U.S. ELECTION ASSISTANCE 

COMMISSION 

OFFICE OF INSPECTOR GENERAL

FINAL REPORT: 

ADMINISTRATION OF PAYMENTS 

RECEIVED UNDER THE HELP 

AMERICA VOTE ACT BY THE 

COMMONWEALTH OF VIRGINIA 

STATE BOARD OF ELECTIONS 

MAY 1,2003 THROUGH AUGUST 31,2006

Report No. 

E-HP-VA-12-06 

May 2007
U.S. ELECTION ASSISTANCE COMMISSION

OFFICE OF INSPECTOR GENERAL

1225 New York Ave. NW - Suite 1100 

Washington, DC 20005

May 17, 2007 

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 Commonwealth of Virginia Sate Board of Elections 

 (Assignment Number E-HP-VA-12-06) 

 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 Commonwealth of Virginia State Board of 

Elections (Board of Elections). 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 Board of Elections, Clifton Gunderson found that the Board of 

Elections 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 Board of Elections also complied with section 251 

requirements. However, Clifton Gunderson identified a need for the Board of Elections to 

improve its financial reporting and property controls. 

In its May 11, 2007 response to the draft report (Appendix A), the Board of Elections 

agreed with the report’s findings and recommendations. The response indicated that the Board of 

Elections had amended and submitted corrected SF-269 reports. In addition, the Board of 

Elections indicated that steps were underway to improve controls over property.

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

report by July 18, 2007. Your response should contain information on actions taken or planned, 

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

recommendations. 

 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 COMMONWEALTH OF 

VIRGINIA STATE BOARD OF ELECTIONS 

May 1, 2003 Through August 31, 2006 

UNITED STATES ELECTION 

ASSISTANCE COMMISSION 
TABLE OF CONTENTS

PAGE 

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

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

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

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

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

APPENDICES 

Appendix A: STATE BOARD OF ELECTIONS’ RESPONSE 

TO AUDIT RESULTS.................................................................................................. 7 

Appendix B: AUDIT METHODOLOGY........................................................................................ 8 
A1

 Offices in 15 states and Washington, DC 1 h

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 Commonwealth of 

Virginia State Board of Elections (SBE) for the period May 1, 2003 through August 31, 2006 to 

determine whether the Virginia SBE 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, for a 

matching contribution, and for maintenance of a base level of state outlays. 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. 

Our audit concluded that Virginia SBE generally accounted for and expended HAVA funds in 

accordance with the requirements mentioned above. We also determined that the Virginia SBE 

complied with section 251 requirements for an election fund, for a matching contribution, and for 

maintenance of a base level of state outlays. However, we identified a need for the Virginia SBE to 

improve its reporting and property controls in the following two areas needing management 

attention: 

• Interest earned on HAVA funds deposited with the Commonwealth of Virginia was not 

reported on the latest Financial Status Report, SF 269, submitted to the Commission. 
2 

• Physical security over voting equipment purchased with HAVA funds and controlled by the 

counties needs improvement. 

We have included in this report the Virginia SBE’s formal response to our report and 

recommendations dated May 11, 2007. The Virginia SBE stated that it had amended and submitted 

past SF 269 financial reports with the EAC to report the interest earnings, and would implement 

procedures at both the state and county levels to update inventory and security procedures. 

BACKGROUND

The Help America Vote Act of 2002 created the U.S. Election Assistance 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)(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 )(1)). 

AUDIT OBJECTIVES

The objectives of our audit were to determine whether the Commonwealth of Virginia: 

1. Used payments authorized by Sections 101, 102, and 251 of the Help America Vote Act 

(HAVA) in accordance with HAVA and applicable requirements; 
3 

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, for a matching 

contribution, and for maintenance of a base level of state outlays. 

In addition, to account 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: 

4. 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. 

5. 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. 

6. 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 Virginia SBE through August 31, 2006. 

Funds received and disbursed from May 1, 2003 (program initiation date) to August 31, 2006 (41-

month period): 

 

TYPE OF PAYMENT

AMOUNT 

RECEIVED 

AMOUNT 

DISBURSED 

 DATA 

AS OF 

101 $7,575,793 $1,631,100 8/31/2006

102 4,737,340 4,526,743 8/31/2006

251 59,667,595 27,112,702 8/31/2006

$71,980,728 $33,270,545 

Our audit methodology is set forth in Appendix B. 

 

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 31 for the activities of the 

previous fiscal year ending on September 30. 
4 

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. 

We concluded that Virginia SBE generally accounted for and expended HAVA funds in accordance 

with the HAVA requirements and complied with the financial management requirements established 

by the Commission. The Virginia SBE also complied with section 251 requirements. However, we 

identified a need for Virginia SBE to improve its financial reporting and property controls as 

described below: 

I. Financial Reporting 

The Financial Status Report, SF 269, did not include all of the required information. Interest earned

on HAVA funds deposited with the Commonwealth of Virginia in the Sections 101, 102 and 251 

accounts was not reported on SF 269. Interest income aggregating $2,858,908 through August 31, 

2006, was deposited with the HAVA Title II funds by the state Department of Accounts, and 

should have been included in the total receipts on Line 10.0 on the financial forms at each reporting 

period. The interest earned for the reporting year and the cumulative interest earnings to the date of 

the report should be reported in the explanation block on Line 12. The omission of the interest 

from the reports appeared to be an oversight on the part of the SBE staff. 

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, and explained in Line 12, Remarks. 

Recommendations: 

We recommend that the EAC require SBE: 

1. To prepare future SF-269 submissions that contains complete and accurate information prior 

to filing, as identified on EAC’s website at http://www.eac.gov/docs/Model 269 Title II final 

pdf. 

2. File amended reports for prior periods to provide the correct information. 
5 

SBE’s Response: 

The SBE stated that it had amended and submitted past SF 269 reports to reflect interest earned on 

HAVA funds deposited with the Commonwealth of Virginia. 

II. Voting Equipment Security 

We conducted site visits to five (5) of the 134 Virginia counties to perform a physical observation of

selected voting equipment to ensure that the machines matched the inventory records, and to 

determine the security procedures employed by the counties to protect the voting equipment. In 

two (2) of the five (5) counties visited, we determined that the procedures did not provide adequate 

security. 

In one location, the voting machines were kept in a large warehouse shared with the county fire 

department and schools. Although there is a warehouse person at the office by the gate we entered, 

the voting machines are kept in a section accessible to anyone who is inside the warehouse. The 

voting machines are not housed in cages or a locked area where it can be accessed by only 

authorized staff. In addition, most of the voting machines are kept inside a cart that can hold up to

6 machines, the carts are not locked. Moreover, there were some machines that are on wood pallets 

piled on top of one another. 

In another county, The voting machines were locked in a cage within the Election Board Office that 

had no other security devices, such as alarms or cameras, and the machines were located next to a 

window on the ground floor on an obscure side of the building, visible from the outside. 

The Code of Federal Regulations at 41 CFR 105-71.132(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. 

Strong physical security control deters or prevents theft and/or the sabotage of an asset (especially 

sensitive assets). 

Recommendation: 

We recommend that the EAC require SBE to develop and implement policies and procedures to 

ensure that the security of voting machines and other equipment complies with the USEAC 

guidelines in the pamphlet entitled Quick Start Management Guide issued in September 2006, and 

conduct a review of the security procedures in all counties to ascertain compliance. 

SBE’s Response: 

The SBE will: 

• update the State Board of Elections’ inventory procedures for HAVA equipment and security 

policies for voting equipment; 
6 

• require updated security plans from all 134 Virginia localities. (A bill currently pending in the 

General Assembly will codify the current Board requirement for a security plan); and 

• audit the inventory and security procedures of the two counties cited by the auditors. 

County officials took exception to the statement that the machines “are on wood palettes piled on 

top of one another.” They stated that the system was designed to store machines in this manner for 

battery charging and maintenance purpose. 

Auditor’s Evaluation of SBE’s Response: 

We acknowledge the use of palettes for storage purposes, but agree that the machines need to be 

better secured. 

8 

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 SBE employees about the organization and operations of the HAVA 

program. 

• Reviewed prior single audit report and other reviews related to the Commonwealth of Virginia’s 

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

• Reviewed policies, procedures and regulations for the Virginia SBE’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 Virginia 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. 

• Reviewed/examined information regarding source/supporting documents kept for maintenance 

of effort and matching contributions. 
9 

• 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. 

• Verified whether the Commonwealth of Virginia has sustained the state’s level of expenditures 

for Elections. 
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 

By Mail: U.S. Election Assistance Commission 

 Office of Inspector General 

 1225 New York Ave. NW - Suite 1100 

 Washington, DC 20005

Commission or Help 

America Vote Act 

Funds

E-mail: eacoig@eac.gov

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

FAX: 202-566-0957