U.S. ELECTION ASSISTANCE
 

COMMISSION 

OFFICE OF INSPECTOR GENERAL 

FINAL REPORT: 

ADMINISTRATION OF PAYMENTS
 

RECEIVED UNDER THE HELP AMERICA 

VOTE ACT BY THE OKLAHOMA STATE 

ELECTION BOARD
 

MAY 1, 2003 THROUGH SEPTEMBER 30, 2013 

Report No. 

E-HP-OK-02-14 

February 2015 
 

 

 

 

 

 

 

 

 

 

U.S. ELECTION ASSISTANCE COMMISSION
 

OFFICE OF INSPECTOR GENERAL
 

1335 East West Highway - Suite 4300
 

Silver Spring, MD 20910
 

Memorandum 

February 2, 2015 

To:	 Alice Miller 

Acting Executive Director 

From:	 Curtis W. Crider 

Inspector General 

Subject: Final Performance Audit Report – Administration of Payments Received 

Under the Help America Vote Act by the Oklahoma State Election Board 

(Assignment Number E-HP-OK-02-14) 

We contracted with the independent certified public accounting firm of McBride, Lock & 

Associates to audit the administration of payments received under the Help America Vote Act 

(HAVA) by the Oklahoma State Election Board (Board). 

In its audit, McBride, Lock & Associates concluded that the Board generally accounted for and 

expended the HAVA funds in accordance with applicable requirements for the period from May 

1, 2003 through September 30, 2013. However the following exceptions were identified: 

1. The Board did not have established policies and procedures addressing financial 

management activities including equipment management, Federal financial reporting 

and Federal grant oversight and administration. 

2. The Board's equipment management was inadequate in regards to the maintenance of 

property records and the performance of a physical observation of inventory. 

3. The Board untimely credited interest earnings on the Election Fund. 

4. The State of Oklahoma temporarily borrowed HAVA funds for other activities. 

5. The Board did not exceed the maintenance of expenditure during fiscal year 2010. 

In the report, McBride, Lock & Associates summarized the Board’s response to the 

recommendations, as well as their comments on the responses after the recommendations. The 

Board generally agreed with the findings and recommendations. The EAC indicated that it 

would work with the Board to resolve the issues in the report. The Board’s complete response is 

included as Appendix A-1 and the EAC’s complete response is included as Appendix A-2. 

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 findings and 

recommendation included in this report by April 2, 2015. Your response should include 
 

 

 

 

 

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

responsible for implementation. 

To fulfill our responsibilities under Government Auditing Standards, the Office of 

Inspector General: 

 Reviewed McBride, Lock & Associates' approach and planning of the audit; 

 Evaluated the qualifications and independence of the auditors; 

 Monitored the progress of the audit at key points; 

 Reviewed the audit report, prepared by McBride, Lock & Associates to ensure 

compliance with Government Auditing Standards; and 

 Coordinated issuance of the audit report. 

McBride, Lock & Associates is responsible for the attached auditor’s report and the 

conclusions expressed in the report. We do not express any opinion on the conclusions 

presented in McBride, Lock & Associates' audit report. 

The legislation creating the Office of Inspector General requires that we report to 

Congress semiannually on all audit reports issued, actions taken to implement our 

recommendations, and recommendations that have not been implemented. 

If you have any questions regarding this report, please call me at (301) 734-3104. 

Attachment 

cc: Director of Grants and Payments 
 

Performance Audit Report 

Administration of Payments Received Under the Help America Vote Act by 

the Oklahoma State Election Board 

Prepared for 

The United States Election Assistance Commission (EAC) 

Office of Inspector General 

By 

McBride, Lock & Associates, LLC 

October 2014 

McBRIDE, LOCK & ASSOCIATES, LLC 

CERTIFIED PUBLIC ACCOUNTANTS 

KANSAS CITY 
 

 

 

Performance Audit Report
 

Administration of Payments Received Under the Help America Vote Act by 

the Oklahoma State Election Board 

TABLE OF CONTENTS 

Page 

EXECUTIVE SUMMARY 1 

BACKGROUND 2 

AUDIT OBJECTIVES 4 

SCOPE AND METHODOLOGY 5 

AUDIT RESULTS 5 

APPENDICES: 

Appendix A-1: Response of the Oklahoma State Election Board to the Draft Report 

Appendix A-2: Response of the U.S. Election Assistance Commission 

to the Draft Report 

Appendix B: Audit Methodology 

Appendix C: Monetary Impact as of September 30, 2013 
 

 

 

 

 

 

 

 

U.S. Election Assistance Commission
 

Performance Audit Report
 

Administration of Payments Received Under the Help America Vote Act by 

the Oklahoma State Election Board
 

EXECUTIVE SUMMARY 

McBride, Lock & Associates, LLC was engaged by the United States Election Assistance 

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

Oklahoma State Election Board (Board) from inception in May 1, 2003 through September 30, 

2013 to determine whether the Board used payments authorized by Sections 101, 102, and 251 of 

the Help America Vote Act of 2002 (the HAVA) in accordance with HAVA and applicable 

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

and for program income; maintained state expenditures at a level not less than the level 

maintained in the fiscal year ending prior to November 2000; and met HAVA requirements for 

Section 251 funds for an election fund and for a matching contribution. 

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 Government, 41 CFR 105-71, (originally Office of 

Management and Budget Circular A-102, also known as the “Common Rule”). 

•	 Expend payments in accordance with cost principles set forth in Cost Principles for State 

and Local Governments, 2 CFR 225, (originally Office of Management and Budget 

Circular A-87) for establishing the allowability or unallowability of certain items of cost 

for federal participation. 

•	 Follow the requirements of the Federal Cash Management and Improvement Act. 

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

•	 Comply with the provisions of Audits of States, Local Governments and Non-Profit 

Organizations (Office of Management and Budget Circular A-133). 

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. 

Based on the audit procedures performed, except for the matters discussed below, we concluded 

that the Board generally accounted for and expended the Grant funds in accordance with the 

1
 
 

 

 

 

 

requirements mentioned above for the period from May 1, 2003 through September 30, 2013. 

The exceptions are as follows: 

1.	 The Board does not have established policies and procedures addressing financial 

management activities including equipment management, Federal financial reporting and 

Federal grant oversight and administration. 

2.	 The Board's equipment management is inadequate in regards to the maintenance of 

property records and the performance of a physical observation of inventory. 

3.	 The Board untimely credited interest earnings on the Election Fund. 

4.	 The State of Oklahoma temporarily borrowed HAVA funds for other activities. 

5.	 The Board did not exceed the maintenance of expenditure during fiscal year 2010. 

We have included in this report as Appendix A, the State Election Board’s written response to 

the draft report. Such response has not been subjected to the audit procedures and, accordingly, 

we do not provide any form of assurance on the appropriateness of the response or the 

effectiveness of the corrective actions described therein. 

BACKGROUND 

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

(Commission) to assist States and insular areas (hereinafter referred to as States) with improving 

the administration of federal elections and to provide funds to States to help implement these 

improvements. The Commission administers payments to States authorized by HAVA under 

Titles I and II, as follows: 

•	 Title I, Section 101 payments are for activities such as complying with HAVA 

requirements for uniform and nondiscriminatory election technology and administration 

requirements (Title III), improving the administration of elections for federal office, 

educating voters, training election officials and pool workers, and developing a State plan 

for requirements payments. 

•	 Title I, Section 102 payments are available only for the replacement of punchcard and 

lever action voting systems. 

•	 Title II, Section 251 requirements payments are for complying with Title III requirements 

for voting system equipment; and addressing provisional voting, voting information, 

Statewide voter registration lists, and voters who register by mail. 

2
 
 

 

 

 

Title II also requires that states must: 

•	 Have appropriated funds equal to five percent of the total amount to be spent for 

activities for which requirements payments are made. 

•	 Maintain the expenditures of the State for activities funded by the requirements payment 

at a level that is not less than the expenditures maintained by the State for the fiscal year 

ending prior to November 2000. 

•	 Establish an election fund for amounts appropriated by the State for carrying out 

activities for which requirements payments are made, for the Federal requirements 

payments received, for other amounts as may be appropriated under law and for interest 

earned on deposits of the fund. 

The Awardee – The Oklahoma State Election Board 

Established under the Constitution of the State of Oklahoma in 1907, the Oklahoma State 

Election Board is the administrative agency for the conduct of state elections and the oversight of 

the state's 77 county election boards. The Secretary of the State Election Board has used the 

rulemaking authority granted by the statute to create and implement uniform procedures 

governing every aspect of the operations. Beginning with the first publication of the Secretary’s 

Digest (a compendium of the administrative rules, illustrations and other material) in 1975, and 

continuing to this day, the Oklahoma State Election Board provides the County Election Boards 

both with a consistent interpretation of the election laws and with instructions and procedures 

necessary to implement those laws on a daily basis. 

Help America Vote Act State of Oklahoma State Plan 

The State Election Board Secretary formed two committees to assist the State Election Board 

staff with the preparation of the state plan and with development of procedures for the 

provisional voting and voter identification requirements of HAVA. 

In Oklahoma these funds were primarily to be used to coordinate state agency databases for voter 

registration, replace the election management system, and purchase HAVA compliant voting 

machines at the local precincts. 

The State Election Board established and is maintaining an election fund for the exclusive 

purpose of carrying out activities of HAVA. Additionally, the Board has managed all 

expenditures funded by HAVA and has not distributed any of the requirements payments to the 

local units of government. 

3
 
 

 

 

 

AUDIT OBJECTIVES 

The objectives of our audit were to determine whether the Board: 

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

Grant and applicable requirements; 

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

program income; 

3.	 Met HAVA requirements for Section 251 funds for creation of an election fund, 

providing required matching contributions, and meeting the requirements for 

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

Expenditures (MOE). 

In addition to accounting for Grant payments, the Grant 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 Grant funds to 

comply with certain financial management requirements, specifically: 

•	 Comply with the Uniform Administrative Requirements for Grants and Cooperative 

Agreements with State and Local Government, 41 CFR 105-71, (originally Office of 

Management and Budget Circular A-102, also known as the “Common Rule”). 

•	 Expend payments in accordance with cost principles set forth in Cost Principles for State 

and Local Governments, 2 CFR 225, (originally Office of Management and Budget 

Circular A-87) for establishing the allowability or unallowability of certain items of cost 

for federal participation. 

•	 Follow the requirements of the Federal Cash Management and Improvement Act. 

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

•	 Comply with the provisions of Audits of States, Local Governments and Non-Profit 

Organizations (Office of Management and Budget Circular A-133). 

4
 
 

 

 

 

 

 

 

 

 

 

 

 

 

SCOPE AND METHODOLOGY 

We audited the Grant funds received and disbursed by the Board from May 1, 2003 through 

September 30, 2013 as shown in the following table: 

HAVA HAVA HAVA 

Description Section 101 Section 102 Section 251 Total 

Funds Received from EAC 

State Matching Funds 

Program Income 

$ 5,000,000 

-

340,177 

-$ $ 30,200,723 $ 35,200,723

- 1,633,741 1,633,741 

- 3,439,956 3,780,133 

Total Funds 

Less Disbursements 

Fund Balance 

$ 

$ 

5,340,177 

(4,903,734) 

436,443 

-$ $ 35,274,420 $ 40,614,597

- (24,667,870) (29,571,604) 

-$ $ 10,606,550 $ 11,042,993

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. 

Based on the audit procedures performed, except for the matters discussed below, we concluded 

that the Board accounted for and expended the HAVA funds in accordance with the requirements 

mentioned above for the period from May 1, 2003 through September 30, 2013. The exceptions 

to applicable compliance requirements are described below. 

Finding No. 1 – Documentation of Policies and Procedures 

Key internal control policies affecting financial management activities including, equipment 

management, Federal financial reporting and Federal grant oversight and administration, have 

not been addressed in policy and procedure documentation. The Board relies heavily on written 

documentation set forth in State manuals, and electronic controls implemented in the accounting 

system. Due to the few personnel involved in award administration, accounting and financial 

reporting, policies and procedures have developed informally over the years. 

Federal regulations, specifically 41 CFR § 105-71.120 – Standards for Financial Management 

Systems require that: 

(a) A State must expand and account for grant funds in accordance with State laws and 

procedures for expending and accounting for its own funds, and 

(b) Effective control and accountability must be maintained for all grant and subgrant cash, 

real and personal property, and other assets. 

5
 
 

 

 

 

 

 

 

The Statewide Accounting Manual Chapter 70: Internal Control Guidance provides minimum 

requirements for internal controls at the agency they are as follows: 

•	 All functional areas of an agency must have written documentation of its policies and 

procedures. 

•	 A person responsible to perform the duties of the Internal Control Officer (ICO), who 

reports directly to the agency head, should be designated by the agency head as 

responsible for the agency’s internal controls. If the ICO does not report directly to the 

agency head then the “independence” of the ICO should be tested and validated. Some 

smaller agencies may wish to work with the Office of Management and Enterprise 

Services and/or the Office of the State Auditor and Inspector for these services. 

•	 These duties cannot be performed by the internal auditor of the agency. 

•	 Internal controls should be reviewed and updated on an annual basis at a minimum. 

Agencies must review changes to operations and incorporate these changes into a revised 

plan. 

•	 Any unaccounted for variances, losses, shortages, or thefts of cash or property must be 

reported to the agency head and the Office of the State Auditor and Inspector. 

•	 All agencies should develop a written internal control plan. 

A key aspect of maintaining an effective system of internal controls is the documentation of 

related policies and procedures to ensure these criteria are current, approved, communicated, 

incorporated into training materials, and updated when appropriate. 

The lack of documented internal control policies and procedures may result in a lack of 

awareness, consistency in application, and compliance of regulations, which could allow for 

noncompliance with grant terms and conditions to occur and not be detected. 

Recommendation 

We recommend that the EAC require the Board to complete and document internal control 

procedures and other appropriate polices in written manuals and also provide training to 

personnel involved in the administration of Federal awards. Specifically, these policies and 

procedures should address financial management activities including equipment 

management, Federal financial reporting and Federal grant oversight and administration. 

Additionally, these procedures should be reviewed and updated on a regular basis. 

State Election Board Response: 

State Election Board management acknowledges that written documentation of policies and 

internal controls and provision of training are important to ensure continuing compliance 

with all requirements of the administration of Federal awards. Agency management will 

work with the finance department staff to develop written procedures and training for 

financial management, equipment management, Federal financial reporting, and Federal 

grant oversight and administration. We also plan to consult with the Office of the State 

Auditor and Inspector or the Office of Management and Enterprise Services about the 

6
 
 

 

 

 

 

possibility of contracting with one of those agencies for the services of an Internal Control 

Officer. 

Auditor’s Response: 

We agree that the Board should work with finance department staff and consult with the 

Office of the State Auditor and Inspector or the Office of Management and Enterprise 

Services to develop written procedures and training for financial management, equipment 

management, federal financial report, and federal grant oversight and administration. 

Finding No. 2 – Inadequate Equipment Management 

The Board’s equipment management is inadequate in regards to the maintenance of property 

records and the performance of a physical observation of inventory. 

The Uniform Administrative Requirements for Grants and Cooperative Agreements with State 

and Local Governments 41 CFR § 105-71.132 (d) (The “Common Rule”) section states that, (1) 

“Property records must be maintained that include a description of the property, a serial number 

or other identification number, the source of property, who holds the title, the acquisition date, 

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 sale price of the property and (2) A physical inventory of the property must be 

taken and the results reconciled with the property records at least once every two years.” 

The administrative rules Section 580: 70-3-1(c) also provides necessary data inputs for the 

inventory report that is similar to the Federal guidelines above. These reports are to be signed by 

the agency inventory control officer. 

The inventory listing as provided did not include the source of property, title holder, acquisition 

date, cost of property and percentage of federal participation. Additionally, the conduct of a 

physical inventory was not fully documented. It was also noted that policies and procedures were 

not formalized to indicate what data is necessary for population of the inventory system and how 

the physical inventory would be conducted and documented. 

The Board has not fully developed documented policies and procedures regarding inventory 

maintenance and has begun implementing a new inventory management software package. The 

Board believes that policies will be formalized and the software fully integrated by the end of 

calendar year 2014. 

Recommendation: 

We recommend that EAC address and resolve the following recommendations that the 

Oklahoma State Election Board: 

(a) Formalize documented policies and procedures regarding inventory management and 

the conduct of a physical inventory. 

7
 
 

 

 

 

 

(b) Fully populate the required data in the inventory system for assets purchased with 

Federal funds. 

(c) Document the conduct of a physical inventory on a biennial basis. 

State Election Board Response: 

State Election Board management acknowledges that complete equipment records must be 

maintained and that a physical inventory must be completed at least biennially. With the 

purchase of an inventory management system in 2014, we have now recorded the required 

data for all assets purchased with Federal funds. We will develop written policies for 

inventory management and conduct of a physical inventory. We plan to incorporate the 

physical inventory into the preventive maintenance process and the work of the Regional 

Coordinators, county election officials who also work on a contract basis for the State 

Election Board and whose work includes visiting other County Election Board offices. 

Auditor’s Response: 

We agree that developing written policies for inventory management and conducting a 

physical inventory will address the concerns in equipment management. 

Finding No. 3 – Interest Earned on the Election Fund 

The Board untimely credited interest earning on the Elections Fund. 

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

(b) The requirements payment made to the State under this part. 

(c) Such other amounts as may be appropriated under law. 

(d) Interest earned on deposits of the fund. 

The Board did not have interest credited to the Election Fund until June 30, 2008. After June 

2008 interest was only credited to the Federal monies within the fund. Therefore, the matching 

appropriations made available by the state were never credited interest. The funds within in the 

accounting system for the Federal funds were designated as interest bearing in June 2008. The 

matching funds were maintained in the general fund of the Board and therefore did not earn 

interest. 

Prior to June 30, 2008 the Board received $5 million in May 2003 of Section 101 funds and 

approximately $27.6 million in February 2005 of Section 251 funds. Therefore, there are 

8
 
 

 

approximately five years of interest earned that have not been credited to the fund for the Federal 

grant receipts. 

The Board has received $30,200,723 in Section 251 funds as of September 30, 2013, which 

resulted in a matching requirement of $1,589,511. The Board has met the matching requirement. 

However, the matching funds were made available in the general funds of the Board which were 

not credited interest during the period of review. 

The initial matching contribution of $2 million was made during fiscal year 2004 but it had 

lapsed in February 2006 since there were no expenditures made to the appropriation. Two 

months later in April 2006 the state provided a $1.5 million appropriation to satisfy the matching 

requirement of $1,455,770 for the 2003 and 2004 Requirements Payment. 

The Board prepared an analysis of interest earnings for the fund from the initial deposit of 

Section 101 funds on May 1, 2003 through June 30, 2008. The analysis was based on an annual 

compound interest rate of four percent and did include the initial matching appropriation 

provided by the state. This calculation does not consider changes in interest rates from 2003 to 

2008 and a monthly compound factor which is the method used currently by the state. The 

calculation approximated $4.9 million and has been a budget request by the Board on an annual 

basis beginning in fiscal year 2009. 

Recommendation: 

We recommend that the EAC require the Board to calculate the amount of interest lost due 

the untimely crediting of interest earnings and deposit the required money into the Election 

Fund. 

This calculation should consider the following: 

(a) The period from the inception of the HAVA grant funds through June 2008. 

(b) The earlier of the date matching contributions were provided or the date the matching 

contributions were required. The contributions would be required by the date the 

Section 251 Requirements Payments were received. 

(c) Monthly compounding and effective interest rates during the period consistent with 

state interest calculations. 

(d) Compound interest through the date of transfer into the Election Fund. 

State Election Board Response: 

State Election Board management acknowledges that interest on Federal funds was not 

deposited in the Election Fund by the Office of the State Treasurer prior to June 30, 2008 and 

that no interest on state matching funds has been deposited in the Fund. The agency’s annual 

budget request to the Legislature has included an item requesting that the missing interest be 

9
 
 

 

replaced each year since FY 2009. We recognize that the calculation of interest does not 

include changes in interest rates since the receipt of the funds or monthly compounding. We 

will work with the Office of the State Treasurer to determine a more accurate calculation of 

the amount of interest, and we will work with the Election Assistance Commission to seek a 

means of replacing the required interest. 

Auditor’s Response: 

The response when enacted, will be effective to resolve the concern.. 

Finding No. 4 – Short-term Borrowing 

The State of Oklahoma temporarily borrowed HAVA funds for other activities. 

The Uniform Administrative Requirements for Grants and Cooperative Agreements with State 

and Local Governments 41 CFR § 105-71.122 (a) (The “Common Rule”) section states that, 

“Grant funds may be used only for: (1) The allowable costs of the grantees, subgrantees and 

cost-type contractors...” 

The State of Oklahoma withdrew approximately $10 million from the Election Fund in 

December 2009 without consultation with the Board. The Board indicated the state was 

experiencing budget shortfalls during this time period and the Office of State Finance transferred 

funds to temporarily fund the shortfalls in other departments. It was noted that the funds were 

replenished in March 2010. In addition, approximately $65 thousand, representing the lost 

interest that would have been earned during the three months, was transferred from other state 

funds. The interest rate earned during that time period was approximately three percent. 

Recommendation 

We recommend that the Board work with the Office of State Finance to ensure that monies 

are not withdrawn from the Election Fund without consent of the Board. 

State Election Board Response: 

State Election Board management acknowledges that the short-term borrowing of $10 

million from the Election Fund in December 2009 was not an allowable use of the funds. 

This was done by the Office of State Finance, not the management of the State Election 

Board. We agree to work with the Office of Management and Enterprise Services (formerly 

the Office of State Finance) to ensure that funds are not withdrawn from the Election Fund 

for other purposes. 

Auditor’s Response: 

The corrective action plan is responsive to the concerns. 

10
 
 

 

 

 

 

Finding No. 5 – Maintenance of Expenditure 

The Board did not exceed the maintenance of expenditure during fiscal year 2010. 

HAVA Section 254(a)(7) requires the State Plan to describe “How the State, in using the 

requirements payment, will maintain the expenditures of the State for activities funded by the 

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.” 

The State Plan indicated that the State of Oklahoma will continue to fund the election system at 

or above the level required by HAVA. The Board established the maintenance of expenditure as 

$6,059,525. This amount represents the entire budget of the Board during fiscal year 2000. The 

maintenance of expenditure includes administration and data processing under the previous 

election system; election management including cost of poll workers, ballots and supplies; voter 

outreach and voter registration. 

The maintenance of expenditure baseline was exceeded every year from fiscal year 2003 to fiscal 

year 2013 with the exception of fiscal year 2010. The state only expended $5,970,000 during 

fiscal year 2010 due to revenue shortfalls this resulted in $89,525 less than the required level of 

expenditure of state funds. 

Recommendation: 

We recommend the EAC require the Board to evaluate the baseline established for the 

maintenance of expenditure to ensure that those expenditures included in the baseline are 

consistent with the maintenance of expenditure policy established by the EAC in June 2010. 

Additionally, procedures should be implemented to ensure that the maintenance of 

expenditure baseline is exceeded each year. 

State Election Board Response: 

State Election Board management acknowledges that the base used for the maintenance of 

expenditure is the entire budget of the agency for FY 2000 and that expenditures did not 

exceed that base in FY 2010 because of revenue shortfalls. Because almost ten years had 

elapsed when the EAC issued its policy on maintenance of expenditure in June 2010, most of 

the detailed expenditure records for FY 2000 were no longer available. These records had 

been audited and disposed of in accordance with state law and policies. Management agrees 

to work with the EAC to evaluate the base for the maintenance of expenditure in light of the 

2010 policy and to ensure that the base is exceeded each year. 

Auditor’s Response: 

The stated action is responsive to the concerns. 

We provided a draft of our report to the appropriate individuals of the Oklahoma State Election 

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

11
 
 

 

The Board responded on December 15, 2014 and generally agreed with the report’s findings and 

recommendations. The EAC responded on December 16, 2014 and stated they will work with the 

Board to ensure appropriate corrective action. The Board’s complete response is included as 

Appendix A-1 and the EAC’s complete response as Appendix A-2. 

McBride, Lock & Associates, LLC performed the related audit procedures between June 11, 

2014 and October 27, 2014. 

(Original Signed by McBride, Lock & Associates) 

McBride, Lock & Associates, LLC 

October 27, 2014 

12
 
Appendix A-1
 
 

 

 

 

 

 

 

 

December 15, 2014 

Mr. Curtis Crider, Inspector General 

United States Election Commission 

Office of Inspector General 

1335 East West Highway, Suite 4300 

Silver Spring, MD 20910 

Dear Mr. Crider: 

I have reviewed the draft report entitled “Performance Audit Report – Administration of 

Payments Received under the Help America Vote by the Oklahoma State Election Board.” 

Please find below the response of agency management to each of the findings. 

Finding No. 1 – Documentation of Policies and Procedures 

State Election Board management acknowledges that written documentation of policies and 

internal controls and provision of training are important to ensure continuing compliance with all 

requirements of the administration of Federal awards. Agency management will work with the 

finance department staff to develop written procedures and training for financial management, 

equipment management, Federal financial reporting, and Federal grant oversight and 

administration. We also plan to consult with the Office of the State Auditor and Inspector or the 

Office of Management and Enterprise Services about the possibility of contracting with one of 

those agencies for the services of an Internal Control Officer. 

Finding No. 2 – Inadequate Equipment Management 

State Election Board management acknowledges that complete equipment records must be 

maintained and that a physical inventory must be completed at least biennially. With the 

purchase of an inventory management system in 2014, we have now recorded the required data 

for all assets purchased with Federal funds. We will develop written policies for inventory 

management and conduct of a physical inventory. We plan to incorporate the physical inventory 

into the preventive maintenance process and the work of the Regional Coordinators, county 

election officials who also work on a contract basis for the State Election Board and whose work 

includes visiting other County Election Board offices. 
 

Mr. Crider 

December 15, 2014 

Page Two 

Finding No. 3 – Interest Earned on the Election Fund 

State Election Board management acknowledges that interest on Federal funds was not deposited 

in the Election Fund by the Office of the State Treasurer prior to June 30, 2008 and that no 

interest on state matching funds has been deposited in the Fund. The agency’s annual budget 

request to the Legislature has included an item requesting that the missing interest be replaced 

each year since FY 2009. We recognize that the calculation of interest does not include changes 

in interest rates since the receipt of the funds or monthly compounding. We will work with the 

Office of the State Treasurer to determine a more accurate calculation of the amount of interest, 

and we will work with the Election Assistance Commission to seek a means of replacing the 

required interest. 

Finding No. 4 – Short-term Borrowing 

State Election Board management acknowledges that the short-term borrowing of $10 million 

from the Election Fund in December 2009 was not an allowable use of the funds. This was done 

by the Office of State Finance, not the management of the State Election Board. We agree to 

work with the Office of Management and Enterprise Services (formerly the Office of State 

Finance) to ensure that funds are not withdrawn from the Election Fund for other purposes. 

Finding No. 5 – Maintenance of Expenditure 

State Election Board management acknowledges that the base used for the maintenance of 

expenditure is the entire budget of the agency for FY 2000 and that expenditures did not exceed 

that base in FY 2010 because of revenue shortfalls. Because almost ten years had elapsed when 

the EAC issued its policy on maintenance of expenditure in June 2010, most of the detailed 

expenditure records for FY 2000 were no longer available. These records had been audited and 

disposed of in accordance with state law and policies. Management agrees to work with the 

EAC to evaluate the base for the maintenance of expenditure in light of the 2010 policy and to 

ensure that the base is exceeded each year. 

Thank you for the opportunity to respond to this draft report. It is my intent and the intent of all 

staff of the State Election Board to cooperate fully with the Election Assistance Commission in 

addressing each of the issues discussed above. Please do not hesitate to contact me if you need 

additional information. 

Sincerely, 

PAUL ZIRIAX, Secretary 

State Election Board 
Appendix A-2
 
EAC RESPONSE TO THE DRAFT AUDIT: 

OIG Performance Audit Reporl on the Administration of 

Payments Received Under the Help America Vote Act by the 

Oklahoma State Election Board for the Period May 1, 2003 

through September 30, 2013. 

December 16, 2014 

MEMORANDUM 

To: Curtis Crider 

Inspector General 

From: Alice P Miller, ChiefOWPP\1l g 9fficer & 

Acting Executive Dir~(lJ r l! ~ 

Subject: Draft Performance Audit Report - "Administration of Payments 

Received Under the Help America Vote Act by the Oklahoma State 

Election Board" 

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

the Oklahoma State Election Board (Board). 

The Election Assistance Commission (EAC) will work with the Board to ensure 

appropriate corrective action. 
Appendix B 
 
 

 

 

 

 

 

 

 

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 and of 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 Board employees about the organization and operations of the 

HAVA program. 

•	 Reviewed prior single audit reports and other reviews related to the State’s financial 

management systems and the HAVA program for the period under review. 

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

accounting systems as they relate to the administration of the HAVA program. 

•	 Analyzed the inventory lists of equipment purchased with HAVA funds 

•	 Tested major purchases and the supporting documentation. 

•	 Tested randomly sampled payments made with HAVA funds. 

•	 Evaluated compliance with the requirements for accumulating financial information 

reported to the Commission on the financial status reports and progress reports, 

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

for salaries. 

•	 Verified the establishment and maintenance of an election fund. 

•	 Verified the State expenditures met the Maintenance of Expenditures requirement 

•	 Conducted site visits of selected counties to observe physical security/safeguard of 

equipment purchased with HAVA funds and ensure compliance with federal regulation. 

•	 Verified that the matching requirement was timely met and matching expenditures met 

the prescribed criteria and allowability requirements of HAVA. 

•	 Verified program income was properly accounted for and not remitted to the State’s 

general fund. 

16
 
Appendix C 
 
 

 

Appendix C 

MONETARY IMPACT AS OF SEPTEMBER 30, 2013 

Description 

Questioned 

Costs 

Additional 

Funds for 

Program 

Lost Interest Earnings $ - $ 4,939,000 

Note: The lost interest earnings calculation was determined by the Board and should be 

recalculated in accordance with the recommendation identified in Finding No. 3. 

17
 
 

 

 

 

 

 

Help to ensure efficient, effective, and transparent EAC operations and OIG’s Mission 

programs 

Obtaining Copies 

of OIG Reports 

Copies of OIG reports are available on the OIG website, 

www.eac.gov/inspector_general/ 

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
 

1335 East West Highway - Suite 4300
 

Silver Spring, MD 20910 

To order by phone: Voice: (301) 734-3104 

Fax: (301) 734-3115 

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 

1335 East West Highway - Suite 4300 

Silver Spring, MD 20910 

E-mail: eacoig@eac.gov 

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

On-Line Complaint Form: www.eac.gov/inspector_general/
 

FAX: (301)-734-3115