0B

1B

Interim Audit Report of the 

Audit Division on the 

Democratic Party of Arkansas 

(January 1, 2017 - December 31, 2018) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.1 The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act.

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the

matters discussed in this

report.

About the Committee (p. 2)

The Democratic Party of Arkansas is a state party committee 

headquartered in Little Rock, Arkansas. For more information, 

see the chart on the Committee Organization, p. 2. 

Financial Activity (p. 2)

 Receipts 

o Contributions from Individuals 

o Contributions from Political 

Party and Other Committees 

o Transfers from Affiliated/Other 

Party Committees

o Loans Received 

o Other Receipts

o Transfers from Non-Federal 

Account 

Total Receipts 

 Disbursements 

o Operating Expenditures 

o Allocated Federal/Non-Federal 

Expenditures 

o Transfers to Affiliated/Other 

Party Committees

o Coordinated Party Expenditures 

o Loan Repayments 

o Other Disbursements 

o Federal Election Activity

Total Disbursements 

$ 460,817 

16,430 

863,936 

32,500 

40,596 

567,237 

$ 1,981,516 

$ 299,148 

1,198,302 

33,710 

6,797 

82,202 

29,875 

326,518 

$ 1,976,552 

Findings and Recommendations (p. 3) 

 Reporting of Debts and Obligations (Finding 1) 

 Recordkeeping for Employees (Finding 2) 

 Reporting of Apparent Independent Expenditures (Finding 3) 

 Disclosure of Loans and Loan Repayments (Finding 4) 

1 52 U.S.C. §30111(b). 
Interim Audit Report of the 

Audit Division on the 

Democratic Party of Arkansas 

(January 1, 2017 - December 31, 2018) 
 

Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 3 

Part III. Summaries 

Findings and Recommendations 4 

Part IV. Findings and Recommendations 

Finding 1. Reporting of Debts and Obligations 6

Finding 2. Recordkeeping for Employees 7

Finding 3. Reporting of Apparent Independent Expenditures 9

Finding 4. Disclosure of Loans and Loan Repayments 15
 

 

 

 

1

Part I 

Background 

Authority for Audit 

This report is based on an audit of the Democratic Party of Arkansas (DPA), undertaken 

by the Audit Division of the Federal Election Commission (the Commission) in 

accordance with the Federal Election Campaign Act of 1971, as amended (the Act). The 

Audit Division conducted the audit pursuant to 52 U.S.C. §30111(b), which permits the 

Commission to conduct audits and field investigations of any political committee that is 

required to file a report under 52 U.S.C. §30104. Prior to conducting any audit under this 

subsection, the Commission must perform an internal review of reports filed by selected 

committees to determine if the reports filed by a particular committee meet the threshold 

requirements for substantial compliance with the Act. 52 U.S.C. §30111(b). 

Scope of Audit 

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the receipt of excessive contributions and loans; 

2. the receipt of contributions from prohibited sources; 

3. the disclosure of contributions received; 

4. the disclosure of disbursements, debts and obligations; 

5. the disclosure of expenses allocated between federal and non-federal accounts; 

6. the consistency between reported figures and bank records; 

7. the completeness of records; and

8. other committee operations necessary to the review. 

Commission Guidance 

Request for Early Commission Consideration of a Legal Question 

Pursuant to the Commission’s “Policy Statement Establishing a Program for Requesting 

Consideration of Legal Questions by the Commission,” several state party committees 

unaffiliated with DPA requested early consideration of a legal question raised during 

audits covering the 2010 election cycle. Specifically, the Commission addressed whether 

monthly time logs under 11 CFR §106.7(d)(1) were required for employees paid with 100 

percent federal funds. 

The Commission concluded, by a vote of 5-1, that 11 CFR §106.7(d)(1) does require 

committees to keep a monthly log for employees paid exclusively with federal funds. 

Exercising its prosecutorial discretion, however, the Commission decided it will not 

pursue recordkeeping violations for the failure to keep time logs or to provide affidavits 

to account for employee salaries paid with 100 percent federal funds and reported as 

such. The Audit staff informed DPA representatives of the payroll requirement and the 

Commission’s decision not to pursue recordkeeping violations for failure to keep payroll 

logs for salaries paid and correctly reported as 100 percent federal. This audit report does 

not include any findings or recommendations with respect to DPA employees paid with 

100 percent federal funds and reported as such. 
2 

Part II 

Overview of Committee 

Committee Organization 

Important Dates 

 Date of Registration March 8, 1976 

 Audit Coverage January 1, 2017 – December 31, 2018 

Headquarters Little Rock, Arkansas 

Bank Information 

 Bank Depositories Two

 Bank Accounts Three Federal, Two Non-Federal 

Treasurer 

 Treasurer When Audit Was Conducted John Unger (1/10/2019 – Present) 

 Treasurer During Period Covered by Audit Dawne Vandiver (10/27/2017 – 1/9/2019) 

Tyler Clark (3/17/2014 – 10/26/2017) 

Management Information 

 Attended FEC Campaign Finance Seminar Yes 

 Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 
 

2B

3B

4B

3 

Overview of Financial Activity

(Audited Amounts) 

Cash on hand @ January 1, 2017 $ (2,431) 

Receipts 

o Contributions from Individuals 460,817 

o Contributions from Political Party and Other 

Committees 16,430 

o Transfers from Affiliated/Other Party 

Committees 863,936 

o Loans Received 32,500 

o Other Receipts 40,596 

o Transfers from Non-Federal Account 567,237 

Total Receipts $1,981,516 

Disbursements 

o Operating Expenditures 299,148 

o Allocated Federal/Non-Federal Expenditures 1,198,302 

o Transfers to Affiliated/Other Party 

Committees 33,710 

o Coordinated Party Expenditures 6,797 

o Loan Repayments 82,202 

o Other Disbursements 29,875 

o Federal Election Activity 326,518 

Total Disbursements $1,976,552 

Cash on hand @ December 31, 2018 $ 1,7152

2 DPA disclosed its ending cash on hand on December 31, 2018 as $1,715, however, based on its disclosed 

beginning cash on hand on January 1, 2017 of negative $2,431, plus receipts of $1,981,516, less disbursements of 

$1,976,552, the audit-calculated cash on hand on December 31, 2018 should be $2,533. 
 4

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Reporting of Debts and Obligations 

During audit fieldwork, the Audit staff noted that DPA failed to disclose debts and 

obligations owed to 27 vendors totaling $351,097. The Audit staff recommends that, 

absent documentation demonstrating that these expenditures did not require reporting on 

Schedule D (Debts and Obligations), DPA amend its reports or file a Form 99 

(Miscellaneous Electronic Submission) to disclose these debts. (For more detail, see p. 

6.) 

Finding 2. Recordkeeping for Employees 

During audit fieldwork, the Audit staff determined that DPA did not maintain any 

monthly logs, as required, to document the percentage of time each employee spent in 

connection with a federal election. For 2017 and 2018, the Audit staff identified 

payments to DPA employees totaling $408,872 for which DPA did not maintain monthly 

logs. This consisted of payroll which was allocated with federal and non-federal funds 

and payroll paid exclusively with non-federal funds. The Audit staff recommends that 

DPA provide evidence that monthly logs were maintained to document the percentage of 

time employees spent in connection with a federal election. Absent the provision of 

monthly logs specific to employees paid with 100% non-federal funds, DPA may provide 

records sufficient to verify that certain employees were involved in exclusively nonfederal activities. If such monthly logs or records were not maintained by DPA, the 

Audit staff recommends that DPA implement a plan to maintain such monthly logs or 

records in the future. (For more detail, see p. 7.) 

Finding 3. Reporting of Apparent Independent 

Expenditures 

During audit fieldwork, the Audit staff reviewed expenditures totaling $22,803, that DPA 

disclosed on Schedule B, Line 30(b) (Federal Election Activity Paid Entirely with 

Federal Funds). These expenditures appear to be independent expenditures containing 

express advocacy and should have been disclosed on Schedule E, Line 24 (Itemized

Independent Expenditures). 

Additionally, DPA did not provide sufficient documentation, pertaining to dissemination 

dates, to verify whether 24-hour reports were required to be filed for the apparent 

independent expenditures totaling $18,424. Furthermore, DPA did not provide any 

volunteer documentation to support these disbursements. 

If DPA believes that the apparent independent expenditures, totaling $22,803, did not 

require reporting as independent expenditures, the Audit staff recommends that DPA 

provide documentation to support its conclusion. Absent such documentation, the Audit 
 5

staff recommends that DPA amend its reports to disclose these disbursements as 

independent expenditures on Schedule E and submit revised procedures for reporting 

independent expenditures. Lastly, the Audit staff recommends that DPA provide 

documentation to support the date of public dissemination for each communication to 

determine whether a filing of 24-hour reports was required. (For more detail, see p. 9.) 

Finding 4. Disclosure of Loans and Loan Repayments 

During audit fieldwork, the Audit staff determined that DPA failed to properly disclose

transactions totaling $32,500 on a line of credit, the correct terms and balances for 

outstanding loans totaling $87,140, and loan repayments of $3,563. DPA did not 

properly disclose the new loans and the terms and balances for outstanding loans on 

Schedules C (Loans) and/or C-1 (Loans and Line of Credit from Lending Institutions). In 

addition, some loan repayments were reported to the incorrect payee on Schedule B, Line 

26 (Loan Repayments) and others were reported with disclosure errors on Schedule C. 

The Audit staff recommends that DPA provide documentation demonstrating that it 

properly disclosed the line of credit transactions, and the terms, balances and payees for 

the loans. Absent such documentation, DPA should amend its disclosure reports or file a 

Form 99 (Miscellaneous Electronic Submission) to correct the disclosure errors for its

loan activity. (For more detail, see p. 15.) 
 

 

 

 

 

 

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Part IV 

Findings and Recommendations 

Finding 1. Reporting of Debts and Obligations 

Summary 

During audit fieldwork, the Audit staff noted that DPA failed to disclose debts and 

obligations owed to 27 vendors totaling $351,097. The Audit staff recommends that, 

absent documentation demonstrating that these expenditures did not require reporting on 

Schedule D (Debts and Obligations), DPA amend its reports or file a Form 99 

(Miscellaneous Electronic Submission) to disclose these debts. 

Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount 

and nature of outstanding debts and obligations until those debts are extinguished. 52

U.S.C. §30104(b)(8) and 11 CFR §§104.3(d) and 104.11(a). 

B. Separate Schedules. A political committee must file separate schedules for debts 

owed by the committee and debts owed to the committee, together with a statement 

explaining the circumstances and conditions under which each debt and obligation 

was incurred or extinguished. 11 CFR §104.11(a). 

C. Itemizing Debts and Obligations. 

 A debt of $500 or less must be reported once it has been outstanding 60 days from 

the date incurred (the date of the transaction); the committee reports it on the next 

regularly scheduled report. 

 A debt exceeding $500 must be disclosed in the report that covers the date on 

which the debt was incurred, except that any obligation incurred for rent, salary or 

other regularly reoccurring administrative expense shall not be reported as a debt 

before the payment due date. 11 CFR §104.11(b). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed DPA’s disbursement records and 

disclosure reports for proper reporting of debts and obligations. This review identified 

debts owed to 27 vendors totaling $351,0973 that DPA failed to report on Schedule D 

during the audit period. Based on a review of the records, 26 of these vendors provided 

printing services, event rentals, video production, consulting, IT work, mailings, utility 

service, compliance, photography, finance director retainer, legal fees, fundraising, and 

cleaning services. The remaining vendor was a credit card vendor that DPA did not 

report on Schedule D during the audit period. 

3 Each debt was counted only once, even if it was required to be disclosed over multiple periods. 
 

 

 

 

 

7

DPA reported debt totaling $32,984 on Schedule D during the audit period. The Audit 

staff calculated the debts owed to the vendors based on the invoice date and the 

subsequent payment date. Debts were outstanding for periods ranging from 15 days to 

904 days. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with DPA representatives during the exit conference 

and provided a schedule detailing the transactions requiring disclosure on Schedule D. 

During the exit conference, DPA representatives questioned the inclusion of debts 

relating to recurring administrative expenses. The Audit staff responded that regularly 

recurring administrative expenses are subject to debt reporting requirements.4 In its 

response to the exit conference, DPA did not provide any further comments. 

The Audit staff recommends that, within 30 calendar days of service of this report, DPA 

provide documentation demonstrating that the transactions totaling $351,097 were not 

obligations which required reporting on Schedule D. Absent such documentation, the 

Audit staff recommends that DPA amend its reports or file a Form 99 (Miscellaneous 

Electronic Submission)5

 to correctly disclose these debts and obligations on Schedule D. 

Finding 2. Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff determined that DPA did not maintain any 

monthly logs, as required, to document the percentage of time each employee spent in 

connection with a federal election. For 2017 and 2018, the Audit staff identified 

payments to DPA employees totaling $408,872 for which DPA did not maintain monthly 

logs. This consisted of payroll which was allocated with federal and non-federal funds 

and payroll paid exclusively with non-federal funds. The Audit staff recommends that 

DPA provide evidence that monthly logs were maintained to document the percentage of 

time employees spent in connection with a federal election. Absent the provision of 

monthly logs specific to employees paid with 100% non-federal funds, DPA may provide 

records sufficient to verify that certain employees were involved in exclusively nonfederal activities. If such monthly logs and records were not maintained by DPA, the 

Audit staff recommends that DPA implement a plan to maintain such monthly logs and 

records in the future. 

Legal Standard 

A. Maintenance of Monthly Logs. Committees must keep a monthly log of the 

percentage of time each employee spends in connection with a federal election. 

Allocations of salaries, wages, and fringe benefits are to be undertaken as follows: 

 Employees who spend 25% or less of their compensated time in a given month on 

federal election activities must be paid either from the federal account or have 

4 See 11 CFR §104.11(b). 5 If DPA chooses to file a Form 99 instead of amending its disclosure reports, the form must contain all 

pertinent information that is required on each schedule.
 

 

 

 

 

8

their pay allocated as administrative costs between the federal and non-federal 

accounts; 

 Employees who spend more than 25% of their compensated time in a given 

month on federal election activities must be paid only from a federal account; and 

 Employees who spend none of their compensated time in a given month on 

federal election activities may be paid entirely with funds that comply with State 

law. 11 CFR §106.7(d)(1). 

B. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters required to be reported 

which shall provide in sufficient detail the necessary information and data from which 

the filed reports may be verified, explained, clarified, and checked for accuracy and 

completeness. 11 CFR §104.14(b)(1). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed disbursements for payroll. DPA did not 

maintain any monthly logs or equivalent records to document the percentage of time each 

employee spent in connection with a federal election. These logs are required to 

document the proper allocation of federal and non-federal funds used to pay employee 

salaries and wages. For 2017 and 2018, DPA did not maintain monthly logs for $408,872 

in payroll.6 This amount includes: 

 Payroll totaling $373,961 for employees reported on Schedule H4 (Disbursements 

for Allocated Federal and Non-Federal Activity) and paid with an allocation of 

federal and non-federal funds during the same month; 

 Payroll totaling $1,374 for employees reported on Schedule H4 and/or Schedule B 

(Itemized Disbursements) and also paid with 100 percent non-federal funds 

during the same month; and

 Payroll totaling $33,537 for employees paid exclusively with non-federal funds in 

a given month.

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with DPA representatives during the exit conference 

and provided a schedule of the payroll transactions. DPA representatives responded that 

DPA did not maintain monthly logs for employees during calendar years 2017 and 2018 

and objected to the request for non-federal employee payroll records. The Audit staff has 

consistently requested these records and included these types of transactions as findings. 

Therefore, these transactions were included in the exit conference as a preliminary 

finding. In its response to the exit conference, DPA did not provide any further 

comments.

6

 This total does not include payroll for employees paid with 100 percent federal funds and reported as

such (see Part I, Background, Commission Guidance, and Request for Early Commission Consideration 

of a Legal Question, Page 1). Payroll amounts are stated net of taxes and fringe benefits. 
 

 

 

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The Audit staff recommends that, within 30 calendar days of service of this report, DPA 

provide evidence that monthly logs were maintained to document the percentage of time 

employees spent in connection with a federal election. Absent the provision of monthly 

logs specific to employees paid with 100% non-federal funds, DPA may provide 

evidence that records consistent with 11 CFR §104.14(b)(1) were maintained to 

document that certain employees were involved in exclusively non-federal activities. 

Additionally, DPA should provide and implement a plan to maintain monthly logs and 

other records consistent with 11 CFR §104.14(b)(1) in the future. 

Finding 3. Reporting of Apparent Independent 

Expenditures 

Summary 

During audit fieldwork, the Audit staff reviewed expenditures totaling $22,803, that DPA 

disclosed on Schedule B, Line 30(b) (Federal Election Activity Paid Entirely with 

Federal Funds). These expenditures appear to be independent expenditures containing 

express advocacy and should have been disclosed on Schedule E, Line 24 (Itemized

Independent Expenditures). 

Additionally, DPA did not provide sufficient documentation, pertaining to dissemination 

dates, to verify whether 24-hour reports were required to be filed for the apparent 

independent expenditures totaling $18,424. Furthermore, DPA did not provide any 

volunteer documentation to support these disbursements. 

If DPA believes that the apparent independent expenditures, totaling $22,803, did not 

require reporting as independent expenditures, the Audit staff recommends that DPA 

provide documentation to support its conclusion. Absent such documentation, the Audit 

staff recommends that DPA amend its reports to disclose these disbursements as 

independent expenditures on Schedule E and submit revised procedures for reporting 

independent expenditures. Lastly, the Audit staff recommends that DPA provide 

documentation to support the date of public dissemination for each communication to 

determine whether a filing of 24-hour reports was required. 

Legal Standard 

A. Definition of Independent Expenditures. An independent expenditure is an 

expenditure made for a communication expressly advocating the election or defeat of 

a clearly identified candidate that is not made in cooperation, consultation, or concert 

with, or at the request or suggestion of, a candidate, a candidate’s authorized 

committee, or their agents, or a political party or its agents.

A clearly identified candidate is one whose name, nickname, photograph or drawing 

appears, or whose identity is apparent through unambiguous reference, such as “your 

Congressman,” or through an unambiguous reference to his or her status as a 

candidate, such as “the Democratic presidential nominee” or “Republican candidate 

for Senate in this state.” 
 

 

 

 

 

10

Expressly advocating means any communication that: 

 Uses phrases such as “vote for the President” or “re-elect your Congressman” or 

communications of campaign slogan(s) or individual word(s), which in context 

can have no other reasonable meaning than to urge election or defeat of one or 

more clearly identified candidates; or 

 When taken as a whole and with limited references to external events, such as 

proximity to the election, could be interpreted by a reasonable person only as 

advocating the election or defeat of one or more clearly identified candidates. 

11 CFR §§100.16(a), 100.17 and 100.22. 

B. Disclosure Requirements – General Guidelines. An independent expenditure shall 

be reported on Schedule E if, when added to other independent expenditures made to 

the same payee during the same calendar year, it exceeds $200. Independent 

expenditures made (i.e., publicly disseminated) prior to payment should be disclosed 

as memo entries on Schedule E and as a debt on Schedule D. Independent 

expenditures of $200 or less need not be itemized, though the committee must report 

the total of those expenditures on Schedule E, Line 30(b). 11 CFR 

§§104.3(b)(3)(vii), 104.4(a) and 104.11. 

C. Last-Minute Independent Expenditure Reports (24-Hour Reports). Any 

independent expenditures aggregating $1,000 or more, with respect to any given 

election, and made after the 20th day but more than 24 hours before the day of an 

election must be reported and the report must be received by the Commission within 

24 hours after the expenditure is made. A 24-hour report is required for each 

additional $1,000 that aggregates. The 24-hour report must be filed on a Schedule E. 

The date that a communication is publicly disseminated serves as the date that the 

Committee must use to determine whether the total amount of independent 

expenditures has, in the aggregate, reached or exceeded the threshold reporting 

amount of $1,000. 11 CFR §§104.4(f) and 104.5(g)(2).

D. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters required to be reported 

which shall provide in sufficient detail the necessary information and data from which 

the filed reports may be verified, explained, clarified, and checked for accuracy and 

completeness. 11 CFR §104.14(b)(1). 

E. Allocation of Expenses between Candidates. Expenditures made on behalf of more 

than one clearly identified federal candidate shall be attributed to each such candidate 

according to the benefit expected to be derived. In the case of a publication or 

broadcast communication, the attribution shall be determined by the proportion of 

space or time devoted to all candidates. This method shall be used to allocate 

payments involving both clearly identified federal candidates and one or more clearly 

identified non-federal candidates. 11 CFR §106.1(a). 

F. Volunteer Activity. The payment by a state committee of a political party of the 

costs of campaign materials (such as pins, bumper stickers, handbills, brochures, 

posters, party tabloids or newsletters, and yard signs) used by such committee in 
 

 

 

 

 

11

connection with volunteer activities on behalf of any nominee(s) of such party is not a 

contribution, provided that the following conditions are met: 

 Such payment is not for cost incurred in connection with any broadcasting, 

newspaper, magazine, bill board, direct mail, or similar type of general public 

communication or political advertising. The term direct mail means any 

mailing(s) by a commercial vendor or any mailing(s) made from commercial lists; 

 The portion of the cost of such materials allocable to Federal candidates must be 

paid from contributions subject to the limitations and prohibitions of the Act; 

 Such payment is not made from contributions designated by the donor to be spent 

on behalf of a particular candidate for federal office; 

 Such materials are distributed by volunteers and not by commercial or for-profit 

operations; 

 If made by a political committee such payments shall be reported by the political

committee as a disbursement in accordance with 11 CFR §104.3 but need not be 

allocated to specific candidates in committee reports; and

 The exemption is not applicable to campaign materials purchased by the national 

party committees. 11 CFR §100.87 (a), (b), (c), (d), (e) and (g) and 11 CFR 

§100.147 (a), (b), (c), (d), (e) and (g). 

Facts and Analysis 

A. Reporting of Apparent Independent Expenditures 

1. Facts 

During audit fieldwork, the Audit staff reviewed disbursements to ensure proper 

reporting. The Audit staff noted that DPA did not disclose any independent 

expenditures on Schedule E, however, it made apparent independent expenditures 

totaling $22,803 and disclosed them on Schedule B, Line 30(b) (Federal Election 

Activity Paid Entirely with Federal Funds). These expenditures were for pledge 

cards, walking cards, and direct mail pieces, which all contained express advocacy. 

A breakdown analysis for these expenditures is as follows: 

Apparent Independent Expenditures Reported as Federal Election 

Activity (FEA) Paid Entirely with Federal Funds (Associated Mailer 

Provided under 11 CFR §100.22(a)) 

a. DPA made one disbursement for pledge cards totaling $1,128 for which it 

provided a copy of the piece and associated invoice. The pledge card, disclosed 

as “Volunteer Exempt/Printing of Canvass Materials – Tucker for Congress” on 

DPA’s disclosure reports, contained the following phrase: “Pledge to vote early 

for Clarke Tucker.” DPA did not provide evidence of volunteer involvement to 

support the volunteer materials exemption for this activity. This communication 

contained language expressly advocating for the election or defeat of a clearly 

identified candidate, as defined under 11 CFR §100.22(a). 

b. DPA made one disbursement for walking cards totaling $3,251 for which it 

provided a copy of the piece and associated invoice. The walking card, 

disclosed as “Volunteer Exempt/Printing of Canvass Materials – Tucker for 

Congress” on DPA’s disclosure reports, contained the following phrase: “2 
 

 

 

 

12

Ways to vote for Clarke Tucker.” DPA did not provide evidence of volunteer 

involvement to support the volunteer materials exemption for this activity. This 

communication contained language expressly advocating for the election or 

defeat of a clearly identified candidate, as defined under 11 CFR §100.22(a). 

c. DPA made one disbursement for direct mail pieces totaling $18,424 for which it 

provided a copy of the pieces and associated invoice. The direct mail pieces, 

disclosed as “Printing & Postage/Volunteer Exempt Mailing/Clarke Tucker for 

Congress” on DPA’s disclosure reports, contained the following phrase: “Vote 

Clarke Tucker for Congress.” DPA did not provide evidence of volunteer 

involvement to support the volunteer materials exemption for this activity. This 

communication contained language expressly advocating for the election or 

defeat of a clearly identified candidate, as defined under 11 CFR §100.22(a). 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with DPA representatives during the exit 

conference and provided a schedule detailing these expenditures. DPA 

representatives stated that “these were not independent expenditures,” that “no 

state party committee has volunteer support for canvassing materials,” and that 

“canvassing materials don’t qualify as public communications.” DPA 

representatives stated they would “work on obtaining volunteer involvement 

support for the Resonance Campaigns expenditure [identified in 1(c) above]... but 

not for the Print for Progress canvassing expenditures [identified in 1(a) and 1(b) 

above]” because those “two items are not public communications.” In response to 

the exit conference, no additional supporting documentation and no further 

comment was provided. 

The payment by a state or local party committee for the costs of campaign

materials (such as pins, bumper stickers, handbills, brochures, posters, party 

tabloids or newsletters, and yard signs) used by such committee in connection with 

volunteer activities on behalf of any nominee(s) of such party is not an expenditure 

provided that such materials are distributed by volunteers and not by commercial 

or for-profit operations. 11 CFR § 100.147(d). The Audit staff contends, 

therefore, that whether the volunteer materials exemption applies does not hinge 

on the type of campaign material a committee uses, but, instead, on how the 

campaign materials are distributed. In particular, the Commission draws a 

distinction between campaign materials distributed by volunteers, which qualify 

for the exemption, and those that are distributed by paid workers of commercial 

entities or for-profit operations, which do not qualify for the exemption. Id. To 

determine whether the volunteer materials exemption applies, the Commission 

must evaluate whether a committee, in fact, used volunteers to distribute campaign 

materials. 

To date, DPA has not provided evidence of volunteer involvement for these 

expenditures. Prior to determining whether the volunteer materials exemption 

applies to the expenditures, DPA must provide evidence of volunteer involvement. 
 

 

13

The Audit staff recommends that, within 30 calendar days of service of this report, 

DPA:

 Provide documentation that apparent independent expenditures, totaling 

$22,803, did not require reporting as independent expenditures; and/or 

 Provide evidence to support the volunteer materials exemption application for 

apparent independent expenditures, totaling $22,803. Such evidence will assist 

the Commission in determining if the volunteer materials exemption is 

applicable to these expenditures.

Absent such documentation, the Audit staff recommends that DPA amend its 

reports to disclose these disbursements as independent expenditures on Schedule E 

(Itemized Independent Expenditures) and provide documentation to support the 

date of public dissemination for each communication to determine whether a 24-

hour report was required to be filed. 

B. Volunteer Materials Exemption 

1. Facts 

DPA reported three disbursements totaling $22,803 on Schedule B as Federal 

Election Activity. Two of these disbursements were reported as made to “Print for 

Progress” and the third was reported as made to “Resonance Campaigns, LLC.” 

DPA reported the purposes of the two disbursements made to Print for Progress as 

“Volunteer Exempt/Printing of Canvass Materials – Tucker for Congress,” and the 

third disbursement made to Resonance Campaigns, LLC, as “Printing & 

Postage/Volunteer Exempt Mailing/Clarke Tucker for Congress.” The invoices for 

the two disbursements made to Print for Progress were annotated as “AR-02 

Pledge Cards” and “AR-02 Walk Cards,” while the third invoice for the 

disbursement made to Resonance Campaigns, LLC, was annotated as “Production 

and Design DCC1815 (Qty. 60,969) 8.5x11.” DPA, however, did not provide any 

volunteer documentation or evidence of volunteer involvement to support these 

disbursements. 

The Commission has addressed the applicability of the volunteer materials 

exemption in the Final Audit Reports of the Arizona Republican Party, the 

Democratic Executive Committee of Florida, and the Tennessee Republican Party. 

In these reports, the Commission recognized a lack of clarity regarding the 

application of the volunteer materials exemption. The Commission had attempted 

to formulate a consensus policy regarding what constitutes substantial volunteer 

involvement for the purpose of applying the exemption7, but this was never 

achieved. Since a lack of clarity exists concerning the application of the volunteer 

materials exemption, it follows that the type and amount of documentation needed 

to support volunteer involvement is also unclear. 

7

 Proposed Interim Enforcement Policy, Agenda document No. 10-16.

https://www.fec.gov/resources/updates/agendas/2010/mtgdoc1016.pdf
 

 

 

 

 

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2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with DPA representatives during the exit 

conference and provided a schedule detailing these expenditures. DPA 

representatives stated that “these were not independent expenditures,” that “no 

state party committee has volunteer support for canvassing materials,” and that 

“canvassing materials don’t qualify as public communications.” DPA 

representatives stated they would “work on obtaining volunteer involvement 

support for the Resonance Campaigns expenditure ... but not for the Print for 

Progress canvassing expenditures” because those “two items are not public 

communications.” In response to the exit conference, no additional supporting 

documentation and no further comment was provided. 

As previously discussed in section A.2 above, the Audit staff contends that 

whether the volunteer materials exemption applies does not hinge on the type of 

campaign material a committee uses, but, instead, on how the campaign materials 

are distributed. DPA has not provided evidence of volunteer involvement for these 

expenditures. Prior to determining whether the volunteer materials exemption 

applies to the expenditures, DPA must provide evidence of volunteer involvement. 

The Audit staff recommends that, within 30 calendar days of service of this report, 

DPA provide documentation and evidence that apparent independent expenditures 

totaling $22,803 did not require reporting as independent expenditures. Evidence 

should include documentation such as volunteer sign in sheets, photographs of 

volunteers participating in various duties such as reviewing, sorting and packing 

the direct mail pieces, etc., to support the involvement of volunteer processing or 

distributing the communication. Absent such evidence, the Audit staff 

recommends DPA amend its reports to disclose the disbursements as independent 

expenditures on Schedule E. 

C. Failure to File 24-Hour Reports for Apparent Independent Expenditures 

1. Facts 

In addition to not reporting the apparent independent expenditures totaling $22,803 

identified above, DPA did not file any 24-hour reports8

, which may have been 

required. 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with DPA representatives during the exit 

conference and presented a schedule detailing these expenditures. DPA 

representatives stated that “these were not independent expenditures,” that “no 

state party committee has volunteer support for canvassing materials,” and that 

“canvassing materials don’t qualify as public communications.” DPA 

representatives stated they would “work on obtaining volunteer involvement 

8 The date the expenditure is publicly distributed serves as the date that the independent expenditure is

made for purposes of the additional 24-hour report filing requirement. In the absence of a known date for 

public dissemination, the Audit staff used the invoice date of incurrence to determine if a 24-hour report 

was required.
 

 

 

15

support for the Resonance Campaigns expenditure ... but not for the Print for 

Progress canvassing expenditures” because those “two items are not public 

communications.” In response to the exit conference, no additional supporting 

documentation and no further comment was provided. 

As previously discussed in section A.2 above, the Audit staff contends that 

whether the volunteer materials exemption applies does not hinge on the type of 

campaign material a committee uses, but, instead, on how the campaign materials 

are distributed. DPA has not provided evidence of volunteer involvement for these 

expenditures. Prior to determining whether the volunteer materials exemption 

applies to the expenditures, DPA must provide evidence of volunteer involvement. 

Absent documentation that the apparent independent expenditures, totaling 

$22,803, did not require reporting as independent expenditures (per Part A above), 

the Audit staff recommends that, within 30 calendar days of service of this report, 

DPA provide documentation to support the date of public dissemination for each 

mailer to determine whether a 24-hour report was required to be filed. 

Finding 4. Disclosure of Loans and Loan Repayments 

Summary 

During audit fieldwork, the Audit staff determined that DPA failed to properly disclose

transactions totaling $32,500 on a line of credit, the correct terms and balances for 

outstanding loans totaling $87,140, and loan repayments of $3,563. DPA did not 

properly disclose the new loans and the terms and balances for outstanding loans on 

Schedules C (Loans) and/or C-1 (Loans and Line of Credit from Lending Institutions). In 

addition, some loan repayments were reported to the incorrect payee on Schedule B, Line 

26 (Loan Repayments) and others were reported with disclosure errors on Schedule C. 

The Audit staff recommends that DPA provide documentation demonstrating that it 

properly disclosed the line of credit transactions, and the terms, balances and payees for 

the loans. Absent such documentation, DPA should amend its disclosure reports or file a 

Form 99 (Miscellaneous Electronic Submission) to correct the disclosure errors for its

loan activity. 

Legal Standard 

A. Reporting Loans. All loans received by a committee must be itemized and 

continuously reported until repaid. All repayments made on a loan must also be 

itemized. 11 CFR §§104.3(a)(4)(iv), (b)(4)(iii) and §104.11. 

B. Schedule C. Both the original loan and payments to reduce principal must be 

reported each reporting period until the loan is repaid. The committee must report the 

following: 

 The source of the loan; and 

 The type of loan the candidate received (i.e. bank loan, brokerage account, credit 

card, or home equity line of credit) either in the first box for endorsers and 

guarantors with a notation for loan type or in the box for “Loan Source” after the 
 

 

 

 

 

 

 

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candidate’s name. 11 CFR §104.3(d) and §104.11. 

C. Schedule C-1. 

1. Loans to Committees. When a committee obtains a loan from a bank or other 

permissible lending institution it must also file Schedule C-1 with the first report 

due after a new loan or line of credit has been established. The committee must 

disclose the following information on Schedule C-1: 

 The date and amount of the loan; 

 The interest rate and repayment schedule of the loan, or on each draw of line 

of credit; 

 The type and value of collateral or other sources of repayment that secure the 

loan or the line of credit, and whether that security interest was perfected; and 

 An explanation of the basis upon which the loan was made, if not made on the 

basis of either collateral or other sources of repayment. 

2. Loan Agreement/Line of Credit. The committee must also attach a copy of the 

loan agreement. In the case of a committee that has obtained a line of credit, a 

new Schedule C-l must be filed with the next report whenever the committee 

draws on the line of credit. An authorized representative of the lending institution 

must sign the statement on Line I. 11 CFR §104.3(d)(l) and (3). 

D. Continuous Reporting Required. A political committee must disclose the amount 

and nature of outstanding debts and obligations until those debts are extinguished. 

52 U.S.C. §30104(b). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff reviewed bank loans and a line of credit from 

Simmons Bank and First National Bank. Based upon a detailed review, the Audit staff 

determined the following:

 For the line of credit received from Simmons Bank, DPA made three draws on 

the line of credit totaling $32,500 but did not disclose these draws on Schedules 

C (Loans) and/or C-1 (Loans and Line of Credit from Lending Institutions). In 

addition, DPA reported incorrect payment terms (due date and interest rate) and 

an incorrect outstanding balance for this line of credit, which resulted in the 

under-reporting of its 2018 year-end line of credit balance by $77,447.9

 For the loan received from First National Bank, the incorrect balance was 

disclosed on Schedule C throughout the audit period. The loan was paid off on 

9

 For this line of credit, DPA carried an outstanding balance on January 1, 2017 of $60,766 and added to

the principal by incurring three draws on the line of credit totaling $32,500 in 2017, plus an additional 

incurrence adding $557 to the principal in 2018. DPA made payments against the principal of $985 in

2017 and $72,815 in 2018, and this resulted in an audit-calculated outstanding balance for the line of 

credit on December 31, 2018 of $20,023. However, DPA disclosed the ending balance for this line of 

credit to be negative $57,424, which resulted in the under-reporting of its 2018 year-end line of credit 

balance by $77,447 (calculated as $20,023 minus negative $57,424). 
 

17

March 13, 2017, but DPA continued to incorrectly disclose an outstanding 

balance of $9,693 from July 1, 2017 through December 31, 2018. 

 Loan repayments totaling $1,036 to Simmons Bank were reported to the incorrect 

payee (“Simmons First National Bank”) on Schedule B, Line 26, of the 2017 

February Monthly, March Monthly, May Monthly, and July Monthly Reports. 

These loan repayments were also reported on Schedule C to the incorrect payee 

(“First National Bank”) of the 2017 February Monthly, March Monthly, and May 

Monthly Reports, and were not reported on Schedule C of the 2017 July Monthly 

Report. In addition, loan repayments totaling $2,527 to First National Bank were 

reported to the correct payee on Schedule B, Line 26, of the 2017 February 

Monthly and March Monthly Reports, but not reported on Schedule C. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with DPA representatives during the exit conference 

and provided a schedule detailing the disclosure errors. DPA representatives stated that 

they were aware of the disclosure problems and indicated they would amend reports to 

correctly disclose the loans and line of credit. To date, DPA has not amended its reports 

or provided any further comment. 

The Audit staff recommends that, within 30 calendar days of service of this report, DPA 

provide documentation demonstrating that the identified draws on the line of credit, as 

well as the terms and balances for outstanding loans, and loan repayments were correctly 

disclosed. Absent such demonstration, the Audit staff recommends that DPA amend its 

disclosure reports or file a Form 99 (Miscellaneous Electronic Submission)4 to disclose 

the correct information on Schedule B, Line 26 (Loan Repayments), Schedule C, and 

Schedule C-1.