U.S. ELECTION ASSISTANCE 

COMMISSION 

OFFICE OF INSPECTOR GENERAL 

FINAL REPORT: 

 Administration of Payments 

Received Under the Help America Vote 

Act by the Montana Secretary of State 

JUNE 5, 2003 THROUGH SEPTEMBER 30, 2009 

Report No. 

E-HP-MT-02-10 

September 2010 
 

U.S. ELECTION ASSISTANCE COMMISSION
 

OFFICE OF INSPECTOR GENERAL
 

1201 New York Ave. NW - Suite 300 

Washington, DC 20005
 

September 28, 2010 

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 Montana Secretary of State (Assignment Number E-HP-MT-02-10) 

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 Montana Secretary of State (SOS). The contract required that the audit be 

done in accordance with U.S. generally accepted government auditing standards. Clifton 

Gunderson is responsible for the attached auditor’s report and the conclusions expressed therein. 

In its audit of the SOS, Clifton Gunderson concluded that, except for the maintenance of 

adequate property records, financial reporting errors, lack of approval for capital expenditures and 

failure of selected counties to accrue interest on idle HAVA funds, the audit concluded that SOS 

generally accounted for and expended HAVA funds in accordance with the requirements mentioned 

above for the period from June 5, 2003 through September 30, 2009. 

In her July 12, 2010 responses (Appendix A-1), the SOS agreed with the report’s finding 

and recommendations, and provided corrective action. The SOS’ technical comments were 

incorporated into the report as appropriate. Also, we have included in the report the EAC response 

to the draft report (Appendix A-2), dated August 13, 2010, which indicated that the EAC would 

work with the Montana SOS to resolve the issue involving capital improvements. 

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 November 30, 2010. 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 MONTANA
 

June 5, 2003 Through September 30, 2009 

UNITED STATES ELECTION
 

ASSISTANCE COMMISSION
 

a1
TABLE OF CONTENTS 

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PAGE
 

EXECUTIVE SUMMARY 1
 

BACKGROUND 2
 

AUDIT OBJECTIVES 3
 

SCOPE AND METHODOLOGY 4
 

AUDIT RESULTS 4
 

APPENDICES
 

Appendix A-1: Secretary of State Response To Audit Results 10
 

Appendix A-2: U. S. Election Assistance Commission Response to Draft Report 12
 

Appendix B: Audit Methodology 13
 

Appendix C: Monetary Impact as of September 30, 2009 15
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Election Assistance Commission
 

Performance Audit of the Administration of Payments Received Under the
 

Help America Vote Act by the State of Montana
 

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 Montana 

Secretary of State (SOS) for the period June 5, 2003 through September 30, 2009 to determine 

whether the SOS used payments authorized by Sections 101, 102, and 251 of the Help America 

Vote Act of 2002 (HAVA or the Act) in accordance with HAVA and applicable requirements; 

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

program income, and met HAVA requirements for Section 251 funds for an election fund and for 

a matching contribution. We did not include a determination of whether the SOS and its 

subgrantees met the requirements for maintenance of a base level of state outlays because the 

Commission is reviewing its guidance on the applicability of the maintenance of a base level of 

state outlays to the SOS’s subgrantees. 

In addition, the Commission requires states to comply with certain financial management 

requirements, specifically: 

•	 Comply with the Uniform Administrative Requirements for Grants and Cooperative 

Agreements with State and Local Governments (also known as the “Common Rule”) as 

published in the Code of Federal Regulations 41 CFR 105-71. 

•	 Expend payments in accordance with cost principles for establishing the allowance or 

disallowance of certain items of cost for federal participation issued by the Office of 

Management and Budget (OMB) in Circular A-87. 

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

We conducted this performance audit in accordance with Generally Accepted Government 

Auditing Standards. Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on the audit objectives. Because of inherent 

limitations, a study and evaluation made for the limited purposes of our review would not 

necessarily disclose all weaknesses in administering HAVA payments. 

Except for the maintenance of adequate property records, financial reporting errors, lack of 

approval for capital expenditures and failure of selected counties to accrue interest on idle 

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

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

from June 5, 2003 through September 30, 2009. The exceptions needing SOS’s management 

attention are as follows: 

•	 Inventory listings of voting and SVRS equipment did not conform to the requirements of 

41 C.F.R. 105-71.132 (d) (1), (the Common Rule) at the seven counties we visited or in 

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the SOS offices. The listings did not include required elements such as use, condition or 

the federal, state, or county percentage of ownership. 

•	 Fund balances reported on the state’s Financial Status Reports, SF 269, did not 

reconcile with balances in the election fund maintained in the state’s treasury. 

•	 At three of the seven counties we visited there were undisbursed HAVA funds, which 

had been held in the county treasuries for 15 to 48 months. The subject counties did not 

deposit interest earned on these funds into an election fund for use of HAVA approved 

activities. 

•	 Counties used HAVA funds to construct steel cages to house voting equipment, and to 

pave parking lots, build wheelchair ramps and install sliding doors in order to improve 

handicap accessibility. Federal regulations require that grantees obtain prior approval 

for all capital improvements made with grant funds. 

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

draft audit report dated July 12, 2010. Although we have included management’s written 

responses to our notices of findings and recommendations, 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 SOS officials agreed with our recommendations and provided corrective action. 

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

EAC for review and comment. The EAC generally agreed with the report’s reviews and 

recommendations as well as the Montana officials initial responses. 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. 

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)]. 

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•	 “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 Montana Secretary of State: 

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

HAVA and applicable requirements; 

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

program income; 

3.	 Met HAVA requirements for Section 251 funds for an election fund and for a matching 

contribution. We did not determine whether the SOS met the requirement for 

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

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

subgrantees of the SOS. 

In addition, to accounting for HAVA payments, the Act requires states to maintain records that 

are consistent with sound accounting principles that fully disclose the amount and disposition of 

the payments, that identify the project costs financed with the payments and other sources, and 

that will facilitate an effective audit. The Commission requires states receiving HAVA funds to 

comply with certain financial management requirements, specifically: 

1.	 Comply with the Uniform Administrative Requirements for Grants and Cooperative 

Agreements with State and Local Governments (also known as the “Common Rule”) as 

published in the Code of Federal Regulations at 41 CFR 105-71. 

2.	 Expend payments in accordance with cost principles for establishing the allowance or 

disallowance of certain items of cost for federal participation issued by the OMB. 

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 

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. 

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SCOPE AND METHODOLOGY 

We audited the HAVA funds received and disbursed by the SOS from June 5, 2003 through 

September 30, 2009 (78-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 $ 5,000,000 $ 0 $ 0 $ 570,969 $5,570,969 $3,652,632 9/30/2009

Section 102 0 0 0 0 0 0 9/30/2009

Section 251 12,671,803 0 0 2

2 Montana did not deposit its state match into the election fund. Instead, it considered state and county expenditures 

as satisfying its state match. Although these expenditures were made after the state match was due, total 

expenditures exceeded the total of the match and interest on the match had it been made timely. 

412,252 13,084,055 11,727,931 9/30/2009

Total $17,671,803 $ 0 $0 $983,221 $18,655,024 $15,380,563 9/30/2009

Our audit methodology is set forth in Appendix B. 

AUDIT RESULTS 

We conducted this performance audit in accordance with Generally Accepted Government 

Auditing Standards. Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on the audit objectives. Because of inherent 

limitations, a study and evaluation made for the limited purposes of our review would not 

necessarily disclose all weaknesses in administering HAVA payments. 

Except for the maintenance of adequate property records, financial reporting errors, lack of 

approval for capital expenditures, failure of selected counties to accrue interest on idle HAVA 

funds, 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. Property Records 

The equipment inventory listings provided to us by the State of Montana Office of the Secretary 

of State (SOS) and each of the seven counties we visited did not contain the minimum 

information to properly identify and account for property as prescribed by federal regulations. 

We noted for each county we visited, the listings included a description of the equipment, serial 

number and the location, but not the other required elements such as use, condition and the 

federal, state or county percentage of ownership. Inventory records for the State Voter 

Registration System held by the SOS also did not contain all of the required elements. As a 

result, there is no assurance that the accounting records accurately reflect the HAVA equipment 

controlled by the SOS and the counties. 

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The Uniform Administrative Requirements for Grants and Cooperative Agreements with State 

and Local Governments 41 CFR § 105-71.132(d)(1), referred to as the Common Rule, states 

that 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, 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. 

SOS election officials informed us that in 2009 staff reviewed the Common Rule and were 

working on bringing records prepared by previous administrations into compliance with the Rule. 

Recommendation: 

1. We recommend that the SOS ensure that the property records at both the state and county 

level include the minimum information required by the Common Rule, and implement a 

procedure to ensure that the counties report changes in equipment listing to the SOS. 

SOS’s Response: 

The SOS concurred with the recommendation and stated that the inventory control records for 

electronic voting equipment prepared by previous administrations had been revised to include 

the required minimum information to be compliant with federal requirements. They also 

indicated that guidance had been issued to county election officials to ensure that federal 

requirements are followed and changes to the equipment listing are reported to the SOS. 

II. Financial Accounting and Reporting 

The Elections Office was not able to reconcile its records of the HAVA funds with the state 

treasurer’s records. The Elections Office uses its records to report to EAC. We noted 

differences between the Elections Office’s records as reported on the Financial Status Reports 

(SF 269) and the Montana State Accounting Budget and Human Resources System (SABHRS). 

As of December 31, 2008 the SABHRS Section 101 Fund Balance was $2,002,290 compared 

to the SF 269 balance of $1,948,837, a difference of $53,453. Also, as of September 30, 2008 

the SABHRS Section 251 Fund Balance was $905,480 compared to the SF 269 Fund Balance 

of $904,069, a difference of $1,411. 

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

September 30, 2007, and were not individually coded as Section 101 and 251 funds. In 

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

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

worksheets to accumulate HAVA data for tracking purposes. As of December 31, 2008 and 

September 30, 2008, the accounting data utilized by the election office to account for HAVA 

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

from the state’s accounting system. Thus, the accuracy of the Financial Status Reports, Form 

269, filed with the EAC prior to 2009 is in question. 

In addition, at the date we concluded our fieldwork, the September 30, 2009 balances were not 

reconciled; however, the Federal Financial Reports (SF 425) for 9/30/09, submitted to EAC 

subsequent to our fieldwork, were reconciled with the State Treasurer’s records. 

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HAVA Section 902. AUDITS AND REPAYMENT OF FUNDS, Part (a) – Recordkeeping 

Requirement requires that each recipient of a grant or other payment made under this Act shall 

keep such records with respect to the payment as are consistent with sound accounting 

principles, including records which fully disclose the amount and disposition by such recipient of 

funds, the total cost of the project or undertaking for which such funds are used, and the amount 

of that portion of the cost of the project or undertaking supplied by other sources, and such 

other records as will facilitate an effective audit. 

Recommendations: 

We recommend that the Montana Secretary of State: 

2.	 Improve internal controls over the accounting and reporting of HAVA financial activities to 

the EAC. For example, all financial reports should be reviewed and signed by an SOS 

official other than the preparer indicating concurrence with the data. Excel spreadsheets of 

HAVA expenditures should also be updated and reconciled to SABHRS at least monthly. 

3.	 Coordinate with EAC to determine whether previously submitted financial status reports 

should be revised and re-submitted. 

SOS’s Response: 

The SOS concurred with our recommendations and stated that Elections Office staff was not 

able to reconcile its records of the HAVA funds with the state treasurer’s records due to funds 

not being set up properly and accounted for properly in the state accounting system. There 

were also large lump-sum transfers between the HAVA fund and the enterprise fund by a 

previous administration, that was not easily tracked to specific invoices. 

The SOS also stated that the current administration has done a complete reorganization of the 

SOS Fiscal Services Division, including bringing on a Chief Financial Officer with federal 

program and accounting experience, including expertise to oversee all fiscal activity and 

reporting. The SOS further stated that turnover in staff from previous administrations, and many 

different staff preparing reports, resulted in inconsistencies and non-reconciliation of HAVA 

financial reports with the state accounting system. The SOS advised that the reporting process 

was modified to have the Chief Financial Officer prepare the financial reports and the Deputy for 

Elections review and sign the reports, indicating concurrence with the data as compiled by the 

CFO. 

Also, the EAC has been contacted regarding amendments to previously submitted financial 

status reports and the reports submitted for fiscal year 2009 have been updated to reflect 

adjustments to previously submitted reports according to discussions with the EAC. 

III. Subgrants to Counties 

The state did not execute formal written agreements with counties prior to disbursing HAVA 

funds. Counties were notified by email or other written correspondence of the purpose of HAVA 

funds awarded to them. However, counties were not advised of federal requirements for prompt 

expenditure of these funds and to maintain the funds in interest bearing HAVA accounts. We 

found that three counties we visited had maintained undisbursed HAVA advances for 15 to 48 

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months at the time of our audit, totaling approximately $14,500, that were deposited in noninterest bearing accounts. As a result, these funds did not accrue interest which could be used 

for future HAVA activities. 

Staff of the SOS told us they were not aware of this requirement. 

Federal regulations at 41 CFR 105-71.137(a) require that states shall ensure that every 

subgrant includes any clauses required by Federal statute and executive orders and their 

implementing regulations, that subgrantees are aware of requirements imposed upon them by 

federal statute and regulations and conform any advances of grant funds to subgrantees 

substantially to the same standards of timing and amount that apply to cash advances by 

federal agencies. 

Recommendations: 

We recommend that the Montana Secretary of State: 

4.	 Survey all counties to determine the extent to which unspent advances are being held and 

require the counties to either return unneeded funds or to deposit the funds into interest 

bearing accounts; 

5.	 Execute subgrant agreements with counties for any future HAVA advances, which detail all 

applicable federal requirements, and require that any HAVA funds advanced to the counties 

be deposited into an election fund which accrues interest to be used for HAVA related 

activities; 

6.	 Require counties holding unspent HAVA funds to determine the interest earnings lost during 

the period funds have been held and reimburse the election funds for this lost interest, and 

ensure that any funds repaid to the state include interest earnings. 

SOS’s Response: 

The SOS concurred with our recommendations and stated that although grant applications for 

polling place accessibility improvements contained information that the project must be 

completed within six months of receiving funding, counties were not specifically advised of 

federal requirements for prompt expenditure of these funds and to maintain the funds in interest 

bearing HAVA accounts 

The SOS also said that previous administrations had information on the application for polling 

place accessibility grants stating that the project must be completed within six months, and each 

county signed the application. They further advised that the current administration was ensuring 

compliance by issuing a subgrant agreement to each county applying for HAVA project funding, 

and SOS staff was monitoring expenditures made to ensure no unspent funds remained at the 

county level once a project is completed. 

Specifically the SOS said that: 

1)	 They have surveyed counties and requested them to supply information about any unspent 

HAVA funds, and indicated the SOS would issue guidance, accordingly; 

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2)	 They had created and are providing subgrant agreements advising recipients of the federal 

cash management requirements; 

3)	 They investigated unspent HAVA funds held by the counties and are working with any 

counties holding funds to determine and monitor repayment of lost interest. 

IV. Approval of Capital Expenditures 

The state provided grants to its counties for improving security of voting equipment and polling 

place accessibility, and counties used some of these funds to make capital improvements such 

as building cages to store voting equipment, paving parking lots, constructing handicap 

accessible ramps, and installing automatic sliding doors. According to SOS officials the state 

did not request approval for these capital improvements from the Election Assistance 

Commission. The state provided a total of $832,467 in polling place accessibility grants to its 

counties. However, we could not determine how much of these distributions were used for 

capital improvements subject to EAC pre-approval. 

OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, Attachment 

B, Section 15 (b)(3) states that capital expenditures for improvements to land, buildings, or 

equipment which materially increase their value or useful life are unallowable as a direct cost 

except with the prior approval of the awarding agency. 

Recommendation: 

7.	 The state should conduct a survey of all counties to determine which counties used security 

and polling place accessibility grants to make unapproved capital expenditures and submit 

this information to EAC for resolution. 

SOS’s Response: 

The SOS concurred with our recommendation and said that the state had not requested 

approval of these capital improvements, because the grants were under $5,000 each, and the 

state considered $5,000 and over to be the threshold for a project to be considered a capital 

improvement needing prior approval, and because indication from the Commission seemed to 

confirm the $5,000 threshold. 

The SOS concurred with the recommendation, even though prior guidance from the 

Commission had indicated that any grants under $5,000 were not considered capital 

improvements and therefore not subject to preapproval. The SOS stated that they would review 

all security and polling place grants to determine if any grants were made for capital 

improvements. They will compile and submit information to the EAC for consideration and 

resolution, and will request pre-approval from the EAC for any future grants made for polling 

place accessibility or security capital improvements. 

Auditor’s Response: 

OMB Circular A-87 does not reference a $5,000 threshold for capital expenditures. It states 

only that capital expenditures for improvements to land, buildings, or equipment which materially 

increase their value or useful life are unallowable as a direct cost except with the prior approval 

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of the awarding agency. A determination of whether a specific capital expenditure materially 

increases the value or useful life of the asset should be based on assessment of the impact of 

each expenditure and not on its dollar value. 

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

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

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

received prior to finalizing this report. 

The draft report was provided to the Executive Director of the EAC for review and comment. 

The EAC generally agreed with the report’s reviews and recommendations as well as the 

Montana officials initial responses. The EAC’s complete response is included as Appendix A-2. 

a1

CG performed its work between November 9, 2009 and December 16, 2009. 

Calverton, Maryland 

March 8, 2010 

9
 
Appendix 

--MONTANA SECRETARY OF STATE ------­

LINDA McCULLOCH 

July 12, 2010 

Curtis Crider, Inspector General 

U.S. Election Assistance Commission 

1201 New York Avenue NW - Suite 300 

Washington, DC 2005 

Dear Curtis: 

Please find attached our comments to the draft Montana HAVA audit report. Our comments 

are tracked for ease of review by your office. 

Please let me know if you have any questions, or if you need further information regarding our 

comments. 

Montana State Capitol. PO Box 202801 • Helena. Montana 59620-2801
 

tel: (406) 444-4195 • fax: (406) 444-4249 • TIY: (406) 444-9068. 8OS.mt.gov
 
Clifton Gunderson's Comment on the Secretary of State's Response 

The response letter from Ms Linda McCulloch, Montana's Secretary of State, as noted 

above, included an edited version of the draft audit report provided the state, which is 

not included in its entirety, since much of it duplicates the information in this report. 

However, we considered the comments cited in the response, and incorporated them 

into this final report where we considered them to be clarifications of previously reported 

information. 

The SOS responses included with the findings and recommendations, beginning on 

page 4 of this report, reflect the official positions of the SOS as set forth in the edited 

draft report. 
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 Montana, for the Period June 5, 2003 Through 

September 30, 2009 

MEMORANDUM 

August 13,2010 

To: 	 Curtis Crider 

Inspector General 

Fr~~)~-~homas Wilkey

V"-... Executive Director -''''­

Subject: 	 Draft Report Performance Audit Report - "Administration of Payments 

Received Under the Help America Vote Act by the State of Montana". 

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

Montana. 

After a preliminary review of the draft report, the Election Assistance Commission 

(EAC) has no significant concerns. We generally agree with the results of your review 

and recommendations as well as Montana's initial responses. 

Regarding finding IV, Approval of Capital Expenditures, EAC notes that for an 

expenditure to qualify as a capital expenditure under OMB Circular A-87, the 

expenditure must materially increase the value or useful life of a building or structure. 

OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal 

Governments, Attachment B, Section 15 (b)(3) states that capital expenditures for 

improvements to land, buildings, or equipment which materially increase their 

value or useful life are unallowable as a direct cost except with the prior approval 

of the awarding agency. 

EAC will use this standard as we work with the Montana Secretary of State to determine 

whether capital improvements were made and whether EAC pre-approval was necessary. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix B 

AUDIT METHODOLOGY 

Our audit methodology included: 

•	 Assessing audit risk and significance within the context of the audit objectives. 

•	 Obtaining an understanding of internal control that is significant to the administration of the 

HAVA funds. 

•	 Understanding relevant information systems controls as applicable. 

•	 Identifying sources of evidence and the amount and type of evidence required. 

•	 Determining whether other auditors have conducted, or are conducting, audits of the 

program that could be relevant to the audit objectives. 

To implement our audit methodology, below are some of the audit procedures we performed: 

•	 Interviewed appropriate SOS employees about the organization and operations of the HAVA 

program. 

•	 Reviewed prior single audit report and other reviews related to the state’s financial 

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

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

systems as they relate to the administration of HAVA programs. 

•	 Analyzed the inventory lists of equipment purchased with HAVA funds. 

•	 Tested major purchases and supporting documentation. 

•	 Tested randomly sampled payments made with the HAVA funds. 

•	 Verified support for reimbursements to local governments (counties, cities, and 

municipalities). 

•	 Reviewed certain state laws that impacted the election fund. 

•	 Examined appropriations and expenditure reports for state funds used to maintain the level 

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

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

•	 Evaluated compliance with the requirements for accumulating financial information reported 

to the Commission on the Financial Status Reports, Form SF-269, accounting for property, 

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

•	 Verified the establishment and maintenance of an election fund. 

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

� Observe equipment purchased with HAVA funds for proper accounting and 

safeguarding 

� Ensure compliance with HAVA and the Uniform Administrative Requirements for 

Grants and Cooperative Agreement with State and Local Governments, 41 CFR § 105­

71. 

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Appendix C 

MONETARY IMPACT AS OF SEPTEMBER 30, 2009
 

Description 

Questioned 

Costs 

Additional Funds for 

Program 

Unreported HAVA funds on the annual 

Financial Status Reports, SF 269 $54,864 

$0 $54,864 

Note: There are also additional funds for the program from interest earnings on 

undisbursed HAVA funds held by the counties; however, the total amount due has 

not been determined. 

15
 
 

 

 

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