Draft Final Audit Report of the 

Audit Division on 

Steve Daines for Montana 

(January 1, 2019 - December 31, 2020) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that is 

required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.1 The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

About the Campaign (p. 2) 

Steve Daines for Montana is the principal campaign committee 

for Steve Daines, Republican candidate for the United States 

Senate from the state of Montana, and is headquartered in Helena, 

Montana. For more information, see the Campaign Organization 

Chart, p. 2. 

Financial Activity (p. 2) 

• Receipts

o Contributions from Individuals $ 27,131,569 

o Contributions from Political

Committees 3,304,667 

o Transfers from Authorized

Committees 1,371,488 

o Other Receipts 71,802 

Total Receipts $ 31,879,526 

• Disbursements

o Operating Expenditures $ 29,508,162 

o Transfers to Authorized

Committees 7,754 

o Contribution Refunds to

Individuals 498,117 

o Contribution Refunds to

Political Committees 34,003 

o Other Disbursements 3,173,883 

Total Disbursements $ 33,221,919 

Findings and Recommendations (p. 4) 

• Receipt of Contributions in Excess of the Limit (Finding 1)

• Disclosure of Debts and Obligations (Finding 2)

• Disclosure of Receipts (Finding 3)

DRAFT 1 52 U.S.C. §30111(b). 
Draft Final Audit Report of the 

Audit Division on 

Steve Daines for Montana 

(January 1, 2019 - December 31, 2020) 

DRAFT
 

 

 

 

Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Campaign 

Campaign Organization 2 

Overview of Financial Activity 3 

DRAFT

Part III. Summaries 

Findings and Recommendations 4 

Part IV. Findings and Recommendations 

Finding 1. Receipt of Contributions in Excess of the Limit 6 

Finding 2. Disclosure of Debts and Obligations 11 

Finding 3. Disclosure of Receipts 14 
 

 

 

1 

Part I 

Background 

Authority for Audit 

This report is based on an audit of Steve Daines for Montana (SDFM), undertaken by the Audit 

Division of the Federal Election Commission (the Commission) in accordance with the Federal 

Election Campaign Act of 1971, as amended (the Act). The Audit Division conducted the audit 

pursuant to 52 U.S.C. §30111(b), which permits the Commission to conduct audits and field 

investigations of any political committee that is required to file a report under 52 U.S.C. §30104. 

Prior to conducting any audit under this subsection, the Commission shall perform an internal 

review of reports filed by selected committees to determine if the reports filed by a particular 

committee meet the threshold requirements for substantial compliance with the Act. 52 U.S.C. 

§30111(b). 

Scope of Audit 

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

as a result, this audit examined: 

1. the receipt of excessive contributions; 

2. the receipt of contributions from prohibited sources; 

3. the disclosure of contributions received; 

4. the disclosure of individual contributors’ occupation and name of employer; 

5. the disclosure of debts and obligations; 

6. the consistency between reported figures and bank records; 

7. the completeness of records; and 

8. other committee operations necessary to the review. 

DRAFT
 

2 

Part II 

Overview of Campaign 

Campaign Organization 

Important Dates 

• Date of Registration November 12, 2010 

• Audit Coverage January 1, 2019 – December 31, 2020 

Headquarters Helena, Montana 

Bank Information 

• Bank Depositories Three 

• Bank Accounts Three checking, One money market, One 

CD 

Treasurer 

• Treasurer When Audit Was Conducted Lorna Kuney 

• Treasurer During Period Covered by Audit Lorna Kuney 

Management Information 

• Attended FEC Campaign Finance Seminar No 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

DRAFT
3 

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand @ January 1, 2019 $ 1,450,176 

Receipts 

o Contributions from Individuals 27,131,569 

o Contributions from Political Committees 3,304,667 

o Transfers from Authorized Committees 1,371,488 

o Other 

DRAFT

Receipts 71,802 

Total Receipts $ 31,879,526 

Disbursements 

o Operating Expenditures 29,508,162 

o Transfers to Authorized Committees 7,754 

o Contribution Refunds to Individuals 498,117 

o Contribution Refunds to Political Committees 34,003 

o Other Disbursements 3,173,883 

Total Disbursements $ 33,221,919 

Cash on hand @ December 31, 2020 $ 107,783 
 

 

 

4 

Part III 

Summaries 

Findings and Recommendations 

Finding 1. Receipt of Contributions in Excess of the Limit 

During audit fieldwork, the Audit staff reviewed contributions from individuals to 

determine if any exceeded the contribution limit. This review, as revised for the Draft 

Final Audit Report, indicated that SDFM received apparent excessive contributions 

totaling $496,604. These errors occurred as a result of SDFM not resolving the excessive 

portions of contributions by requesting and receiving signed reattribution letters from its 

contributors, issuing refunds for the excessive portion of contributions in a timely 

manner, or ensuring that issued refunds were resolved in a timely manner. In response to 

the Interim Audit Report recommendation, SDFM maintained its objection to the use of 

sampling to estimate or project errors. SDFM resolved excessive contributions, totaling 

$114,177, albeit untimely. SDFM stated that an additional $36,000 in refunds were 

issued; however, it did not provide cancelled checks to the contributors, or an acceptable 

alternative, to substantiate these refunds. The Audit staff recommends that SDFM 

provide documentation demonstrating that the remaining excessive contributions, totaling 

$382,427, were not excessive, or if excessive, that the contributions were resolved in a 

timely manner. Absent such demonstration, the Audit staff further recommends that 

SDFM obtain a signed reattribution letter from each contributor, refund any remaining 

excessive amounts, or disgorge to the U.S. Treasury any refunds it has been unable to 

process. 

(For more detail, see p. 6.) 

DRAFT

Finding 2. Disclosure of Debts and Obligations 

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

obligations to five vendors, totaling $373,967. In response to the Interim Audit Report 

recommendation, SDFM filed amended disclosure reports; however, it did not include 

these debts and obligations. In its narrative response, SDFM stated that an ad buy of 

$108,750 did not require reporting because it was not incurred at the time of the invoice. 

SDFM stated the ad buy was “delayed” and the invoice was paid, instead, when the 

vendor indicated the obligation was made. SDFM did not provide additional 

documentation, such as email communications with the vendor, to substantiate this 

position. SDFM further stated that invoices, totaling $48,868, did not require reporting 

as debts because the invoiced amounts were disputed, and it paid the invoices once 

clarification was received from the vendor. Regarding the remaining debts and 

obligations, SDFM stated that the debts should be excluded from the finding because they 

only overlapped reporting periods by 6-8 days and were therefore “...immaterial to the 

public record.” 

The Audit staff maintains that SDFM should provide documentation to support its 

position that the ad buy was delayed and appropriately paid once incurred. For the 
 

 

 

 

5 

possible disputed debts and remaining obligations, the explanations provided by SDFM 

do not exclude the debts and obligations from the reporting requirements. Absent the 

provision of supporting documentation, the Audit staff maintains that these debts and 

obligations were required to be reported on Schedule D (Debts and Obligations). 

(For more detail, see p. 11.) 

Finding 3. Disclosure of Receipts 

During audit fieldwork, the Audit staff reviewed receipts to verify the accuracy of the 

information disclosed on SDFM’s reports. The review indicated that SDFM did not 

correctly disclose contributions from individuals and political committees, totaling 

$568,804 and $39,000, respectively on Schedule A (Itemized Receipts). In addition, the 

Audit staff determined that SDFM received a total of $1,409,254 in net proceeds from 

joint fundraising activity from 22 joint fundraising committees. However, SDFM did not 

itemize or correctly disclose transfers and memo entries, totaling $843,231, on Schedule 

A, as required. Finally, the Audit staff determined that SDFM received a total of $9,400 

in net proceeds through one conduit. The conduit was itemized on Line 12 (Transfers 

from Other Authorized Committees) instead of disclosed as a memo entry, and the 

original contributors, totaling $9,400, were not itemized. In response to the Interim Audit 

Report recommendation, SDFM maintained its objection to the use of sampling to 

estimate or project errors. Additionally, SDFM filed amended reports for the 2020 

election cycle; however, the amended reports did not materially correct the public record. 

SDFM’s amended reports corrected most of the disclosure errors for the political 

committees, the joint fundraising activity, and the conduit. However, nearly all of the 

identified errors for contributions from individuals remain inaccurately disclosed.2 The 

Audit staff recommends that SDFM amend its disclosure reports or file a Form 99 

(Miscellaneous Electronic Submission) to correctly disclose the contributions from 

individuals totaling $549,204. 

(For more detail, see p. 14.) 

DRAFT 2 

 The disclosure errors for contributions from individuals are presented in the chart, Disclosure Errors for 

Individuals, on page 16. 
 

6 

Part IV 

Findings and Recommendations 

Finding 1. Receipt of Contributions in Excess of the Limit 

Summary 

During audit fieldwork, the Audit staff reviewed contributions from individuals to 

determine if any exceeded the contribution limit. This review, as revised for the Draft 

Final Audit Report, indicated that SDFM received apparent excessive contributions 

totaling $496,604. These errors occurred as a result of SDFM not resolving the excessive 

portions of contributions by requesting and receiving signed reattribution letters from its 

contributors, issuing refunds for the excessive portion of contributions in a timely 

manner, or ensuring that issued refunds were resolved in a timely manner. In response to 

the Interim Audit Report recommendation, SDFM maintained its objection to the use of 

sampling to estimate or project errors. SDFM resolved excessive contributions, totaling 

$114,177, albeit untimely. SDFM stated that an additional $36,000 in refunds were 

issued; however, it did not provide cancelled checks to the contributors, or an acceptable 

alternative, to substantiate these refunds. The Audit staff recommends that SDFM 

provide documentation demonstrating that the remaining excessive contributions, totaling 

$382,427, were not excessive, or if excessive, that the contributions were resolved in a 

timely manner. Absent such demonstration, the Audit staff further recommends that 

SDFM obtain a signed reattribution letter from each contributor, refund any remaining 

excessive amounts, or disgorge to the U.S. Treasury any refunds it has been unable to 

process. 

Legal Standard 

A. Authorized Committee Limits. For the 2020 election, an authorized committee may 

not receive more than a total of $2,800 per election from any one person or $5,000 

per election from a multicandidate political committee. 52 U.S.C. §§30116(a)(1)(A) 

and (a)(2)(A); 11 CFR §§110.1(a) and (b) and 110.9. 

B. Handling Contributions That Appear Excessive. If a committee receives a 

contribution that appears to be excessive, the committee must either: 

• Return the questionable check to the donor; or 

• Deposit the check into its federal account and: 

• Keep enough money in the account to cover all potential refunds; 

• Keep a written record explaining why the contribution may be illegal; 

• Include this explanation on Schedule A if the contribution has to be itemized 

before its legality is established; 

• Seek a reattribution or a redesignation of the excessive portion, following the 

instructions provided in the Commission regulations (see below for 

explanations of reattribution and redesignation); and 

• If the committee does not receive a proper reattribution or redesignation 

within 60 days after receiving the excessive contribution, refund the excessive 

DRAFT
7 

portion to the donor. 11 CFR §§103.3(b)(3), (4) and (5) and 110.1(k)(3)(ii) 

(B). 

C. Joint Contributions. Any contribution made by more than one person (except for a 

contribution made by a partnership) must include the signature of each contributor on 

the check, money order, or other negotiable instrument or in a separate writing. A 

joint contribution is attributed equally to each donor unless a statement indicates that 

the funds should be divided differently. 11 CFR §110.1(k)(1) and (2). 

D. Reattribution of Excessive Contributions. The Commission regulations permit 

committees to ask donors of excessive contributions (or contributions that exceed the 

committee’s net debts outstanding) whether they had intended their contribution to be 

a joint contribution from more than one person and whether they would like to 

reattribute the excess amount to the other contributor. The committee must inform 

the contributor that: 

• The reattribution must be signed by both contributors; 

• The reattribution must be received by the committee within 60 days after the 

committee received the original contribution; and 

• The contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(k)(3). 

Within 60 days after receiving the excessive contribution, the committee must either 

receive the proper reattribution or refund the excessive portion to the donor. 11 CFR 

§§103.3(b) (3) and 110.1(k)(3)(ii)(B). Further, a political committee must retain 

written records concerning the reattribution in order for it to be effective. 11 CFR 

§110.1(l)(5). 

Notwithstanding the above, any excessive contribution that was made on a written 

instrument that is imprinted with the names of more than one individual may be 

attributed among the individuals listed unless instructed otherwise by the 

contributor(s). The committee must inform each contributor: 

• How the contribution was attributed; and 

• The contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(k)(3)(ii)(B). 

E. Redesignation of Excessive Contributions. When an authorized candidate 

committee receives an excessive contribution (or a contribution that exceeds the 

committee’s net debts outstanding), the committee may ask the contributor to 

redesignate the excess portion of the contribution for use in another election. The 

committee must inform the contributor that: 

• The redesignation must be signed by the contributor; 

• The redesignation must be received by the committee within 60 days after the 

committee received the original contribution; and 

• The contributor may instead request a refund of the excessive amount. 11 CFR 

§110.1(b)(5). 

DRAFT
 

8 

Within 60 days after receiving the excessive contribution, the committee must either 

receive the proper redesignation or refund the excessive portion to the donor. 11 CFR 

§§103.3(b) (3) and 110.1(b) (5) (ii) (A). Further, a political committee must retain 

written records concerning the redesignation in order for it to be effective. 11 CFR 

§110.1(l)(5). 

When an individual makes an excessive contribution to a candidate’s authorized 

committee, the campaign may presumptively redesignate the excessive portion to the 

general election if the contribution: 

• Is made before that candidate’s primary election; 

• Is not designated in writing for a particular election; 

• Would be excessive if treated as a primary election contribution; and 

• As redesignated, does not cause the contributor to exceed any other contribution 

limit. 11 CFR §110.1(b)(5)(ii)(B)(1)-(4). 

The committee is required to notify the contributor of the redesignation within 60 

days of the treasurer’s receipt of the contribution and must offer the contributor the 

option to receive a refund instead. 

Facts and Analysis 

A. Facts 

1. Facts 

The Audit staff utilized sample testing and a review of other contributions, not 

included in the sample population, to identify apparent excessive contributions from 

individuals, as noted below. 

DRAFT

Excessive Contributions - Testing Method 

Sample Projection Amount 3 $291,803 

100% Review of High Dollar Contributions $152,4514 

100% Review of Contributions Received Through 

Joint Fundraisers $52,350 

Total Amount of Excessive Contributions $496,604 

Reason for Excessive Contributions 

Contributions Not Resolved via Signed Reattribution 

Letter or Refund $496,604 

3 

 The sample error amount ($291,803) was projected using a Monetary Unit Sample with a 95 percent 

confidence level. The sample estimate could be as low as $143,260 or as high as $583,597. 4 

 After reviewing the response to the Interim Audit Report, the Audit staff removed one contribution 

totaling $2,800 from the finding. This contribution, while excessive, was refunded prior to the Audit. 

Additionally, the Audit staff removed excessive contributions, totaling $2,400, after discovering that the 

contributions were presumptively redesignated by SDFM prior to the Audit. As such, the finding has 

been updated from $501,804 in total excessive contributions to $496,604. 
 

 

 

 

 

 

 

9 

Excessive Contributions - Testing Method 

Total Amount of Excessive Contributions $496,604 

2. Additional Information 

The errors were primarily a result of SDFM not resolving the excessive portions of 

contributions made on single/joint account checks, credit card, or through a joint 

fundraiser by requesting signed reattribution letters or a refund. SDFM did issue 

refunds, however, some of the refunds were not cashed by the contributors. The total 

amount of refunds issued, but not cashed, is $60,327. 

SDFM did not maintain a separate account for questionable contributions. Based on 

its cash on hand at the end of the audit period, it appears that SDFM did not maintain 

sufficient funds to refund the apparent excessive contributions. 

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with SDFM representatives at the exit conference 

and provided a schedule of the apparent excessive contributions. SDFM representatives 

questioned the use of sampling in the audit, and the Audit staff explained that the Audit 

Division has used statistical sampling for many years and that it is a widely used tool in 

accounting and auditing. The Audit staff then walked SDFM representatives through 

each excessive contribution, at their request. 

In response to the exit conference, SDFM representatives stated that they object to the 

use of sampling to project errors. The Audit staff notes that the use of statistical 

sampling has been approved by the Commission for use in Title 52 audits for over 30 

years. 

SDFM representatives also contended that contributions, for which it issued refunds but 

the refund checks were not cashed by the contributors, should be treated as a separate 

category from those contributions that were never refunded. The Audit staff 

acknowledged that SDFM issued refund checks, which were not cashed, for excessive 

contributions; however, these checks should have been re-issued, or the excessive 

amounts disgorged to the U.S. Treasury, so that the amount of the excessive contribution 

did not remain in SDFM’s bank accounts. 

SDFM representatives also objected to the inclusion of a contribution that they stated was 

not actually excessive. SDFM’s database records and its disclosure reports showed the 

receipt of three contributions on the same date from a single contributor, one in the 

amount of $5,600, and two in the amount of $2,800 each. The $5,600 contribution was 

refunded timely, via a credit card chargeback, so SDFM did not believe this contributor 

made excessive contributions. However, the Audit staff reviewed the credit card records 

provided by SDFM, and found three contributions from this same contributor, all on the 

same date, each for $5,600, for a total of $16,800. There was one chargeback that 

refunded one of the $5,600 contributions in a timely manner. SDFM may designate one 

of the remaining two $5,600 contributions, as $2,800 for the primary election and 

DRAFT
 

10 

presumptively redesignate $2,800 to the general election. However, the final $5,600 

contribution remains excessive and should be refunded. 

The Interim Audit Report recommended that SDFM: 

• Provide evidence, which demonstrates that the contributions, totaling $496,604,5 

were not excessive, or if excessive, were resolved in a timely manner. 

• Absent such demonstration, SDFM should have obtained a signed authorization 

letter from the contributor, refunded any remaining excessive amounts, or 

disgorged any refunds, which were not cashed by the contributors, to the U.S. 

Treasury. 

• If funds were not available to make such refunds, SDFM should have reported 

the excessive contributions as debts owed on Schedule D (Debts and Obligations) 

until funds became available to make the refunds. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, SDFM representatives 

maintained their objection to the use of sampling to project errors. The Audit staff 

reiterates that the use of statistical sampling has been approved by the Commission for 

use in Title 52 audits for over 30 years. 

SDFM representatives also restated their contention that contributions, for which it issued 

refund checks, but the refund checks were not cashed by the contributors, should be 

treated as a separate category from contributions that were never refunded. The Audit 

staff again acknowledges that SDFM issued refund checks for excessive contributions, 

which were not cashed; however, these refund checks should have been voided and reissued, or the excessive amounts disgorged to the U.S. Treasury, so that the excessive 

contributions did not remain in SDFM’s bank accounts. 

In addition, SDFM stated that excessive contributions, totaling $56,920, were disgorged 

to the U.S. Treasury and provided bank records showing the same. SDFM further stated 

that “all remaining contributions specifically identified by the Audit Division as 

excessive” were refunded, and that the refunds were reported on its 2022 October 

Quarterly Report, with additional refunds to appear on its next disclosure report. SDFM 

reported refunds, totaling $96,782, on its 2022 October Quarterly Report, however, bank 

records documenting the refunds were provided for only $57,282 of the $96,782 in 

reported refunds. 

DRAFT 5 See footnote 4. 
 

 

 

 

 

 

 

 

11 

Corrective Action Taken by SDFM – Excessive Contributions 

Total Excessive Contributions as of the 

Draft Final Audit Report $496,6046 

Contributions Refunded – Issued Untimely, Refunds 

Supported by Documentation – Resolved $57,2827 

Contributions Disgorged to the U.S. Treasury – 

Disgorged Untimely, Disgorgements Supported by 

Documentation – Resolved 

$56,8958 

Contributions Refunded – Issued Untimely, No 

Documentation to Support Refunds – Not Resolved $36,0007 

Amount of Excessive Contributions –Not Resolved $382,427 

DRAFT

The Audit staff concludes that SDFM resolved excessive contributions, totaling 

$114,177,9 albeit untimely. The Audit staff recommends that SDFM provide 

documentation demonstrating that the remaining excessive contributions, totaling 

$382,427,10 were not excessive, or if excessive, were resolved in a timely manner. 

Absent such demonstration, the Audit staff further recommends that SDFM obtain a 

signed reattribution letter from each contributor, refund any remaining excessive 

amounts, or disgorge to the U.S. Treasury any refunds it has been unable to process. 

Finding 2. Disclosure of Debts and Obligations 

Summary 

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

obligations to five vendors, totaling $373,967. In response to the Interim Audit Report 

recommendation, SDFM filed amended disclosure reports; however, it did not include 

these debts and obligations. In its narrative response, SDFM stated that an ad buy of 

$108,750 did not require reporting because it was not incurred at the time of the invoice. 

SDFM stated the ad buy was “delayed” and the invoice was paid, instead, when the 

6 See footnote 4. 7 The reported refunds, totaling $96,782, exceed the amount of the corrective action taken ($57,282 + 

$36,000 = $93,282) because SDFM refunded $3,500 in contributions that were not included in the 

violation amount for this finding. 8 The reported disgorgements to the U.S. Treasury ($56,920) exceed the amount of the corrective action 

taken ($56,895) because SDFM disgorged $25 in contributions that were not included in the violation 

amount for this finding. 9 $57,282 + $56,895 = $114,177 10 $496,604 - $114,177 = $382,427 
 

 

12 

vendor indicated the obligation was made. SDFM did not provide additional 

documentation, such as email communication with the vendor, to substantiate this 

position. SDFM further stated that invoices, totaling $48,868, did not require reporting 

as debts because the invoiced amounts were disputed, and it paid the invoices once 

clarification was received from the vendor. Regarding the remaining debts and 

obligations, SDFM stated that the debts should be excluded from the finding because they 

only overlapped reporting periods by 6-8 days and were therefore “...immaterial to the 

public record.” 

The Audit staff maintains that SDFM should provide documentation to support its 

position that the ad buy was delayed and appropriately paid once incurred. For the 

possible disputed debts and remaining obligations, the explanations provided by SDFM 

do not exclude the debts and obligations from the reporting requirements. Absent the 

provision of supporting documentation, the Audit staff maintains that these debts and 

obligations were required to be reported on Schedule D (Debts and Obligations). 

Legal Standard 

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

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

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

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

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

explaining the circumstances and conditions under which each debt and obligation 

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

C. Itemizing Debts and Obligations. 

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

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

regularly scheduled report. 

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

which the debt was incurred. 11 CFR §104.11(b). 

D. Reporting Disputed Debts 

A disputed debt shall be reported in accordance with 11 CFR§ 104.3(d) and 104.11 if 

the creditor has provided something of value to the political committee. Until the 

dispute is resolved, the political committee shall disclose on the appropriate reports 

any amounts paid to the creditor, any amount the political committee admits it owes 

and the amount the creditor claims is owed. The political committee may also note on 

the appropriate reports that the disclosure of the disputed debt does not constitute an 

admission of liability or a waiver of any claims the political committee may have 

against the creditor. 11 CFR §116.10(a). 

DRAFT
 

 

13 

Facts and Analysis 

A. Facts 

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

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

identified debts, owed to five vendors totaling $373,967,11 that SDFM failed to report on 

Schedule D during the audit period. Based on a review of the records, these vendors 

provided advertising, fundraising, direct mail, website and listing services, shipping, 

event catering, and consulting services. SDFM reported debt, totaling $758,664, on 

Schedule D during the audit period. The Audit staff calculated the debts, owed to the 

vendors, based on the invoice date and the subsequent payment date. Debts were 

outstanding for periods ranging from 13 to 108 days. 

DRAFT

B. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with SDFM representatives at the exit conference 

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

The SDFM representatives had no comments at that time. 

In response to the exit conference, SDFM provided additional documentation for $23,907 

of the outstanding debt showing that the invoices were provided at a later date than the 

dates reflected on these invoices. As a result, this amount was deducted from the overall 

undisclosed debt balance discussed at the exit conference and is not included in this 

finding. SDFM did not provide comments on the remaining undisclosed debts. 

The Interim Audit Report recommended that SDFM provide additional documentation 

demonstrating that the transactions, totaling $373,967, were not obligations which 

required reporting on Schedule D. Absent such documentation, it was further 

recommended that SDFM amend its disclosure reports or file a Form 99 (Miscellaneous 

Electronic Submission)12 to disclose these debts and obligations. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, an SDFM representative stated 

that while one debt for an ad buy, totaling $108,750, was invoiced in June 2020, SDFM 

did not actually purchase this ad buy until September of 2020, and therefore no reporting 

of the debt was required. In addition, the SDFM representative stated that SDFM 

disputed the amount of two debts owed to one vendor totaling $48,868, and once that 

dispute was resolved, the debts were paid promptly. Finally, the SDFM representative 

stated that the remaining debts were only unreported for brief periods of time (6-8 days), 

and are therefore “...immaterial to the public record,” as the debts were paid in the 

subsequent reporting period. 

Regarding the ad buy, the Audit staff requested additional documentation, such as an 

email with the vendor, to verify this, and none was provided. For the debts that SDFM 

11 Each debt was counted only once, even if it was required to be disclosed over multiple periods. 12 If SDFM chooses to file a Form 99 instead of amending its disclosure reports, the form must contain all 

pertinent information that is required on each schedule. 
 

 

14 

DRAFT

disputed, the Audit staff notes that, per 11 CFR §116.10(a), disputed debts must be 

reported if the creditor has provided something of value to the political committee. 

Furthermore, the Audit staff notes that 11 CFR §104.11(b) states that debts in excess of 

$500 must be disclosed in the report that covers the date on which the debt was incurred. 

Each of these debts exceeded $500 and were not paid in the reporting period in which 

they were incurred. 

Absent the provision of documentation to show that the $108,750 ad buy was not actually 

incurred in June 2020, the Audit staff maintains that all the transactions, totaling 

$373,967, were debts and obligations that required reporting on Schedule D. 

Finding 3. Disclosure of Receipts 

Summary 

During audit fieldwork, the Audit staff reviewed receipts to verify the accuracy of the 

information disclosed on SDFM’s reports. The review indicated that SDFM did not 

correctly disclose contributions from individuals and political committees, totaling 

$568,804 and $39,000 respectively, on Schedule A (Itemized Receipts). In addition, the 

Audit staff determined that SDFM received a total of $1,409,254 in net proceeds from 

joint fundraising activity from 22 joint fundraising committees. However, SDFM did not 

itemize or correctly disclose transfers and memo entries, totaling $843,231, on Schedule 

A, as required. Finally, the Audit staff determined that SDFM received a total of $9,400 

in net proceeds through one conduit. The conduit was itemized on Line 12 (Transfers 

from Other Authorized Committees) instead of disclosed as a memo entry, and the 

original contributors, totaling $9,400, were not itemized. In response to the Interim Audit 

Report recommendation, SDFM maintained its objection to the use of sampling to 

estimate or project errors. Additionally, SDFM filed amended reports for the 2020 

election cycle; however, the amended reports did not materially correct the public record. 

SDFM’s amended reports corrected most of the disclosure errors for the political 

committees, the joint fundraising activity, and the conduit. However, nearly all of the 

identified errors for contributions from individuals13 remain inaccurately disclosed. The 

Audit staff recommends that SDFM amend its disclosure reports or file a Form 99 

(Miscellaneous Electronic Submission) to correctly disclose the contributions from 

individuals totaling $549,204. 

Legal Standard 

A. Itemization Required for Contributions from Individuals. An authorized 

candidate committee must itemize any contribution from an individual if it exceeds 

$200 per election cycle, either by itself or when combined with other contributions 

from the same contributor. 52 U.S.C. §30104(b)(3)(A). (Authorized) 

B. Election Cycle. The election cycle begins on the first day following the date of the 

previous general election and ends on the date of the next general election. If 

13 See chart, Disclosure Errors for Individuals, on page 16. 
 

 

 

 

 

 

 

15 

contributions and expenditures are designated for another election cycle, then the 

election cycle begins when the first contribution is received or expenditure is made. 

11 CFR §100.3(b). 

C. Required Information for Contributions from Individuals. For each itemized 

contribution from an individual, the committee must provide the following 

information: 

• The contributor’s full name and address (including zip code); 

• The contributor’s occupation and the name of his or her employer; 

• The date of receipt (the date the committee received the contribution); 

• The amount of the contribution; and 

• The calendar year-to-date (Unauthorized) election cycle-to-date (Authorized) total 

of all contributions from the same individual. 11 CFR §§100.12 and 104.3(a)(4) 

and 52 U.S.C. §30104(b)(3)(A). 

D. Best Efforts Ensures Compliance. When the treasurer of a political committee 

shows that the committee used best efforts (see below) to obtain, maintain, and 

submit the information required by the Act, the committee’s reports and records will 

be considered in compliance with the Act. 52 U.S.C. §30102(i). 

E. Definition of Best Efforts. The treasurer and the committee will be considered to 

have used “best efforts” if the committee satisfied all of the following criteria: 

• All written solicitations for contributions included: 

 A clear request for the contributor's full name, mailing address, 

occupation, and name of employer; and 

 The statement that such reporting is required by Federal law. 

• Within 30 days after the receipt of the contribution, the treasurer made at least one 

effort to obtain the missing information, in either a written request or a 

documented oral request. 

• The treasurer reported any contributor information that, although not initially 

provided by the contributor, was obtained in a follow-up communication or was 

contained in the committee’s records or in prior reports that the committee filed 

during the same two-year election cycle. 11 CFR §104.7(b). 

F. Itemization of Contributions from Joint Fundraising Efforts. After the joint 

fundraising representative distributes the net proceeds, each participating political 

committee reports its share as a transfer-in from the joint fundraising representative 

and itemizes the transfer on a separate schedule A for that Line. Using the records 

received from the joint fundraising representative, a participating committee also 

must itemize its share of gross receipts as contributions from the original donors on a 

memo entry Schedule A to the extent required under 11 CFR §104.3(a). 

When itemizing gross contributions, the participant must report the date of receipt as 

the day the joint fundraising representative received the contribution. 11 CFR 

§102.17(c)(3)(iii) and (c)(8)(i)(B). 

DRAFT
 

 

16 

Facts and Analysis 

A. Disclosure of Receipts 

1. Facts 

The Audit staff utilized sample testing and a review of other contributions not 

included in the sample population to identify contributions from individuals, totaling 

$568,804, and political committees, totaling $39,000, which were not correctly 

disclosed on Schedule A of SDFM’s disclosure reports. These reporting errors 

consisted of the following. 

DRAFT

Disclosure of Contributions - Testing Method 

Sample Projection Amount14 $535,012 

100% Review of High Dollar Contributions from 

Individuals $33,792 

100% Review of Contributions from Political 

Committees $39,000 

Total Error Amount $607,804 

The types of errors discovered in the sample review include incorrect disclosure of 

receipt date, name, and/or disclosure without a partnership attribution. 

Disclosure Errors for Individuals 

Type of Review 100% 

Contributions Disclosed without Partnership Attribution $19,600 

Contributions Disclosed with Incorrect Receipt Date $5,600 

Contributions Disclosed with Incorrect Amount $5,592 

Contributions Disclosed with Incorrect Name $3,000 

Total Error Amount $33,792 

14 The sample error amount ($535,012) was projected using a Monetary Unit Sample with a 95 percent 

confidence level. The sample estimate could be as low as $273,748 or as high as $970,100. 
17 

Disclosure Errors for PACs15 

Type of Review 100% 

Contributions Disclosed without an Address $27,000 

Contributions Disclosed with Incorrect Name $16,000 

Contributions Disclosed with an Incorrect Election Designation $1,000 

Total Error Amount $39,000 

DRAFT

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed the disclosure errors at the exit conference and provided 

schedules detailing the incorrectly disclosed contributions. SDFM representatives 

inquired, and the Audit staff confirmed the method for determining date errors, and 

that contemporaneous documentation would be sufficient to show the date of the 

contribution receipt. 

In response to the exit conference, SDFM stated that the date reported was correct 

for two contributions. The Audit staff accepted SDFM’s explanation, and those 

contributions are not included in the error amounts within the report. Additionally, 

SDFM representatives stated that they object to the use of sampling to project errors. 

The Audit staff reiterated that the use of statistical sampling has been approved by 

the Commission for use in Title 52 audits for over 30 years. Finally, SDFM 

indicated that it would amend disclosure reports to correct the errors. 

The Interim Audit Report recommended that SDFM amend its disclosure reports or 

file a Form 99 (Miscellaneous Electronic Submission)

12 to correctly disclose these 

contributions. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, SDFM maintained its 

objection to the use of sampling to estimate or project errors. SDFM amended all 

of its disclosure reports for calendar years 2019 and 2020 to correct the disclosure 

of contributions, as detailed below. Furthermore, an SDFM representative stated 

their belief that several contributions noted by the Audit staff as being reported with 

an incorrect date “...involve immaterial discrepancies that have no impact on the 

public record.” The Audit staff notes that committees are required to report the date 

of receipt of a contribution. In the case of these contributions, SDFM did not 

15 This group of errors and their respective dollar value exceed total errors ($39,000) because one 

contribution, totaling $5,000, had multiple disclosure errors. Each contribution was only counted once, 

toward the total error amounts, even if there were multiple errors. 
18 

provide proof of a receipt date that differed from documentation provided. 

Therefore, the Audit staff maintains that these discrepancies should be corrected 

and SDFM should amend its disclosure reports. 

Corrective Action Taken by SDFM – Disclosure of Receipts

Incorrect Disclosures as of the 

Interim Audit Report $607,804 

Reports Amended - 100% Review of High Dollar 

Contributions from Individuals – Corrected $19,600 

Reports Amended - 100% Review of Contributions 

from Political Committees – Corrected $38,000 

Amount of Incorrectly Disclosed Contributions – Not 

Resolved $550,20416 

DRAFT

The Audit staff concludes that incorrect disclosure of receipts, totaling $550,204, 

remains unresolved. 

B. Disclosure of Joint Fundraising Transfers and Memo Entries 

1. Facts 

During audit fieldwork, the Audit staff determined that SDFM received a total of 

$1,409,254 in net proceeds from joint fundraising activity from 22 joint fundraising 

committees. However, SDFM did not itemize or correctly disclose transfers and 

memo entries, totaling $843,231, on Schedules A (Itemized Receipts). These 

reporting errors consisted of the following: 

Disclosure Errors17 

Type of Review 100% 

Transfers Disclosed on Schedule A – Missing Address $84,110 

Transfers Disclosed on Schedule A – Incorrect Receipt Date $78,941 

Transfers Disclosed on Schedule A – Incorrect Amount $111 

16 $607,804 - $19,600 - $38,000 = $550,204. This amount includes contributions from individuals, totaling 

$549,204, and contributions from political committees, totaling $1,000. 17 These groups of errors and their respective dollar value exceed total errors ($843,231) because three 

contributions, totaling $5,100, had multiple disclosure errors. Each contribution was only counted once 

toward the total error amount, even if there were multiple errors. 
19 

Disclosure Errors17 

Memo Entries Not Itemized $306,585 

Memo Entries Disclosed on Schedule A - Incorrect Receipt 

Date $345,034 

Memo Entries Disclosed on Schedule A – Apparent Duplicate 

Entries $22,250 

Memo Entries Disclosed on Schedule A – Incorrect Address $5,100 

Memo Entries Disclosed on Schedule A – Incorrect or 

Missing Name $3,200 

Memo Entries Disclosed on Schedule A – Incorrect Election 

Designation $2,400 

Memo Entries Disclosed on Schedule A – Incorrect 

Aggregate Total $600 

Total Error Amount $843,231 

DRAFT

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with SDFM representatives at the exit 

conference and provided schedules detailing the missing or incorrectly disclosed 

contributions. SDFM representatives did not directly comment on these errors in 

response to the exit conference. 

The Interim Audit Report recommended that SDFM amend its disclosure reports or 

file a Form 99 (Miscellaneous Electronic Submission)

12 to correctly disclose the 

joint fundraising transfers and memo entries. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, SDFM amended all of its 

disclosure reports for calendar years 2019 and 2020 to correct the disclosure of 

transfers and memo entries, as detailed below. 
 

 

 

20 

Corrective Action Taken by SDFM – Disclosure of Joint Fundraising Transfers 

and Memo Entries 

Incorrect Disclosures as of the Interim Audit Report $843,231 

Reports Amended – Transfers Corrected $163,162 

Reports Amended – Memo Entries Corrected $669,132 

Amount of Incorrect Disclosures Remaining–Not 

Resolved $10,93718 

DRAFT

The Audit staff concludes that the incorrect disclosure of joint fundraising transfers 

and memo entries, totaling $10,937, remains unresolved. 

C. Disclosure of Contribution from a Conduit 

1. Facts 

During audit fieldwork, the Audit staff determined that SDFM received a total of 

$9,400 in net proceeds through one conduit. The conduit was itemized on Line 12 

(Transfers from Other Authorized Committees), however, the original contributors, 

totaling $9,400, were not itemized. This resulted in a total of $18,800 of incorrectly 

disclosed contributions. These reporting errors consisted of the following. 

Disclosure Errors 

Type of Review 100% 

Conduit Incorrectly Itemized on Line 12 $9,400 

Contributors Not Itemized $9,400 

Total Error Amount $18,800 

2. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with SDFM representatives at the exit 

conference and provided schedules detailing the missing or incorrectly disclosed 

contributions. SDFM representatives did not directly comment on these errors in 

response to the exit conference. 

18 $843,231 - $163,162 - $669,132 = $10,937 
 

21 

The Interim Audit Report recommended that SDFM amend its disclosure reports or 

file a Form 99 (Miscellaneous Electronic Submission)12 to itemize the required 

contributions and report the conduit as a memo entry. 

3. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, SDFM amended all of its 

disclosure reports for calendar years 2019 and 2020 to correct the disclosure of 

contribution from a conduit, as detailed below. 

Corrective Action Taken by SDFM – Disclosure of Contribution from a Conduit 

Incorrect Disclosures as of the Interim Audit Report $18,800 

Reports Amended – Conduit Corrected $9,400 

Reports Amended – Contributors Corrected $6,600 

Amount of Incorrectly Disclosed Contributions – Not 

Resolved $2,80019 

DRAFT

The Audit staff concludes that the incorrect disclosure of a $2,800 contribution 

from one contributor remains unresolved. 

In summary, the Audit staff concludes that SDFM corrected 97% of the disclosure errors 

for political committees, 99% of disclosure errors for the joint fundraising activity, and 

85% of the disclosure errors for the conduit. However, because SDFM did not correct 

97% of the disclosure errors for contributions from individuals, totaling $549,204, 

SDFM’s disclosure errors remain materially incorrect.20 Therefore, the Audit staff 

recommends that SDFM amend its disclosure reports or file a Form 99 to correctly 

disclose the remaining contributions from individuals totaling $549,204. 

19 $18,800 - $9,400 - $6,600 = $2,800. 20 The Audit staff calculated the percentages of the corrected disclosure information by dividing the 

disclosure errors resolved by total disclosure errors for each disclosure category.