TITLE: B-306475, Help America Vote Act of 2002: Audits and Recovery of Funds, January 30, 2006
BNUMBER: B-306475
DATE: January 30, 2006
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B-306475, Help America Vote Act of 2002: Audits and Recovery of Funds, January 30, 2006

   B-306475

   January 30, 2006

   Mr. Roger La Rouche

   Acting Inspector General

   Election Assistance Commission

   Subject: Help America Vote Act of 2002: Audits and Recovery of Funds

   Dear Mr. La Rouche:

   You requested information on how the Government Accountability Office
   (GAO) will implement section 902(c) of the Help America Vote Act of 2002
   (HAVA). Pub. L. No. 107-252, sect. 902(c), 116 Stat. 1666, 1728 (Oct. 29,
   2002) (codified at 42 U.S.C. sect. 5542(c)). Section 902(c) provides that
   recipients of funds provided pursuant to HAVA shall repay certain amounts
   if the Comptroller General makes a determination as a result of certain
   audits that the recipient did not comply with program requirements or
   received an excess payment. In an audit of California's use of HAVA funds,
   conducted on behalf of the U.S. Election Assistance Commission (the
   Commission) by the Department of the Interior, Office of Inspector General
   (DOI-OIG), auditors questioned some of California's costs because they
   were either unallowable or unsupported. You would like to know if the
   Comptroller General must make a determination under section 902(c) for an
   agency to recover funds, and if so, what procedure he will apply in doing
   so. For the reasons set forth below, the Comptroller General need not make
   a determination under section 902(c) before an agency making payments may
   take corrective action on questioned costs.

   HAVA authorizes various federal agencies to make grants or provide
   payments of federal funds to the states and various other entities for
   purposes related to election reform. See, e.g., Pub. L. No. 107-252, sect.
   101, 116 Stat. 1666, 1668-69 (Oct. 29, 2002) (codified at 42 U.S.C. sect.
   15301). The U.S. General Services Administration (GSA) disbursed
   $27,340,830 of HAVA funds[1] in fiscal year 2003 to California to improve
   the administration of elections. In an audit of California's use of these
   funds conducted by the DOI-OIG on behalf of the Commission, auditors took
   exception to some costs and found others to be unsupported. As found in
   the DOI-OIG audit report, the auditors questioned these costs because
   California did not comply with applicable regulations and requirements.[2]

   Section 902 of HAVA has a number of subsections relevant to this
   discussion. Subsection 902(b)(1) authorizes each agency making a grant or
   payment to audit any recipient of the funds. Pub. L. No. 107-252, sect.
   902(b)(1), 116 Stat. 1666, 1727 (Oct. 29, 2002) (codified at 42 U.S.C.
   sect. 15542). Subsection 902(b)(3) provides that "all funds provided under
   this Act shall be subject to mandatory audit by the Comptroller General
   once during the lifetime of the program involved." Id. at sect. 902(b)(3).
   Finally, subsection 902(b)(6) authorizes the Commission to conduct "a
   special audit or special examination" of a recipient upon a vote of the
   Commission. Id. at sect. 902(b)(6).

   In addition to the provisions of section 902(b) for federal audits of HAVA
   funds discussed above, section 902(c) provides:

   "If the Comptroller General determines as a result of an audit conducted
   under section 902(b) that--

   "(1) a recipient of funds under this Act is not in compliance with each
           of the requirements of the program under which the funds are
           provided; or

   "(2) an excess payment has been made to the recipient under the
           program,

   "the recipient shall pay to the office which made the grant or payment
   involved a portion of the funds provided which reflects the proportion of
   the requirements with which the recipient is not in compliance, or the
   extent to which the payment is in excess, under the program involved."

   Pub. L. No. 107-252, sect. 902(c), 116 Stat. 1666, 1728 (codified at 42
   U.S.C. sect. 15542(c)).

   Because this provision refers to audits specified in section 902(b), you
   have inferred that the authority of agencies making HAVA payments to take
   corrective action is limited by section 902(c) to when the Comptroller
   General makes determinations. However, we cannot draw such an inference.

   The audit and recovery provisions in section 902 are not the exclusive
   authority for audits of HAVA funds and corrective actions resulting from
   such audits. While section 902(b) provides GAO, the Commission, and
   agencies making HAVA payments with the authority to audit the recipients
   of those funds, other audit authorities also exist on which an agency may
   rely to audit recipients' use of HAVA funds. For example, the Commission
   is a "designated federal entity" under the Inspectors General Act of 1978;
   therefore the Commission has an inspector general with the authority to
   conduct audits of HAVA funds paid by the Commission. See 5 U.S.C. App.
   sections 8G(a)(2), (g), 4(a); 13 Op. Off. Legal Counsel 54, 66 (1989). In
   addition, there is no indication either in the language or the structure
   of section 902 that Congress intended that HAVA supersede the audit
   authority of other inspectors general of federal agencies making HAVA
   payments, such as the Department of Health and Human Services,[3] under
   the Inspector General Act. See 5 U.S.C. App. sect. 11(2). Further, in
   cases where a state expends in excess of $500,000 of federal awards, the
   state must undergo a single audit or a program specific audit to comply
   with the Single Audit Act, as amended (Single Audit Act). 31 U.S.C. sect.
   7502(a)(1)(A); OMB Cir. No. A-133, 68 Fed. Reg. 38,401, sect. ___ .200
   (June 27, 2003).

   Likewise, the head of an executive agency has independent authority to
   collect a claim of the U.S. government for money or property arising out
   of the activities of the agency. 31 U.S.C. sect. 3711(a)(1); see also Old
   Republic Insurance Co. v. Federal Crop Insurance Corp., 947 F.2d 269, 275
   (7th Cir. 1991); B-303927, June 7, 2005. Under this provision, a "claim"
   includes any amount of funds determined by an agency official to be owed
   to the government, including payments disallowed by audits performed by
   the inspector general of the agency administering the program and
   overpayments. 31 U.S.C. sect. 3701(b); 31 C.F.R. sect. 900.2(a) (2005). In
   cases where an agency has entered into an agreement with a state, the
   agency may determine and enforce its rights under the agreement. See,
   e.g., 41 C.F.R. sect. 105-71.143 (2005); see also Alabama v. Shalala, 124
   F. Supp. 2d 1250, 1261 (M.D. Ala. 2000). In addition, when a single audit
   or program-specific audit under the Single Audit Act results in audit
   findings, the awarding agency must issue a management decision stating
   whether the findings are sustained, the reason for the decision, and the
   expected corrective action of the recipient, which includes repaying
   disallowed costs. OMB Cir. No. A-133, 68 Fed. Reg. 38,401, sections ___
   .400(c)(5), ___.405 (June 27, 2003); see also B-303927, June 7, 2005
   (granting agency has the responsibility to recover grant funds misused by
   the grantee).

   The recovery provision of section 902(c) does not supersede these
   preexisting authorities of agencies awarding federal funds to take
   corrective action, as section 902 can be construed consistently with these
   authorities and there is no evidence in the statute or the legislative
   history of HAVA that Congress intended for HAVA to supersede these
   authorities. It is a general principle of statutory construction that
   specific and general statutes covering the same subject should be
   construed consistently to give each statute maximum effect when possible.
   Helvering v. Credit Alliance Corp., 316 U.S. 107, 112 (1942); United
   States v. Borden Co., 308 U.S. 188, 198-99 (1939); B-163375, Sept. 2,
   1971. Section 902(c) of HAVA and the preexisting recovery authorities can
   be construed to coexist with respect to HAVA payments because section
   902(c) does not state expressly that the Comptroller General's
   determination is the exclusive procedure by which funds may be recovered.

   We read section 902(c) to apply only to Comptroller General audits
   conducted under 902(b), not to other audits conducted under section 902(b)
   or other authorities.

   Section 902(c) provides notice to recipients that they must repay funds to
   the granting agency "if" the Comptroller makes a determination based on an
   audit under section 902(b). The word "if" connotes only a condition
   precedent to a recipient's requirement to repay HAVA funds if the
   Comptroller General conducts an audit and makes a determination that a
   recipient of HAVA funds is not in compliance with program requirements or
   the recipient received an excess payment. It is not an instruction to the
   Comptroller General to review each audit under section 902(b), but rather,
   prescribes the results of audits the Comptroller General conducts. The
   framework Congress established for audits under section 902(b) suggests
   only that Congress sought to ensure opportunities for the Comptroller
   General to make findings under the criteria set out in section 902(c).
   Agencies have independent authority to take corrective action related to
   funds paid under HAVA when the agency determines that a recipient has
   received an excess payment or has improperly used funds.

   Interpreting section 902 as compatible with, rather than superseding,
   preexisting authority for administratively adjudicating allowable grant
   costs avoids potential constitutional problems. See Bowsher v. Synar, 478
   U.S. 714 (1986). If we were to read section 902(c) to require a
   Comptroller General determination before an agency could take corrective
   action, such an interpretation would raise significant constitutional
   concerns. Congress was aware when enacting section 902(c) that GAO is an
   auditing and investigating organization within the legislative branch. 31
   U.S.C. sections 712-717. Indeed, as noted above, we have found no evidence
   that Congress intended the Comptroller General to effectively assume the
   programmatic responsibility of implementing HAVA that would be inherent in
   assigning final decision-making authority to him. Accordingly, and
   consistent with longstanding practice of construing statutes to avoid
   constitutional infirmities, see United States v. Morrison, 529 U.S. 598,
   607 (2000) (analysis of a congressional enactment begins with the
   presumption of constitutionality), we construe section 902(c) as
   applicable only to audits that GAO conducts.

   If GAO were to determine as part of any GAO audit that a recipient of HAVA
   funds is not in compliance with program requirements or that the recipient
   received an excess payment, then GAO would make appropriate
   recommendations to the paying agency. Each paying agency must determine
   the liability of the recipient with respect to the HAVA funds and take any
   necessary corrective action available to the agency under law.

   Sincerely yours,

   /signed/

   Anthony H. Gamboa

   General Counsel

   cc: Jeanette M. Franzel, Director

   Financial Management and Assurance

   DIGEST

   The Help America Vote Act of 2002 provides that if the Comptroller General
   determines as a result of an audit that a fund recipient is not compliant
   with program requirements, or that an excess payment has been made, the
   recipient must return a certain portion of the payment. However, the
   Comptroller General need not make such a determination before a paying
   agency may audit and take corrective action on questioned costs. This
   provision of the Act does not supersede the independent statutory
   authority of agencies to audit and take corrective action on the use of
   federal funds. If the Comptroller General were to make a determination
   under the Act as a result of any audit he conducts, he will make an
   appropriate recommendation for the agency to determine liability and to
   take corrective action.

   ------------------------

   [1] GSA paid the funds to California pursuant to section 101 of HAVA,
   codified at   42 U.S.C. sect. 15301. Congress appropriated the funds to
   GSA for such payments on February 20, 2003. Miscellaneous Appropriations
   Act, 2003, Pub. L. No. 108-7, div. N, 117 Stat. 537 (Feb. 20, 2003). Such
   payments are to be deposited into an election fund established and
   maintained by California. 42 U.S.C. sect. 15304(d). These funds remain
   available indefinitely, except for appropriated funds that remain
   unobligated as of September 1, 2003. Id. at sect. 15304(c)(2)(B). The
   Commission is deemed to be the office making the grant or payments for
   purposes of section 902 of HAVA. 42 U.S.C. sect. 15542(b)(4).

   [2] GSA informed California that these include the Cash Management
   Improvement Act, 41 C.F.R. subtitle C (2005) (GSA's "common rule" for
   uniform administrative requirements for grants and cooperative agreements
   with states and local governments), OMB Circular Nos. A-87, A-102, and
   A-133, and California procurement regulations. U.S. Election Assistance
   Commission, Office of Inspector General, Final Report: Audit of
   Expenditures of Help America Vote Act Funds by the California Office of
   the Secretary of State, Rep. No. E-HP-CA-01-06 (Washington, D.C.: December
   2005).

   [3] Under HAVA, the Secretary of Health and Human Services (HHS) is
   required to make payments to each eligible state and local government unit
   to ensure voting access for persons with disabilities. Pub. L. No.
   107-252, sect. 261, 116 Stat. 1666, 1698 (Oct. 29, 2002) (codified at 42
   U.S.C. sect. 15421).