Oversight Agency Faults How N.H. Accounts for Federal Election Money

Sep 1, 2017

A federal oversight agency’s review of how New Hampshire is spending $18 million in federal election money finds that the state, for the most part, follows the rules. But the back-and-forth within the audit illuminates a larger and long-running tension between the New Hampshire Secretary of State’s office and the federal elections officials.

The audit by the U.S. Election Assistance Commission Office of Inspector General, which New Hampshire is one of the last state’s to undergo, is intended to account for how states are spending money distributed through the 2002 Help America Vote Act, or HAVA. State election officials here have long argued the commission behind the audit lacks the authority to govern how states conduct their elections or how they spend the money distributed through HAVA.

Among the audit’s findings:

  • The oversight agency said the Secretary of State didn’t adequately maintain property records for all of its HAVA equipment and didn’t comply with federally mandated rules around inventory listings.
  • The report takes issue with the fact that the Secretary of State didn’t get prior approval from the federal government before using $1 million of its HAVA funds to build an addition on the state archives. The Secretary of State said that spending was “reasonable, practical, and justifiable,” and that it’s repeatedly made a “good faith effort to address and resolve the matter” with the federal commission.
  • The report takes issue with the Secretary of State’s payroll procedures in a small number of cases. The oversight agency says $2,446 in payroll costs paid for with HAVA money were “unsupported,” and the state should transfer that amount back into its election fund to make up the difference. The state, in response, noted that the audit covered a 13-year period that included more than 8,700 pay periods, and therefore characterized this finding as “de minimis.”

Some of the findings of this federal audit echo those included in an audit conducted nearly a decade ago by state investigators.

That audit also found that the Secretary of State’s office “did not have accounting procedures in place to efficiently record, report, and monitor financial activity and ensure compliance with provisions of the Help America Vote Act of 2002.” Like the federal audit, that state-level audit also directed the Secretary of State’s office to  “establish written procurement policies and procedures for all significant Department expenditures, including expenditures funded from federal HAVA payments.”

In a letter included within the federal audit, Gardner said his office has “expended the federal funds frugally, in a fiscally sound manner, to ensure their most efficient use.”

“Since 1986, New Hampshire is one of a very few states that has not been sued by the federal Department of Justice for noncompliance with federal laws,” Gardner wrote. “While we disagree with the findings in the audit, we believe that the report, as a whole, reflects sound management of the funds.”

Deputy Secretary of State Dave Scanlan, speaking Thursday, said the state plans to continue to push back on the audit’s findings.

“Although we are using the funds consistent with the way any state agency within New Hampshire would, it’s not necessarily the way the federal government would like to see it work,” Scanlan said. “Overall, I think the issues that they’ve raised are fairly minor. But we are holding their feet to the fire in terms of whether they have the authorization to take the positions that they’re taking or not.”

The federal audit report is just the latest example of long-running tension between state and federal election officials. For an example, look no further than the report’s first finding.

The oversight agency said the Secretary of State’s office “lacks complete, documented policies with respect to internal controls.” They claim “much of the training has occurred informally rather than the use of written documentation of policies and procedures,” and recommend that the Secretary of State’s office should be forced to make sure “all significant accounting, financial management and grant administration procedures are documented.”

The Secretary of State’s response: “This finding lacks any actual findings but has rather stipulated that something ‘may’ happen or something ‘could’ happen simply because the processes and procedures chosen to be used by the SOS are not documented. Having documentation will not necessarily improve how the SOS operates as evidenced by the lack of any substantive findings within this entire audit report.”

The Office of the Inspector General, in turn, found the state’s reply inadequate: “This response does not provide any additional information to refute the conditions that are cited in the finding.”