HAVA Grant Earned Interest Guidance

Depositing, Calculating, Recording, & Reporting Interest Income Guidance for HAVA Formula Grants

Under the Help America Vote Act of 2002 (HAVA), the U.S. Election Assistance Commission (EAC) advances award funds to grantees. As noted in § 200.305, entities must maintain advance payments of Federal awards in interest-bearing accounts unless certain conditions apply.
The EAC Office of Grants Management (OGM) has created this guide to help clarify various requirements for ensuring earned interest income and its data are accessible for HAVA activities. 

Deposit

The EAC cannot require any banking eligibility requirements. However, an entity must be able to account for funds received, obligated, and expended. Advance payments of Federal funds must be deposited and maintained in insured accounts whenever possible. Where needed, entities must minimize the time elapsing between the transfer of advanced payments into an interest-bearing account. Timeliness of deposit ensures the appropriate amount of interest accrues for the life of the award. If the entity is unable to place the advanced award into an interest-bearing account within 90 days of receipt, they must make a calculation to determine the amount of lost interest. The resulting total should be restored to the account as quickly as possible to avoid additional lost interest.
Note: § 2 CFR 200.305(b)(7) defines these requirements

HAVA grantee requirements are passed through to subgranteesᵻ. Where subgrants are disbursed as advanced payments, the subgrantee is required to place their funds in an interest-bearing account and report any interest earned and expended to the grantee.
Note: § 2 CFR 200.305(b)(1-9) further define these requirements and applicable exemptions for sub-recipients

Calculation

Accrued interest calculations may be performed in any reasonable manner. States' financial offices may have a method for calculating and recording interest on behalf of the election office, which is also considered reasonable and acceptable.

Recording

States must maintain records that identify and clarify accrued interest amounts for HAVA awards from inception through closeout. The EAC requires interest income to be reported on the FFR for both the state and its subgrantees. During an audit, financial records will be reviewed to ensure they match the interest income reported on the FFR. No matter which office performs interest calculations and recording, the grantee is responsible for maintaining the records.

Reporting

All federal awards require reporting of financial (§ 200.328) and programmatic (§ 200.329) activities. Recipients are required to complete reports per the terms and conditions of an award. Any sub-recipients on the award must also provide relevant reporting data for the prime recipient (§ 200.332)

EAC Federal Financial Reporting Specifics for Earned Interest Income

Federal Interest Earned/Expended Reporting

The EAC uses a custom version of the SF425 Federal Financial Report form to collect specific data for HAVA formula grants. Lines 10p, 10q, and 10r focus on the interest income earned from depositing the federal award into an interest-bearing account. Interest earned from the federal award should be spent on allowable HAVA activities with cumulative expenditure amounts reported in this section.

State Match Earned Interest/Expended Reporting

Lines 12a and 12b on the EAC FFR identify the earned and expended interest resulting from state match. This reporting element applies to grantees who use cash as their method of meeting match requirements. 

Interest dollars resulting from the match cash deposit may be expended towards any allowable HAVA activities. ES and 251 state-earned interest should be reported in 12a/12b of the FFR. 101 awards require no match. In the unusual circumstance, the state match earned interest on the 101 award, report earnings in 12a and the amount expended in 10g.

If the amount of interest earned from a cash match exceeds the required match amount (as reported on 10i of the FFR), grantees may overreport the total recipient share required. Please note that all identified income and expense amounts on the FFR are subject to audit review.

FAQ: If our state maintains a higher level of state share than what is required in our election account, how much interest and match should we report?

Answer: The best practice is to only report on the required match amount and associated interest. If it is too burdensome to separate the match and interest funds, you may overreport on match and associated interest. Please keep a record of this in the comments section of the FFR. Note that all identified income and expenses on the FFR are subject to audit review.

Exceptions

The non-Federal entity must maintain advance payments of Federal awards in interest-bearing accounts unless the following apply:

• The entity receives less than $250,000 in Federal awards per year.
• The best reasonably available interest-bearing account would not be expected to earn more than $500 of interest per year on Federal cash balances.
• The depository (bank) would require an average or minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources.
• A foreign government or banking system prohibits or precludes interest-bearing accounts.
• Interest earned amounts up to $500 per year may be retained by the entity for administrative expenses.

Definitions

Examples of Non-compliance with Interest Requirements

Untimely Deposit

A state requests its Election Security FY24 award. The EAC approves their related award packet and notifies the Federal Treasury to disburse funds. Within five business days, the state receives its award. Three months later, the Elections Office realizes they are not seeing their FY24 award revenue on the latest financial report. They contact their State Treasury Office to clarify where the funds were deposited. The Treasury Office confirms the revenue is still sitting in the initial account where received, has not been transferred to an interest-bearing bank account, and has not accrued interest.

• The Treasury Office should have immediately transferred HAVA award dollars to an interest-bearing account based on federal regulations under § 200.305.
• The Elections Office will need to calculate how much simple interest was lost while not accruing interest and restore the difference to the grant.
• Policies should be reviewed and revised to reflect timely deposit needs.
• Additional transfer/deposit of HAVA revenue procedures between the State Election and Treasury offices should be created or revised to avoid untimely deposits in the future.

Improper Calculation

Monthly calculations on accrued interest are performed by the State Treasury office for the State Elections Office. Every HAVA reporting cycle, the Elections Office runs a special financial report to identify the amount of interest accrued against their HAVA fund balance. They use the report balances when completing their FFR, which is regularly approved by the EAC. A year later, there is an audit performed where the FFR is compared to the state’s general ledger financial reports. The auditors identify the amount of interest noted on the FFR greatly differs from the balances on the financial reports. The Elections Office contacts the Treasury and learns that the method for accounting interest has changed and several adjustments were made to the balance which were never communicated to the Elections Office.

• The Elections office will need to identify if there were adjustments or revisions executed on the interest report and revise and resubmit their affected FFRs.
• The Elections office should advise the Treasury office to notify them when errors are discovered and adjustments made, so they can avoid conflicting reporting issues in the future.
• Policies should be reviewed and revised to incorporate accurate interest reporting needs.
• Where possible, stronger communication within the state agencies should be established.

Inconsistent Recording

Maintaining the record of interest calculations is the responsibility of one person within a State’s Election Office. The responsible employee leaves for a new job and the filing updates go unnoticed until the next FFR is due months later. A new employee tries to replicate the process for calculating interest, based on assumptions from reviewing old files. After submitting the FFR, the EAC Grants Specialist rejects the report noting the interest has increased four times from the previous reporting period which does not seem accurate. The new employee is unsure how to rectify the issue.

• Procedures for documenting and reporting interest should be kept and maintained.
• Offboarding and onboarding should occur with staff turnover wherever possible.

Inaccurate Reporting: Federal Interest Income

An EAC Grants Management Specialist is reviewing a state’s FFR and notices the Federal Interest that should be reported in lines 10p has significantly reduced from the previously reported amount. The EAC emails the grantee for clarification. The state reviews its financial reports and finds it accidentally reported the interest earned on the federal award for the reporting period and not cumulatively through the reporting end date. The state edits its FFR and resubmits with noted clarification.

• Policy, procedure, or SOP should be updated to include instructions noting the amounts that must be reported as cumulative from inception to the reporting period end date.

Inaccurate Reporting: State Interest Income

A state routinely records and monitors the interest earned on their HAVA cash match. A recent audit found the grantee was not reporting the state interest within 12a and 12b of the FFR. The grantee had routinely reported the state interest earned and expended on lines 10i and 10j but failed to identify the amounts related to interest in 12a and 12b.

• The grantee should revise their most recent FFR and add a comment clarifying the sudden reporting of amounts in 12a and 12b.
• Policy, procedure, or SOP should be updated to include instructions for fully executing the EAC’s FFR.