

We have included in this report as Appendix A-1 the SOS management’s formal response on 

June 30, 2010, to our notice of findings and recommendations (NFRs). In an October 14, 2010 

email response to the draft report, SOS management confirmed that there were no changes to 

the previous responses. 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. 

The draft report, including the SOS responses, was provided to the Executive Director of the 

EAC for review and comment. The EAC responded on October 29, 2010, and generally agreed 

with the report’s findings and recommendations and the Alabama official’s iresponse. Although 

the Alabama official disagreed that the program income should be deposited to the election 

fund, the EAC stated that they would work with the state to resolve the issue. 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: 

•	 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. 

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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 Alabama SOS: 

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. Since there was no definitive guidance during the audit period, 

Maintenance of Effort was not included in the scope of our audit procedures. On June 

28, 2010, the Commission issued its revised guidance on the Maintenance of 

Expenditures (MOE) requirement, which includes a provision that the states will have 12 

months from the date of the policy to voluntarily submit an amended MOE plan to the 

EAC. 

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 

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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 SOS from April 30, 2003 through 

January 31, 2010 (81-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 $ 4,989,605 $ 0 $ 0 $ 351,437 $ 5,341,042 $ 2,042,254 1/31/2010 

Section 102 51,076 0 0 3,597 54,673 919 1/31/2010 

Section 251 35,866,513 0 1,998,335 2,451,203 40,316,051 28,287,366 1/31/2010 

Total $40,907,194 $ 0 $1,998,335 $2,806,237 $45,711,766 $30,330,539 1/31/2010 

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 lack of personnel certifications, lack of approval of expenditures for sub-awards to 

counties, failure to maintain adequate property records, lack of security over HAVA funded 

equipment, questionable use of HAVA funds for promotional activities, failure of the state and 

counties to deposit program income related to the sale of voter registration lists to the HAVA 

fund, and the determination of whether the SOS and its subgrantees met the requirement for 

maintenance of a base level of state outlays which were specifically omitted from our scope of 

work as explained above, our audit concluded that the SOS generally accounted for and 

expended HAVA funds in accordance with the requirements mentioned above. The SOS has 

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

A-1: 

I. Personnel Certifications 

The SOS did not complete semi-annual certifications for the one full-time employee that worked 

on the HAVA activities for the period of August 31, 2005 through September 30, 2006. There 

were also no timesheets available to verify the charged hours. However, the SOS did obtain the 

appropriate semi-annual certifications for the one full-time employee for the period from October 

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1, 2007 through September 30, 2009. There were no salaries and benefits charged to the HAVA 

election fund for the period of October 1, 2006 through September 30, 2007. 

The United States Election Assistance Commission (EAC) has no assurance that salaries and 

fringe benefit costs of $62,695.92 paid to SOS staff using HAVA program funds were incurred 

for work done solely on HAVA activities during the time period of August 31, 2005 through 

September 30, 2006. 

OMB Circular A-87, in Attachment B Section 8(h) (3) requires that: 

(3) Where employees are expected to work solely on a single Federal award or cost 

objective, charges for their salaries and wages will be supported by periodic 

certifications that the employees worked solely on that program for the period covered 

by the certification. These certifications will be prepared at least semi-annually and will 

be signed by the employee or supervisory official having first hand knowledge of the 

work performed by the employee. 

The SOS serving during the period in question was not aware of this requirement. 

Recommendation: 

1.		 We recommend that the EAC resolve with the SOS the appropriate corrective action 

regarding the lack of periodic certifications for the questioned period that personnel costs 

were paid from HAVA program funds. 

SOS’s Response: 

The SOS’s Office agreed to the finding and stated that the former SOS did not sign or keep 

proper records as required by OMB Circular A-87. The current SOS took office in January 

2007, and, in October 2007, the SOS’s Office began paying one full-time employee from HAVA 

funds. Since that period, the SOS’s Office has maintained semi-annual certifications of work 

done by that employee, which are signed by the SOS. 

II.	 Sub-Awards to Counties 

The SOS distributed sub-awards to counties to reimburse them for the purchase of voting 

equipment necessary to comply with the HAVA. The counties seeking a sub-award from the 

SOS were required to submit an application, which included documentation and affidavits to 

support the amount of the requested sub-award as follows: 

1.		 The voting equipment was purchased under the Association of County Commissions of 

Alabama (ACCA) bid agreement. 

2.		 The type of voting equipment that was purchased and the amount paid for the 

equipment. 

3.		 Copies of invoices from the vendor and cancelled checks that show payment for the 

voting equipment purchased. 

4.		 A copy of the minutes at which the County Commission approved the purchase of the 

voting equipment. 

5.		 A signed and notarized affidavit that the voting equipment purchased is certified by the 

Alabama Electronic Voting Committee; has a certification number from either the 

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National Association of State Election Directors (NASED) or the EAC; and complies with 

Section 301 of HAVA. 

6.		 A signed and notarized affidavit that the county complied with and will continue to 

comply with all local, state and federal laws governing HAVA sub-awards. 

To ensure the application received from the counties was complete the SOS completed an 

internal checklist. When the internal checklist was complete the SOS approved the sub-award 

amount to be remitted to the county. 

During the testing of the HAVA sub-awards to counties, it was determined that five of the 47 

sub-awards selected for testing did not comply with the administrative rules outlined above. We 

determined that two counties did not provide the proper approval of their County Commission, 

one county did not provide a signed and notarized affidavit that they complied with and will 

continue to comply with all local, state and federal laws, the SOS did not complete an internal 

checklist for one county, and the SOS reimbursed one county excess funds. 

Under Circular A-87 Amendment A, Part C, No. 1, costs must meet the following general 

criteria: 

•	 Be authorized or not prohibited under State or local laws or regulations. 

•	 Conform to any limitations or exclusions set forth in these principles, Federal laws, 

terms and conditions of the Federal award, or other governing regulations as to types or 

amounts of cost items. 

•	 Be consistent with policies, regulations, and procedures that apply uniformly to both 

Federal awards and other activities of the governmental unit. 

•	 Be adequately documented. 

Improper approvals or lack thereof could lead to sub-awards made with HAVA funds for 

expenditures that might not be allowable costs. 

Recommendations: 

We recommend that the SOS: 

2.		 Determine whether the sub-awards in question are allowable HAVA expenditures, and 

secure appropriate approvals. 

3.		 Review all sub-awards to counties to ensure that amounts paid were adequately 

supported by documentation and all payments were for qualified HAVA purposes. 

4.		 Request reimbursements from counties for all unauthorized payments. 

SOS’s Response: 

The SOS’s Office agrees with the finding, and stated that the former SOS administered the 

grant program prior to the current SOS taking office in January 2007. The SOS’s Office will 

determine whether the sub-awards in question are allowable HAVA expenditures and secure 

appropriate approvals. The SOS’s Office will also review all sub-awards to counties to ensure 

that amounts paid were adequately supported by documentation and all payments were for 

qualified HAVA purposes. 

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III. Property Management 

Voting Equipment 

Property Records: 

During our review of the counties’ equipment/property management practices, we determined 

that four of the seven counties we visited did not comply with the requirements of 41 CFR 105-

71.132 regarding the identification of equipment purchased with federal funds. The counties 

could not locate equipment that was included on the inventory listings because the listings had 

not been updated when equipment was replaced. The counties do not maintain property records 

that include the following attributes: a description of the property, a serial number or other 

identification number, the source of property, who holds the title, the acquisition date and cost of 

the property, percentage of Federal participation in the cost of the property, the location, use 

and condition of the property, and any ultimate disposition data including the date of disposal 

and sales price of the property. 

Moreover, the acquisition cost of ten printers included on the SOS’s statewide voter register 

system equipment listing was misstated. The equipment listing indicated that the cost of each 

printer was $500; however the invoice indicated a cost of $698. 

The Uniform Administrative Requirements for Grants and Cooperative Agreements with 

State and Local Governments 41 CFR § 105-71.132(d)(1) 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. 

The State Code of Alabama Section 36-16-8 requires additional information to be 

provided on equipment records such as custodial agency, responsible officer or 

employee, and state property control marking. 

Security: 

During our site visits we noted that two of the seven counties visited did not comply with the 

requirements of 41 CFR § 105-71.132(d)(3) with regards to ensuring that adequate security is 

provided at the location where the equipment is stored. 

One county locks the doors to the room where the voting equipment is stored at night but the 

doors are open during the day and accessible to the public who use the adjoining room. Another 

county locks the doors to the rooms where the equipment is stored, but there are numerous 

personnel with keys that can access the voting equipment. Neither of the counties has standard 

security practices such as visitor logs, cameras or alarms. 

The Uniform Administrative Requirements for Grants and Cooperative Agreements with 

State and Local Governments 41 CFR § 105-71.132(d)(3) states that a control system 

must be developed to ensure adequate safeguards to prevent loss, damage or theft of 

the property. Any loss, damage or theft shall be investigated. 

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Recommendations: 

We recommend that the SOS: 

5.		 Require staff of the counties to conduct a physical inventory of all HAVA-funded 

equipment in their possession and use the results to correct its property records. 

6.		 Ensure that the property management records of the counties have at least the minimum 

information required in the federal requirements of 41 CFR § 105-71.132 and the 

Alabama State Code Section 36-16-8. 

7.		 Ensure that the property records are updated to reflect the correct acquisition cost for 

the ten printers. 

8.		 Ensure that the property is secured in a manner consistent with the federal requirements 

of 41 CFR § 105-71.132. 

SOS’s Response: 

The SOS’s Office corrected the clerical error of the cost of ten printers listed in the property 

management system. The SOS’s Office will also implement corrective action as follows: 

1. Require		staff of the counties to conduct a physical inventory of all HAVA-funded 

equipment in their possession and use the results to correct its property records. 

2. Ensure that the property management records of the counties have at least the minimum 

information required in the federal requirements of 41 CFR § 105-71.132 and the 

Alabama State Code Section 36-16-8. 

3. Ensure that the property is secured in a manner consistent with the federal requirements 

of 41 CFR § 105-71.132. 

IV. Expenditures 

The SOS expended $26,459 in Section 101 HAVA funds for the “Take a Kid to Vote” project. 

This included $23,229 for a booklet which was written for children who are not of voting age and 

$3,230 for a radio advertisement which urged voters to take their children with them to the polls. 

The radio advertisement did not contain educational information. These expenditures are 

questionable uses of Section 101 HAVA funds. 

Furthermore, we cannot conclude on the full amount expended on the “Take a Kid to Vote” 

project due to the vague descriptions on the invoices received from radio vendors for advertising 

costs. 

HAVA Section 101(b)(1), subparts (B),(C) and (D) prescribe that HAVA funds can be used to 

improve the administration of elections for federal office; educate voters concerning voting 

procedures, voting rights, and voting technology; and training election officials, poll workers, and 

election volunteers. 

SOS officials were not aware that the “Take a Kid to Vote” project may not be an allowable cost 

under Section 101 of HAVA. 

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Recommendation: 

9.		 We recommend that the EAC work with the SOS to resolve the issue of whether the 

costs associated with the “Take a Kid to Vote” project of approximately $26,459 are 

allowable uses of HAVA funds. If it is determined that the project is not an allowable use 

of HAVA funds, the SOS should also determine if any additional HAVA funds have been 

spent on the “Take a Kid to Vote” project. 

SOS’s Response: 

The SOS’s Office agrees to the finding. The previous SOS developed and approved the “Take a 

Kid to Vote” project. The SOS’s Office will reimburse the HAVA Fund for the cost of the “Take a 

Kid to Vote” project in the amount of $26,459. 

Auditor’s Response: 

The SOS’s Office should determine if there were any additional HAVA funds spent on the “Take 

a Kid to Vote” project. 

V.	 Program Income 

The SOS has not deposited program income, generated by the SOS and the counties from the 

sale of voter registration lists that was in excess of the costs associated with preparing the lists, 

into the HAVA election fund. The SOS and three of the counties we visited prepared these lists 

from the SOS’s HAVA funded voter registration system. The program income has also not been 

reported to the EAC as required. 

The state generates program income of approximately $88,000 per fiscal year from the sale of 

voter registration lists. The voter registration system was complete as of the fiscal year ended 

September 30, 2008. The state does not know the amount of expenditures they incurred to 

generate the voter registration lists. 

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. Additionally, 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. 

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. 

According to SOS election officials, the program income was deposited in an account to defray 

the cost of voter registration within the state. Under county law, counties are required to deposit 

the income into the counties’ general funds. 

Recommendations: 

We recommend that: 

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10. The EAC work with the SOS to resolve the conflict between federal, state and county 

law which requires that program income be deposited in non-HAVA funds at the state 

and county levels. 

11. The SOS provide guidance to the counties on how to properly record and report program 

income received from the sale of voter registration lists generated from the state’s voter 

registration database. The SOS should also report such income to the EAC. 

SOS’s Response: 

The SOS’s Office strongly disagrees with the finding. The SOS does not believe the net income 

from the sale of voter registration lists should be deposited into the HAVA election fund. The 

information contained in the voter registration lists is owned by the state of Alabama. While 

HAVA funds were used to upgrade the technology for managing the voter list, it is still the 

property of the state of Alabama and state law provides that the income from the sale of the 

vote list should be deposited into a specific state fund within the Secretary of State’s Office (Ala. 

Code, 1975 §§ 17-4-34(10); 17-4-38) long before HAVA was enacted. 

Auditor’s Response: 

We will defer the resolution of the conflict between federal and state law to the EAC. 

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

We provided a draft of our report to the appropriate individuals of the Alabama SOS and the 

Commission. We considered any comments received prior to finalizing this report. 

The EAC responded on October 29, 2010, and generally agreed with the report’s findings and 

recommendations and the Alabama official’s response. Although the Alabama official disagreed 

that the program income should be deposited to the election fund, the EAC stated that they 

would work with the state to resolve the issue. The EAC’s complete response is included as 

Appendix A-2. 

a1

CG performed its work between February 23, 2010 and March 11, 2010. 

Calverton, Maryland 

July 9, 2010 

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Appendix A-1 

Secretary of State Responses to Audit Results2 

2 The responses to our NFR (Notice of Findings and Recommendations) were received in writing. On October 14, 

2010, Alabama election officials responded in an email that the responses included in this Appendix were still 

applicable and no additional comments would be submitted. 

Response to NFR #1 

The Secretary of State’s Office agrees to the finding. Then-Secretary of State Nancy Worley did 

not sign or keep proper records as required by OMB Circular A-87. Secretary of State Beth 

Chapman took office in January 2007. In October 2007 the Secretary of State’s Office started 

paying one full time employee out of HAVA funds. Since that period, the Secretary of State’s 

Office has kept semi-annual certifications of work done by that employee and signed by 

Secretary Chapman. 

Response to NFR #2 

The Secretary of State’s Office agrees with the finding. Then-Secretary of State Nancy Worley 

administered the grant program prior to Secretary of State Beth Chapman taking office in 

January 2007. The Secretary of State’s Office will validate the sub-awards in question as valid 

HAVA expenditures, and secure appropriate approvals. The Secretary of State’s Office will also 

review all sub-awards to counties to ensure that amounts paid were adequately supported by 

documentation and all payments were for qualified HAVA purposes. 

Response to NFR #3 

The Secretary of State’s Office has already corrected the clerical error of the cost of ten printers 

listed in the property management system. The Secretary of State’s Office will take the following 

actions: 

4.		 Require staff of the counties to conduct a physical inventory of all HAVA-funded 

equipment in their possession and use the results to correct its property records. 

5.		 Ensure that the property management records of the counties have at least the 

minimum information required in the federal requirements of 41 CFR § 105-71.132 

and the Alabama State Code Section 36-16-8. 

6.		 Ensure that the property is secured in a manner consistent with the federal 

requirements of 41 CFR § 105-71.132. 

Response to NFR #4 

The Secretary of State’s Office agrees to the finding. Then-Secretary of State Nancy Worley 

developed and approved of the “Take a Kid to Vote” project. The Secretary of State’s Office will 

reimburse the HAVA Fund for the cost of the “Take a Kid to Vote” project, $26,459. 

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Response to NFR #5
	

The Secretary of State’s Office strongly disagrees with the finding. The Secretary of State’s 

Office does not believe the net income from the sale of voter registration lists should be 

deposited into the HAVA election fund. The information contained in the voter registration lists is 

owned by the State of Alabama. While HAVA funds were used to upgrade the technology for 

managing the voter list, it is still the property of the State of Alabama and state law provides that 

the income from the sale of the vote list should be deposited into a specific state fund within the 

Secretary of State’s Office (Ala. Code, 1975 §§ 17-4-34(10); 17-4-38) long before HAVA was 

enacted. 

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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 Alabama, for the Period April 30, 2003 Through 

January 31, 2010. 

October 29, 2010
	

MEMORANDUM
	

To: Curtis Crider 

Inspector General 

From: Thomas Wilkey 

Executive Director 

Subject: Draft Performance Audit Report – “Administration of Payments 

Received Under the Help America Vote Act by the State of 

Alabama”. 

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

Alabama. 

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

the review and recommendations. The EAC will work with the Alabama 

Secretary of State (SOS) to ensure appropriate corrective action. Where the 

SOS disagrees with the finding that net income from the sale of voter registration 

lists should be deposited into the HAVA election fund, the EAC will work with the 

SOS to address the issue. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 two 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. 

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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 

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Appendix C 

MONETARY IMPACT AS OF JANUARY 31, 2010
 

Description 

Questioned 

Costs 

Additional Funds for 

Program 

Expenditures – “Take a Kid to Vote” 

booklet $26,459 $0 

Program Income – Sale of Voter 

Registration Lists $0 $03 

3 The SOS could not determine the amount of the expenditures that were incurred to generate the voter registration 

lists. Therefore, the amount of additional funds for the program, related to the sale of the voter registration lists 

could not be determined since the additional funds is net of program income and the cost to generate the lists. 

Semi-annual certifications of full-time 

employment on HAVA activities not filed $62,696 $0 

Totals $89,155 $0 

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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