Federal Election Commission Performance and Accountability Report Fiscal Year 2006

Federal Election Commission

Performance and Accountability Report

Fiscal Year 2006

Released November 2006

Layout and Design by James Landon Jones

Table of Contents

Message From The Chairman...................................................................................vii

How To Use This Report...........................................................................................ix

SECTION I Management, Discussion and Analysis ...........................................1

Section I.A: Mission and Organizational Structure .......................................................................1

Brief History of the Federal Election Commission......................................................1

The FEC Today ..........................................................................................................1

How the FEC is Organized ........................................................................................2

Section 1.B: FEC Performance Goals, Objectives and Results.......................................................6

Sources of Funds ........................................................................................................6

Personnel vs. Non-Personnel Costs.............................................................................7

Core Segment Costs...................................................................................................7

Public Disclosure–Keeping the Public Informed.........................................................7

Outreach – Educating the Public About Campaign Finance.......................................9

Compliance With the FECA – Interpreting and Enforcing the Law...........................9

Public Financing – Funding Presidential Elections .....................................................9

Section 1.C: Analysis of FEC Financial Statements and Stewardship Information......................10

Balance Sheet ...........................................................................................................10

Statement of Net Cost..............................................................................................10

Statement of Changes in Net Position ......................................................................10

Statement of Budgetary Resources............................................................................10

Statement of Financing ............................................................................................10

Statement of Custodial Activity................................................................................10

Section 1.D: Analysis of FEC’s Systems, Controls, and Legal Compliance..................................11

1.D.i – FEC Managerial Internal Controls Self-Assessment......................................11

1.D.ii – Management's Response to the Inspector General's Management and 

Performance Challenges.............................................................................11

1.D.iii – FEC Integrated Internal Control Framework Legal Compliance................12

Section 1.E: Possible Future Effects of Existing Events and Conditions......................................13

Section 1.F: Other Management Information, Initiatives and Issues .........................................14

Overview of Strategic Plan .......................................................................................14

Section 1.G: Limitations of the Financial Statements..................................................................15

SECTION II Performance Report....................................................................................17

Performance Purposes, Objectives, and Results...........................................................................17

Goals and Objectives for FY 2006 ...............................................................................................17

1. Disclosure .............................................................................................................................17

 Results for FY 2006.................................................................................................18

(cont.)
2. Compliance .............................................................................................................................21

Results for FY 2006..................................................................................................22

3. Public Financing......................................................................................................................30

Results for FY 2006..................................................................................................31

Further FY 2006 Performance Results.........................................................................................31

Data Sources and Quality ............................................................................................................32

SECTION III Auditor’s Report And Financial Statements...............................33

Message From The Chief Financial Officer..................................................................................33

Independent Auditor's Report.....................................................................................................35

Notes To The Financial Statements .............................................................................................77

Note 1 – Summary of Significant Accounting Policies..............................................77

Note 2 – Non-Entity Assets......................................................................................82

Note 3 – Fund Balance with Treasury.......................................................................82

Note 4 – Accounts Receivable, net ...........................................................................83

Note 5 – General Property and Equipment, Net ......................................................84

Note 6 – Liabilities Covered and Not Covered By Budgetary Resources...................85

Note 7 – FECA Liability ..........................................................................................85

Note 8 – Commitments and Contingencies .............................................................86

Note 9 – Leases ........................................................................................................86

Note 10 – Statement of Net Cost.............................................................................87

Note 11 – Statement of Budgetary Resources...........................................................88

Note 12 – Custodial Revenues and Accounts Receivable..........................................89

Note 13 – Explanation of the Relationship Between Liabilities 

Not Covered by Budgetary Resources on the Balance Sheet 

and the Change in Resources that Fund Expenses Recognized 

in Prior Periors of Operations..................................................................89

Appendix A: Inspector General Statement................................................................91

Appendix B: Report on the Status of FMFIA Non-Conformance .................99

Appendix C: Federal Election Commission 

 Strategic Plan FY 2004-2009................................................................103

Appendix D: Glossary of Terms .....................................................................................111
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Federal Election Commission Performance and Accountability Report 2006

Message From The Chairman

November 15, 2006

I am pleased to present the Federal Election Commission’s (FEC) Performance and Accountability 

Report for fiscal year (FY) 2006, as required by the Accountability of Tax Dollars Act of 2002. This report 

highlights how our Core segments of Disclosure, Compliance, and Public Funding accomplish FEC’s 

goals to: 1) disclose campaign finance information efficiently and effectively; 2) enforce the provisions of 

the Federal Election Campaign Act; and 3) oversee the public funding of Presidential elections.

The financial and performance data presented in this report are reliable, complete and accurate. As more 

fully discussed in Section III, our employees continually assess the efficiency and effectiveness of our 

organizational processes and take corrective action when necessary. As demonstrated by Appendix B, 

the FEC is also executing a corrective action plan to address the identified material weaknesses pointed 

out by the independent audit of FEC in FY06. The FEC is committed to working both internally and 

externally with auditors to improve our management and fiscal processes.

In accordance with the requirements of the Federal Managers’ Financial Integrity Act, I hereby give a 

statement of assurance that management controls are in place and the Commission’s financial systems 

conform to government standards articulated in OMB Circulars A-123 and A-136. Our compliance 

with these laws, rules and regulations is discussed more fully in Sections I, II, and III of this Report. The 

FEC is committed to working with the Inspector General and our auditors, Clifton Gunderson, LLP 

to address the FY05 Material Weaknesses: 1) Cost Accounting Systems and Processes; 2) Administrative 

Fines, Civil Penalties, and Miscellaneous Receipts; 3) General Property and Equipment; and 4) 

Information Technology.

Our corrective action plan is discussed in Appendix B and shows what progress the FEC is making to 

address those material weaknesses.

The FEC’s 2006 Performance and Accountability Report demonstrates how well the FEC performed 

during the year and shows our commitment to providing the high level of service the electorate expects 

and deserves from the Commission. I am very pleased to be able to share our progress with all of our 

stakeholders and look forward to reporting even more success in the years ahead.

Sincerely,

Michael E. Toner

Chairman

vii

Federal Election Commission Performance and Accountability Report 2006

This Performance and Accountability Report is 

submitted pursuant to the Chief Financial Officers Act, 

as amended by the Reports Consolidation Act of 2000, 

and Office of Management and Budget Circular A-136, 

Financial Reporting Requirements. The Commission’s 

audited financial statements also are contained in 

this report, as required by the Accountability of Tax 

Dollars Act of 2002. It provides the Federal Election 

Commission’s (FEC) financial and performance 

information for fiscal year (FY) 2006, enabling the 

President, the Congress, and the American people to 

assess the Commission’s performance in meeting its 

mission. This report is available on the Commission’s 

website at www.fec.gov (click on “About the FEC” 

and then “Budget”). The FY 2006 Performance and 

Accountability Report is organized into three major 

sections:

1. Management’s Discussion and Analysis – which 

provides an overview of the financial and performance 

information presented in the report. This section, 

together with the Chairman's Letter, includes the 

Management Assurances required under the Federal 

Managers’ Financial Integrity Act and a statement on 

Office of Management and Budget Circular A-123 

Management’s Responsibility for Internal Control and 

Budget Circular A-136. Management’s Discussion 

and Analysis also describes the FEC organization and 

addresses issues affecting the Commission’s future 

performance.

2. Performance Report – which provides a report 

on the FEC’s accomplishments and results in meeting 

its goals and objectives, as required by the Government 

Performance and Results Act.

3. Auditor’s Report and Financial Statements – which 

provides details on the FEC’s finances, including 

the auditor’s report and the Commission’s financial 

statements.

The Commission’s Strategic Plan, FY 2004 – 2009, 

and its annual performance plans, that form the basis 

for this report, are available on the FEC website at 

www.fec.gov (click on “About the FEC” and then 

“Budget”). In addition, the FEC prepares an Annual 

Report that covers the activities of each calendar year. 

Annual reports for 1996 through 2005 are available 

on the FEC website at http://www.fec.gov/pages/

anreport.shtml. The 2006 Annual Report will be 

published in the spring of 2007.

How To Use This Report

1

Federal Election Commission Performance and Accountability Report 2006

Section I.A: Mission and 

Organizational Structure

The Federal Election Commission (FEC) was created 

to strengthen the integrity of the electoral process 

by ensuring that the campaign finance process is 

fully disclosed and that the campaign finance laws 

are effectively and fairly enforced. In addition to 

administering and enforcing the limits, prohibitions, 

and reporting requirements of the Federal Election 

Campaign Act (FECA), the Commission also 

administers and oversees the Presidential public 

funding program, which is funded by the tax checkoff 

provided on Federal tax returns.

Brief History of the 

Federal Election Commission

Following reports of serious financial abuses in the 

1972 Presidential campaign, Congress amended 

the FECA in 1974 to set limits on contributions by 

individuals, political parties and PACs. It established 

the FEC as an independent agency to enforce the law, 

facilitate disclosure and administer the Presidential 

Public Funding Program. Amendments to the 

Internal Revenue Code that same year established 

the matching fund program for Presidential primary 

campaigns.

Congress amended the FECA in 1976 after the 

Supreme Court case Buckley v. Valeo. The Court 

upheld contribution limits because they served the 

government’s interest in safeguarding the integrity 

of elections by preventing even the appearance of 

corruption of public officials. However, the Court 

overturned expenditure limits, stating: “It is clear 

that a primary effect of these expenditure limitations 

is to restrict the quantity of campaign speech by 

individuals, groups and candidates. The restrictions...

limit political expression at the core of our electoral 

process and of First Amendment freedoms.” The Court 

also sustained other public funding provisions and 

upheld disclosure and recordkeeping requirements.

The most recent amendments to the FECA were 

passed in 2002. Among other things, the Bipartisan 

Campaign Reform Act of 2002 (BCRA or McCainFeingold) banned national parties from raising 

or spending non-Federal funds (often called “soft 

money”), restricted so-called issue ads, increased 

the contribution limits, and indexed certain limits 

for inflation. BCRA was challenged in court within 

days of its passage into law. The Supreme Court, in 

McConnell v. FEC, upheld most of the challenged 

provisions of the BCRA, including its two principal 

features: the control of soft money and the regulation 

of electioneering communications.

The FEC Today

 The FEC strives to foster voluntary compliance with 

the rules of the campaign finance process in three 

Responsibility Segments:

Public Disclosure

Facilitates public disclosure of campaign finance 

activity and provides information and outreach 

policy guidance on the law and Commission 

regulations to the public, press, and the regulated 

community;

Compliance

Enforces the FECA through audits, investigations, 

and civil litigation;

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SECTION I

Management, Discussion and Analysis
2

Section I | Mission and Organizational Structure

Public Financing

Implements the public funding programs for 

Presidential campaigns and conventions. This 

includes certification and audits of participating 

candidates and committees and enforcement of 

public funding legislation.

The FEC’s purposes, objectives and accomplishments 

in each of these areas are summarized later in this 

section and presented in detail in Section 2.

How the FEC is Organized

The FEC is structured to foster bipartisan decision 

making. Its work is directed by six Commissioners 

appointed by the President with the advice and consent 

of the Senate. The Commissioners serve full time and 

are responsible for administering and enforcing the 

FECA. They generally meet twice weekly, once in a 

closed executive session to discuss matters that, by 

•

law, must remain confidential, and once in a meeting 

open to the public. At these meetings they formulate 

policy and vote on significant legal and administrative 

matters. Each member serves a six-year term; two 

seats are subject to appointment every two years. 

By law, no more than three Commissioners can be 

members of the same political party. A majority vote 

and in some cases at least four votes are required for 

any official Commission action. Chairmanship of the 

Commission rotates among the members each year, 

with no member serving as Chairman more than once 

during his or her term.

The FEC’s structure is depicted in the organizational 

chart below:

The Office of the General Counsel and the Office 

of the Staff Director support the Commissioners in 

accomplishing the FEC’s mission. FEC also has an 

independent Office of the Inspector General. These 

three offices perform the following functions:
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Federal Election Commission Performance and Accountability Report 2006

Office of General Counsel

Lawrence H. Norton

Telephone: 1-(202) 694-1650

1-(800) 424-9530

(press 0, then extension 1650)

Website: www.fec.gov/about/offices.shtml#ogc

The General Counsel position was created by the 

FECA in 1974. The Office of General Counsel (OGC) 

consists of five organizational units:

Enforcement Division

Investigates alleged violations of the law, negotiates 

conciliation agreements, and 

Recommends civil penalties for individuals and 

entities that have violated the FECA;

General Law and Advice Division

Responsible for processing all campaign audit and 

repayment matters;

Handling debt settlements, administrative 

terminations, and administrative fines matters; 

Handles all administrative law, disclosure, Freedom 

of Information Act, Privacy Act, and employment 

and labor law matters, and administers FEC’s 

Ethics in Government Act program;

Litigation Division

Handles all civil litigation arising out of any legal 

actions brought by or against the Commission 

regarding the FECA and/or Title 26;

Serves as the exclusive representative of the 

Commission before the Federal district and 

circuit courts, and before the Supreme Court with 

respect to matters involving public financing of 

Presidential campaigns and conventions;

Office of Complaints Examination and

Legal Administration

Provides strategic planning and central docketing 

functions; 

Coordinates information technology (IT) and 

information services; and 

Tracks performance data for the Office of General 

Counsel (OGC): and

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Policy Division

Provides legal advice in response to legislative 

inquiries, legal reviews for all FEC publications; 

Trains Commission staff concerning changes in 

the law. Drafts, for Commission consideration, 

Advisory Opinions and regulations, legal 

memoranda interpreting the Federal campaign 

finance law; 

Once issued, Political Action Committees, candidates, 

and contributors can make campaign finance decisions 

based upon these carefully considered and researched 

Advisory Opinions.

Office of the Staff Director

Patrina Clark: (202) 694-1007

E-mail: director@fec.gov

Telephone: 1-(202) 694-1007

1-(800) 424-9530

(press 0, then extension 1007)

Website: www.fec.gov/about/offices/osd/osd.shtml

The Staff Director position was also created by the 

FECA in 1974. The Staff Director is supported by 

a Deputy Staff Director for Management/Chief 

Financial Officer; a Deputy Staff Director for Audit & 

Review; and a Deputy Staff Director for Information 

Technology/Chief Information Officer. 

The Commission’s work is supported by several staff 

offices including: the Administration Division; Office 

of Congressional, Legislative and Intergovernmental 

Affairs; Office of Equal Employment Opportunity 

and Special Programs; Office of Human Resources 

and Labor Relations; Office of Budget, Planning and 

Management; and the Press Office. Program offices 

under the Office of the Staff Director include:

Alternative Dispute Resolution Office

Provides parties in certain enforcement actions 

with an alternative method for resolving 

complaints filed against them or for addressing 

issues identified in the course of an FEC audit. 

The resolution process is designed to promote 

compliance with FECA and Commission regulations 

and to reduce the cost of processing complaints by 

encouraging settlements outside the FEC’s normal 

enforcement track.

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Section I | Mission and Organizational Structure

Audit Division

Evaluates the matching fund submissions of 

Presidential primary candidates and determines 

the amount of contributions that may be matched 

with Federal funds;

Audits all public funding recipients as required by 

law;

Audits those committees that, according to 

FEC determinations, do not meet the threshold 

requirements for substantial compliance with the 

law. 

The division’s resources are also used in the 

Commission’s investigations of complaints.

Commission Secretary

Responsible for all administrative matters relating 

to Commission meetings, as well as Commission 

votes taken outside of the meetings, including: 

preparing meeting agendas; agenda documents; 

Sunshine Act notices; meeting minutes; and vote 

certifications. 

Logs, circulates, and tracks numerous materials 

not related to Commission meetings and records 

the Commissioners’ votes on these matters. 

All matters on which a vote is taken are entered into 

the Secretary’s database.

Information Division

Provides general educational assistance to 

candidates, committees, and others involved in 

elections through the Internet, e-mail, letters, 

telephone conversations, publications, and 

conferences for both domestic and foreign 

audiences. 

Engages in proactive outreach and educational 

efforts, such as seminars and reminder notice 

mailings before each major filing period.

Information Technology Division

Provides internal IT support and operates the 

electronic filing system. 

Operates and maintains the FEC website, www.

fec.gov, that now serves as the main source for 

information and disclosure of Federal election 

campaign finance data;

Publishes the Reports on Financial Activity series 

of periodic studies on campaign finance and 

generates statistics for other publications;

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Maintains the computer programs that sort and 

organize campaign finance data into indexes;

These indexes permit a detailed analysis of campaign 

finance activity and provide a tool for monitoring 

contribution limits. The indexes can be seen and 

accessed on the website.

Office of Administrative Review

Established in 2000 after statutory amendments 

permitted the Commission to impose civil money 

penalties for violations of certain reporting 

requirements. 

Evaluates challenges that are made in the 

Commission's Administrative Fines Program. 

Serves as the Commission’s liaison with the U.S. 

Department of the Treasury on debt collection 

matters involving unpaid civil money penalties 

under this program.

Public Disclosure Division

Processes incoming campaign finance reports from 

Federal political committees. 

Enters information into the FEC database from 

all reports filed by political committees and other 

entities. 

These reports are made available to the public both 

on the FEC website and in the Public Records Office 

at FEC headquarters, located at 999 E Street, N.W., 

Washington, DC. The division also faxes and mails 

copies of reports to requestors.

Reports Analysis Division (RAD)

Conducts risk assessments for the purpose of 

referring committees to the Audit Division for 

compliance audits or to OGC or ADR for civil 

enforcement purposes. 

Provides committee officials with technical 

assistance in complying with reporting 

requirements. 

Conducts detailed examinations of the campaign 

finance reports filed by political committees. 

Due to the limited resources available, the review of 

reports represents the only full scrutiny of 100 percent 

of all committee filings. Each committee has an analyst 

assigned, who assists the committee and seeks to ensure 

voluntary compliance with the law. The division along 

with the Office of Administrative Review is responsible 

for the Commission's Administrative Fine Program.

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5

Federal Election Commission Performance and Accountability Report 2006

Office of the Inspector General

Lynne McFarland

Website: www.fec.gov/fecig/fecig.shtml

E-mail: oig@fec.gov

Telephone: 1-(202) 694-1015

1-(800) 424-9530

 The Office of the Inspector General, established in 

1988 under amendments to the Inspector General Act, 

is independent and reports to both the Commissioners 

and the Congress. The FEC’s Inspector General 

has two major responsibilities: to conduct internal 

audits and investigations to detect fraud, waste 

and abuse within the agency and to improve the 

economy and effectiveness of agency operations. The 

Inspector General is required to report its activities to 

Congress on a semiannual basis. These reports include 

descriptions of any serious problems or deficiencies in 

agency operations, as well as corrective steps taken by 

the agency.
6

Section I | Mission and Organizational Structure

Section 1.B:

FEC Performance Goals, 

Objectives and Results

To accomplish its mission, the Commission has 

established three Core Programs/Responsibility 

Segments as illustrated in Figure 1a:

Disclosure– Promoting public disclosure;

Compliance– Compliance with the FECA; and

Public Financing– Administering the public 

financing of Presidential elections.

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Disclosure

Compliance

Office of the General Counsel

Audit Division

Refer committees for audit action;

Issue Advisory Opinions and file litigation;

Manage and maintain active enforcement 

caseload

Primary

Responsibility

Area(s)

Outputs

Civil litigation; 

Investigations 

performed and closed

Public Financing

Audit Division Establish eligibility of candidates for 

Matching Funds; Ensure funds are properly 

disbursed and utilized by candidates

reshold submissions 

reviewed and certified;

Post-election audits 

performed and closed

Reports Analysis Division

Public Disclosure Division

Information Division

Review all reports received; Respond to data 

requests; Make reports available to public

Reports examined and 

late or non-filing actions 

referred: Reports made 

available on website and 

in person; Respond to 

inquiries

Responsibility Segment

Figure 1a – FEC Core Programs/Responsibility Segments

FEC Expenditures

0

$ 10

20

30

40

50

$ 60

48.93 50.18 51.48

 (in millions)

 2003 2004 2005 2006

fiscal year

54.04

Figure 1b – FEC Expenditures

(in millions)

Source: Budget Execution Report

Sources of Funds

To fund these three Responsibility Segments, the 

FEC receives an annual appropriation for Salaries and 

Expenses. These funds are available until expended. 

The FEC’s appropriated Budget Authority in FY 2006 

was $54.15 million. Figure 1b shows the agency's 

expenditures from 2002–2006. 
7

Federal Election Commission Performance and Accountability Report 2006

Personnel vs. Non-Personnel Costs

Figure 2 represents the Commission's actual 

expenditures broken out between personnel and 

non-personnel costs for FYs 2004, 2005 and 2006. 

Personnel costs comprised 71.4% of FEC’s FY 2006 

budget costs; the other 28.6% of budget costs was 

spent primarily on building rent, capital items and 

Information Technology software and hardware.

Core Segment Costs

The Commission fully supports the Federal 

government-wide mandate for Federal agencies to 

maximize efficiency and effectiveness to ensure the 

most responsible expenditure of taxpayer dollars. 

Toward that end, the FEC devotes considerable focus 

to emphasizing voluntary compliance, the agency's 

least resource intense program. The FEC relies heavily 

on effective outreach and information programs to 

reduce violations due to lack of understanding of the 

law. These outreach efforts – including the www.fec.

gov website; toll free 800 information line, campaign 

finance workshops and seminars, and campaign guides 

and brochures – receive high marks from the election 

community, the media, and the public.

Figure 3 identifies the resource requirements associated 

with each of our responsibility segments:

$21,317,170, or 38% of the FY 2006 budget, was 

spent on the FECA Disclosure Segment; and

$27,383,031, or 49% of the FY 2006 budget, was 

spent on the Compliance Segment;

$7,206,355, or 13% of the FY 2006 budget, was spent 

on the Public Financing of Presidential Elections 

Segment. The next sections break down these Core 

Responsibility Segments into detail and discuss each 

segment's Performance Measures

Public Disclosure–

Keeping the Public Informed

Disclosing the sources and amounts of funds used to 

finance Federal elections is one of the most important 

of the FEC’s duties. Through its website, www.fec.

gov, the Commission makes the financial reports of all 

Federal political committees accessible to the general 

public. This online disclosure provides an added 

FEC Program Costs

-0

$ 5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

$ 35,000,000

31,058,811

15,792,329

4,591,751

309,386

dollars

fiscal year Source: Statement of Net Cost

21,932,137

27,383,031

21,317,170

7,206,355

25,682,814

8,435,437

2004 2005 2006

Compliance

Disclosure

Public Financing

Election Administration

Figure 3 – FEC Segment Costs

Cost of FEC Operations,

Personnel vs. Non-Personnel Costs (in millions)

-0

10

20

30

40

50

60

2004 2005 2006

fiscal year Source: Budget ExecutionReport

35.29

14.90

37.78

13.72 15.40

38.64

Non-Personnel

Personnel

millions

of dollars

Figure 2 – Cost of FEC Operations, 

Personnel vs Non-Personnel Costs
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Section I | Mission and Organizational Structure

incentive for the regulated community to comply 

with the campaign finance law.

The sheer volume of data available to the public is 

staggering. The Commission defines its work in the 

context of election cycles, which include the preceding 

and actual election years. For example, the 2006 

election cycle includes calendar years 2005 and 2006. 

It also spans three Federal fiscal years. Calendar year 

2005 begins in FY 2005, but calendar year 2006 

ends in FY 2007, which began in October 2006. The 

timeframes for each election cycle make it difficult to 

provide meaningful performance data on a fiscal year 

basis. So in Section 2, the FEC includes data for both 

the Fiscal Years and the Election Cycles.

In the 2004 election cycle, more than 8,000 

political committees filed approximately 95,000 

reports containing information concerning nearly 

3 million itemized contributions, as well as millions 

of other itemized disbursements, receipts, and other 

payments previously not entered into Commission 

databases. During the 2006 election cycle, that will 

end in December 2006, the Commission expects that 

more than 100,000 reports will be filed by political 

committees.

These reports are filed electronically, except for Senate 

reports and reports from other committees with less 

than $50,000 in annual activity. Paper reports filed by 

political committees are available on the Commission’s 

website within 48 hours of their receipt, and almost 

immediately for electronically filed reports. Interested 

citizens can select a profile of a committee’s financial 

activity for each election cycle. Citizens also can access 

information on contributions by using a variety of 

search elements (e.g., donor’s name, recipient’s name, 

date, amount, or geographic location). By publicly 

posting this campaign finance information on its 

website, thus facilitating its availability, FEC fosters 

compliance with, and deters violation of, the FECA.

In addition to campaign finance reports, the FEC 

makes available on its website and through the 

Disclosure Segment items such as:

Statistical summaries of reported campaign 

activities;

A monthly FEC newsletter, the Record, offering 

information on Advisory Opinions, court cases, 

and enforcement actions;

Information on all closed enforcement actions 

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such as cases settled or dismissed;

Audit reports and Commission meeting agenda 

items;

FEC Annual Reports;

Brochures for use as quick reference on various 

campaign finance topics;

Reports on State Campaign Finance Laws;

Information Division Campaign Guides, with 

updated Supplements, to be used by various 

participants in campaign finance on how to comply 

with the various provisions of the FECA;

The Presidential Public Funding Program Report.

Advisory Opinions drafted by the OGC’s Policy 

Division and approved by the Commission; and

Other public documents. The FEC also discloses 

information by issuing press releases covering 

statistical information and the agency’s activities.

The FEC’s disclosure program focuses on reviewing 

and placing information on the website and in the 

public records division. It supplements the website 

and public records work with these activities:

Educational outreach including campaign finance 

workshops and seminars at its DC Headquarters 

and in different regions in the United States;

A toll-free line and automatic fax transmission of 

FEC publications 24-hours-a-day, 7-days-a-week; 

and

On demand downloads from our website.

The FEC has achieved its goal of making reports filed 

with the FEC available to the public within 48 hours. 

To accomplish this, the staff is scheduled to be in the 

office on evenings and weekends when reports are due. 

This ensures coverage for phones calls from all time 

zones and mail deliveries. The Public Disclosure office 

also works closely with the IT Division to ensure all 

equipment and programs are functioning properly.

During FY 2006, the Reports Analysis Division was 

able to meet its goals in reviewing all reports and 

statements received. The reports reviewed statistic is 

at its highest level ever compared to previous election 

cycles. This review level was attained due to efforts 

made to: 1) replace staffing vacancies slots rapidly; 

2) improve training capabilities; 3) better coordinate 

RAD business activities with other FEC divisions and 

offices; 4) establish more defined roles for each of the 

division’s branches; and 5) continually review processes 

and procedures used to conduct division activities.

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9

Federal Election Commission Performance and Accountability Report 2006

The FEC has also achieved its goal of responding to 

information requests within 72 hours. The agency 

maintains a staff of information specialists and press 

spokespersons sufficient to respond efficiently to the 

large number of inquiries that often arise during 

elections and at other times when the public interest 

focuses on the FEC. The agency further ensures FEC 

staff members are well trained and informed about 

recent legal developments and agency actions. The 

FEC ensures staff can access the resources needed to 

respond to inquiries. Staff members strive to respond 

to inquiries during the same day calls are received. 

Response time may be affected by the nature and 

complexity of the request, equipment malfunctions, 

call volume, and staffing issues.

The Office of General Counsel timely responded to all 

Advisory Opinion (AO) requests made during FY 2006. 

When the Commission receives a complete request for 

an AO, it generally has 60 days to respond. In certain 

situations the time frame is reduced to 20 days. OGC 

prepares a draft opinion that the Commissioners 

then discuss and vote on in an open meeting. A draft 

opinion must receive at least four favorable votes out 

of six possible votes to be approved.

Outreach – Educating the Public 

About Campaign Finance

The FEC actively communicates its experience and 

expertise to interested individuals, political committees, 

state and local governments, and foreign dignitaries 

and officials. The Commission conducted educational 

conferences throughout the United States and offered 

seminars on campaign finance at its headquarters in 

Washington, DC.

Compliance With the FECA – 

Interpreting and Enforcing the Law

The Commission exercises exclusive jurisdiction over 

the civil enforcement of Federal campaign finance law. 

The FEC reviews each report filed by Federal candidates 

and committees to ensure they have complied 

with the contribution and disclosure requirements. 

FEC staff may generate enforcement actions called 

Matters Under Review (MURs) when it appears that 

a violation of the law has occurred. Individuals and 

groups outside the agency may also initiate MURs by 

filing complaints. Other government agencies may 

also refer enforcement matters to the FEC. If four of 

the six Commissioners vote to find reason to believe 

a violation of the law has occurred, the Office of the 

General Counsel will investigate the matter or the 

ADR office will try to negotiate a mutually agreeable 

resolution. If the investigation reveals a violation 

of the law, the Commission attempts to resolve the 

matter by reaching a conciliation agreement with the 

respondents. The agreement may require the candidate 

or committee to pay a civil penalty and take other 

remedial steps. If an agreement cannot be reached, 

the Commission may file suit against the appropriate 

persons in a U.S. District Court. As required by 

law, the Commission keeps enforcement matters 

strictly confidential until they are concluded. Once 

the Commission has resolved and closed a MUR, 

pertinent documents, including those reflecting the 

Commission's final determination are placed on 

the public record as well as on the FEC website at

www.fec.gov/em/mur.shtml.

Public Financing – Funding 

Presidential Elections

Every Presidential election since 1976 has utilized 

public funds. Public funds are provided through two 

programs: (1) grants are given to party conventions 

and candidates running in the general election; and 

(2) matching funds are given to candidates running in 

the party primaries. The FEC administers the public 

funding program by determining those candidates 

and committees eligible to receive the funds and in 

what amounts. The Secretary of the Treasury makes 

the payments. Committees receiving public funds 

must keep detailed records of their financial activities. 

After the elections, the FEC audits each publicly 

funded committee. If an audit reveals a committee has 

exceeded the spending limits or used public funds for 

impermissible purposes, the committee must pay back 

an appropriate amount to the U.S. Treasury.
10

Section I | Mission and Organizational Structure

Section 1.C: 

Analysis of FEC 

Financial Statements 

and Stewardship 

Information

Balance Sheet

As a small agency, about 97 percent of FEC’s assets 

consist of Fund Balance with Treasury (cash) and 

Property Plant and Equipment (PP&E). Cash 

increased by about $1.5 million, or 18 percent from 

FY 2005, largely due to obligations incurred late in 

the fiscal year but not paid. Net PP&E decreased by 

approximately $1.3 million, or 13 percent from FY 

2005, primarily as a result of depreciation.

Statement of Net Cost

FEC’s total budget in FY 2006 was $54.1 million. 

Roughly $39 million, or 71 percent, of the budget was 

dedicated to personnel costs. Overall, costs decreased 

by approximately $143 thousand largely due to a 

decrease in payments to GSA for construction.

Statement of Changes in Net 

Position

Total Financing Sources under Cumulative Results of 

Operations decreased by about $2.5 million, or 4.4 

percent, primarily due to a decrease in Appropriations 

Used, which is largely a function of payments made. 

FEC paid approximately $2 million less to GSA in 

FY 2006 for a construction project that ended in late 

FY 2005.

Statement of Budgetary Resources

Total Budgetary Resources increased by approximately 

$3 million, or 5.6 percent over FY 2005. This is 

largely due to an increase in the appropriation of $2.6 

million. Total Status of Budgetary Resources increased 

by $3 million. This increase comes from an increase in 

payroll, and IT spending for improvements.

Statement of Financing

Total resources used to finance activities increased 

by $2.5 million. This increase is primarily due to an 

increase in obligations incurred for payroll and IT 

contracts.

Statement of Custodial Activity

Total custodial revenue increased from the prior year 

in the area of civil penalties by approximately $4.0 

million. This increase is largely due to the settlement 

of one case for $3.8 million, the largest in FEC history. 

The FEC does not maintain any stewardship assets.
11

Federal Election Commission Performance and Accountability Report 2006

Section 1.D: 

Analysis of FEC’s 

Systems, Controls, 

and Legal Compliance

1.D.i – FEC Managerial Internal 

Controls Self-Assessment

The FEC Manager's self-assessment required by FEC 

Directive 53 and OMB Circulars A-123, A-127 and 

A-136 indicate that there are no material weaknesses. 

Employees in all divisions continue to review specific 

procedures on an ongoing basis and improve internal 

controls where possible.

As noted in the Chairman's Letter, assurance is 

given that management controls are in place and 

the Commission's Financial Systems conform to 

government standards articulated in OMB Circulars 

A-123 and A-136.

This year the independent auditors, Clifton Gunderson 

(CG), identified two material weaknesses: 1) program 

cost allocation; and 2) General Property and Equipment. 

The independent auditors also observed five reportable 

conditions: 1) Information Technology; 2) Integrated 

Financial Management System; 3) Administrative Fines, 

Civil Penalties and Miscellaneous Receipts; 4) Control 

over Procurement and Disbursement Transactions; and 

5) Audit Follow-Up. 

1.D.ii – Management's Response 

to the Inspector General's 

Management and Performance 

Challenges

Human Capital Management

As the Inspector General's report in Appendix A 

observes, the Commission confronts the same 

long-standing challenge that faces the rest of the 

Federal government: developing and implementing 

a consistent strategic approach to managing and 

maintaining an appropriately skilled workforce. 

To address this challenge, the Commission has 

undertaken a comprehensive human capital 

management initiative. This initiative includes 

effective planning for future needs; changes in 

recruitment; strategic hiring; training the current 

workforce; and retaining critical staff. The 

Commission made strides in succession planning 

and diversity in the hiring of several mid-career 

managers to fill critical top-level positions. The 

FEC installed a new performance appraisal system. 

The FEC also identified and addressed training 

gaps and mission-critical leadership positions.

The Commission will soon partner with a Federal 

Line of Business (LOB) to take advantage of the 

latter’s efficiencies. The agency and the various LOBs 

will match up their respective needs and attributes to 

determine what LOB is most appropriate for FEC. 

The Commission is committed to enacting 

the President’s Management Agenda to make 

Government more citizen-centered, market-based 

and results-oriented. The FEC has already met 

the President’s Management Agenda’s eGov and 

transparency requirements. The FEC is dedicated to 

maintaining and strengthening its commitment to 

a diverse Federal workforce that is skilled, flexible, 

and focused on results and service. The FEC has 

demonstrated its improved efficiency by meeting all 

workload challenges, peforming more work while 

simultaneously reducing FTEs from 391 to 375. 

Information Technology Security

The Commission agrees with the Inspector General's 

argument in Appendix A that the benefits of 

information technology (IT) also bring risks of 

fraud, inappropriate disclosure of sensitive data, and 

disruption of critical operations and services. While 

the FEC is exempt from the Paperwork Reduction Act

and eGov initiative and other IT regulations, FEC 

management continues its commitment to the spirit 

and intent of such legislation.

As the Inspector General points out, computerized 

systems enable the FEC to carry out its mandate 

to ensure the campaign process is fully disclosed. 

To address the ever-present threats of data misuse, 

destruction, or inappropriate disclosures, as well 

as to ensure continuity of operations in the event 

of a disaster, the Commission has taken aggressive 

actions to secure its IT infrastructure. In FY 2005, 
12

Section I | Mission and Organizational Structure

the Commission implemented a mandatory security 

awareness training program for its employees and 

contractors. FEC continues to monitor and evaluate 

its Information System Security Policy. The FEC 

will continue its vigilance in this area and welcomes 

further comments from the Inspector General on IT 

security issues.

Financial Reporting

The FEC shares the IG’s goal in Appendix A of 

producing timely, accurate, and useful financial 

information that is essential for making day-to-day 

operating decisions and managing the government’s 

operations more efficiently and effectively. The FEC 

is also committed to fully complying with all financial 

management laws and standards. 

The FEC made considerable progress in financial 

reporting in FY 2006. Steps were taken to formalize 

and streamline its reporting processes. The number 

of reconciliations was expanded to improve control, 

timeliness and efficiency. Reportable conditions 

in the areas of payroll and financial reporting were 

eliminated. And finally, the FEC has begun the 

process to replace its accounting system in order to 

meet the demands of the Federal government’s new 

reporting requirements.

Although significant progress was achieved in this 

area, the FEC understands the challenges ahead. In 

FY 2007, FEC plans to work with its internal and 

external auditors to eliminate material weaknesses 

and reportable conditions identified in FY 2006 as 

well as convert to a service provider. 

1.D.iii – FEC Integrated Internal 

Control Framework Legal 

Compliance

FEC is subject to numerous legislative and regulatory 

requirements that promote and support effective 

internal control. The Federal statutes discussed below 

help FEC to both identify and control internal control 

weaknesses. These laws also improve both program 

and financial management.

Federal Managers Financial Integrity Act 

of 1982 (FMFIA)

This act requires FEC to establish and maintain 

internal control. FEC’s Staff Director must annually 

evaluate and report on the control and financial 

systems that protect the integrity of its financial 

programs. FMFIA requirements offer a framework 

to conduct and coordinate other reviews, evaluations, 

and audits.

Government Performance and Results Act 

(GPRA)

To motivate results-oriented management by FEC, 

GPRA requires it to create strategic plans, set 

performance goals and report annually on actual 

performance compared to goals. GPRA integrates 

FEC’s budget process, operational management, and 

public accountability. GPRA’s PART process assesses 

FEC’s program effectiveness and helps to improve its 

program performance.

Chief Financial Officers Act, as amended

(CFO Act)

This act requires FEC to both establish and assess 

internal control related to financial reporting by 

preparing and auditing financial statements by 

November 15 annually.

Inspector General Act of 1978, as 

amended (IG Act)

This act requires FEC’s programs and operations be 

independently reviewed by an Inspector General. 

The FEC Inspector General submits semiannual 

reports to Congress on any significant abuses or 

deficiencies identified in its reviews and recommends 

appropriate action.

Federal Financial Management 

Improvement Act of 1996 (FFMIA)

This act requires FEC to use a financial management 

system complying with Federal financial management 

standards, Federal Accounting Standards Advisory 

Board (FASAB) standards, and the U.S. Standard 

General Ledger (USSGL) transaction standards.
13

Federal Election Commission Performance and Accountability Report 2006

Federal Information Security 

Management Act of 2002 (FISMA)

This act provides FEC with a framework of information 

security controls proportionate to the agency’s needs.

Clinger-Cohen Act of 1996

This act requires FEC to use a disciplined Capital 

Planning and Investment Control (CPIC) risk 

assessment process when the agency makes capital 

investments, especially on Information Technology 

investments, to make sure the investments achieve a 

net return on investment.

Debt Collection Improvement Act

The FEC manages its delinquent debt pursuant to 

the Debt Collection Improvement Act (DCIA) of 1996. 

It refers delinquent debt greater than 90 days old to 

the Department of the Treasury (Treasury) for cross 

servicing and offset. 

Prompt Payment Act

The Prompt Payment Act requires Federal agencies 

to make timely vendor payments and to pay interest 

penalties when payments are late. The FEC’s on-time 

payment rate for FY 2006 was effectively 100%.

Improper Payments Information Act of 

2002

In accordance with OMB guidance, the FEC reviewed 

all of its programs and activities to identify those 

susceptible to significant erroneous payments. The FEC 

does not make grants, and its non-personnel expenses 

are approximately $15 million. The FEC is confident 

that improper payments, if any, are immaterial.

Section 1.E: 

Possible Future Effects

of Existing Events and 

Conditions

There are several existing events and conditions that 

may affect the FEC in the future. Any amendments to 

the FECA may significantly impact the Commission. 

Amendments to the Act may require changes in 

internal processes or procedures and require that 

implementing regulations be adopted.

For example, proposed legislation in the House and 

Senate, if enacted, will significantly affect the FEC 

in the future. S. 1053, the 527 Reform Act of 2005, 

amends the FECA to clarify when organizations 

described in section 527 of the Internal Revenue 

Code of 1986 must register as political committees. 

The House has a similar piece of legislation pending, 

H.R. 1316, the 527 Fairness Act of 2005. During 

FY06, these same two bills were still pending in 

Congress. A third bill proposing to reorganize the 

FEC by replacing the six commissioners with one 

Chairman was also pending.

Further, the solvency of the Presidential Election 

Campaign Fund may impose major burdens on 

the FEC. The agency’s early projections concerning 

primary matching payments for the 2004 election 

cycle indicated that January 2004 payments to 

eligible Presidential candidates could be less than 

20 percent of the amount certified, even if one 

major party candidate declined to participate in the 

matching payment program. However, three major 

party candidates—Howard Dean, John Kerry and 

President Bush—chose not to participate in the 

program, and the only shortfall that occurred in the 

2004 cycle took place in February, when candidates 

received approximately 46 cents per dollar certified. 

For the 2004 elections, a total of eight candidates were 

certified for matching funds. With the participation 

of three additional major party candidates, the 

program would have experienced severe shortfalls. The 

Presidential Election Campaign Fund (PECF) is likely 

to continue to face major deficits in timely payments 

for the 2008 election. The PECF could be short of the 

funds necessary to meet the objectives of the public 

financing program unless legislative action is taken. 
14

Section I | Mission and Organizational Structure

The Commission has consistently made legislative 

recommendations to Congress to address this issue. 

The FEC is concerned that the possibility of a totally 

open primary in both major parties in 2008 (with 

the presumed participation of many candidates in 

both primaries) will further exacerbate this potential 

shortfall. At some point, without a legislative remedy, 

the shortfall may affect payments to general election 

candidates as well as to primary candidates.

Section 1.F: 

Other Management 

Information, Initiatives 

and Issues

Overview of Strategic Plan

The FEC’s Strategic Plan for FY 2004 – 2009 (see 

Appendix C), was developed in accordance with the 

Government Performance and Results Act. This plan 

provides the framework for how the FEC will use its 

resources to implement and enforce the campaign 

finance laws during the 2004 (FYs 2003-2005), 2006 

(FYs 2005-2007), and 2008 (FYs 2007-2009) election 

cycles. The Strategic Plan emphasizes doing more 

with 15 less FTEs than the 391 FTEs the agency was 

originally authorized to hire. New improved technology 

and more careful management enable the FEC to 

execute its Strategic Plan.

The Commission defines its work within the context 

of election cycles. An election cycle consists of the 

preceding and actual election years, i.e., calendar years 

2003 and 2004 constitute the 2004 election cycle. An 

election cycle, therefore, spans three fiscal years (i.e., the 

2004 cycle begins in FY 2003 and ends in FY 2005). The 

2004 Presidential election took place in FY 2005. The 

beginning of the new fiscal year (October 1) coincides 

with the peak pre-election period when the FEC 

experiences its heaviest workloads for many programs.

The flow of work for programs such as audits and 

enforcement actions can be spread over several years. 

Action on the referrals for audits and compliance actions 

from the 2004 election sometimes is not finalized up to 

two years after the election. As a result, work undertaken 

or completed in any fiscal year includes work that began 

in previous election cycles. The Strategic Plan for FY 

2004-2009 outlines performance goals and workloads 

by election cycle, while the annual performance plan 

(now the performance budget) relates the specific 

activities of FY 2006 to work from several election 

cycles. The performance budget relates the performance 

goals for FY 2006 to the levels of funding. Goals created 

for the major program areas of: 1) public disclosure; 2) 

compliance; and 3) public financing; establish targets 

for the speed/timeliness for these three types of actions 

and the volume of transactions to be processed.
15

Federal Election Commission Performance and Accountability Report 2006

Section 1.G: 

Limitations of the 

Financial Statements

The principal financial statements were prepared to 

report the financial position and results of operations 

of the Federal Election Commission, pursuant to 

the requirements of 31 U.S.C. 3515 (b). While the 

statements were prepared from the books and records 

of the Federal Election Commission in accordance with 

U.S. generally accepted accounting principles (GAAP) 

for Federal entities and the formats prescribed by the 

Office of Management and Budget, the statements 

exist in addition to the financial reports used to 

monitor and control budgetary resources prepared 

from the same books and records. The statements 

should be read by realizing they are for a component 

of the U.S. Government, a sovereign entity.

17

Federal Election Commission Performance and Accountability Report 2006

Performance Purposes, Objectives, 

and Results

This section of the report serves as the Commission’s 

Annual Performance Report as specified in Office 

of Management and Budget Circular A-11, Part 6, 

Preparation and Submission of Strategic Plans, Annual 

Performance Plans, and Annual Program Performance 

Reports, as amended. It fulfills FEC’s requirements 

under the Government Performance and Results 

Act.

Goals and Objectives for FY 2006

To achieve its mission, the FEC has identified three 

core segment areas - disclosure, compliance and public 

financing. FEC’s goals, objectives, performance 

measures, and desired outcomes described in this 

report are tied to these three core FEC segments. 

The FEC provides the electorate with the capability 

to make educated, informed decisions in the political 

process based, in part, on where candidates for 

Federal office derive their financial support. While 

it is difficult to measure how the FEC ensures public 

faith in the political and campaign finance systems, 

the FEC gauges its effectiveness through a series of 

indicators designed to measure performance in areas 

that promote confidence in the campaign finance 

process. By fully disclosing campaign finances, 

FEC aims to foster voluntary compliance by those 

involved in campaign finance. The agency also aims 

to reassure the electorate that those who disregard 

the laws regarding campaign financing and/or its 

requirements for public disclosure will suffer real and 

even-handed consequences for noncompliance. The 

Commission presides over the Presidential Election 

Campaign Fund and provides important outreach 

by sharing its Best Practices with those interested in 

learning them.

The FEC’s activities focus on three targeted 

segments:

Segment 1: Disclosure

Fully disclose the sources of Federal campaign funding 

to the public.

Segment 2: Compliance

Foster voluntary compliance with the disclosure and 

limitations provisions of the FECA and enforce the Act

in a timely, consistent, and comprehensive manner.

Segment 3: Public Funding of 

Presidential Elections

To effectively administer the public financing system.

1. Disclosure

Purpose

Enable the public to make informed choices in the 

electoral process by fully disclosing the sources of 

Federal campaign funding.

Objective

To ensure full, accurate, and timely disclosure of 

campaign finance activity in Federal elections by 

publicizing campaign finance reports required to be 

filed for public view under the FECA, and to provide 

information and policy guidance on the FECA to the 

public, press, and those persons and entities required 

to comply with the FECA.

SECTION II

Performance Report
18

Section II | Performance Report

Total Reports and Statements Filed

0

10,000

20,000

30,000

40,000

50,000

60,000

42,337

37,954

48,444

42,263

50,656

 2002 2003 2004 2005 2006

number

of filings

fiscal year Source: ITD database

Figure 4a – Total Reports and Statements Filed

 by Fiscal Year

Total Reports and Statements Filed,

Election Cycle

0

20,000

40,000

60,000

80,000

100,000

86,867

81,102

67,972 65,348 62,509

 97–98 99–00 01–02 03–04 05–06

number

of filings

election cycle Source: ITD database

Figure 4b – Total Reports and Statements Filed

 by Election Cycle

Outcome

To enable citizens to make educated, informed 

decisions in the political process based, in part, on 

where candidates for Federal office derive their 

financial support.

Performance Measures

Make reports and statements filed with the FEC 

available to the public within 48 hours.

Monitor public use by measuring website traffic.

Review all reports and statements received.

Respond to data requests from press, public, and 

committees within 72 hours.

 Results for FY 2006

As mentioned in Section 1.B, the FEC Responsibility 

Segment for Disclosure spent $21,317,170 in Fiscal 

Year 2006. So, what did the public get for its money?

When a committee files its FEC report on paper, the 

Commission’s Public Records Office ensures that a 

copy is available for public inspection within 48 hours 

at FEC’s headquarters, located at 999 E Street, N.W., 

Washington, DC. Simultaneously, the FEC’s staff 

enters the information disclosed in the report into 

the FEC computer database. Disclosure reports filed 

electronically are made available to the public within 

24 hours, if not almost immediately. The amount of 

information disclosed has grown dramatically over 

the years.

Figure 4a illustrates how many campaign finance 

reports are filed with the FEC per Fiscal Year. Figure 

4b illustrates election cycle filings by committee 

through September 30 of the election year. Note the 

number of campaign finance reports and statements 

that must be filed even in off/odd numbered years. 

Also note how the reports increase in Presidential 

election cycles.

On the FEC website, the public can access all reports 

filed with the agency regardless of whether they were 

filed electronically or on paper. Scanned copies of 

paper reports can be searched and viewed through the 

FECs digital imaging system on-line. The imaging 

•

•

•

•
19

Federal Election Commission Performance and Accountability Report 2006

system permits a user to view a committee’s report 

on a high resolution computer screen (or a paper 

copy), just as the document appeared in its original 

form. Campaign finance data can also be searched in 

a host of different ways: one can search the database 

by individual contributor, committee, candidate, 

occupation, date, dollar amount, or other search 

criteria.

The 2002 President’s Management Agenda urges 

Federal agencies to enact its E-government strategy 

to:

“Provide high quality customer service regardless 

of whether the citizen contacts the agency by 

phone, in person, or on the Web”;

“Provide citizens with readier access to government 

services”; and

“Make government more transparent and 

accountable.”

While other Federal agencies still struggle to only 

partially enact this eGov strategy, the FEC has 

voluntarily executed eGov goals of quality customer 

service, ready access, transparency and accountability 

since its website www.fec.gov reached its current level 

of functionality on October 1, 2004. Website workers 

are allowed and encouraged to use their own initiatives 

to continuously improve the website’s functionalities. 

User input is used to constantly improve the website 

making it more user friendly and citizen-centered. The 

FEC has made all Federal election records available to 

anyone with internet access.

Figure 5 illustrates how website activity has increased 

over the last few fiscal years. The FEC's website 

continues to be the main source for Federal campaign 

finance information. In FY 2006, the website recorded 

more than 96 million “hits” from the public, more 

than double the “hits” in FY 2002.

Figure 6 illustrates how Disclosure's efficient 

processing of campaign finance reports continues to 

improve since Fiscal Year 2000 despite the steadily 

increasing number of reports shown in Figures 4a and 

4b. It now takes Disclosure only thirty days to process 

95% of campaign finance reports. By comparison, it 

took Disclosure fifty days to do this in Fiscal Year 2002.

•

•

•

Total Website Hits, Fiscal Year

0

20

40

60

80

100

120

46.6

59.2

100 102

96

 (in millions)

 2002 2003 2004 2005 2006

total hits

fiscal year Source: FEC Records

Figure 5 – Total Website Hits by Fiscal Year

(in millions)

Days Needed to Complete Processing

for 95% of Reports

0

15

30

45

60

42

20

50

 2000 2002 2004 2006

days

election cycle Source: FEC Statistical Records

30

Figure 6 – Days Needed to Complete Processing

for 95% of Reports)
20

Section II | Performance Report

Median Days Required to Process Reports

0

2

4

6

8

10

12 11

2 2

6

 2000 2002 2004 2006

days

election cycle Source: FEC Statistical Records

Figure 7 – Median Days Required to Process Reports

Document Volumes and Process Efficiency

(through 9/30 of election year)

-0

5,000

10000

15,000

20000

25,000

30000

35,000

40000

45,000

50000

55,000

60000

65,000

49,700

 2000 2002 2004 2006

number of

documents

election cycle Source: FEC Reports Status System

48,609

32,173

49,245

47,195

34,574

58,757

58,379

50,976

63,690

62,592

59,528

Filed

Entered

Reviewed

Figure 8 – Document Volumes and Process Efficiency 

(through 9/30 of election year)

Figure 7 illustrates how the median days Disclosure 

needs to process a campaign finance report were 

drastically reduced from eleven days in Fiscal Year 

2000 to only two days during Fiscal Years 2004 – 

2006. Although the Commission seeks to improve its 

operation every year, it recognizes the 2 day median is 

an optimum performance level.

Figure 8 illustrates how Disclosure processed over 

98% of campaign finance reports during the 2006 

election cycle. This extremely high processing rate was 

achieved despite the constantly rising increases in both 

campaign reports and campaign dollars disbursed. 

Disclosure has constantly improved its performance 

despite the increasing workload.

The Disclosure Responsibility Segment's Reports 

Analysis Division (RAD) reviews all reports to track 

compliance with the law and to ensure that the 

public record provides a full and accurate portrayal 

of campaign finance activity. As the Figure illustrates, 

the division has consistently improved its timeliness 

of review. For the 2006 election cycle, the division 

has shown its best performance by reviewing 83% of 

the reports filed. The division also collaborated with 

other divisions to provide greater accessibility and 

more efficient service to the public and the regulated 

community.

RAD is ably supported by the Public Disclosure 

Division comprised of Public Records, Coding and 

Entry, and Processing. Public Records organizes and 

archives the campaign finance reports. The reports 

are imaged by the processing section and are then 

forwarded on to the coding and entry section to be 

entered into the computer system. As the Figures 

in this section demonstrate, these operations have 

successfully met the demands of an ever increasing 

workload.

The other Disclosure Segment Divisions, Information 

and the Press Office, also play key roles.

The Information Division answers inquiries about 

the FEC and Federal campaign finance issues from 

both within and outside the agency. The Press Office 

Division publicizes the FEC's most significant 

accomplishments and activities to the public as 
21

Federal Election Commission Performance and Accountability Report 2006

well as responding to questions from the press. The 

above four divisions make up the FEC's Disclosure 

Responsibility Segment.

Figure 9 illustrates the steep increase of total dollars 

disbursed in Presidential election campaign cycles. 

FEC Disclosure must track and account for these 

expenditures that have tripled over the last five 

Presidential election cycles.

Figure 10 illustrates the steep increase of total dollars 

disbursed in Congressional election campaign cycles. 

FEC Disclosure also must track and account for these 

non-Presidential campaign expenditures that have 

more than tripled over the last two decades.

2. Compliance

Purpose

The purpose of the FEC’s Compliance program is 

to promote voluntary compliance with the limits, 

prohibitions, and reporting requirements of the 

FECA and enforce the FECA in a timely, consistent, 

and comprehensive manner.

Objective

Demonstrate to the public and the election community 

that the FECA is enforced fairly and timely, thus 

resulting in; (1) a high level of voluntary compliance 

with the FECA; and (2) the most efficient use of FEC 

enforcement resources by focusing on the most salient 

and significant FECA compliance concerns.

Outcome

That the public has confidence that the FECA is 

fairly and swiftly enforced;

That the election community has a high level 

of confidence that the FECA is fairly enforced, 

resulting in a high level of voluntary compliance 

with the FECA;

That the election community believes that there 

are real, timely consequences for violations of the 

disclosure and limitation provisions of the FECA;

That FEC’s enforcement resources are focused 

on the most salient and significant compliance 

concerns under the FECA.

•

•

•

•

Disbursements in Federal Elections,

Presidential Cycles–Total and Direct

0

1,000

2,000

3,000

4,000

$5,000

1,607

 1988 1992 1996 2000 2004

millions

of dollars

election cycle Source: FEC Press Releases

368

2,051

366

2,738

426

3,750

520

4,728

804

direct

total

Figure 9 – Disbursements in Federal Elections,

Presidential Cycles–Total and Direct

Disbursements in Federal Elections,

Congressional Cycles

0

500

1,000

1,500

2,000

2,500

3,000

$3,500

1,094

 1986 1990 1994 1998 2002 2006

millions

of dollars

election cycle Source: FEC Press Releases

1,115

1,708

2,021

3,116

3,400

(projected)

Figure 10 – Disbursements in Federal Elections,

 Congressional Cycles
22

Section II | Performance Report

Performance Measures

Committees found to have questionable activity 

are referred for audit or enforcement action. 

Meet deadlines for issuance and filing litigation 

pleadings.

Maintain an average active enforcement caseload 

in excess of 50% of total caseload.

Close more than 50% of enforcement cases with 

substantive Commission action.

Audits

Conduct 40-45 audits “for cause” for the 2004 election 

cycle, pursuant to 2 U.S.C. §438(b), in those cases 

where committees have failed to meet the threshold 

requirements for substantial compliance with the 

FECA and have failed voluntarily to correct errors or 

omissions on their reports.

Maintain a “stand alone” Title 2 Audit “For Cause” 

Program. This initiative improves auditing capabilities 

and facilitates continuity of audit operations even 

during Presidential election cycles.

Enforcement

Continue progress in shortening case processing 

times.

•

•

•

•

•

All Audits Started

0

5

10

15

20

25

30

35

24

30 31

22

 2002 2003 2004 2005 2006

audit

starts

fiscal year Source: FEC Audit Division

17

Figure 11 – All Audits Started

Close between 75 and 100 cases, with at least 60% 

closed through substantive Commission action.

Defend BCRA against constitutional challenges.

Initiate civil actions in Federal court to enforce the 

FECA/BCRA in accordance with 2 U.S.C. 437g(a)(6) 

and defend against all actions in Federal court 

challenging the Commission’s determinations under 

the Administrative Fine Program pursuant to 2 

U.S.C.437g(a)(4)(C)(iii) and all actions challenging 

the disposition of enforcement matters.

Maintain and revise, as necessary, the Enforcement 

Priority System (EPS), a system that is used to prioritize 

the enforcement docket and assist in determining 

whether matters are appropriate for ADR.

Results for FY 2006

The FEC exercises its enforcement authority 

by investigating potential violations, making 

appropriate findings, attempting conciliation, 

and when conciliation is unsuccessful, filing suit 

in Federal district court. The FEC coordinates its 

enforcement activities with the Department of 

Justice, U.S. Attorney’s Offices, and state and local 

agencies. In the last several years, the FEC has dealt 

with certain kinds of enforcement matters through 

its Administrative Fines and Alternative Dispute 

Resolution programs. The FEC maximizes the 

effectiveness of the compliance and enforcement 

programs through technology and management 

initiatives to more strategically focus available 

resources. As the Figures in this section demonstrate, 

the Commission has improved its performance in 

timliness and quantity,

As already mentioned in Section 1.B, Compliance 

spent $27,383,031 in Fiscal Year 2006. What did 

the Compliance Responsibility Segment do for the 

public?

Compliance goals focus primarily on the number 

of actions accomplished. Enforcement cases are 

generated through complaints filed by the public, 

referrals from other Federal and state agencies, and 

the FEC’s own monitoring procedures. The Reports 

Analysis Division reviews each committee report 

filed to ensure the accuracy of the information on 

the public record and to monitor the committee’s 

compliance with the law. If the information disclosed 

•

•
23

Federal Election Commission Performance and Accountability Report 2006

Number of Non-Presidential Audits Completed

0

5

10

15

20

25

30

35

17

30

20 21

 2002 2003 2004 2005 2006

completed

audits

fiscal year Source: FEC Audit Division

13

Figure 12 – Number of Non-Presidential Audits Completed

in a report appears to be incomplete or inaccurate, 

the reviewing analyst sends the committee a “request 

for additional information.” The committee may 

avoid a potential enforcement action and/or audit 

by responding promptly to such a request. Most 

responses take the form of an amended report. 

Although the Commission does not have authority to 

conduct random audits of committees, it can audit a 

committee “for cause” when the committee’s reports 

indicate probable violations of the law.

Figure 11 illustrates the total number of audits, 

non-Presidential and Presidential, started by the 

Compliance Responsibility Segment's Audit Division 

during Fiscal Years 2002–2006. The number of 

audits declined since Fiscal Year 2004 because the 

Presidential audits have become much more complex 

while the Audit staff lost 5.5 FTEs.

In FY 2005, the Audit Division completed a major 

effort to increase the number of non-Presidential 

committees audited in each election cycle. Figure 12 

illustrates the number of non-Presidential committees 

the Audit division completed between FY2002 and 

FY2006. This graphic, combined with Figure 13, 

which illustrates Presidential committee audits, show 

how Presidential committees demand more time and 

resources because of their complexity.

 Whether initiated by outside complaint or internal 

referral, the most complex and legally significant 

enforcement matters are handled by the Enforcement 

Division in the Office of General Counsel (OGC), 

which:

Recommends to the Commission whether to find 

“reason to believe” the FECA has been violated, a 

finding that formally initiates an investigation;

Investigates potential violations of the FECA by 

requesting, subpoenaing, and reviewing documents 

and interviewing and deposing witnesses; and

Conducts settlement negotiations on behalf of 

the Commission, culminating in “conciliation 

agreements” with respondents on the assessment 

of fines.

Based on the results of its investigations, the Office 

of General Counsel recommends to the Commission 

whether to find “probable cause to believe” the 

FECA has been violated. The agency must attempt 

to resolve enforcement matters through conciliation. 

If conciliation fails, however, the FEC may sue a 

respondent in Federal district court.

•

•

•

Number of Presidential Audits Completed

0

2

4

6

8

10

12

7

0

11

1

 2002 2003 2004 2005 2006

completed

audits

fiscal year Source: FEC Audit Division

5

Figure 13 – Number of Presidential Audits Completed
24

Section II | Performance Report

cases. Since the Program's inception, the FEC has 

closed over 1,300 cases and assessed more than $3 

million in fines through FY 2006.

Alternative Dispute Resolution Program 

(ADR)

The Alternative Dispute Resolution (ADR) Program 

was implemented in FY 2001 to facilitate settlements 

outside of the traditional enforcement or litigation 

processes. The program’s primary objective is to 

enhance the agency’s overall effectiveness through 

more expeditious resolution of enforcement matters 

with fewer resources required to process complaints 

and internal referrals. Since inception, the FEC has 

formally closed 259 cases, with substantive action 

taken in 73 percent of those cases.

Enforcement Program

All other enforcement matters are handled pursuant 

to the procedures set forth in 437g of the FECA. 

Enforcement matters, referred to as Matters Under 

Review (“MUR”), are initiated through sworn 

complaints filed by individuals and entities; referrals 

from other agencies, both Federal and state; selfreports from individuals and entities seeking to 

cooperate with the Commission; and internal referrals 

from other offices within the agency. The majority of 

cases (65% since 1995) are the result of complaints 

filed by individuals outside of the agency.

Over the past five years, the General Counsel has 

initiated a number of management and organizational 

changes to increase the quality and efficiency of 

the Commission’s enforcement work, and has 

implemented policy initiatives to facilitate the 

processing of MURs. The result is a fairer and more 

expeditious process, with meaningful penalties and 

other remedies proportionate to the violation. Among 

other reforms, the Commission has published a policy 

statement on the liability of committee treasurers, 

eased respondents’ access to deposition transcripts, 

and revised its standard confidentiality admonition to 

clarify that witnesses may, if they wish, provide factual 

information to respondents and their counsel.

In terms of efficiency, cases closed on average 36% 

faster in FY 2006 compared to FY 2003, and the 

Commission is on pace to resolve by year’s end all but 

a small number of complaints that allege violations 

pertaining to the 2004 elections that were received 

Number of Cases Opened for Enforcement Action

-0

50

100

150

200

250

203

 2002 2003 2004 2005 2006

opened

cases

fiscal year

185

148

203

218

Figure 14 – Number of Cases Opened for Enforcement Action

In addition, two programs under the Office of the 

Staff Director (Office of Administrative Review 

(OAR) and Alternative Dispute Resolution) allow the 

Office of General Counsel to focus its enforcement 

resources on more substantive cases and improve the 

timeliness of cases closed. (A substantive finding is a 

finding based on the merits of the matter and includes 

findings of “no reason-to-believe” the FECA was 

violated. The Commission can also dispose of a case 

through dismissal.)

Figures 14 through 25 are derived from the 

Commission's Enforcement Profile.

Administrative Fine Program (OAR)

In response to a legislative mandate, an Administrative 

Fine Program was implemented in July 2000. This 

program, administered by the Reports Analysis 

Division and the Office of Administrative Review 

(OAR), has served to reduce resource requirements 

associated with addressing failures to timely 

filing disclosure reports. The program facilitates 

more expeditious resolution of these relatively 

straightforward violations and allows the agency to 

devote more resources to addressing more complex 
25

Federal Election Commission Performance and Accountability Report 2006

Number of Cases Closed – OGC

-0

20

40

60

80

100

120

140

93

 2002 2003 2004 2005 2006

closed

cases

fiscal year

86

73

81

127

Figure 15 – Number of Cases Closed – OGC

Number of Cases Closed – AF, OGC and ADR

-0

100

200

300

400

500

600

18

 2002 2003 2004 2005 2006

closed

cases

fiscal year

117

49

86

41

73

137

79

81

214

61

127

89

394

93

AF

OGC

ADR

Figure 16 – Number of Cases Closed – AF, OGC and ADR

either before or within a few months after the election. 

Importantly, the General Counsel has eliminated the 

practice of dismissing “stale” cases, that is, cases that 

remained on the docket for lengthy periods without 

action. From FY 1995 to 2000, the FEC dismissed 

21% of its cases as “stale.” FY 2006 was the third year 

in a row in which the FEC did not dismiss a single case 

as stale.

During the past five fiscal years, the General Counsel 

has steered resources to the most significant violations, 

leading to a steep increase in civil penalties for serious 

violators. From FY 1995 to FY 2000, OGC negotiated 

conciliation agreements with respondents providing for 

civil penalties totaling $6.82 million. From FY 2001 

to FY 2006, to date, OGC negotiated conciliation 

agreements providing for civil penalties totaling more 

than $13.92 million. In FY 2006 alone, OGC obtained 

civil penalties amounting to more than $5.5 million; an 

increase of over $2 million in civil penalties in comparison 

to the prior highest fiscal year’s results. This marks the 

fifth consecutive year with more than $1 million in civil 

penalties. The high civil penalties in FY 2006 include 

the $3.8 million civil penalty negotiated in one matter, 

which is not only more than four times greater than any 

civil penalty obtained in Commission history, it alone 

is more than the aggregate amount obtained in any 

previous year.

Figure 14 shows how cases opened for enforcement 

action substantially increased from FY04 to FY06. 

Figure 15 shows how cases closed declined and then rose 

higher in FY06. The efforts by the Office of General 

Counsel, Administrative Fine Program, and Alternative 

Dispute Resolution led to increased fines and penalties 

being levied against committees because the Compliance 

Responsibility Segment more efficiently deployed its 

resources.

Figure 16 illustrates how the Alternative Dispute 

Resolution Division and the Office of Administrative 

Review Division (Administrative Fines) both close 

cases themselves and enable OGC to devote its energies 

to closing increased numbers of the most substantive 

Compliance cases. OGC increased its case closings from 

93 in Fiscal Year 2002 to 127 in Fiscal Year 2006, a 37% 

increase.

Administrative Fine cases for late and non-filers take less 

time to complete, especially when measured from the 

date a “reason to believe” determination is made to the 

final resolution date. The difficulties associated with the 
26

Section II | Performance Report

FEC Average Number of Days for Cases Dismissed

or Closed with Substantive Action

-0

100

200

300

400

500

 2002 2003 2004 2005 2006

number

of cases

fiscal year

Dismissed

Substantive

482

313

475

411

296

270

167

33

311

270

Figure 18 – FEC Average Number of Days for Cases Dismissed

 or Closed with Substantive Action

mail processing and delivery post-9/11 had a somewhat 

adverse impact on processing these cases. There is 

evidence, however, that the program is improving filing 

timeliness and compliance, and that the cases are most 

likely to derive from non-electronically filed reports (also 

from smaller committees in terms of dollar activity). 

Alternative Dispute Resolution cases have shown 

improvement in timeliness for those cases not dismissed 

and generally take less time to complete than traditional 

enforcement cases. Figure 16 indicates the deterrent 

effect AF and ADR exerted on political committees to 

comply since 2002. 

Figure 17 illustrates how the combination of ADR, 

OAR and OGC quintupled the collected compliance 

fines from $1.15 million in 2002 to $5.56 million in 

Fiscal Year 2006.

Amounts of Fines or Penalties – AF, OGC and ADR

-0

1

2

3

4

5

6

7

.02

 2002 2003 2004 2005 2006

fines or

penalties

(in millions)

fiscal year

.26

.03

2.21

.06

3.02

.36

.15

1.42

.41

.13

5.56

.20

.66

1.15

AF

OGC

ADR

Figure 17 – Amounts of Fines or Penalties – AF, OGC and ADR

Figure 18 illustrates how OGC keeps steadily lowering 

the number of days necessary to either dismiss cases or 

to close cases with substantive action. This productivity 

derives from better management of OGC personnel, 

improved IT, and the successful use of AF and ADR. 

Figure 19 shows how these improvements now allow 

OGC to close 74% of cases with substantive action.
27

Federal Election Commission Performance and Accountability Report 2006

FEC Cases Dismissed or Closed with Substantive Action,

Fiscal Years 1995 – 2006

Dismissed

Substantive

26%

870

74%

2,478

Figure 19 – FEC Cases Dismissed or Closed with Substantive

 Action, Fiscal Years 1995 – 2006

FEC Enforcement Vote Report

Approved

Without

Dissent

Approved

With

Dissent

Failed with

Insufficient

Votes

Failed with

3 – 3

Tie

Failed with

Majority

Opinion

14%

1,386

83%

8,127

1% – 101

1% – 105

1% – 107

Figure 20 – FEC Enforcement Vote Report

Figure 19 demonstrates, the percentage of 

“substantive” closings over the past 11 years. This has 

climbed to 74%, with only 26% of the matters being 

dismissed. In the mid-1990s, it was not unusual for the 

Commission to dismiss over half of its Enforcement 

caseload with no action. A significant portion of those 

cases were dismissed as “stale” (e.g., cases that went 

unassigned for one year or 18 months). However, 

due to numerous developments in the Enforcement 

program, dismissals now represent only a small 

percentage of the overall case closings, and “stale” 

closings are all but eliminated.

Figure 20 illustrates how the FEC Commissioners 

unanimously approved action on 83% of all 

enforcement cases brought before it during FY1995-

FY2006.
28

Section II | Performance Report

OGC Cases Dismissed or Closed with

Substantive Action, Fiscal Years 1995 – 2006

Substantive

Action

Dismissed

1,827 Cases Closed or Dismissed

44%

794

56%

1,026

Figure 22 – OGC Cases Dismissed or Closed with

 Substantive Action, Fiscal Years 1995 – 2006

Much of the criticism leveled at the Commission 

is focused on the Commission’s inability to reach 

consensus on Enforcement matters. However, as 

Figure 21 illustrates, the Commission unanimously 

approved over 76% of all Enforcement matters, and 

approved a total of 96% of all matters with a majority 

vote of the Commission. Only 1% of all of the 

matters voted on between 1995 and 2006 resulted in 

“deadlocks,” or 3-to-3 splits.

OGC Enforcement Vote Report

Approved

Without

Dissent

Approved

With

Dissent

Failed with

Insufficient

Votes

Failed with

3 – 3

Tie

Failed with

Majority

Opinion

20%

1,353 76%

5,143

1% – 98

1% – 102

2% – 107

Figure 21 – OGC Enforcement Vote Report

Similar to Figure 19, Figure 22 illustrates the positive 

trend in substantive closings for OGC. Ten years ago, 

it was not unusual for OGC to dismiss over half of 

its caseload. Most of these dismissals were for “stale” 

closures where the Commission failed to activate 

a matter within one year or 18 months. Due to the 

implementation of several Enforcement initiatives, 

dismissals now represent only a small percentage of all 

closings, and “stale” closures are all but eliminated.
29

Federal Election Commission Performance and Accountability Report 2006

OGC Average Number of Days for Cases Dismissed

or Closed with Substantive Action

-0

100

200

300

400

500

600

700

800

 2002 2003 2004 2005 2006

average

number

of days

fiscal year

Dismissed

Substantive

555

369

446

690

421

516

660

305

529

383

Figure 23 – OGC Average Number of Days for Cases 

 Dismissed or Closed with Substantive Action

ADR Cases Dismissed or Closed with

Substantive Action, Fiscal Years 2001 – 2006

Substantive

Action

Dismissed

275Cases Closed or Dismissed

28%

76

72%

199

Figure 24 – ADR Cases Dismissed or Closed with

 Substantive Action, Fiscal Years 2001 – 2006

Figure 23 shows how average number of days OGC 

spends on dismissed cases are declining while average 

number of days on substantive action cases increased 

during FY 2002-FY 2006.

Figure 24 shows how the ADR method helps OGC 

deal with more substantive cases by closing or 

dismissing 275 cases during FY 2001-FY 2006.
30

Section II | Performance Report

any discrepancies are discussed with the committee. 

The committee then makes the requested changes and/

or additions. The threshold submissions are reviewed 

by temporary staff hired for that purpose. Then the 

submission is reviewed by the Deputy Assistant Staff 

Director and undergoes a referencing process by a 

member of the Audit staff. The review of threshold 

submissions is completed within 15 business days 

of receipt. To date, all threshold submissions were 

completed within the 15-day time frame except in 

cases where the 20-state threshold has not been met 

and additional time is given to the committee to 

correct the problem, which may include submitting 

additional contributors.

To ensure all public funds disbursed in Federal 

elections are properly certified and accounted, funds 

for nominating conventions and general election 

candidates are disbursed only after the proper 

documentation is received and reviewed. In both 

cases, a letter similar to the primary candidate letter 

of agreements and certifications is presented by the 

committees and is reviewed in the same manner as 

the primary letter. Primary candidates make monthly 

submission requests that are reviewed by temporary 

staff in the same manner as the threshold submission. 

Submission review must be completed by the end 

of the month in order to certify payments to the 

Department of the Treasury for payment on the first 

business day of the following month. All submission 

reviews were completed on a timely basis.

One factor that affects the primary payments is 

a shortfall in the Fund that results in candidates 

receiving only a portion of the funds to which they 

are entitled. Although the full amount is certified to 

the Department of the Treasury, a pro rata payment is 

made when the balance in the Fund is not sufficient to 

make the full payment. The agency’s goal is to release 

all audit reports to the public by December 31 of the 

year after the election. In some cases, the report is 

made public by placement on an open session agenda 

prior to December 31; however, the Commission’s 

discussion of the report may delay final approval until 

after December 31.

Outcome

The playing field for Presidential elections is leveled 

by reducing the influence of personal wealth and 

special interest groups on the outcome by offering 

public funding of campaigns.

ADR Average Number of Days for Cases Dismissed

or Closed with Substantive Action

-0

100

200

300

400

500

600

 2002 2003 2004 2005 2006

average

number

of days

fiscal year

Dismissed

Substantive

555

251 254

225

256 238

221

167

303

486

Figure 25 – ADR Average Number of Days for Cases 

 Dismissed or Closed with Substantive Action

Figure 25 illustrates how the Compliance ADR office 

has steadily reduced the work days necessary to either 

close substantive cases or dismiss less serious cases over 

the last five fiscal years. ADR's work frees OGC to 

spend more time on substantive enforcement cases.

3. Public Financing

Purpose

Limit the influence of personal wealth and special 

interest groups on the outcome of Presidential 

elections by offering public funding of campaigns.

Objective

Implement the Presidential election public funding 

provisions of the campaign finance law and successfully 

administer the public funding provisions for qualified 

candidates in Presidential elections.

Each primary candidate requesting public funding 

must prepare candidate letter of agreements and 

certifications and present a threshold submission 

verifying the receipt of contributions greater than 

$5,000 in each of twenty states to qualify for public 

funding. The Audit Division and OGC review the 

letter for completeness immediately upon its receipt; 
31

Federal Election Commission Performance and Accountability Report 2006

Matching Fund Payouts

0

$ 50,000,000

100,000,000

150,000,000

200,000,000

$ 250,000,000

 1992 1996 2000 2004

dollars

election cycle Source: Audit Division records

176,007,952

210,624,595

202,521,886

236,261,277

Figure 26 – Matching Fund Payouts

Performance Measures

Establishing the eligibility of candidates for 

matching funds in a timely manner.

Ensuring that all Federal funds disbursed in 

Presidential elections are properly certified to 

eligible candidates and accounted for.

Results for FY 2006

As mentioned in Section 1.B, the FEC Responsibility 

Segment for Presidential Election Campaign Funds 

spent $7,206,355 in Fiscal Year 2006. What did the 

public get for its money?

Based on statutory criteria, the Commission 

determines which candidates and committees are 

eligible for public funds, and in what amounts. The 

U.S. Treasury then makes the necessary payments. 

Figure 26 shows the dollar amounts of matching 

payouts from the Presidential Election Campaign 

Fund during Fiscal Years 1992–2004. Later, the 

Commission audits all of the committees that 

received public funds to ensure that they used the 

funds properly. Based on the Commission’s findings, 

committees may be required to make repayments to 

the U.S. Treasury. (For information about the public 

financing process, visit the FEC website www.fec.

gov.)

Further FY 2006 Performance 

Results

IT developments and enhancements assist the FEC 

in meeting its objectives and goals. The two major 

on-going initiatives are the IT Enhancements and 

the Electronic Filing projects. Some of the major 

accomplishments in FY06 were:

Implementation of a new data base and reporting 

tools that allowed the Commissioners to evaluate 1 

million records of media market advertising results.

Enhancement of the Filenet Image and Content 

Management System hosting 13 million images of 

electronically filed campaign finance forms. These 

can be searched by the general public through a 

web interface that is replicated daily.

Implementation of new legislative directives to protect 

private information and agency sensitive data.

Implementation of Podcasting. This allows the public 

access to downloadable audio from open sessions.

•

•

•

•

•

•

Implementation of a one-year Flexi-Place pilot 

program for bargaining unit employees in certain 

organization components of the organization.

Conversion of the paper Explanation and 

Justification for all FEC regulations and Court 

Case Abstracts into hypertext files available on the 

web by the Information Division.

During FY 2006, the Commission continued to 

provide point of entry for the filing of House disclosure 

documents; scan all documents and transmit images 

to the House Office in usable format for that office; 

work with the Senate Office in making Senate 

documents available for disclosure; and enhance and 

upgrade the FEC imaging system and all web-based 

disclosure applications. The FEC also continued its 

multi-year enhancement and upgrade of IT systems 

for all Commission Offices and Divisions; migration 

to client/server environment; implementation of 

document management system; and maintenance 

of its new finance and accounting system. The 

Commission started a data mining program to take 

advantage of the enhanced disclosure system and to 

enhance the automated review process in RAD.

The Commission has begun Disaster COOP planning 

for its Information Technology operations and will 

do a comprehensive Risk Analysis when funds are 

available. 

•

•
32

Section II | Performance Report

Data Sources and Quality

The FEC has a planning and budgeting system based 

on a detailed Management Information System 

(MIS), and is driven by program-based workloads 

and activity data, outputs, and productivity measures. 

The FEC has incorporated the A-123 and A-127 

processes, under the Federal Managers’ Financial 

Integrity Act, to ongoing program management 

activities, and relates the annual A-123 reports to 

the FEC budget requests. The evaluation of program 

resources–mainly staff resources–and the resulting 

program outputs and productivity measures are used 

in the internal planning and budget formulation 

processes. Commission management plans and 

budget requests are workload-driven and related to 

resource levels and expected program activity levels. 

As a personnel-intensive agency, approximately 70 

percent of the Commission’s resources are staff costs, 

and the remaining 30 percent represents mainly 

rent and other direct support for that staff. Several 

tracking systems monitor the status of reports 

processing (filing, filming, data coding and entry, and 

reports review), enforcement and litigation activities, 

Advisory Opinions and regulatory rule making, and 

audit progress. The Enforcement Priority System 

continually adjusts active enforcement case loads to 

match available resources.

A major, multiyear effort to institute a case management 

system for OGC to track enforcement cases resulted 

in the system becoming fully operational in FY 2003. 

This system monitors case status and tracks staff time 

by case for all OGC programs, not just enforcement. 

The implementation of the case management system 

provides a significant tool for the FEC to monitor 

resource usage and case progress.
33

Federal Election Commission Performance and Accountability Report 2006

SECTION III

Auditor’s Report And Financial Statements

Message From The Chief Financial Officer

November 15, 2006

I am pleased to present the Federal Election Commission’s (FEC’s) financial statements for fiscal year (FY) 2006. 

Our stakeholders can review these financial statements and can see our financial position. This section contains the 

independent auditor’s report, management’s response to the auditor’s report, principal financial statements and notes and 

the Inspector General’s Management and Performance Challenges. The response to the Inspector General's Challenges 

is in Section I.D.

The financial statements have been prepared from the books and records of the FEC in accordance with U. S. generally 

accepted accounting principles (GAAP) for the Federal Government and Office of Management and Budget Circular 

A-136, Financial Reporting. The FEC continues to strive for excellence in the financial management. Every dollar is 

important and the way the FEC manages those dollars makes a difference in how successfully the FEC accomplishes its 

mission. The qualified opinion on our FY 2006 Statement of Net Cost is derived from the cost allocation system. The 

remainder of the financial statements are prepared accurately and stated fairly. The auditor opined, however, that the 

FEC has two material weaknesses (Program Cost Allocation and General Property and Equipment).

During the past year, the FEC made significant progress on many fronts. The FEC eliminated two material weaknesses 

from last year, 1) Information technology; and 2) Administrative Fines, Civil Penalties and Miscellaneous Receipts. 

The FEC also eliminated reportable conditions in the area of Financial Reporting and Payroll. The FEC had hoped to 

correct the cost allocation issue, but unfortunately we were not informed until late that there were issues with our newly 

implemented system. The FEC also updated its policy and procedure manual for the accounting department.

Looking ahead, the FEC will be taking actions that will provide both short- and long-term benefits. The FEC will 

continue to strengthen its fiscal management and accountability by enhancing internal controls, complying with 

financial management laws and regulations, and taking timely corrective actions on the auditor’s recommendations 

concerning material weaknesses and reportable conditions. Specifically, the FEC will work towards eliminating the 

material weaknesses in property and program cost allocation. The FEC is currently working on its needs requirements 

to secure one of the government’s Line of Businesses for our accounting system in order to enhance our operations.

I am fully committed to the continuing improvement of the Commission’s financial management. The goal for the 

future is to develop a corrective action plan that will eliminate all of the items noted from this year’s audit. Given the 

challenge that I faced with this year, I believe that the efforts to overcome them were great and that I am positive that 

the future will be better. I want to personally thank those who helped me in putting this report together especially, Brian 

Duffy, Sam Pierce, Chris Gray and Gena Braveboy. 

Sincerely,

John Gibson

Acting Chief Financial Officer

35

Federal Election Commission Performance and Accountability Report 2006

Independent Auditor's Report
Section III | Independent Auditor’s Report

36
37

Federal Election Commission Performance and Accountability Report 2006
Section III | Independent Auditor’s Report

38
39

Federal Election Commission Performance and Accountability Report 2006
Section III | Independent Auditor’s Report

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  

Independent Auditor’s Report 

To the Inspector General of the 

 Federal Election Commission 

We have audited the balance sheets of the Federal Election Commission (the FEC) as of 

September 30, 2006 (FY 2006) and 2005 (FY 2005), and the related statements of net cost, 

changes in net position, budgetary resources, financing, and custodial activity for the years then 

ended (hereinafter collectively referred to as the “financial statements”). These financial 

statements are the responsibility of the FEC’s management. Our responsibility is to express an 

opinion on these financial statements based on our audits. 

Except as explained in the following paragraph, we conducted our audit in accordance with 

auditing standards generally accepted in the United States of America; the standards applicable 

to financial audits contained in Government Auditing Standards, issued by the Comptroller 

General of the United States; and Office of Management and Budget (OMB) Bulletin No. 06-03, 

Audit Requirements for Federal Financial Statements. Those standards require that we plan and 

perform the audit to obtain reasonable assurance about whether the financial statements are free 

of material misstatement. An audit includes examining, on a test basis, evidence supporting the 

amounts and disclosures in the financial statements. An audit also includes assessing the 

accounting principles used and significant estimates made by management, as well as evaluating 

the overall financial statements’ presentation. We believe our audits provide a reasonable basis 

for our opinion. 

In FY 2006 and 2005, we were not able to obtain sufficient competent audit evidence to support 

the allocation of program costs reported on the statements of net cost. As a result, we were not 

able to apply auditing procedures necessary to conduct the audit in accordance with the standards 

and the OMB guidance mentioned above. 

In our opinion, except for the effects of such adjustments, if any, to the FY 2006 and FY 2005 

statements of net cost referred to in the preceding paragraph, as might have been necessary had 

we been able to obtain sufficient competent audit evidence and perform adequate audit 

procedures on the allocation of the program costs, the financial statements present fairly, in all 

material respects, the financial position of the FEC as of September 30, 2006 and 2005, and its 

net cost, changes in net position, budgetary resources, reconciliation of net cost to budgetary 
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obligations, financing and custodial activity for the years then ended in conformity with 

accounting principles generally accepted in the United States of America. 

In accordance with Government Auditing Standards, we have also issued our reports dated 

November 7, 2006 on our consideration of the FEC’s internal control over financial reporting, 

and on our tests of the FEC’s compliance with certain provisions of laws and regulations and 

other matters. The purpose of those reports is to describe the scope of our testing of internal 

control over financial reporting and compliance and the results of that testing, and not to provide 

an opinion on the internal control over financial reporting or on compliance. Those reports are 

an integral part of our audit performed in accordance with Government Auditing Standards and 

should be considered in assessing the results of our audit. 

Our audits were made for the purpose of forming an opinion on the basic financial statements 

taken as a whole. The Management Discussion and Analysis, required supplementary 

stewardship information, supplementary information, and other accompanying information 

containing a wide range of data, some of which is not directly related to the financial statements. 

We do not express an opinion on this information. However, we compared this information for 

consistency with the financial statements and discussed the methods of measurement and 

presentation with the FEC officials. Based on this limited work, we found no material 

inconsistencies with the financial statements or no



nconformance with OMB guidance. 

Calverton, Maryland 

November 7, 2006 
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





  



Independent Auditor’s Report on Compliance and Other Matters 

To the Inspector General of the 

 Federal Election Commission 

We have audited the financial statements of the Federal Election Commission (FEC) as of and 

for the year ended September 30, 2006, and have issued our report thereon dated November 

7, 2006. In our report, our opinion was qualified for the effects of adjustments, if any, as might 

have been necessary had we been able to obtain sufficient competent audit evidence and perform 

adequate audit procedures on the allocation of the program costs in the statement of net cost. 

Except as described above, we conducted our audit in accordance with auditing standards 

generally accepted in the United States of America; the standards applicable to financial audits 

contained in Government Auditing Standards, issued by the Comptroller General of the United 

States; and Office of Management and Budget (OMB) Bulletin No. 06-03, Audit Requirements 

for Federal Financial Statements.

The management of FEC is responsible for complying with laws and regulations applicable to 

FEC. As part of obtaining reasonable assurance about whether FEC’s financial statements are 

free of material misstatements, we performed tests of its compliance with certain provisions of 

laws and regulations, noncompliance with which could have a direct and material effect on the 

determination of financial statement amounts, and certain other laws and regulations specified in 

OMB Bulletin No. 06-03. We limited our tests of compliance to these provisions and we did not 

test compliance with all laws and regulations applicable to FEC. 

The results of our tests of compliance disclosed no instances of noncompliance with the laws and 

regulations discussed in the preceding paragraph or other matters that are required to be reported 

under Government Auditing Standards and OMB Bulletin No. 06-03. 

Providing an opinion on compliance with certain provisions of laws and regulations was not an 

objective of our audit, and accordingly, we do not express such an opinion. 

We noted certain immaterial instances of noncompliance that we have reported to management 

of FEC in a separate letter dated November 7, 2006.

This report is intended solely for the information and use of the management of FEC, FEC 

Office of Inspector General, Government Accountability Office, OMB and Congress, and is not 



intended to be and should not be used by anyone other than these specified parties. 

Calverton, Maryland 

November 7, 2006 
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





  

Independent Auditor’s Report on Internal Control 

To the Inspector General of the 

 Federal Election Commission 

We have audited the financial statements of the Federal Election Commission (the FEC) as of 

and for the year ended September 30, 2006, and have issued our report dated November 7, 2006. 

In our report, our opinion was qualified for the effects of adjustments, if any, as might have been 

necessary had we been able to obtain sufficient competent audit evidence and perform adequate 

audit procedures on the allocation of the program costs in the statement of net cost. Except as 

described above, we conducted our audit in accordance with auditing standards generally 

accepted in the United States of America; the standards applicable to financial audits contained 

in Government Auditing Standards, issued by the Comptroller General of the United States; and 

Office of Management and Budget (OMB) Bulletin No. 06-03, Audit Requirements for Federal 

Financial Statements.

In planning and performing our audit, we considered the FEC’s internal control over financial 

reporting by obtaining an understanding of the FEC’s internal control; determining whether 

internal controls had been placed in operation; assessing control risk; and performing tests of 

controls in order to determine our auditing procedures for the purpose of expressing our opinion 

on the financial statements. We limited our internal control testing to those controls necessary to 

achieve the objectives described in OMB Bulletin No. 06-03. We did not test all internal 

controls relevant to operating objectives as broadly defined by the Federal Managers’ Financial 

Integrity Act (FMFIA) (31 U.S.C. 3512), such as those controls relevant to ensuring efficient 

operations. The objective of our audit was not to provide assurance on internal control. 

Consequently, we do not provide an opinion on internal control. 

Our consideration of the internal control over financial reporting would not necessarily disclose 

all matters in the internal control over financial reporting that might be reportable conditions. 

Under standards issued by the American Institute of Certified Public Accountants, reportable 

conditions are matters coming to our attention relating to significant deficiencies in the design or 

operation of the internal control that, in our judgment, could adversely affect the agency’s ability 

to record, process, summarize, and report financial data consistent with the assertions by 

management in the financial statements. Material weaknesses are reportable conditions in which 

the design or operation of one or more of the internal control components does not reduce to a 

relatively low level the risk that misstatements caused by error or fraud in amounts that would be 
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material in relation to the financial statements being audited may occur and not be detected 

within a timely period by employees in the normal course of performing their assigned functions. 

Because of inherent limitations in internal controls, misstatements, losses, or noncompliance may 

nevertheless occur and not be detected. However, we noted certain matters discussed in the 

following paragraphs involving the internal control and its operation that we consider to be 

material weaknesses and reportable conditions. 

Finally, with respect to internal control related to performance measures reported in the FEC’s 

Performance and Accountability Report as of September 30, 2006, we obtained an understanding 

of the design of significant internal controls relating to the existence and completeness 

assertions, as required by OMB Bulletin No. 06-03. Our procedures were not designed to 

provide assurance on internal control over reported performance measures, and, accordingly, we 

do not provide an opinion on such controls. 

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

MATERIAL WEAKNESSES

I. Program Cost Allocation (Modified Repeat Finding) 

The FEC has made significant progress in the area of cost accounting. In the last half of 

FY 2006, the FEC implemented a new cost accounting system called the Time Reporting 

System (TRS). The TRS automates and standardizes the cost accumulation and the 

allocation of program costs. Training on the new cost system was conducted, and a 

memorandum from the Chief Financial Officer was issued to ensure that employees 

understand and know the importance of and how to use the new system. Also, towards 

the end of the fiscal year, the FEC has identified its responsibility segments and the need 

for re-alignment of its organizational structure for performance costing, has identified the 

outputs of its responsibility segments and is in the process of revising its cost accounting 

policies and procedures. 

The FEC program costs are driven by hours charged by each employee to activity codes 

that roll up to the specific FEC programs. The results of our tests disclosed that 

completeness, timeliness and discrepancies between the source data and the system data 

are the key deficiencies identified in the new cost system. As a result, we were not able 

to obtain reasonable assurance on the costs reported for each program on the statement of 

net cost. We understand that the FEC is still in the process of fine tuning its processes 

and controls to ensure that data input into the system are complete, timely, and are 

supported by an audit trail that agrees with the source data coming from the employees. 

Other system deficiencies and exceptions noted, which may or may not have been 

corrected during the audit process are as follows: 

 The new cost system password settings do not follow the FEC’s password standards. 

The account lockout threshold is set at seven invalid attempts instead of five invalid 

attempts. 
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 The FEC does not have a formal process for ensuring that hours are entered in the 

system timely and correctly, that is, to the correct activity codes that will correspond 

to the correct program codes. Further, a review process is not implemented 

Commission-wide. 

 The cost allocation percentages used in preparing the initial statement of net costs 

were incorrect because the FEC did not follow the reallocation process outlined in the 

system conceptual design document. Specifically, hours which should have been 

reallocated to the division only were reallocated Commission-wide. 

 The system default allocation for the Information Division improperly allocated hours 

to the Compliance program when the hours should have been allocated to the Public 

Financing program. 

Recommendations: 

1. Revise the account lockout threshold in TRS to five invalid attempts. 

2. Establish written policies and procedures to ensure that employees enter their time in 

the cost system timely and properly and the results are supported by source data 

which is reviewed and approved by management. 

3. Ensure correct and consistent application of the cost allocation process in accordance 

with the cost system user manual and conceptual design document. 

4. Ensure errors in TRS causing the system to allocate hours for the Information 

Division to the wrong program are resolved. 

Management Response

Overall, the FEC agrees with this finding. Management will change the lockout threshold 

in TRS to five invalid attempts (#1 above). The FEC will also strengthen written policies 

and procedures, including management approval to ensure data is entered correctly in 

TRS (#2). Guidance will also be issued to ensure operators understand the sequence of 

steps necessary to perform the allocations correctly (#3). Further, the FEC will consider 

building controls into the software to prevent errors in performing the steps. If cost 

effective, the FEC will implement the changes in FY 2007. The errors in TRS related to 

the allocation of errors for the Information Division were corrected prior to the 

conclusion of the audit (#4). 

The audit finding acknowledges considerable progress in the area of cost accounting in 

FY 2006. However, the FEC is disappointed that CG did not raise issues with the source 

data until late in the audit. If the issues had been raised earlier, steps would have been 

taken to correct the data. 
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Auditor’s Response 

The FEC delayed full implementation of the new cost allocation process until the fourth 

quarter of 2006. As a result, the auditors and management came to an understanding that 

the substantive testing would be performed at year end, when the program costs are 

reported on the statement of net cost using the new cost system, rather than testing at 

interim (ending June 2006). The auditors believe concerns regarding the cost allocation 

process were promptly communicated to management once weaknesses were discovered. 

II. General Property and Equipment (Property) (Modified Repeat Finding) 

As noted in the prior year, the FEC’s accounting for property involves a time-consuming 

effort that increases the risk of errors due to the FEC’s process of expensing its property 

at the time of acquisition and preparing a journal voucher to reclassify the expense to an 

asset account for reporting purposes. 

Our audit disclosed deficiencies, errors or omissions that question the effectiveness of the 

FEC’s internal control on property. The weaknesses identified below collectively 

resulted in a material weakness in the FEC’s general property and equipment. 

 Management’s periodic property reconciliation process and review of related 

subsidiary schedules and journal vouchers did not uncover errors during the year. 

These errors were uncovered during the audit process. Specifically, the errors 

included duplicate entries to record first quarter additions to leasehold improvements 

and adjustments needed to accrue costs. 

 Additionally, journal entries to transfer property amounts from the expense to asset 

accounts were posted to the wrong United States Standard General Ledger (USSGL) 

account. The posting errors were detected during the interim testing phase of the 

audit process. The posting errors continued into the fourth quarter of the fiscal year 

(FY) and were again detected as part of the audit process. Journal entries to correct 

the aforementioned errors were posted to the general ledger more than once or were 

done incorrectly. 

 Although the number of the FEC’s capitalized assets reported in the financial 

statements is not many, most of these assets are bulk purchases comprised of many 

individual items which are individually entered into the property system for 

accountability purposes. The information contained in the property system is not 

always complete. We found that some items in the property system did not have the 

bar code identification, serial number and location of the asset. 

 Although we were informed a physical inventory of capitalized assets had been 

performed, the FEC did not provide: the instructions used to complete the annual 

inventory of assets; complete results; and reconciliation of the physical inventory to 

the property system and the general ledger balance. 

 The FEC has not established a standard process, mechanism or policy to ensure that 

program offices notify the Finance Office of the acquisition or disposition of property 

assets to ensure that the accounting impact of the transaction is recorded timely and 

properly. 
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 Management’s monthly analysis of financial activities did not show an analysis of 

property. 

Recommendations: 

5. Improve analytical and quality control review of subsidiary schedules, journal 

vouchers and property reconciliation to ensure material errors and differences are 

identified and resolved timely. 

 

6. Use correct USSGL accounts. 

7. Develop a mechanism for reconciling individual property items in the property 

system to the bulk purchases recorded in the general ledger to ensure completeness of 

the property system records. Also, ensure that the property management system has 

complete information, such as bar code identification, serial number and location of 

the asset. 

8. Clearly document physical inventory procedures, results of the physical inventory, 

and the reconciliation performed. Maintain the documentation for audit trail and 

management review purposes. 

9. Establish a standard process, mechanism or policy to ensure program offices notify 

the Finance Office of the acquisition and disposition of property assets. 

10. Perform a monthly analysis of property as part of the monthly analysis of financial 

activities. 

Management Response 

The FEC agrees with findings and recommendations but not its classification as a 

Material Weakness. In FY 2007, the FEC will make an effort to review spreadsheets (#1 

above) and journals (#2) more thoroughly to catch errors. The FEC will update its 

internal directive on property for the custodians to prescribe forms to assist with the 

reconciling of detailed records to the property system (#3), taking of physical inventory 

(#4) and the acquisition and disposal of assets (#5). Also, management will consider 

adding property reports to the monthly analysis prepared by the Accounting Officer (#6). 

Auditor’s Response 

We have carefully reviewed the FEC management response, however we have not 

changed our conclusion that the general property and equipment weaknesses evaluated 

collectively is a material weakness. 
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REPORTABLE CONDITIONS

III. Information Technology (IT) 

A. Entity-Wide Security Program 

The Government Accountability Office (GAO) reported in July 2005 that the 

underlying cause for information security weaknesses is that agencies have not yet 

fully implemented entity-wide information security programs. An entity-wide 

security program provides a framework and continuing cycle of activity for managing 

risk, developing security policies, assigning responsibilities, and monitoring the 

adequacy of the entity’s computer-related controls. Without a well-designed 

program, security controls may be inadequate; responsibilities may be unclear, 

misunderstood, and improperly implemented; and controls may be inconsistently 

applied. Such conditions may lead to insufficient protection of sensitive or critical 

resources and disproportionately high expenditures for controls over low-risk 

resources. (U.S. Government Accountability Office, Weaknesses Persist at Federal 

Agencies Despite Progress Made in Implementing Related Statutory Requirements, 

GAO-05-552 [Washington, D.C. July 2005]). 

Improvement is needed in the FEC’s enterprise-wide security management program 

as indicated in the prior year audit. During our FY 2006 review of the FEC's existing 

security program, we noted that the FEC made the following progress: 

 The FEC’s management solicited bids for risk assessments. The risk assessment 

and business impact analysis are key components in the development of security 

plans and disaster recovery plans. In FY 2006, the FEC’s management 

determined that it did not have the funds available to conduct risk assessments or 

a business impact analysis. The FEC’s management is currently allocating funds 

in its FY 2007 budget to complete these tasks. 

 The FEC’s management revised its Security Review Policy. The revised policy 

calls on management to perform annual external penetration tests, disaster 

recovery tests, incidence response tests, network vulnerability studies and a 

review of access control procedures. Additionally, the FEC performed a review 

of its firewall rule-set to identify and modify/delete obsolete rules. 

Our review of the FEC's existing security program revealed continuing weaknesses in 

controls that expose the FEC's significant financial management systems and data to 

unauthorized access and/or modification. Weaknesses included the following: 

 The FEC has not completed the documentation, approval and implementation of 

its entity-wide security program plan. (Repeat Finding)

 The FEC has not fully implemented its framework of policies and standards to 

mitigate risks associated with the management of its information resources. 

Although the FEC has implemented the majority of its information security 

policies, it has not fully implemented all of the related policies and standards. 
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The FEC has not finalized and implemented an information classification policy 

or its certification and accreditation policy. Management is currently not ready to 

implement these policies and is in the process of reviewing and revising them. 

(Repeat Finding) 

 Risk assessments, as part of the FEC’s overall strategy to mitigate risks associated 

with its information technology environment, have not been conducted for more 

than three years. Therefore, resource classifications in the FEC’s completed 

security plans are not based on risk assessments. The FEC informed us that it is 

currently waiting for the availability of funds to complete a risk assessment. 

(Repeat Finding)

 The FEC has created security plans for all of its major applications and mission 

critical general support systems. However, the security plans are not viable 

because they are not based on an assessment of the risks to the FEC’s systems. 

Accordingly, these major applications and mission critical general support 

systems have not been certified and accredited to ensure that they are operating 

according to the FEC’s security requirements. (Modified Repeat Finding)

 There are weaknesses in the FEC’s program for the continuous monitoring and 

evaluation of the computer security policy and control effectiveness. The FEC 

has implemented its security review policy and performed all of the review steps 

outlined in the policy. However, a key part of a continuous monitoring program 

is a process for documenting and monitoring the status of corrective actions. 

Although the FEC has a corrective action plan for the CFO audit, the corrective 

action plan is not being applied to all reviews of security controls. (Modified 

Repeat Finding)

 The FEC needs to strengthen its process of documenting corrective actions. A 

corrective action plan should identify the task to be completed in addition to 

identifying the resources required to accomplish the elements of the plan, any 

milestones in meeting the tasks, and scheduled completion dates for the 

milestones. The FEC’s corrective action plans identify the issue that needs to be 

addressed, but does not always include the persons assigned to the task, estimated 

completion dates, and steps or milestones necessary to complete the task. 

(Modified Repeat Finding)

Recommendations: 

11. Complete the documentation, approval and implementation of an entity-wide 

security program plan. 

Management Response 

In November 1997, the FEC established Directive 58, outlining the Commission 

policy on the control of commission software, and the use of agency computers. This 

directive formed the basis of the agency’s computer security program. This directive 

has been enhanced and expanded incorporating the latest guidance and best 

practices provided by NIST in detail, and issued in policy 58A. The updating of 

Directive 58 was initiated in December 2001 with the establishment of an agency 
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Information Systems Security Officer. This was followed with the establishment of an 

interim Information System Security Program Policy 58A dated April 2004. This 

interim policy became final in September 2004 as approved by the agency’s Chief 

Information Officer (CIO). The implementation of the FEC entity wide security 

program plan occurred on October 2004, when the FEC issued a memo informing all 

employees/contractors that “Information System Security Program Policy” Policy 

Number: 58A was approved and should be adhered to by all employees/contractors. 

12. Finalize and implement the FEC’s information classification policy and 

certification and accreditation policy along with any accompanying standards. 

Management Response 

The FEC reserves the right to review, rescind, and modify any existing and/or 

proposed policy within its IT security program policy. The Information Classification 

and Certification and Accreditation policies were rescinded from the implementation 

process to study their suitability and feasibility within the FEC information 

technology environment. In addition, both policies are heavily dependent upon the 

completion of a third party risk assessment prior to implementation. In absence of 

these assessments a management decision was made to rescind these policies until 

such time as to their successful implementation can be reasonably assured. 

13. Perform risk assessments, as part of the FEC’s overall strategy to mitigate risks 

associated with its information technology environment. 

Management Response 

As a vital component of the Information Systems Security Program Policy (ISSPP) 

58A, the FEC has developed and approved sub-policy 58-2.1: Risk Management 

policy. This policy establishes a framework of procedures and standards to mitigate 

risks associated with the management of information resources. 58-2.1 Risk 

Management Policy states that external risk assessments should be performed within 

the recommended 3 year period; however, current budgetary restraints have 

prevented this. 

The FEC management has completed the Statement of Work (SOW) and the FEC 

management has received proposals from three vendors and is currently reviewing 

the proposals. In addition, the FEC has allocated funds in fiscal 2007 (pending no 

further budgetary constraints) to partially accomplish this goal. Until greater 

resources are allocated toward this project, the FEC shall continue to conduct its 

own internal reviews such as those specified in its Security Review Policy. 

14. Incorporate the results of the risk assessments into the FEC’s security plans. 

15. Classify information resources in accordance with the risk assessments. 
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Management Response 

The FEC has created security plans, which document the security safeguards for its 

major applications and general support system. As stated in previous responses the 

FEC was unable to conduct third-party risk assessments due to budgetary restraints, 

however in the absence of such assessments the Commission has leveraged the 

considerable knowledge, skills, and experience of the Information Technology 

Division senior management to create security plans based upon appropriate levels 

of risk 

16. Utilize corrective action plans for all reviews of security controls whether 

performed internally or by a third-party. 

17. Ensure that corrective action plans identify the task to be completed in addition to 

identifying the resources required to accomplish the elements of the plan, any 

milestones in meeting the tasks, and scheduled completion dates for the 

milestones. 

Management Response 

The FEC has instituted a comprehensive process for the continuous monitoring and 

evaluation of the computer security policy and control effectiveness that it believes is 

sufficient for an effective review and appraisal of its policy and procedures. 

However, in an effort to enhance the financial auditors understanding of the FEC 

Information Technology Division’s internal work processes, the FEC will review and 

consider a revised format. 

18. Certify and accredit all major applications and mission critical general support 

systems. 

Management Response 

Same response as in recommendations 14 and 15. 

B. Contingency Plan 

Losing the capability to process and protect information maintained on the FEC’s 

computer systems can significantly impact the FEC’s ability to accomplish its 

mission to serve the public. The purpose of service continuity controls is to ensure 

that, when unexpected events occur, critical operations continue without interruption 

or critical operations are promptly resumed. 

To achieve this objective, the FEC should have procedures in place to protect 

information resources and minimize the risk of unplanned interruptions and a plan to 

recover critical operations should interruptions occur. These plans should consider 

activities performed at the FEC’s general support facilities (e.g. the FEC’s local area 
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network, wide area network, and telecommunications facilities), as well as the 

activities performed by users of specific applications. To determine whether the 

disaster recovery plans will work as intended, the FEC should establish and 

periodically test the capability to perform its functions in disaster simulation 

exercises. 

Our review of the service continuity controls identified deficiencies that could affect 

the FEC’s ability to respond to a disruption in business operations as a result of a 

disaster or other long-term emergency. The deficiencies were as follows: 

 The FEC has not performed a Business Impact Analysis (BIA) to formally 

identify and prioritize all critical data and operations on its networks and the 

resources needed to recover them if there is a major interruption or disaster. In 

addition, we could not determine whether the FEC had established emergency 

processing priorities that will help manage disaster situations more effectively for 

the network. The FEC also has not included business owners in the discussion to 

determine how much backup data is needed on-hand to minimize the impact of a 

disaster. The FEC is currently waiting for the budgetary funds to complete a BIA. 

(Repeat Finding)

 The FEC has not established an alternate processing site for its operations in the 

event of a disaster, including its general ledger system. Additionally, the FEC’s 

disclosure database is replicated at an off-site location as a web-enabled read-only 

database the public can access. In the event that data cannot be updated at the 

FEC and then replicated to the off-site location, there is no operational 

mechanism to update the disclosure database at the off-site location. The FEC has 

developed a cost analysis of establishing an alternate site and is currently pursuing 

interagency agreements to address this issue. (Repeat Finding)

 The FEC has not developed and documented a comprehensive contingency plan 

of its data centers, networks and telecommunication facilities. The plan does not 

include steps for recovering all of the FEC’s major applications and mission 

critical general support systems. Additionally, the comprehensive contingency 

plan does not prioritize resources or set a timeframe for recovery. However, the 

FEC has updated the disaster recovery plan to include both a power failure 

scenario and a data center air-condition failure scenario. (Repeat Finding)

 The FEC has not developed a Continuity of Operations Plan (COOP) to support 

the continuation of its core mission in the event of a disaster that renders the 

FEC’s facilities unusable. (Repeat Finding)

Recommendations: 

19. Perform a BIA to formally identify and prioritize all critical data and operations 

on the FEC’s networks and the resources needed to recover them if there is a 

major interruption or disaster. 
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Management Response 

The FEC agrees that a formal business impact analysis would be useful and it is 

currently awaiting funds to complete the project. In lieu of a formal BIA the FEC has 

leveraged its own internal expertise to identify and prioritize its critical data and 

operations on the FEC’s networks and the resources needed to recover them if there 

is a major interruption or disaster. 

20. Ensure that emergency processing priorities are established to assist in managing 

disaster situations more effectively for the network and include business owners 

in the discussion to determine how much backup data is needed on-hand to 

minimize the impact of a disaster. 

Management Response 

The FEC has developed emergency processing priorities. These emergency process 

priorities have been outlined in the FEC’s Disaster Recovery Plan. 

21. Establish an alternative processing site for the FEC’s operations in the event of a 

disaster and ensure that an operational mechanism exists to update the disclosure 

database in the event that the FEC’s database is unavailable to replicate the 

disclosure database resident at the off-site location. 

Management Response 

The FEC believes that the cost to establish an alternative processing site would be 

cost prohibitive and would not be cost effective. Therefore, an alternative processing 

site is not part of the FEC budget request.

22. Develop and document a comprehensive COOP of the FEC’s data centers, 

networks, and telecommunication facilities. 

23. Develop a COOP to support the continuation of the FEC’s core mission in the 

event of a disaster that renders the FEC’s facilities unusable. 

Management Response 

The FEC agrees that a Continuity of Operations Plan would be useful and it is 

currently awaiting funds to complete the project. 

C. Controls to Protect Information 

For a computerized organization like the FEC, achieving an adequate level of 

information protection is highly dependent upon maintaining consistently effective 

access controls and system software controls. Access controls limit and monitor 

access to computer resources (i.e., data files, application programs, and computerrelated facilities and equipment) to the extent necessary to provide reasonable 
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assurance that these resources are protected against waste, loss, unauthorized 

modification, disclosure, or misappropriation. Access controls include logical 

controls, such as security software programs designed to prevent or detect 

unauthorized access to sensitive files. Similarly, system software controls limit and 

monitor access to powerful programs and sensitive files that control computer 

processing and secure the application and data supported by the system. 

Our limited testing of internal controls identified weaknesses related to the 

information protection in the FEC’s information systems environment. Impacted 

areas included the local area and wide area networks as well as its midrange computer 

systems (e.g. servers). These vulnerabilities expose the FEC and its computer 

systems to risks of external and internal intrusion, and subject sensitive information 

related to its major applications to potential unauthorized access, modification, and/or 

disclosure. 

Current weaknesses in access controls include the following: 

 The FEC is not actively monitoring the use of budgetary overrides in the general 

ledger (GL) application. The FEC is currently finalizing a process where the 

chief financial officer will review the use of overrides on a monthly basis and 

initial the override log to show that overrides have been reviewed. (Repeat 

Finding)

 The PeopleSoft application does not have the built in functionality to enforce the 

FEC’s password policy. Additionally, the mitigating controls implemented by the 

FEC do not address the following weaknesses: (Modified Repeat Finding)

o PeopleSoft does not have an account lockout policy.

o PeopleSoft does not prevent users from using previous passwords. 

o PeopleSoft does not have the ability to enforce strong password requirements. 

 Oracle audit trails were not maintained on the FEC’s servers. The FEC maintains 

audit trails at the application level, but not the database level because of the 

potential impact to production. However, we have not been provided any 

documentation to show that the FEC has conducted a test to determine what the 

impact on processing would be. 

 The FEC’s procedure for granting access to its networks, systems, and physical 

facility through access authorization e-mails needs improvement. Additionally, 

the FEC’s procedure for reviewing and recertifying user access rights needs 

improvement. We noted the following weaknesses in the access reauthorization 

process, in addition to weaknesses in the access authorization e-mails used to 

document and grant access rights and privileges: (Modified Repeat Finding)

o Seven out of 30 individuals reviewed did not have e-mails to document their 

network access. 

o Seven out of 30 individuals have network access rights that did not match 

their access requests. 
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Federal Election Commission Performance and Accountability Report 2006

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o Thirteen of 30 individuals’ network access e-mails did not identify the 

network groupings that the user should have access to. 

o Four dial-in users did not have access documentation on file and were not on 

the list of users with laptops. 

o Two VPN users were not on the list of users with laptops. Additionally, these 

two users are employees of the FEC that should have the FEC’s laptops. 

o All 17 of the dial-in users did not have their access periodically recertified. 

o One separated employee still had a dial-in account.

o Data center access documentation was not available for 19 users. 

Additionally, there was no evidence that data center access was periodically 

recertified. 

o Access documentation was not maintained for system administrators and 

database administrators. The FEC’s current policy is to grant employees 

access based on their positions. According to the FEC, only employees hired 

to perform administrative functions are granted administrative access. 

However, “best practices” state that access forms should be maintained. 

o There were 21 individuals with access to the data center that did not have a 

justifiable need (based on job functionality) to have data center access. 

Recommendations: 

24. Finalize and implement the FEC’s process to manually review logs of users using 

budgetary overrides where the reviewer is an individual who does not have access 

to utilize the overrides. 

Management Response 

Budget overrides are rarely used by the FEC. They are only used when transactions 

cannot be processed any other way. In most cases budget errors result in funds being 

moved from another object class. This eliminates the error rather than overrides the 

control. Effective with the August reports, the CFO began signing off on a control 

report that lists all budget overrides used. The Accounting Officer and Budget Officer 

run reports independently for the CFO to approve. The FEC agrees this is an 

important safeguard. No budgets have been exceeded without management approval. 

25. Develop mitigating controls to ensure that PeopleSoft passwords are in agreement 

with the FEC’s policy or ensure that when PeopleSoft processing is outsourced, 

the third-party maintains password controls that comply with the FEC’s password 

policies. 

Management Response 

The current version of PeopleSoft does not contain any mechanisms for the 

automated enforcement of passwords. The FEC is aware of this vulnerability and the 

risk associated with this version of PeopleSoft’s lack of automated authentication 

enforcement. The FEC has implemented a series of compensating controls consisting 
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of additional user awareness training, policy issuance, and manual enforcement to 

mitigate associated risk. The FEC understands and accepts the residual risk until an 

automated solution can be found. In addition, the FEC plans to ensure that 

automated password enforcement is either native or a third-party maintains password 

controls that comply with the FEC’s password policy when PeopleSoft Processing is 

outsourced. 

26. Use access request forms that identify the user’s access level to document user 

access rights to all the FEC’s systems. Additionally, the FEC should periodically 

review the appropriateness of access granted and recertify user access rights. 

Management Response 

The FEC utilizes either an email from management or the new hire report from 

Human Resources as user access request forms. In addition, the FEC periodically 

revalidates all network access for appropriateness as dictated by 58-2.11 Security 

Review Policy 

27. Investigate to determine a baseline level of auditing that can be performed without 

causing a detrimental impact to the performance of the Oracle databases and the 

applications that they support. 

Management Response

In the normal course of business, performance indicators are monitored to ensure 

application stability. This constant monitoring provided the FEC with the 

information needed to determine that the enabling of Oracle audit trails would prove 

an unnecessary hindrance to system performance. The FEC recognizes the risk 

associated with not enabling Oracle audit trails and has initiated audit trails at the 

application level and limited database access to a select number of persons as two 

compensating controls. The FEC understands and accepts any residual risk left from 

this process. 

28. Periodically review data center access and remove unnecessary access rights. 

Management Response

Although the FEC maintains an accurate list of those persons requiring access to its 

Datacenter the requirement for maintaining supporting documentation is a recent 

one. The FEC is currently evaluating the necessity of adding the Datacenter access 

list to its 58-2.11 Security Review Policy to ensure that periodic recertification will 

occur. 

D. Software Development and Change Controls 

Establishing controls over the modification of application software programs helps to 

ensure that only authorized programs and authorized modifications are implemented. 
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This is accomplished by instituting policies, procedures, and techniques that help 

make sure all programs and program modifications are properly authorized, tested, 

and approved, and that access to and distribution of programs is carefully controlled. 

Without proper controls, there is a risk that security features could be inadvertently or 

deliberately omitted or "turned off" or that processing irregularities or malicious code 

could be introduced. 

Our review of the software development and change controls identified deficiencies 

that could affect the FEC’s ability to ensure that only authorized programs and 

authorized modifications are implemented. The deficiencies were as follows: 

 The FEC has not implemented a formal process for identifying, documenting, 

testing and installing security patches and updates to its Oracle, UNIX and 

Windows environments. 

 The FEC does not maintain documentation evidencing that Oracle and Solaris 

patches are tested and approved before being installed into production. 

 The PeopleSoft application is currently supported by an Oracle 8 database that is 

no longer supported by the vendor. 

Recommendations: 

29. Implement formal policies and procedures for managing system software changes. 

30. Maintain documentation to support the testing and approval of system software 

changes. 

Management Response

The FEC has developed and implemented a comprehensive set of policies and 

procedures for managing system changes. These include 58-2.3 Change 

Management Policy and the FEC Change Management Standard. In addition, based 

upon early feedback from the financial auditors the FEC instituted the FEC Patch 

Management Standard on 10/04/06. 

31. Complete the migration of financial processing to a third-party service provider 

and verify that the service provider is utilizing vendor supported system software 

versions. 

Management Response

Due to legacy issues associated with some of the FEC applications the current 

version of Oracle 8 is required. Although the vendor no longer provides patches for 

this version of Oracle it does provide limited support, which includes assisting 

customers with work-arounds to issues that may arise. In addition, the FEC has built 

a considerable amount of experience and internal expertise over the years that this 

product has been in its inventory. 
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The FEC recognizes the risk associated with maintaining a product with limited 

support. Accordingly, the FEC is relying upon its considerable internal expertise, 

restricted access to only a few persons and Oracle’s limited support as compensating 

factors until the migration of financial processing to a third-party service provider is 

implemented. The FEC understands and accepts any residual risk left from this 

situation. Additionally, the FEC plans to verify that any third party service provider 

has adequate support during the migration of its financial processing. 

IV. Integrated Financial Management System (Repeat Finding)

The FEC does not have an integrated financial management system. Significant financial 

management systems, such as the cost system, accounts receivable system and the 

property and equipment system do not interface with the general ledger system. 

A single, integrated financial management system is a unified set of financial systems 

linked together electronically in an efficient and effective manner to provide agency-wide 

financial system support. Integration means that the user is able to have one view into 

systems such that, at whatever level the individual is using the system, he or she can 

obtain necessary information efficiently and effectively through electronic means. It does 

not necessarily mean having only one software application covering all financial 

management system needs within an agency. Interfaces are acceptable as long as the 

supporting details are maintained and accessible to managers. Interface linkages must be 

electronic unless the number of transactions is so small that it is not cost beneficial to 

automate the interface. Easy reconciliation between systems, where interface linkage is 

appropriate, must be maintained to ensure data accuracy. 

Recommendation: 

32. Evaluate the extent of systems integration needed for existing systems when 

considering the outsourcing of the FEC’s accounting services to a shared service 

provider. 

Management Response

The FEC agrees with this finding and recommendation. The FEC is actively pursuing 

securing the services of a financial line of business provider in FY 2007 or early FY 

2008. 

V. Administrative Fines, Civil Penalties and Miscellaneous Receipts (Modified Repeat 

Finding) 

The program offices serve as the primary source of information related to accounts 

receivable transactions which should be recorded in the general ledger by the Finance 

Office. Accounting events requiring recordation in the general ledger include assessment 

of administrative fines and civil penalties, determination of an uncollectible debt and 

payment by a respondent. On a monthly basis, civil penalty and administrative fine 
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Federal Election Commission Performance and Accountability Report 2006

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activities are initially reported to the Finance Office by the program offices in a memo. 

These memos are used by the Finance Office to update the accounts receivable subsidiary 

schedule that serves as the basis for accounts receivable transactions recorded in the 

general ledger. The information submitted by the program offices is augmented by more 

detailed information obtained from the FEC website and collection reports prepared by 

the Finance Office. The schedules are reconciled to the program offices’ records and 

submitted to management for review and approval. 

Our audit found the aforementioned reconciliation and management review were 

ineffective in detecting: mathematical or classification errors; and accounts receivable 

balances recorded for the wrong amount. 

Further, the methodology used to determine allowance for doubtful accounts is not 

formally documented or fully disclosed in the financial statements. 

Recommendations: 

33. Implement policies and procedures for reviewing the accounts receivable schedules 

for reasonableness and accuracy prior to recording related account transactions in the 

general ledger. 

34. Formalize policies and procedures for performing accounts receivable reconciliations. 

While developing these procedures, the FEC should consider establishing a timeline 

for when the reconciliations should be finalized by the program offices and forwarded 

to the Finance Office. 

35. Document all the methodologies applied in calculating allowance for uncollectible 

accounts. Periodically review the methodologies against actual procedures performed 

and revise them as necessary. 

Management Response

The FEC agrees with these findings and recommendations 33, 34, and 35. Significant 

progress was made in the receivables area in FY 2006. The findings in this area were 

mainly the result of errors in cells of the new spreadsheets and have been corrected. In 

FY 2007, we intend to improve further by: a) issuing a directive for receivables 

management; b) review the spreadsheets more thoroughly; c) working with Treasury to 

ensure better reports and; d) improve documentation of the allowance for uncollectible 

accounts. 

VI. Controls Over Procurement and Disbursement Transactions 

 

The weaknesses identified below collectively resulted in a reportable condition in the 

FEC’s procurement processes. 

 Several procurement documents meeting the criteria for approval by the 

Commissioners were not submitted to the Commission for approval or the 
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Commissioners’ approval was not clearly documented or provided to us for review. 

Other procurement transactions were not approved by all the individuals in the 

approval chain or were signed by the same individual for more than one position in 

the approval chain. 

 For one of 45 sample items the total obligations and disbursements exceeded the 

contract amount. Although the disbursements were determined to be legitimate, the 

contract was not modified for the increase in obligation. 

 There were several incidents where documents intended to support approval of 

procurement and disbursement actions were not properly submitted for approval, 

supported or maintained by the agency. 

 Accounts payable reconciliations were not always timely prepared by the FEC’s 

personnel and approved by management. 

GAO Standards for Internal Control in the Federal Government states that transactions 

and other significant events should be authorized and executed by persons acting within 

the scope of their authority. This is a principal means of assuring that only valid 

transactions to exchange, transfer, use or commit resources and other events are initiated 

or entered into. Evidence of approval should be clearly documented and readily available 

for examination. Further, key duties and responsibilities need to be divided or segregated 

among different people to reduce the risk of error or fraud. 

Recommendations: 

 

36. Issue formal guidance for performing corrective action when negative obligation 

balances occur. Procedures should describe the conditions when corrective action is 

needed, corrective actions to perform and the individuals responsible for resolving the 

error. The timely response and clear communication on corrective action should also 

be included in the procedures. 

37. Ensure documentation related to procurement and disbursement actions are properly 

approved and supported. Procurement policies and procedures should be enhanced to 

document, completely and clearly, operating procedures for the procurement cycle 

and should include procedures for documenting justification when exceptions are 

made to established procedures. 

38. Ensure reconciliations are consistently performed, reviewed and approved in a timely 

manner. 

Management Response

The FEC agrees with these findings and recommendations 36, 37, and 38. The FEC will 

issue additional internal guidance on how to handle negative obligations (#36). The 

Administrative Officer issued updated guidance to clarify signatures needed on 

procurement documents in early FY 2007. The FEC Procurement Directive will be 

updated in FY 2007 to reflect this change (#37). The FEC will address the timeliness of 

reconciliations with appropriate staff members (#38). 
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VII. Audit Follow-up 

Establishing a comprehensive system for audit follow-up helps to ensure prompt and 

proper implementation of corrective action on identified internal control deficiencies. 

Accordingly, OMB Circular A-50, Audit Follow-up, requires an agency to establish an 

audit follow-up system which includes, among other provisions: 1) resolution and 

corrective action on audit recommendations within six months following final report 

issuance; 2) specific and written plans for corrective action with specified action dates; 3) 

a complete and accurate record of the status of audit reports or recommendations through 

the entire process of resolution and corrective action and 4) semi-annual report to the 

agency head on the status of audit report recommendations. 

The FEC was not able to provide the May 2006 report detailing the status of audit 

recommendation submitted to the Commissioners as required by the FEC Directive 50 

Audit Follow-up, revised April 2006. During the audit period, we recognized that the 

Audit Follow-up Official for the financial audit was in the process of establishing a 

follow-up system. However, we identified deficiencies in the follow-up system that 

could affect the FEC’s ability to ensure prompt and proper resolution of audit findings 

and recommendations. The deficiencies were as follows: 

 Sections of the audit follow-up matrix for the financial statement audit are maintained 

in various locations within the agency. A separate matrix for Information 

Technology and non-Information Technology related recommendations are 

maintained by the Chief Information Officer and Accounting Officer, respectively. 

The financial audit Audit Follow-up Official does not maintain a consolidated matrix 

nor does he have ready access to the matrix for Information Technology related audit 

findings. During the FY 2006 financial statement audit, significant effort on the part 

of the FEC personnel and multiple requests from the auditors was needed to 

determine the status of FY 2005 financial statement audit recommendations. The 

FEC’s procedures for the corrective action matrix compromises the financial 

statement Audit Follow-up Official’s ability to monitor the remediation process for 

audit findings and implement additional corrective action, where necessary. 

 The matrix for the FY 2005 financial statement audit findings was not complete. It 

did not include the corrective action plan, or targeted and actual completion dates 

and/or responsible party for several recommendations. 

 The FEC has not formalized a methodology or timetable for updating the matrix with 

the current status of corrective action plans and/or revised targeted and/or completion 

dates. During the FY 2006 audit, we noted the current status of the corrective action 

plan or target date of completion was not always updated in the matrices provided to 

the auditors. As such, management’s assertion regarding the status of audit 

recommendations was not always correct. 

Recommendation: 

39. Formalize the remediation process related to audit findings and recommendations that 

is consistent with OMB Circular A-50 guidelines. 
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Management Response

The FEC agrees with the finding and the recommendation. In FY 2006, the FEC 

developed a detailed matrix for ITD and accounting findings which will be monitored 

closely by the CFO. The first follow-up report is expected to be sent to the Commission 

through the Staff Director in November 2006.

OTHER MATTER 

OMB Bulletin No. 06-03 requires that the auditor’s report on internal control “identify those 

material weaknesses disclosed by the audit that were not reported in the reporting entity’s 

Federal Managers’ Financial Integrity Act (FMFIA) report.” The FEC’s schedule of material 

weaknesses and non-conformances included in the PAR did not identify the material weaknesses 

noted in the FY 2006 Independent Auditor’s Report on Internal Control. We do not believe, 

however, that failure to report these material weaknesses in FMFIA constitutes a separate 

reportable condition or a material weakness because different criteria are used by management 

and the auditors in determining material weaknesses. 

STATUS OF PRIOR YEAR CONDITIONS 

As required by Government Auditing Standards and OMB Bulletin No. 06-03, we have reviewed 

the status of the FEC’s corrective actions with respect to the findings and recommendations from 

the previous year’s report on internal controls. We have attached Appendix A to our report that 

presents the status of prior year findings and recommendations. 

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

In addition to the material weaknesses and reportable conditions described above, we noted 

certain matters involving internal control and its operation that we reported to the management of 

the FEC in a separate letter dated November 7, 2006. 

This report is intended solely for the information and use of the management of the FEC, the 

FEC Office of Inspector General, GAO, OMB, and Congress, and is not intended to be and 

should not be used by anyone other than these speci



fied parties. 

Calverton, Maryland 

November 7, 2006 
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Federal Election Commission Performance and Accountability Report 2006

APPENDIX A 

FEDERAL ELECTION COMMISSION 

STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS 

September 30, 2006 

Page 24 of 30

Recommendation No. Condition/Audit Area Recommendation Current Status 

Material Weaknesses 

I. Cost Accounting System and Processes

1 Cost Allocation 

Methodology 

Establish formal and 

comprehensive cost 

allocation methodology 

and related policy and 

procedures. 

Open 

2 Cost Allocation 

Methodology 

Cross-train employees to 

minimize the risks of 

major interruptions in 

normal business 

operations. 

Closed 

3 Cost Allocation 

Methodology 

Establish a review process 

wherein a person, other 

than the preparer, reviews 

the work performed to 

ensure accuracy and 

propriety. 

Open 

4 Cost Allocation 

Methodology 

Maintain audit trials to 

support the allocation 

methodology and amounts. 

Open. 

5 Managerial Cost 

Accounting 

Evaluate the functional 

requirements for the new 

cost accounting system to 

ensure that the minimum 

level of cost accounting 

required in SFFAS No. 4 

is attained. 

Closed 

II. Administrative Fines, Civil Penalties and Miscellaneous Receipts

6 Administrative Fines, 

Civil Penalties and Misc. 

Receipts 

Establish and implement 

policy and procedures 

ensuring communication 

and coordination between 

program offices and 

Finance Office on 

activities with financial 

impact. The policy should 

also clearly establish the 

FEC's revenue recognition 

policy. The Finance 

Office should design a 

standard report outlining 

all the necessary 

information to record the 

financial activities. The 

report should be prepared 

and submitted timely at 

least monthly by the 

program offices to the 

Finance Office. 

Open. Now a reportable 

condition. 
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64

APPENDIX A 

FEDERAL ELECTION COMMISSION 

STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS 

September 30, 2006 

Page 25 of 30

Recommendation No. Condition/Audit Area Recommendation Current Status 

II. Administrative Fines, Civil Penalties and Miscellaneous Receipts

7 Administrative Fines, 

Civil Penalties and Misc. 

Receipts 

Document the policy and 

basis for the allowance for 

uncollectible accounts. 

Partially closed. Although 

the FEC had documented 

the policy, the 

documentation for the 

basis for the allowance for 

uncollectible accounts was 

not complete. The FEC 

uses other methodologies 

that were not documented. 

III. General Property and Equipment

8 Property, Plant and 

Equipment 

Reconcile the total of the 

individual property items 

in the property system to 

the bulk purchase total 

recorded in the books to 

ensure completeness of the 

property system records. 

Open 

9 Property, Plant and 

Equipment 

Document physical 

inventory procedures, 

results, and reconciliation 

and maintain the 

documentation for audit 

trail purposes. 

Open 

10 Property, Plant and 

Equipment 

Revise the software 

capitalization policy to 

comply with SFFAS No. 

10. 

Closed 

11 Property, Plant and 

Equipment 

Enforce compliance and 

consistent implementation 

of policies and procedures 

related to completing 

receiving reports and the 

review and approval of 

obligating memos or 

documents. 

Open – Now a reportable 

condition reported under 

Controls Over 

Procurement and 

Disbursement 

Transactions. 

12 Property, Plant and 

Equipment 

Establish a standard 

process and policy where 

program offices are 

required to notify the 

Finance Office of any 

property acquisition or 

disposition with 

accounting impact to 

ensure proper and timely 

recording of the 

transaction. 

Open 
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Federal Election Commission Performance and Accountability Report 2006

APPENDIX A 

FEDERAL ELECTION COMMISSION 

STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS 

September 30, 2006 

Page 26 of 30

Recommendation No. Condition/Audit Area Recommendation Current Status 

IV. Information Technology

13 Entity-Wide Security 

Program 

Implement a framework of 

policies and standards to 

mitigate risks associated 

with the information 

resources management. 

Open. Now a reportable 

condition. 

14 Entity-Wide Security 

Program 

Complete the 

documentation, approval, 

and implementation of an 

entity-wide security 

program plan. 

Open. Now a reportable 

condition. 

15 Entity-Wide Security 

Program 

Develop and implement 

security plans for all major 

applications and MCGSS 

as part of a risk mitigation 

strategy. 

Open. Now a reportable 

condition. 

16 Entity-Wide Security 

Program 

Ensure that Resource 

Classifications in the 

FEC's security plans 

accurately reflect the risk 

and vulnerability of the 

FEC systems. 

Open. Now a reportable 

condition. 

17 Entity-Wide Security 

Program 

Complete the 

implementation of the 

program for the 

continuous monitoring and 

evaluation of the computer 

security policy and control 

effectiveness. 

Open. Now a reportable 

condition. 

18 Entity-Wide Security 

Program 

Conduct risk assessments 

at least every three years 

as part of an overall 

strategy to mitigate risks 

associated with its 

information technology 

environment. 

Open. Now a reportable 

condition. 

19 Entity-Wide Security 

Program 

Certify that the major 

applications and MCGSS 

are operating according to 

the FEC's security 

requirements. 

Open. Now a reportable 

condition. 
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APPENDIX A 

FEDERAL ELECTION COMMISSION 

STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS 

September 30, 2006 

Page 27 of 30

Recommendation No. Condition/Audit Area Recommendation Current Status 

20 Entity-Wide Security 

Program 

Strengthen the FEC's 

program to document 

corrective actions and 

verify that weaknesses 

identified have been 

addressed. Ensure and 

document that 

recommendations from the 

most recent network 

security review have been 

implemented. 

Open. Now a reportable 

condition. 

21 Controls to Protect 

Information 

Create a new GL system 

application role to give 

employees with necessary 

and appropriate access 

rights to fulfill their job 

responsibility. 

Closed 

22 Controls to Protect 

Information 

Monitor and record visitor 

access to the data center. 

Closed 

23 Controls to Protect 

Information 

Use access request forms 

to document user access 

rights and periodically 

review the access for 

appropriateness. 

Open. Now a reportable 

condition. 

24 Controls to Protect 

Information 

Develop mitigating 

controls to ensure that GL 

system passwords are in 

agreement with the FEC 

policy. 

Open. Now a reportable 

condition. 

25 Controls to Protect 

Information 

Automatically log network 

activity as required by the 

Audit Events Standards. 

Closed 

26 Controls to Protect 

Information 

Institute a process to 

manually review logs of 

users using budgetary 

overrides where the 

reviewer is an individual 

who does not have access 

to utilize the overrides. 

Open. Now a reportable 

condition. 

27 Controls to Protect 

Information 

Periodically review the 

firewall rule set for 

appropriateness. 

Closed 

28 Controls to Protect 

Information 

Periodically review LAN 

user accounts and disable 

unnecessary user accounts. 

Open. Now a reportable 

condition. 
67

Federal Election Commission Performance and Accountability Report 2006

APPENDIX A 

FEDERAL ELECTION COMMISSION 

STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS 

September 30, 2006 

Page 28 of 30

Recommendation No. Condition/Audit Area Recommendation Current Status 

29 Contingency Plan Perform a Business Impact 

Analysis to formally 

identify and prioritize all 

critical data and operations 

on the FEC's networks and 

the resources needed to 

recover them if there is a 

major interruption or 

disaster. Ensure that 

emergency processing 

priorities are established to 

assist in managing disaster 

situations more effectively 

for the network and 

include business owners in 

the discussion to 

determine how much 

backup data is needed onhand to minimize the 

impact of a disaster. 

Open. Now a reportable 

condition. 

30 Contingency Plan Establish alternative 

processing site for the 

FEC's operations in the 

event of a disaster and 

ensure that an operational 

mechanism exists to 

update the disclosure 

database in the event that 

the FEC database is 

unavailable to replicate the 

disclosure database 

resident at the off-site 

location. 

Open. Now a reportable 

condition. 

31 Contingency Plan Develop a Continuity of 

Operations Plan (COOP) 

to support the continuation 

of the FEC's core mission 

in the event of a disaster 

that renders the FEC's 

facilities unusable. 

Open. Now a reportable 

condition. 

32 Contingency Plan Develop and document a 

comprehensive 

contingency of operations 

plan of the FEC's data 

centers, networks, and 

telecommunication 

facilities. 

Open. Now a reportable 

condition. 
Section III | Independent Auditor’s Report

68

APPENDIX A 

FEDERAL ELECTION COMMISSION 

STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS 

September 30, 2006 

Page 29 of 30

Recommendation No. Condition/Audit Area Recommendation Current Status 

33 Software Development 

and Change Control 

Fully implement the 

System Development Life 

Cycle Methodology. 

Closed 

Reportable Conditions 

V. Financial Reporting 

34 General Ledger System 

Setup and Posting Model 

Definition 

Ensure that corrections 

made to the posting logic 

comply with the USSGL 

and that the USSGL 

accounts and posting logic 

are updated as changes to 

USSGL are issued. 

Closed 

35 Continuing Resolution 

Accounting 

Comply with the 

continuing resolution 

accounting scenario 

prescribed by the US 

Treasury in accordance 

with memorandum issued 

by OMB. 

Closed 

36 Integrated Financial 

Management 

Continue to assess the 

degree of integration 

necessary to have a single, 

unified financial system by 

evaluating the functional 

requirements and the costs 

and benefits of integrating 

the financial reporting, 

property and equipment, 

receivable and the cost 

systems with the GL 

system. 

Open 

VI. Payroll

37 Payroll Implement procedures to 

ensure that leave 

adjustments are 

completely processed and 

transmitted to the service 

provider. 

Closed 

38 Payroll Maintain in the personnel 

files all payroll deduction 

authorization forms 

initiated through the FEC, 

i.e. not done directly by 

the employee with the 

service provider. 

Closed 
69

Federal Election Commission Performance and Accountability Report 2006

APPENDIX A 

FEDERAL ELECTION COMMISSION 

STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS 

September 30, 2006 

Page 30 of 30

Recommendation No. Condition/Audit Area Recommendation Current Status 

39 Payroll Ensure that timekeepers: 

perform the bi-weekly 

reconciliation between 

leave balances reported in 

its records and the service 

provider's records; and 

submit the bi-weekly leave 

balance certification to the 

Finance Office timely. 

Closed 

40 Payroll Implement procedures for 

ensuring all payroll and 

personnel documents are 

properly completed and 

authorized before payroll 

data is transmitted to the 

payroll service provider 

for processing. 

Closed 

41 Payroll Consider automating 

payroll processing to 

decrease the risk of error. 

Closed. Now in 

Management Letter. 
Financial Statements

70

Assets 2006 2005

Intragovernmental:

Fund Balance with Treasury (Notes 2 & 3) $ 10,068,481 $ 8,567,325 

Total Intragovernmental Assets 10,068,481 8,567,325

Accounts Receivable, net (Note 4) 520,471 427,150

General Property and equipment, net (Note 5) 8,757,157 10,064,293

Advances to others – 11,614

Total Assets $ 19,346,109 $ 19,070,382

Liabilities

Intragovernmental:

 Accounts Payable (Note 6) $ 50,000 $ 137,000

Custodial Liability 976,525 677,317

Total Intragovernmental 1,026,525 814,317

With the Public:

Accounts Payable 864,387 884,084

Accrued payroll and benefits 1,395,736 1,484,178

Unfunded leave 1,931,980 1,963,941

Actuarial Federal Employees Compensation Act 

(FECA) liability (Note 7) 17,631 36,076

Other 12,681 1,954

Total Liabilities 5,248,940 5,184,550

Commitments and Contingencies (Note 8) _ _

Net Position

Unexpended appropriations - Other Funds 7,289,060 5,821,557

Cumulative results of operations - Other Funds 6,808,109 8,064,275

Total Net Position 14,097,169 13,885,832

Total Liabilities and Net Position $ 19,346,109 $ 19,070,382

BALANCE SHEET

As of September 30, 2006 and 2005

The accompanying notes are an integral part of these statements.
Federal Election Commission Performance and Accountability Report 2006

71

STATEMENT OF NET COST

For the Years Ended September 30, 2006 and 2005

The accompanying notes are an integral part of these statements.

Program Costs: 2006 2005

Program: Compliance

Gross costs (Note 10) $ 27,383,031 $ 21,932,137

Less: Earned revenue – –

Net program costs 27,383,031 21,932,137

Program: Disclosure

Gross costs 21,317,170 25,868,674

Less: Earned revenue – (185,860)

Net program costs 21,317,170 25,682,814

Program: Public Funding

Gross costs 7,206,355 8,435,437

Less: Earned revenue – –

Net program costs 7,206,355 8,435,437

Net Cost of Operations $ 55,906,556 $ 56,050,388
Financial Statements

72

STATEMENT OF CHANGES IN NET POSITION

As of September 30, 2006 and 2005

The accompanying notes are an integral part of these statements.

2006 2005

Other Funds Eliminations Consolidated 

Total

Consolidated 

Total

CUMULATIVE RESULTS OF 

OPERATIONS:

Beginning Balances $ 8,064,275 $ _ $ 8,064,275 $ 6,925,230

Prior period adjustments (+/-) – – – –

Beginning Balances, as adjusted 8,064,275 _ 8,064,275 6,925,230

Budgetary Financing Sources

Appropriations used 52,297,572 – 52,297,572 54,870,931

Total Budgetary Financing Sources 52,297,572 – 52,297,572 54,870,931

Other Financing Sources:

Imputed financing from costs absorbed 

by others 2,352,818 – 2,352,818 2,318,502

Total Other Financing Sources 2,352,818 – 2,352,818 2,318,502

Total Financing Sources 54,650,390 _ 54,650,390 57,189,433

Net Cost of Operations (+/-) (55,906,556) – (55,906,556) (56,050,388)

Net Change (1,256,166) – (1,256,166) 1,139,045

Cumulative Results of Operations $ 6,808,109 $ _ $ 6,808,109 $ 8,064,275

UNEXPENDED APPROPRIATIONS:

Beginning Balances $ 5,821,556 $ _ $ 5,821,556 $ 9,280,593

Prior period adjustments (+/-) – – – –

Beginning Balances, as adjusted 5,821,556 _ 5,821,556 9,280,593

Budgetary Financing Sources:

Appropriations Received 54,700,000 – 54,700,000 52,159,000

Other adjustments (recissions, etc) (+/-) (934,925) – (934,925) (747,105)

Appropriations used (52,297,571) – (52,297,571) (54,870,931)

Total Budgetary Financing Sources 1,467,504 _ 1,467,504 (3,459,036)

Total Unexpended Appropriations 7,289,060 _ 7,289,060 5,821,557

Net Position $ 14,097,169 $ _ $ 14,097,169 $ 13,885,832
Federal Election Commission Performance and Accountability Report 2006

73

STATEMENT OF BUDGETARY RESOURCES

For the Years Ended September 30, 2006 and 2005

2006 2005

Budgetary Resources

Unobligated balance, brought forward, October 1

Beginning of Period $ 1,794,495 $ 1,401,279

Total Unobligated Balance 1,794,495 1,401,279

Recoveries of prior year obligations 967,661 693,562

Budget authority:

Appropriations received 54,700,000 52,159.000

Total Budget Authority 54,700,000 52,159,000

Permanently not available: (934,925) (747,105)

Total Budgetary Resources $ 56,527,231 $ 53,506,736

Status of Budgetary Resources

Obligations Incurred

Direct

Apportioned- Category A $ 54,448,901 $ 43,207,209

Exempt- Category B – 8,505,031

Total Obligations Incurred 54,448,901 51,712,240

Unobligated balance

Balance currently available:

Apportioned- Category A 108,327 32,731

Exempt- Category B – 1,398

Total Unobligated Balance available 108,327 34,129

Unobligated balance not available 1,970,003 1,760,367

Total Status of Budgetary Resources $ 56,527,231 $ 53,506,736

Change in Obligated Balance:

Obligated balance, net

Unpaid Obligations, brought forward, October 1 $ 6,520,709 $ 10,045,151

Total unpaid obligated balance, net 6,520,709 10,045,151

Obligations incurred net +/- 54,448,901 51,712,241

Less: Gross Outlays (52,480,533) (54,543,120)

Less: recoveries of prior year unpaid obligations, actual (967,661) (693,562)

Obligated balance, net, end of period

Unpaid obligations 7,521,417 6,520,710

Total, unpaid obligated balance, net, end of period 7,521,417 6,520,710

Net Outlays

Disbursements 52,480,533 54,543,120

Net Outlays $ 52,480,533 $ 54,543,120

The accompanying notes are an integral part of these statements.
Financial Statements

74

2006 2005

Resources Used to Finance Activities

Budgetary Resources Obligated

Obligations Incurred $ 54,448,901 $ 51,712,240

Less: Recoveries of prior year obligations (967,661) (693,562)

Obligations net of recoveries of prior year obligations 53,481,240 51,018,678

Net obligations 53,481,240 51,018,678

Other Resources

Imputed financing from costs absorbed by others 2,352,818 2,318,502

Net other resources used to finance activities 2,352,818 2,318,502

Total resources used to finance activities 55,834,058 53,337,180

Resources Used to Finance Items not Part of the Net cost of Operations

Change in budgetary resources obligated for goods, services and benefits 

ordered but not yet provided 1,184,233 (3,852,253)

Resources that fund expenses recognized in prior periods cost of 

operations 50,406 7,349

Resources that finance the acquisition of assets 2,160,662 4,443,890

Total resources used to finance items

not part of the net cost of operations 3,395,301 598,986

 Total resources used to finance the net cost of operations 52,438,758 52,738,194

Components of the Net Cost of Operations that will not require or 

Generate Resources in the Current Period

Components Requiring or Generating Resources in Future 

Periods:

Increase in annual leave liability – 178,635

Total components of Net Cost of Operations that will 

require or generate resources in future periods – 178,635

Components not Requiring or Generating Resources:

Depreciation and amortization 3,990,233 3,133,559

Revaluation of assets or liabilities (522,435) 0

Total components of Net Cost of Operations that will not 

require or generate resources 3,467,798 3,133,559

Total components of net cost of operations that will not require or 

generate resources in the current periods 3,467,798 3,312,194

Net Cost of Operations $ 55,906,556 $ 56,050,388

STATEMENT OF FINANCING

For the Years Ended September 30, 2006 and 2005

The accompanying notes are an integral part of these statements.
Federal Election Commission Performance and Accountability Report 2006

75

2006 2005

Revenue Activity

Sources of Cash Collections (Note 12)

Miscellaneous Receipts $ 373,669 $ 184,936

Civil Penalties 5,960,484 1,724,915

Administrative Fees 174,924 350,800

Total Cash Collections 6,509,077 2,260,651

Accrual Adjustments 93,321 331,793

Total Custodial Revenue $ 6,602,398 $ 2,592,444

Disposition of Collections

Transferred to Treasury $ 6,303,190 $ 2,260,652

Amount Yet to be Transferred 299,208 331,792

Total Disposition of Collections $ 6,602,398 $ 2,592,444

Retained by FEC $ – $ _

Net Custodial Activity $ (0) $ (0)

STATEMENT OF CUSTODIAL ACTIVITY

For the Years Ended September 30, 2006 and 2005

The accompanying notes are an integral part of these statements.

77

Federal Election Commission Performance and Accountability Report 2006

Notes To The Financial Statements

Note 1 – Summary of Significant Accounting Policies

Reporting Entity

The accompanying financial statements present the financial position, net cost of operations, changes in 

net position, custodial activity, budgetary resources, and financing of the Federal Election Commission 

(FEC). Created in 1975 by an act of Congress, the FEC is an independent agency charged with 

administering and enforcing the Federal Election Campaign Act (FECA). The financial activity presented 

relates primarily to the execution of the FEC congressionally approved budget.

The Presidential Election Campaign Fund (“the fund”) is not a reporting entity of the FEC. Federal 

Accounting Standards Advisory Boards’ (FASAB) Statement of Federal Financial Accounting Concept No. 

2, “Entity and Display,” states that two criteria determine whether a program qualifies as an agency’s 

reporting entity: conclusive criteria and indicative criteria. Conclusive criteria include which agency 

budgets the funds. Indicative criteria include which agency exercises “continuing administrative control 

including the ability to select or remove the governing authority and the authority to review and/

or modify budget requests.” Since the funds are budgeted, apportioned, recorded, reported and paid 

by Treasury, the accounts of the Presidential Election Campaign Fund are not included in the FEC’s 

financial statements.

The FEC maintains eligibility requirements for the fund. Under the Internal Revenue Code, qualified 

Presidential candidates receive money from this fund. The FEC helps Treasury determine which candidates 

are eligible to receive the funds and the amount of funds to be received. The Secretary of the Treasury 

makes the payments to eligible candidates and major party and qualified minor party nominees as well 

as National Party Conventions also receive money from this fund. The Fund is financed exclusively by a 

voluntary tax check off. Individual taxpayers may direct $3 of their tax to the Fund (up to $6 for joint 

filers) by checking a box on their tax return.

Basis of Accounting and Presentation

These financial statements reflect both accrual and budgetary accounting transactions. Under the 

accrual method of accounting, revenues are recognized when earned and expenses are recognized when 

a liability is incurred, without regard to receipt or payment of cash. Budgetary accounting is designed to 

recognize the obligation of funds according to legal requirements. Budgetary accounting is essential for 

compliance with legal constraints and controls over the use of Federal funds.

These financial statements have been prepared from the books and reports of FEC in accordance with 

U.S. generally accepted accounting principles (GAAP) for the Federal government and the Office of 

Management and Budget (OMB) Circular A-136, Form and Content of Agency Financial Statements.

Assets

Intra-governmental assets are those assets that arise from transactions with other Federal entities. Entity 

assets are available for use by the entity in its operations while nonentity assets are assets held by the 

entity but not available for use by the entity in its operations.
Notes on the Financial Statements 

78

Fund Balance with Treasury

FEC does not maintain cash in commercial bank accounts. The U.S. Treasury processes cash receipts 

and disbursements. Funds with the U.S. Treasury consist of appropriated and deposited funds that are 

available to pay current liabilities and finance authorized purchase commitments as well as custodial 

collections which are not available to finance FEC activities. Custodial collections are classified as nonentity assets.

Accounts Receivable

FEC’s accounts receivable represent amounts due from the public or U.S. Treasury for fines and penalties 

assessed by FEC and referred to Treasury for collection. An allowance for uncollectible accounts has been 

established and included in Accounts Receivable, net on the balance sheet. The allowance is a percentage 

of the overall receivable balance and the collection rate of past balances.

General Property and Equipment

General P&E is reported at acquisition cost. The capitalization threshold is established at $25,000 

and a useful life of 2 or more years. General P&E consists of items that are used by FEC to support its 

mission. Depreciation on these assets is calculated using the straight-line method with no salvage value. 

Depreciation begins the month after the asset is placed in service. Maintenance, repairs and minor 

renovations are expensed as incurred. Expenditures that materially increase values, change capacities or 

extend useful lives are capitalized.

Internal use software development and acquisition costs of $25,000 are capitalized as software 

development in progress until the development stage is completed and the software successfully tested. 

At acceptance, software development-in-progress costs are reclassified as internal use software costs 

and amortized using the straight-line method over an estimated useful life of 5 to 10 years. Purchased 

commercial software that does not meet the capitalization criteria is expensed. Enhancements which do 

not add significant new capability or functionality are expensed. Construction costs of $25,000 or more 

are accumulated as Construction in Progress until occupancy and then are capitalized as a Leasehold 

Improvement over 7 years or the remainder of the lease whichever is less.

The land and building in which the FEC operates is leased from a commercial entity. The General 

Services Administration (GSA) provides the facility occupied by the FEC. GSA charges the FEC a 

Standard Level Users Charge that approximates the commercial rental rates for similar properties.

Liabilities

Liabilities represent amounts that are likely to be paid by the FEC as the result of transactions or 

events that have already occurred; however, no liabilities are paid by the FEC without an appropriation. 

Intragovernmental liabilities arise from transactions with other Federal entities. Liabilities classified as 

not covered by budgetary resources are liabilities for which appropriations have not been enacted and 

liabilities resulting from the agency’s custodial activities. FEC also has an intragovernmental liability to 

the U.S.Treasury for funds collected from the public but not yet transferred. These funds may not be 

used to fund FEC operations.
79

Federal Election Commission Performance and Accountability Report 2006

Accounts Payable

Accounts payable consist of amounts owed for goods, services, and other expenses received but not yet 

paid.

Accrued Payroll and Benefits

Accrued Payroll and Benefits represents salaries, wages and benefits earned by employees, but not 

disbursed as of September 30, 2006. Accrued payroll and benefits are payable to employees and are 

therefore not classified as intragovernmental.

Annual, Sick and Other Leave

Annual leave is recorded as a liability when it is earned; the liability is reduced as leave is taken. Each 

quarter, the balance in the accrued, restored, and compensatory leave account is adjusted to reflect 

current leave balances and pay rates. Accrued annual leave is paid from future funding sources and 

accordingly is reflected as a liability not covered by budgetary resources. Sick leave and other types of 

non-vested leave are expensed as taken.

Employee Retirement Plans

Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS)

FEC employees participate in one of two retirement programs, either the CSRS or the FERS, which 

became effective on January 1, 1987. Most FEC employees hired after December 31, 1983, are 

automatically covered by FERS and Social Security.

For CSRS covered employees, the FEC withheld 7.0% of gross earnings. The FEC matches the 

withholding, and the sum of the withholding and the matching funds is transferred to the Civil Service 

Retirement System.

For each fiscal year the Office of Personnel Management (OPM) calculates the U.S. Government service 

cost for covered employees, which is an estimate of the amount of funds that, if accumulated annually 

and invested over an employee’s career, would be enough to pay that employee’s future benefits. Since 

the U.S. Government’s estimated service cost exceeds contributions made by employer agencies and 

covered employees this plan is not fully funded by the FEC and its employees. For 2006 and 2005, 

FEC recognized $2.352M and $2.318M, respectively, as of September 30, as an imputed cost and as 

an imputed financing source for the difference between the estimated service cost and the contributions 

made by FEC and its employees.

FERS contributions made by employer agencies and covered employees exceed the U.S. Government’s 

estimated service costs. For FERS covered employees the FEC made contributions of 10.7% of basic 

pay. Employees contributed .80% of gross earnings. Employees participating in FERS are covered under 

the Federal Insurance Contribution Act (FICA) for which the FEC contributes a matching amount to the 

Social Security Administration.
Notes on the Financial Statements 

80

Thrift Savings Plan (TSP)

Employees covered by CSRS and FERS are eligible to contribute to the U.S. Government’s Thrift Savings 

Plan (TSP), the government’s 401-k plan administered by the Federal Retirement Thrift Investment Board. 

The FEC makes a contribution of 1% of basic pay for FERS-covered employees once they complete a 

required waiting period anywhere from 6 months to one year for new hires. FERS employees are eligible 

to contribute up to $15,000 of basic pay to their TSP account for 2006 for regular contributions and an 

additional $5,000 in catch-up contributions for employees who are 50 or older and who turned 50 in 

2006. In addition, FEC makes matching contributions, of up to 5% of basic pay, for FERS employees 

who contribute to the Thrift Saving Plan once they complete a required waiting period anywhere from 6 

months to one year for new hires. Contributions are matched dollar for dollar for the first 3 percent of pay 

contributed each pay period and 50 cents on the dollar for the next 2 percent of pay. CSRS participants 

may contribute up to $15,000 in regular contributions and an additional $5,000 in catch-up contributions 

for employees who are 50 or older and who turned 50 in 2006, but there is no governmental matching 

contribution. The maximum amounts that either FERS or CSRS employees may contribute to the plan in 

calendar year 2006 is $15,000 for those under age 50 and $20,000 for those fifty and older. Employees are 

no longer limited to a defined percentage of salary when contributing to TSP. The only ceiling is the 401-k 

elective deferral limit authorized by the Internal Revenue Service for plans such as TSP.

The FEC financial statements do not report CSRS or FERS assets, accumulated plan benefits, or unfunded 

liabilities, if any, which may be applicable to FEC employees and funded by FEC. Such reporting is the 

responsibility of OPM.

Contingencies

A contingency is an existing condition, situation, or set of circumstances involving uncertainty as to possible 

gain or loss. The uncertainty will ultimately be resolved when one or more future events occur or fail to 

occur. A contingency liability is recognized when a past event or exchange transaction has occurred, and 

future outflow or other sacrifice of resources is measurable and probable. A contingency is not disclosed 

when any of the conditions for liability recognition are met but the chance of the future event or events’ 

occurring is remote. A contingency is disclosed when any of the conditions for liability recognition are not 

met and the chance of the future confirming event or events occurring is more than remote but less than 

probable.

Revenues and Other Financing Sources

Annual Salaries and Expenses Appropriation

Annual one year appropriations are provided by Congress and are available for obligation in the fiscal year 

for which it was provided to fund the overall operation of the FEC.

Imputed Financing Sources

In accordance with OMB Circular A-136, all expenses should be reported by agencies whether or not these 

expenses would be paid by the agency that incurs the expense. The amounts for certain expenses of the FEC, 

which will be paid by other Federal agencies, are recorded in the “Statement of Net Cost.” A corresponding 

amount is recognized in the “Statement of Changes in Net Position” as an “Imputed Financing Source.” 

These imputed financing sources primarily represent unfunded pension costs of FEC employees.
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Federal Election Commission Performance and Accountability Report 2006

Statement of Net Cost

Sub-Organization Program Costs

The FEC Statement of Net Cost is presented by Responsibility Segment. The Responsibility Segments are 

based on the FEC’s mission and funding sources. The major programs that comprise the Responsibility 

Segments are: Obtain Compliance, Promote Disclosure and Public Financing.

Earned Revenue

Earned revenues collected by FEC included fees for seminars and conferences held during the year 

in various parts of the country. Earned revenues collected by FEC also included amounts collected 

from the public for information provided under the Freedom of Information Act (FOIA), primarily 

photocopying.

Net Position

Net position is the residual difference between asset and liabilities and comprises Unexpended 

Appropriations and Cumulative Results of Operations.

Unexpended appropriations represents the unobligated balances and undelivered orders of FEC’s 

appropriated funds. Unobligated balances associated with appropriations that expire at the end of the 

fiscal year remain available for obligation adjustments, but not for new obligations, until that account is 

closed, five years after the appropriations expire. Cumulative Results of Operations is the Net Result of 

FEC’s operation since inception.

Statement of Custodial Activity

The Statement of Custodial Activity summarizes collections transferred or transferable to the U.S. 

Treasury or other parties for miscellaneous receipts, fines and penalties. These amounts are reported as 

custodial revenue and are not available for FEC operations.

Use of Estimates

The preparation of financial statements in accordance with the accounting principles described above 

require management to make estimates and assumptions that affect the amounts reported in the financial 

statements and accompanying footnotes. Actual results could differ from those estimates.
Notes on the Financial Statements 

82

Note 2 – Non-Entity Assets

Non – entity assets consist of the following at September 30:

2006 2005

Intragovernmental:

Fund balance with Treasury (Custodial) $ 456,054 $ 250,167

With the Public:

Accounts Receivable 520,471 427,150

Total non-entity assets $ 976,525 $ 677,317

Total entity assets 18,369,584 18,393,065

Total Assets $ 19,346,109 $ 19,070,382

Non-entity assets are not available to finance FEC activities.

Note 3 – Fund Balance with Treasury

Fund balances with Treasury consisted of the following at September 30:

2006 2005

Appropriated Funds $ 9,612,427 $ 8,317,158

Custodial Funds 456,054 250,167

Total Fund Balance with Treasury $ 10,068,481 $ 8,567,325

Status of Fund Balance with Treasury

2006 2005

Unobligated Balance

- Available $ 108,327 $ $34,129

- Unavailable 1,970,003 1,760,367

Obligated Balance, Not Yet Disbursed 7,534,097 6,522,662

Custodial Funds 456,054 250,167

Total Status of Fund Balance with Treasury $ 10,068,481 $ 8,567,325

Fund Balance with Treasury is an asset maintained with Treasury. The appropriated funds are available to 

pay current liabilities. FEC has the authority to disburse funds to agencies and institutions participating 

in its programs through the Treasury, which processes cash receipts and disbursements on its behalf. 

Custodial Funds consist of monies collected by FEC but not yet transferred to the U.S. Treasury. 

Custodial Funds are not available to finance FEC activities and are therefore classified as non-entity 

assets.
83

Federal Election Commission Performance and Accountability Report 2006

Available unobligated balances represent amounts that are apportioned for obligation in the current 

fiscal year. Unavailable unobligated balances represent amounts that are not apportioned for obligation 

during the current fiscal year and expired appropriations no longer available to incur new obligations. 

Obligated balances not yet disbursed include reimbursements and other income earned, undelivered 

orders and expended authority-unpaid.

Note 4 – Accounts Receivable, net

Accounts Receivable consist of the following at September 30:

2006

Gross Accounts 

Receivable Allowance

Net Accounts 

Receivable

NON-ENTITY

With the Public $ 1,074,698 $ 554,227 $ 520,471

TOTAL NON-ENTITY $ 1,074,698 $ 554,227 $ 520,471

2005

Gross Accounts 

Receivable Allowance

Net Accounts 

Receivable

NON-ENTITY

With the Public $ 869,161 $ 442,011 $ 427,150

TOTAL NON-ENTITY $ 869,161 $ 442,011 $ 427,150

Non-Entity Receivables consist of Civil Penalties assessed by FEC through its enforcement processes 

or conciliation agreements reached with parties. Three FEC offices administer the fines: the Office 

of General Counsel (OGC), the Office of Administrative Review (OAR) and the Office of Alternate 

Dispute Resolution (ADR). Each has a distinct role in the enforcement and collection process. The 

offices also have significantly different volumes. Therefore, each has a different rate of collection. The 

Allowance is based on the historical rate of collection for the office and an overall assessment of the 

debtor’s willingness and ability to pay. OAR debts are referred to the U.S. Treasury for collection when 

delinquent. At September 30, 2006, OGC had receivables of $354,750 and an allowance of $62,791 

(18%) for a net receivable of $291,959. At September 30, 2005 OGC’s receivable was $285,750 and 

the allowance was $65,187 (23%) for a net receivable of $220,563. At September 30, 2006, OAR has a 

receivable of $663,648 and an allowance of $490,436 (74%) for a net receivable of $173,212. For the 

year ended September 30, 2005, OAR was owed $509,911 and the allowance was $376,824 (74%) for a 

net receivable of $133,087. The ADR receivable at September 30, 2006 was $56,300 with an allowance 

of $1,000 (2%) for a net receivable of $55,300. At September 30, 2005 the receivable for ADR was 

$73,500 while the allowance was $0 (0%) for a net receivable of $73,500.
Notes on the Financial Statements 

84

Note 5 – General Property and Equipment, Net

Capitalized property and equipment, net of accumulated depreciation, consisted of the following as of 

September 30, 2006 and 2005:

2006

Asset Class

Service 

Life 

(years)

Acquisition 

Value

Accumulated 

Depreciation

Net Book 

Value

Software 5 $ 12,582,805 $ 6,971,393 $ 5,611,412

Desktop and laptop computers 

and peripherals 3 3,553,620 2,810,613 743,007

Leasehold Improvement 7 or less 4,912,211 3,566,376 1,345,835

Furniture 7 852,754 450,409 402,345

Equipment 7 0 0 0

Software-in-Development n/a 654,558 – 654,558

Totals $ 22,555,948 $ 13,798,791 $ 8,757,157

2005

Asset Class

Service 

Life 

(years)

Acquisition 

Value

Accumulated 

Depreciation

Net Book 

Value

Software 5 $ 8,661,885 $ 5,206,852 $ 3,455,033

Desktop and laptop computers 

and peripherals 3 2,956,069 2,098,701 857,368

Leasehold Improvement 7 or less 4,416,381 1,961,072 2,455,309

Furniture 7 852,754 306,338 546,416

Equipment 7 284,611 235,595 49,016

Software-in-Development n/a 2,701,151 – 2,701,151

Totals $ 19,872,851 $ 9,808,558 $ 10,064,293

Depreciation expense was $3,990,233 and $3,133,559 for the periods ending September 30, 2006 and 

September 30, 2005, respectively.
85

Federal Election Commission Performance and Accountability Report 2006

Note 6 – Liabilities Covered and Not Covered 

By Budgetary Resources

Liabilities Covered by Budgetary Resources are those for which budgetary resources are available in the 

current fiscal year. Liabilities Not Covered by Budgetary Resources result from the receipt of goods and 

services, or the occurrence of events, for which appropriations, revenues, or other financing sources 

necessary to pay the liabilities have not yet been made available through Congressional appropriation. 

These include FECA (see Note 6) and annual leave liability. FEC’s liabilities covered and not covered by 

budgetary resources are as follows as of September 30, 2006 and 2005:

2006 2005

Liabilities Covered by Budgetary Resources:

Accounts Payable – Intragovernmental $ 50,000 $ 137,000

Accounts Payable – With the Public 864,387 884,084

Accrued Payroll and Benefits 1,395,736 1,484,178

Other 12,681 1,954 

Total Liabilities Covered by Budgetary Resources $ 2,322,804 $ 2,507,216

Liabilities Not Covered by Budgetary Resources:

Intragovernmental:

Custodial Liability $ 976,525 $ 677,317

With the Public:

Accrued Unfunded FECA Liability 17,631 36,076

Accrued Unfunded Annual Leave 1,931,980 1,963,941

Total Liabilities Covered by Budgetary Resources $ 2,926,136 $ 2,677,334

Total Liabilities $ 5,248,940 $ 5,184,550

Note 7 – FECA Liability

The Federal Employee’s Compensation Act (FECA) provides income and medical cost protection to 

covered Federal civilian employees injured on the job, employees who have incurred a work-related 

occupational disease, and beneficiaries of employees whose death is attributable to a job-related injury 

or occupational disease. Claims incurred for benefits for FEC employees under FECA are administered 

by the Department of Labor (DOL) and are ultimately paid by the FEC.

The FEC accrues FECA liability at September 30th each year. FECA liability includes two components: 

(1) the accrued liability which represents money owed for claims paid by the DOL through the current 

fiscal year, for which billing to and payment by the FEC will occur in a subsequent fiscal year and; 

(2) the liability for future costs which represents the expected liability for approved compensation 

cases beyond the current fiscal year. Estimated future costs have been actuarially determined, using 

the model provided by DOL, and are regarded as a liability to the public because neither the costs nor 

reimbursement have been recognized by DOL. FECA liability is included in Liabilities Not Covered by 

Budgetary Resources, as described in Note 6.
Notes on the Financial Statements 

86

Note 8 – Commitments and Contingencies

In the opinion of FEC management and legal counsel, FEC is not a party to any legal actions which 

are likely to result in a material liability. Accordingly, no provision for loss is included in the financial 

statements.

Note 9 – Leases

The FEC has a commitment under an operating lease for its headquarters office space. The lease is for a 

period of ten years and expires September 30, 2007. Under their lease agreement with GSA, the FEC is 

charged rent that is intended to approximate commercial rental rates. FEC has no capital leases. Future 

payments due under the lease:

Future Operating Lease Payments

Fiscal Year

Lease 

Payments

2007 $ 4,075,749

Total Future Lease Payments $ 4,075,749
87

Federal Election Commission Performance and Accountability Report 2006

Note 10 – Statement of Net Cost

FEC’s costs are broken into three main programs as noted below:

2006

Obtain 

Compliance

Promote 

Disclosure

Public 

Financing Totals 

Intragovernmental gross costs $ 2,307,153 $ 1,796,075 $ 607,170 $ 4,710,398

Intragovernmental net costs 2,307,153 1,796,075 607,170 4,710,398

Gross costs with the public 25,075,878 19,521,095 6,599,185 51,196,158

Net costs with the public 25,075,878 19,521,095 6,599,185 51,196,158

Net Cost of Operations $ 27,383,031 $ 21,317,170 $ 7,206,355 $ 55,906,556

2005

Obtain 

Compliance

Promote 

Disclosure

Public 

Financing Totals 

Intragovernmental gross costs $ 2,898,838 $ 3,419,141 $ 1,114,937 $ 7,432,916

Intragovernmental net costs 2,898,838 3,419,141 1,114,937 7,432,916

Gross costs with the public 19,033,299 22,249,533 7,320,500 48,803,332

Less: earned revenues

from the public – (185,860) – (185,860)

Net costs with the public 19,033,299 22,263,673 7,320,500 48,617,472

Net Cost of Operations $ 21,932,137 $ 25,682,814 $ 8,435,437 $ 56,050,388
Notes on the Financial Statements 

88

Note 11 – Statement of Budgetary Resources

The Statement of Budgetary Resources (SBR) compares budgetary resources with the status of those 

resources. As of September 30, 2006, budgetary resources were $56,527,231 and net outlays were 

$52,480,533. As of September 30, 2005, budgetary resources were $53,506,736 and net outlays were 

$54,543,120.

Apportionment Categories of Obligations Incurred

FEC receives apportionments of its resources from OMB. Category A apportionments are those for 

resources that can be obligated without restriction on the purpose of the obligation, other than to be in 

compliance with legislation underlying programs for which the resources were made available. Prior to 

FY 2006 Category B apportionments were to be used for Information Technology enhancements only. 

Beginning in FY 2006 the B fund designation was eliminated. 

The apportionment categories of obligations incurred are summarized below at September 30, 2006 

and 2005:

2006 2005

Direct:

Category A $ 54,448,901 $ 43,207,209

Category B 0 8,505,031

Total Apportionment Categories 

of Obligations Incurred $ 54,448,901 $ 51,712,240

Comparison to the Budget of the United States Government

Statement of Federal Financial Accounting Standards No. 7 (SFFAS No. 7), Accounting for Revenue and 

Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, requires an 

explanation of material differences between budgetary resources available, the status of those resources 

and outlays as presented in the Statement of Budgetary Resources to the related actual balances 

published in the Budget of the United States Government (Budget). However, the Budget has not yet been 

published. The Budget is scheduled for publication in February 2007 and will be available through 

OMB. Accordingly, information required for such disclosure is not available at the time of publication 

of these financial statements.
89

Federal Election Commission Performance and Accountability Report 2006

Note 12 – Custodial Revenues and Accounts Receivable

FEC uses the accrual basis of accounting for the collections of fines, penalties and miscellaneous receipts. 

Collectibility by FEC of the fines and penalties is based on the responsible parties’ willingness and ability 

to pay:

2006 2005

Fines, Penalties and Other Misc. Revenue $ 6,602,398 $ 2,592,444

Accounts Receivable for Fines, Penalties 

and Other Miscellaneous Receipts

Accounts Receivable $ 1,074,698 $ 869,161

Less: Allowance for Doubtful Accounts 554,227 442,011

Total $ 520,471 $ 427,150

Note 13 – Explanation of the Relationship Between Liabilities 

Not Covered by Budgetary Resources on the Balance Sheet and 

the Change in Resources that Fund Expenses Recognized in Prior 

Periors of Operations

The decrease in FECA liability of $18,445 and annual leave liability of $31,961 from FY 2005 is included 

in the Resources that fund expenses recognized in prior periods of operations line on the Statement of 

Financing. In FY 2005, there was a decrease of $7,349 in the FECA liability. See Note 6 for liability 

balances. Undelivered orders at September 30, 2006 and 2005 totalled $5,211,294 and $4,015,447 

respectively.

91

Federal Election Commission Performance and Accountability Report 2006

Office of Inspector General 

MEMORANDUM

TO: The Commission 

FROM: Inspector General 

SUBJECT: Inspector General Statement on the Federal Election Commission’s 

Management and Performance Challenges 

DATE: October 13, 2006 

Each year, the Inspector General is required to provide a summary and assessment of the 

most serious management and performance challenges facing the Federal Election 

Commission. The requirement is contained in the Reports Consolidation Act of 2000 

(Public Law 106-531), an amendment to the Chief Financial Officers (CFO) Act of 1990. 

The attached document responds to the requirement, and provides the annual statement 

on Commission challenges to be included in the Federal Election Commission 

Performance and Accountability Report (PAR) Fiscal Year (FY) 2006. 

The Inspector General has identified three areas for inclusion in the FEC’s FY 2006 

PAR: 

 Human Capital Management 

 Information Technology Security 

 Financial Reporting 

The Inspector General identified these same three challenges in the 2005 PAR and 

continues to believe the issues remain challenges for the FEC. This year, human capital 

management is highlighted, due in part to the increased importance in this area as a result 

of the departure of several senior management of the FEC. Overall, the FEC has devoted 

significant efforts to address the challenges and progress is being made on these 

important areas. 

The Inspector General’s assessment is based on information derived from a combination 

of several sources; including Office of Inspector General audit and inspection work, 

FEDERAL ELECTION COMMISSION

WASHINGTON, D.C. 20463

Appendix A: 

Inspector General Statement
Appendix A | Inspector General Statement

92

2

Commission reports, and a general knowledge of the Commission’s programs and 

activities. 

The Reports Consolidation Act of 2000 permits agency comment on the Inspector 

General’s statements. Agency comments, if applicable, are to be included in the final 

version of the PAR that is due on November 15, 2006. 

 Lynne A. McFarland 

 Inspector General 

Attachment 

Cc: Patrina M. Clark, Staff Director 

 John D. Gibson, Acting Chief Financial Officer 
93

Federal Election Commission Performance and Accountability Report 2006

	









	



	
	
 
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99

MATERIAL WEAKNESS

FY

FIRST

NOTED

STATUS CORRECTIVE ACTIONS

Cost Accounting System and Processes

1. Establish formal and comprehensive cost 

allocation methodology and related policy and 

procedures. 

2005 Completed: 

April 2006

Implemented cost allocation and Time Reporting System (TRS) 

effective April 2006. 

2. Cross-train employees to minimize the risks 

of major interruptions in normal business 

operations.

2005 Completed: 

July 2006

The TRS was developed jointly with ITD. As such, training 

related to TRS was cross-functional. For example, the program 

offices and Acting Budget Officer have received TRS training. 

The Budget Analyst will be trained when hired. 

3. Establish a review process wherein a person, other 

than the preparer, reviews the work performed to 

ensure accuracy and propriety.

2005 Completed: 

July 2006

The Budget Officer is responsible for generating information/

output from TRS. The CFO then reviews and approves the 

allocation percentages derived and documents the review.

4. Maintain audit trails to support the allocation 

methodology and amounts 2005

Completed: 

September 

2006

TRS has embedded edit checks and audit trails to support the 

allocation percentages. The CFO is responsible for reviewing the 

reports quarterly. 

5. Evaluate the functional requirements for the 

new cost accounting system to ensure that the 

minimum level of cost accounting required in 

SFFAS No. 4 is attained.

2005

Completed: 

September 

- October 

2006

The CFO, Accounting Officer and an outside contractor have 

reviewed the requirements of SFFAS and found FEC to be in 

compliance. A new policy, procedures and documentation were 

developed.

Administrative Fines, Civil Penalties and 

Miscellaneous Receipts

6. Establish and implement policy and procedures 

ensuring communication and coordination 

between program offices and finance office 

on activities with financial impact. The policy 

should also clearly establish the FEC's revenue 

recognition policy. The finance office should 

design a standard report outlining all the 

necessary information to record the financial 

activities. The report should be prepared and 

submitted timely at least monthly by the 

program offices to the finance office.

2005

Completed: 

JulySeptember 

2006

Finance met with the program offices in Dec. 2005 to discuss 

information needed by Finance. Finance developed detailed 

spreadsheets by cases which track receivables, collections and 

payables (budget clearing). These spreadsheets were completed 

in July 2006 and are sent to the offices for confirmation each 

month. 

Appendix B:

Report on the Status of FMFIA Non-Conformance
100

Appendix B | Report on the Status of FMFIA Non-Conformance

MATERIAL WEAKNESS

FY

FIRST

NOTED

STATUS CORRECTIVE ACTIONS

7. Document the policy and basis for the allowance 

for uncollectable accounts. 2005

Completed: 

September 

2006

Procedures are documented in the Accounting Manual section 

2.3.9. Spreadsheets exist to record the monthly transactions. 

General Property and Equipment

8. Reconcile the total of the individual property 

items in the property system to the bulk 

purchase total recorded in the books to ensure 

completeness of the property system records. 

2005

Completed: 

March 

2006

FEC began recording bulk purchases of computers in detail 

in the property system in FY 2006. All purchases from that 

point forward are recorded in detail. FEC has also certified 

all capitalized assets are in good condition and in use as of 

09/30/06.

9. Document physical inventory procedures, 

results, and reconciliation and maintain the 

documentation to audit trail purposes.

2005

Completed: 

September 

2006

A physical inventory was taken of all capitalized assets by FEC 

personnel in September 2006. A contractor performed the 

inventory of non-capital assets. Results were made available to 

CG. No adjustments to the books were necessary. 

10. Revise the software capitalization policy to 

comply with SFFAS No. 10. 2005

Completed: 

March 

2006

FEC performed a review of its capitalization policy in March 

2006 and found no changes were needed.

11. Enforce compliance and consistent 

implementation of policies and procedures 

related to completing receiving reports and the 

review and approval of obligating memos or 

documents.

2005 Completed: 

April 2006

The receiving report was redesigned and placed in service in 

April 2006. 

12. Establish a standard process and policy where 

program offices are required to notify the finance 

office of any property acquisition or disposition 

with accounting impact to ensure proper and 

timely recording of the transaction. 

2005 Completed: 

June 2006

Finance met with ITD several times during FY 2006 to ensure it 

had the latest status of software in development. FEC intends to 

develop a form in FY 2007 to replace e-mail notifications. 

Entity-Wide Security Program

13. Implement a framework of policies and standards 

to mitigate risks associated with the information 

resources management.

2005

Completed 

September, 

2004

Completed \\Ntsrv1\fec-wide\FEC IT Policies and Standards\IT 

System Security Program Policy Cover Letter.pdf

14. Complete the documentation, approval and 

implementation of an entity-wide security 

program plan.

2005

Completed 

September, 

2004

Completed \\Ntsrv1\fec-wide\FEC IT Policies and Standards\IT 

System Security Program Policy Cover Letter.pdf

15. Develop and implement security plans for all 

major applications and MCGSS as part of a risk 

mitigation strategy.

2005

Completed 

September, 

2004

Completed.

16. Ensure that Resource Classifications in FEC's 

security plans accurately reflect the risk and 

vulnerabilities of FEC systems.

2005

Requires 

additional 

funding

Funds were requested in the 06 budget but they were not 

available. The best case for completion of a partial risk 

assessment would be 2007 if funds become available.

17. Complete the implementation of the program 

for the continuous monitoring and evaluation 

of the computer security policy and control 

effectiveness.

Modified 

from 2004

Completed 

September, 

2005

Completed.
Federal Election Commission Performance and Accountability Report 2006

101

MATERIAL WEAKNESS

FY

FIRST

NOTED

STATUS CORRECTIVE ACTIONS

18. Conduct risk assessments at least every three 

years as part of an overall strategy to mitigate 

risks associated with its information technology 

environment.

2005

Requires 

additional 

funding

Funds were requested in the 06 budget but they were not 

available. The best case for completion of a partial risk 

assessment would be 2007 if funds become available.

19. Certify that the major applications and MCGSS 

are operating according to FEC's security 

requirements.

2005

Requires 

additional 

funding

Funds were requested in the 06 budget but they were not 

available. The best case for completion of a partial certification 

would be 2007 if funds become available.

20. Strengthen FEC's program to document 

corrective actions and verify that weaknesses 

identified have been addressed. Ensure and 

document that recommendations from the 

most recent network security review have been 

implemented.

Modified 

from 2004

Completed 

December, 

2005

Completed.

Controls to Protect Information 

21. Create a new GL system application role to give 

employees with necessary and appropriate Access 

rights to fulfill their job responsibility.

Modified 

from 2004

Completed 

January, 

2006

Completed \Ntsrv1\fec-wide\FEC IT Policies and Standards\58-

2.2 Account Management Policy.doc & 58-3.1 Logical Access 

Policy.doc

22. Monitor and record visitor access to the data 

center. 2005

Completed 

October, 

2005

Completed. Process has been greatly improved and now in 

compliance with FEC's physical security policy.

23. Use access request forms to document user access 

rights and periodically review the access for 

appropriateness.

2005

Completed 

January, 

2005

Completed \Ntsrv1\dsdd\System Security Plans\Completed\

FEC LAN and PeopleSoft Security Plans & \\NTSRV1\FECWide\IT Policies and Standards\FEC Password Standard and 

Rules of Behavior.

24. Develop mitigating controls to ensure that GL 

system passwords are in agreement with FEC 

policy.

Modified 

from 2004

Completed 

January, 

2005

Completed.

25. Automatically log network activity as required by 

the Audit Events Standard. 2005

Completed 

October, 

2005

Completed. The FEC adjusted the Audit Events Standard to 

accurately reflect what it does under the current infrastructure.

26. Institute a process to manually review logs 

of users using budgetary overrides where the 

reviewer is an individual who does not have 

access to utilize the overrides.

2005

Completed 

August, 

2006

Completed. The CFO now approved a list of all budget overrides 

used during the year.
102

Appendix B | Report on the Status of FMFIA Non-Conformance

MATERIAL WEAKNESS

FY

FIRST

NOTED

STATUS CORRECTIVE ACTIONS

27. Periodically review the firewall rule set for 

appropriateness. 2005

Completed 

December, 

2005

Completed.

28. Periodically review LAN user accounts and 

disable unnecessary user accounts. 2005

Completed 

March, 

2006

Completed.

 Contingency Plan

29. Perform a Business Impact Analysis to formally 

identify and prioritize all critical data and 

operations on FEC's networks and the resources 

needed to recover them if there is a major 

interruption or disaster. Ensure that emergency 

processing priorities are established to assist in 

managing disaster situations more effectively for 

the network and include business owners in the 

discussion to determine how much backup data 

is needed on-hand to minimize the impact of a 

disaster.

Modified 

from 2004

Requires 

additional 

funding

Funds were requested in the 06 budget but they were not 

available. The best case for completion of a partial BIA would be 

2007 if funds are available.

30. Establish alternative processing site for FEC's 

operations in the event of a disaster and ensure 

that an operational mechanism exists to update 

the disclosure database in the event that the FEC 

database is unavailable to replicate the disclosure 

database resident at the off-site location.

Modified 

from 2004

Not Cost 

Justified The cost is prohibitive and not cost effective.

31. Develop a Continuity of Operations Plan 

(COOP) to support the continuation of the 

FEC's core mission in the event of a disaster that 

renders the FEC's facilities unusable.

2005

Requires 

additional 

funding

Funds were requested in the 06 budget but they were not 

available. The best case for completion of a partial COOP would 

be 2007, if funds are available.

32. Develop and document a comprehensive 

contingency of operations plan of FEC's data 

centers, networks and telecommunication 

facilities.

2005

Requires 

additional 

funding

Funds were requested in the 06 budget but they were not 

available. The best case for completion of a partial COOP would 

be 2007, if funds are available.

33. Fully implement the System Development Life 

Cycle Methodology.

Modified 

from 2004

Completed 

August, 

2005

Completed. This was completed with the implementation of the 

ClearQuest Change Tracking in August 2005. Item is closed.
103

Federal Election Commission Performance and Accountability Report 2006

Appendix C: 

Federal Election Commission 

Strategic Plan FY 2004-2009

PURSUANT TO GPRA AND OMB A-11 April 

11, 2005 Submitted to Congress/OMB 2 FEDERAL 

ELECTION COMMISSION STRATEGIC PLAN 

FY 2004-2009 As directed by the Congress, OMB, 

and the GPRA, the Strategic Plan provides the 

framework for how the Federal Election Commission 

(FEC) will use its resources to implement and enforce 

the campaign finance laws during the 2002 (FY 

2002-2003), 2004 (FY 2004- 2005), 2006 (FY 2006-

2007) and 2008 (FY 2008-2009) election cycles. The 

information in this plan is consistent with all currently 

available OMB guidance including OMB Circular A11, as revised, per Transmittal Memorandums for all 

OMB A-11 Supplements. The plan will be modified 

in accordance with any future OMB guidance to 

agencies concerning compliance with the provisions 

of Public Law 103-62, the Government Performance 

and Results Act (GPRA.) The FEC Strategic Plan 

will be reviewed and revised in the FY 2007 Budget 

preparation process.

MISSION STATEMENT

The mission of the FEC is to assure that the 

campaign finance process is fully disclosed and 

that the rules are effectively and fairly enforced, 

fostering the electorate’s faith in the integrity of 

the nation’s political process. The sanctity of the 

political process is key to public faith in the policy 

decisions made by the elected and executive branches 

of government. Desired outcomes from the successful 

achievement of this mission include providing the 

electorate with the capability to make educated, 

informed decisions in the political process based in 

part on where candidates for Federal office derive 

their financial support, and the confidence that those 

who disregard the Federal Election Campaign Act of 

1971, as amended, (FECA) restrictions on campaign 

financing and/or its requirements for public disclosure 

will suffer real and evenhanded consequences for noncompliance. In attaining these outcomes, the FEC 

strives to foster and maintain an attitude of voluntary 

compliance with the rules of the campaign finance 

process. The FEC realizes that voluntary compliance 

and public confidence are necessary because limited 

budgetary resources preclude massive efforts to 

enforce the FECA. In any election cycle, nearly 

8,000 committees file between 85,000 to 90,000 

reports, which contain between 2.5 to 3.0 million 

itemized processed transactions (contributions), as 

well as millions of other itemized disbursements, 

receipts and other payments previously not entered 

into Commission databases (now filed electronically 

except for Senate reports and other committees with 

less than $50,000 in activity.) At the same time, the 

FEC has the resources to audit less than 1% of the 

committees filing reports in any given cycle, and 

only has the capacity to actively pursue between 1.5 

to 2% of total committees through the compliance 

(enforcement) process (average monthly total of active 

cases since FY 1995) at any given time. As a result, 

voluntary compliance is the only possible method 

to ensure widespread compliance with the FECA

in the campaign finance universe as it is configured 

currently. Administering and enforcing the FECA

includes facilitating public disclosure of campaign 

finance activity; providing information and policy 

guidance to the public, press, political committees, 

and elections officials on the law and Commission 

regulations; encouraging voluntary compliance 

with the disclosure and other requirements of the 

FECA; and 3 enforcing the statute through audits, 

investigations, and civil litigation. Administering and 

enforcing the FECA also involves implementing the 

public funding programs for Presidential campaigns 

and conventions. This includes certification and 

audits of participating candidates and committees, 

and enforcement of public funding legislation.
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Appendix C | FEC Strategic Plan

DESCRIPTION OF GOALS AND 

OBJECTIVES

To achieve this mission, the FEC has identified three 

major goals and objectives. The transfer of the Office 

of Election Administration to the Election Assistance 

Commission in FY 2004 reduced the number of 

objectives from four to three. The goals and objectives 

are tied to the remaining three core FEC programs:

PROGRAM I: Public Disclosure

Promoting disclosure of campaign finance reports 

required to be filed for public view under the FECA

(Title 2): to promote full, accurate, and timely 

disclosure of campaign finance activity in Federal 

elections, and to provide information and policy 

guidance on the FECA to the public, press, and those 

persons and entities required to comply with the 

FECA.

PROGRAM II: Compliance

Enforcing the disclosure and limitations provisions of 

the FECA (Title 2): to encourage and obtain voluntary 

compliance with the disclosure and limitations 

provisions of the FECA through enforcement of the 

FECA in a timely, consistent, and comprehensive 

manner.

PROGRAM III: Public Financing

Implementing the presidential election public funding 

provisions of the FECA (Title 26): to successfully 

administer the public funding provisions of the FECA

under Title 26 U.S.C. for qualified candidates in 

presidential elections. The successful outcome of these 

programs will lead to the achievement of the FEC 

mission to assure public confidence in the campaign 

finance system.

ACHIEVEMENT OF GOALS 

AND OBJECTIVES–

EXPECTED OUTCOMES

The expected outcome is that the public has a high 

level of faith and trust in the fairness of the campaign 

finance and political processes. Program outcomes 

include:

Program I: Public Disclosure

Outcomes are:

That sources of campaign funds in Federal 

elections are accurately, fully, and timely disclosed 

to the public;

That the electorate can make informed decisions 

as to the sources of campaign funds for candidates 

for Federal office;

That the electorate can readily obtain campaign 

finance information directly from the FEC in 

usable formats;

That the press and media can use FEC data to more 

widely disclose campaign finance information;

That the public and the campaign finance 

community can easily obtain policy guidance and 

assistance in understanding and complying with 

the FECA.

Program II: Compliance

Outcomes are:

That the public has confidence that the FECA is 

fairly and swiftly enforced;

That the election community has a high level 

of confidence that the FECA is fairly enforced, 

resulting in a high level of voluntary compliance 

with the FECA;

That the election community believes that there 

are real, timely consequences for violation of the 

disclosure and limitation provisions of the FECA;

That FEC enforcement resources are focused 

on the most salient and significant compliance 

concerns under the FECA.

Program III: Public Financing

Outcomes are:

That the successful implementation of the public 

funding provisions of the FECA continues for 

each presidential election;

That all Federal funds disbursed in presidential 

elections are properly certified and accounted for 

by eligible candidates;

That all audits and enforcement actions related to 

public funding are completed in a fair and timely 

fashion;

That there are real and timely consequences for 

failure to comply with the FECA requirements 

under Title 26.

•

•

•

•

•

•

•

•

•

•

•

•

•
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Federal Election Commission Performance and Accountability Report 2006

RELATIONSHIP BETWEEN 

PERFORMANCE GOALS IN THE 

ANNUAL PERFORMANCE PLAN 

(BUDGET) AND GOALS AND 

OBJECTIVES IN THE STRATEGIC 

PLAN.

Definition of an Election Cycle

The Commission defines its work in the context of 

election cycles. An election cycle is defined generally as 

the preceding and actual election years, i.e., calendar 

years 2003 and 2004 constitute the 2004 election 

cycle. In the Strategic Plan, the FEC notes that the 

2004 election occurs in FY 2005, and that the break 

in fiscal years (October 1) comes in the middle of the 

peak pre-election period when the FEC experiences 

its heaviest workloads for many programs. The flow 

of work for programs such as audits and enforcement 

actions is such that action on the referrals for audits 

and compliance actions from the 2004 election most 

likely will not be finalized for three to four 5 years 

after the election cycle. This is particularly true for 

presidential audits and enforcement cases arising from 

the public funding provisions of the FECA. Therefore, 

work undertaken or completed in any fiscal year will 

necessarily include work arising from two or more 

election cycles. Strategic Plan and Election Cycles/

Performance Plan and FY’s The Strategic Plan discusses 

performance goals and workloads by election cycle 

(unless otherwise noted), while the Performance Plan 

(now Performance Budget) relates the activities of the 

specific fiscal year (FY 2005) to work from several 

election cycles. The Performance Budget request also 

relates the performance goals for the FY to the levels 

of funding, relating the impact of reduced funding to 

the obtainable level of outcomes possible.

STRATEGIC PLAN FY 2004-2009 

PERFORMANCE GOALS

The targets and goals included in this Strategic Plan are 

based on the assumption that the Commission receives 

an appropriation at least sufficient to fund 391 FTE 

in each FY, which is the Current Services Performance 

level. Any level of funding less than the Current 

Services Performance level is a Minimal Performance 

level. This reduced level of funding results in a reduced 

level of performance and jeopardizes the achievement 

of our mission and our major program objectives. The 

reduced performance is reflected in several ways. For 

example, there would be slippage of the time frames 

for completion of data collection, reports review, and 

referrals for audits and/or compliance actions, as well 

as for responsiveness to requests for information and 

data inquiries. Reduced performance would also be 

reflected in delays in completing the milestones for 

the IT programs set forth in our IT Strategic Plan. 

In some instances, less would be accomplished as 

well as delays experienced. Minimal funding levels 

would also jeopardize the operations of the ADR 

and the administrative fine programs and the standalone Title 2 audit program (audits of committees not 

receiving Federal funds). The FEC has experienced a 

more than 1366% percent increase in total campaign 

finance activity since 1976 (from $300 million in 

total disbursements in Federal elections in 1976 to 

over $4.4 billion in the 2004 election.) This increase 

in total financial activity has led to a 27% increase in 

total documents filed in an election cycle since the 

1984 cycle, as well as a 400% increase in itemized 

transactions entered into the disclosure databases 

since 1984. The Commission has met these increases 

with a relatively static level of staffing though the use 

of management initiatives, productivity increases, and 

the use of technological improvements. It is vital to 

the successful achievement of the FEC mission and 

major program objectives that the Current Services 

Performance level is funded. The goals identified 

below reflect the Current Services Performance level.

PROGRAM I. DISCLOSURE

To meet the goal that the public is fully informed 

about campaign finance sources, during each Federal 

election cycle (primaries and the general elections) the 

Commission will accomplish the following:

A. Place between 85,000 to 90,000 reports and 

20,000 to 25,000 statements from 7,500 to 

8,000 committees filing reports on the public 

record each election cycle:

1. Complete coding and entry of summary 

data from documents and statements filed each 

cycle and meet the 48 hour deadline for making 

documents public for 99% of those filed;

2. Complete coding and entry of itemized data 

from reports filed, including 2.5 to 3.0 million 

itemized transactions per cycle, completing 95% 

within 45 days of reports being received at the 
106

Appendix C | FEC Strategic Plan

FEC, and all reports processed within a median 

7 days from receipt at the commission;

3. Complete the review of all reports filed and 

refer all potential enforcement actions and audits 

each cycle, 60% of reviews within 90 days of 

receipt (quarterly filing periods);

4. Issue 20,000 Requests for Additional 

Information (RFAI’s) per cycle to correct the 

public record, 60% within 90 days of receipt of 

report (contacting filers within 90 days minimizes 

repetitious errors which tend to further burden 

the disclosure process);

5. Respond to requests for assistance from 40,000 

filers per cycle.

B. Produce analytical summaries and releases of 

campaign finance data in summary form, and 

in the aggregate and by individual committees, 

periodically prior to each election, and in 

summary form after each general election:

1. Produce analytical releases after each election 

year quarterly report and the pre-general election 

report;

2. Produce Summary statistical analyses after each 

election cycle: Reports on Financial Activity;

3. Conduct a database accuracy review monthly 

for summary and itemized data entry.

C. Make FEC database and data available to 

requesters directly through on-line, website 

access:

1. Provide free access to the FEC disclosure 

database to all state elections offices wishing to 

participate and grant waivers for state filings 

for participating states: all 50 states and two 

territories;

2. Provide timely on-line access to the FEC 

disclosure database to the public through the 

FEC website and the storefront Public Records 

Office;

3. Make electronic filings available over the 

Internet upon receipt and processing at the FEC 

and make images of non-electronically filed 

reports also viewable on the FEC Web site: 4 

million visits and over 100 million hits per cycle 

on the FEC Disclosure site.

D. Respond to over 200,000 requests for data, 

information, copies of reports or indices, and 

other requests for assistance each cycle (not 

including visits and hits on the FEC website):

1. 50,000 requests in Public Records;

2. 60,000 inquiries in Information, primarily 

over the toll-free line;

3. 16,000 requests in the Press Office, and 100 

FOIA requests;

4. 10,000 requesters receive copies of materials 

and publications;

5. 75,000 computer indices and printouts.

E. Respond to Advisory Opinion requests and 

operates informational outreach programs:

1. Respond to 100% of 50 to 60 Advisory 

Opinion requests per cycle within 60 and 20-day 

statutory deadlines;

2. Publish an Annual Report each year, the FEC 

Record monthly, and provide prior notice of filing 

dates to filers;

3. Make FEC disclosure forms and copies of 

FECA and FEC Regulations available to filers 

electronically and in print form;

4. Produce additional informational and 

educational publications and videos such 

as campaign guides, brochures, and other 

pamphlets;

5. Conduct five to six campaign finance workshops 

to educate filers, and monthly roundtables on 

FECA issues.

PROGRAM II. COMPLIANCE

To meet the goal that the public is assured of impartial 

and timely enforcement of FECA, the Commission 

will accomplish the following:

A. Make 100-125 referrals from the Reports Analysis 

Division for potential audit or enforcement per 

cycle:
107

Federal Election Commission Performance and Accountability Report 2006

1. Refer 75 committees for potential audits under 

2 U.S.C. 438(b) per cycle, with 50 in the second 

year of cycle (e.g. FY 2005 for 2004 cycle) and 

all audit referrals of candidate committees within 

the statutory deadline of six months from the 

general election;

2. Refer 45 to 50 committees for potential 

enforcement actions under 2 U.S.C. 437(g) per 

cycle

B. Complete audits of committees referred under 2 

U.S.C. 438(b), estimated 45-50 for each cycle:

1. 20-25 unauthorized (non-candidate) 

committees;

2. 20-25 authorized (candidate) committees;

3. Also complete review of all audits for legal 

issues.

C. Process enforcement workload arising from 

complaints and the internal review and referral 

system for each cycle:

1. Process 175-200 complaints plus 45-50 

internal referrals during the two-year period;

2. Assuming an average total caseload of 125-150 

cases in any given month, maintain an average 

active caseload of 50% of total caseload;

3. Activate 50% of incoming cases on average 

over the election cycle.

D. Close 175-200 cases in each election cycle, at least 

50% with substantive Commission action. (This 

50% represents cases in which the Commission 

has reached a substantive finding on the merits 

of the matter, other than dismissal, including 

findings of no RTB.)

E. Conserve limited enforcement resources for more 

complex, substantive cases by continuing an 

administrative fine program for late and non-filing 

committees, removing non-filer enforcement 

from the standard complex enforcement process; 

close 375-400 cases in the second year of the 

cycle (e.g. FY 2005 for the 2004 cycle.)

F. Conserve additional enforcement resources 

through the continued operation of the ADR 

program, designed to streamline the resolution 

of administrative complaints and Title 2 audit 

referrals without resorting to the more complex, 

substantive enforcement procedures. Close 75-

100 cases per election cycles, including any cases 

referred for mediation.

G. Pursue resolution of cases through litigation and 

defend the FEC and FECA in suits brought by 

other parties to fully enforce the FECA:

1. Initiate litigation in an estimated 7-10 offensive 

suits per cycle (always meeting five-year statute of 

limitations);

2. Defend the FEC and FECA in 20-30 suits 

initiated per cycle.

PROGRAM III. PUBLIC FINANCING

To meet the goal that the public funding programs 

under the FECA are fully implemented and fairly and 

speedily enforced, the Commission will accomplish 

the following: Within two years of each presidential 

general election:

A. Complete the certification of payments to 

and audits of publicly funded candidates in 

presidential elections:

1. Process monthly certification requests for 

Federal matching funds (estimated 10-12 

candidates in a presidential election with an 

incumbent, 15-17 candidates in an “open” 

presidential election);

2. Audit primary candidates receiving Federal 

matching funds (same criteria for number of 

candidates);

3. Audit at least four (major) national party 

convention and host committees receiving Federal 

funds for nominating conventions, and any 

eligible minor party convention committees;

4. Audit general election candidate committees 

of two major parties (and any eligible minor 

parties). Within three years of each presidential 

general election:

B. Complete legal review of presidential audits:

1. Review legal issues arising from primary audits, 

at least four convention audits, and two or three 

general election audits;
108

Appendix C | FEC Strategic Plan

2. Resolve repayment questions for committees 

receiving Federal funds (always meeting three 

year statute of limitations).

C. Initiate enforcement cases involving presidential 

committees referred through internal referral 

process or complaint.

D. Provide Congress with a report on the public 

funding programs. Within four years of each 

presidential general election:

E. Complete initial actions on enforcement cases 

involving presidential committees referred 

through internal process or complaint.

KEY FACTORS THAT COULD AFFECT 

ACHIEVEMENT OF GOALS AND 

OBJECTIVES

External factors that have the greatest potential to 

significantly and adversely affect our ability to achieve 

our statutory mission are those that affect the general 

application of the FECA itself. Such factors include, 

but are not limited to:

The number of candidates who run for Federal 

office and the amount of money involved in the 

political process;

Significant and substantive amendment to the 

FECA itself, which could either close present 

“loopholes” in the law and strengthen the FEC’s 

enforcement and disclosure operations, or changes 

loosening the regulations regarding the limits and 

restrictions on fundraising and reporting (recent 

BCRA amendments were an example of significant 

amendments to the FECA);

Definitive Supreme Court judicial review of 

presently contested elements of the FECA, e.g. 

the definition of “express advocacy,” the legal 

determination of what activity by a group triggers 

registration as a committee (and thus reporting 

requirements and limitation provisions), and 

similar controversial elements of the present 

regulatory regime (the BCRA amendments to 

the FECA resolved some issues, left others still 

open, and created some potential new issues to be 

resolved);

The solvency of the Presidential Election Campaign 

Fund and, as a consequence, the determination of 

presidential candidates to opt either in or out of 

the public funding programs;

•

•

•

•

Significant increases or decreases in the level of 

competition in Federal election campaigns, the 

volume and intensity of fundraising for Federal 

campaigns, and the general political attitude, 

interest, and awareness of the public and the 

electorate, which can greatly influence the tone 

and competitiveness of elections;

Major increases or decreases in the level of funding 

appropriated to the FEC and the presence and 

nature of any restrictions on the use of those 

funds;

All of these factors can influence the amount of 

money to be regulated by the FEC each election 

cycle, driving FEC workloads such as the number 

of reports filed and transactions to be processed, 

the volume of requests for information, data, and 

assistance made to the FEC, and the number of 

complaints filed with the Commission. Of all these 

factors, the status of the presidential fund and the 

appropriations level for the FEC are perhaps the most 

salient currently. Record levels of campaign finance 

activity in the past six election cycles, coupled with 

available budgetary resources, have severely strained 

the Commission’s ability to meet mission objectives 

and performance goals. The status of the presidential 

fund may become an active factor in future elections, 

because of declining public support of the check-off 

and absent any legislative fix to index income into 

the fund. Several major candidates have chosen not 

to participate in the public financing process in the 

presidential primaries for the 2000 and 2004 election 

cycles.

FEC PROGRAM EVALUATION 

ACTIVITIES

The FEC has a planning and budgeting system which is 

based on a detailed Management Information System 

(MIS), and is driven by program based workloads and 

activity data, outputs, and productivity measures. In 

an on-going evaluation process, the monthly MIS 

reports and FY based productivity measures are used 

to evaluate program efficiency and effectiveness. The 

FEC has also married the A-123 and A-127 processes, 

under the Federal Managers’ Financial Integrity Act, 

to ongoing program management activities, and 

has striven to relate the annual A-123 reports to the 

FEC Budget requests. The evaluation of program 

resources, mainly staff resources, and the resulting 

program outputs and productivity measures are used 

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Federal Election Commission Performance and Accountability Report 2006

in the internal planning and budget formulation 

processes. Commission Management Plans and 

Budget Requests are workload-driven, and related 

to resource levels and expected program activity 

levels. As a personnel intensive agency, about 70% 

of the Commission’s resources are staff costs, and 

the remaining 30% represents mainly rent and other 

direct support for that staff. Using the MIS and 

Summary MIS reports, both produced on a monthly 

basis, all workloads, program outputs, productivity, 

and effectiveness and efficiency are being monitored, 

in monthly Management Reports. Several other 

tracking systems monitor the status of reports 

processing (filing, filming, data coding and entry, and 

reports review), enforcement and litigation activities, 

Advisory Opinions and regulatory rule making, and 

audit progress. The Enforcement Priority System 

continually adjusts active enforcement caseloads to 

match available resources. A major, multiyear effort to 

institute a Case Management system for OGC to track 

enforcement cases resulted in the system becoming 

fully operational in FY 2003. This system monitors 

case status and tracks staff time by case for all OGC 

programs, not just enforcement. The implementation 

of the Case Management system provides a significant 

tool for the FEC to monitor resource usage and case 

progress. The Performance Goals contained in this 

Strategic Plan and the annual FY based Performance 

Budgets are tied directly to the Commission’s 

workload and activity measures and the level of 

funding requested. The on-going program activity 

monitoring and output measurement efforts enable 

the Commission to determine if its performance goals 

are being achieved. This provides the basis for future 

evaluation efforts.

STRATEGIC PLANNING ISSUES FY 

2004-2009

Over the next several election cycles, the FEC will 

be dealing with several major issues as it evaluates 

the annual performance of the agency and prepares 

budget requests. Some of the most significant issues 

include:

Public Financing Issues

The status and sufficiency of the presidential 

election campaign fund in the 2004 and 2008 

presidential elections;

•

The role of the FEC in a mixed environment of 

publicly funded and privately funded presidential 

campaigns in the next two cycles (scope of audits, 

etc.);

The impact of a potential severe shortfall of 

available public funds during a presidential 

election cycle;

The possible collapse of public funding due to 

either the choice of the candidates and/or the 

shortfall of the fund.

Filing and Processing Issues

The change in IT resources from the coding and 

entry-processing environment to the electronic 

filing environment (with a mix of the electronic 

filers and the Senate and smaller committees 

continuing to file under the manual system);

The impact of the on-going issue of the Senate 

filings, which represent a significant segment of 

the filing universe that is not electronically filed;

Maintaining consistency of data from electronic 

and non-electronic filers in the disclosure 

databases;

Reports Review Issues

The implementation of the automated review 

system and processes by the 2006 election cycle;

The resolution of significant reports review 

backlogs during the 2000 and 2002 election 

cycles: additional staff resources and the automated 

review procedures should relieve the workload 

pressure in RAD. RAD has significantly improved 

the timeliness of reports review in the 2004 cycleto-date;

The role of the review of reports and audits in 

the disclosure and compliance programs of the 

Commission.

Information and Disclosure Issues

Possible changes in staff allocations in response 

programs because of the reduction of direct 

inquiries to FEC staff due to the use of IT and other 

technology to process demands for information, 

reports and data;

Impact of possible FEC reorganization and 

restructuring of FEC programs in response to 

changing demands for information and data and 

related impact of BCRA changes on outreach 

efforts;

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110

Appendix C | FEC Strategic Plan

Review of efficacy and scope of FEC outreach 

efforts to educate and inform the public and the 

filing community post-BCRA.

Compliance Issues

Role of administrative fine program: extension of 

program beyond December 31, 2005; impact on 

filing and reporting of disclosure data and on RAD 

review programs;

Scope of Title 2, or 438(b), Discretionary Audit 

program: expand number of audits, continue 

limited scope audit program

Continuing role of the ADR program in the 

compliance and enforcement programs.

Impact of BCRA implementation on compliance 

programs. Enforcement Issues

Impact of ADR and administrative fine programs 

on OGC enforcement workloads; impact of 

automated review and adjustments to RAD 

thresholds on enforcement workloads;

Impact of BCRA changes on enforcement 

workloads and programs;

Efficacy of litigation and enforcement—setting 

precedents and building a case record in significant 

areas of the FECA and fostering compliance with 

the FECA, particularly with respect to new issues 

raised by the BCRA amendments to the FECA

Regulations and Policy Issues

Areas of the FECA and/or Regulations that need to be 

clarified, or revisited for possible revision;

Continuing impact of BCRA amendments and 

Supreme Court decision on FEC regulations and 

legal policy issues.

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Federal Election Commission Performance and Accountability Report 2006

ADR

Alternative Dispute Resolution

BCRA

Bipartisan Campaign Reform Act of 2002

DAP

Data Access Program

EAC

Election Assistance Commission

EQS

Enforcement Query System

EPS

Enforcement Priority System

FEC

Federal Election Commission

FECA

Federal Election Campaign Act

FMFIA

Federal Managers’ Financial Integrity Act

FTE

Full Time Equivalent

FY

Fiscal Year

GPRA

Government Performance and Results Act

IG

Inspector General

IT

Information Technology

MIS

Management Information System

MUR

Matters Under Review

OAR

Office of Administrative Review

OEA

Office of Election Administration

Appendix D:

Glossary of Terms
112

Appendix D | Glossary of Terms

OGC

Office of General Counsel

OIG

Office of the Inspector General

OMB

Office of Management and Budget

PAR

Performance and Accountability Report

PAC

Political Action Committee

RAD

Reports Analysis Division

RTB

Reason to Believe

RFAI

Request for Additional Information

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