Federal Election Commission

Agency Financial Report

Fiscal Year 2019
Federal Election Commission

Agency Financial Report

Fiscal Year 2019

Federal Election Commission

1050 First Street, NE

Washington, D.C. 20463

(202) 694-1100

1-(800) 424-9530

www.fec.gov

Released November 19, 2019
Contents

Message from the Chair i

How to Use This Report ii

SECTION I – Management’s Discussion and Analysis 1

Section I.A: Mission and Organizational Structure 1

Mission Statement 2

Organizational Structure 2

Sources of Funds 5

Risk Identification and Mitigation 7

Section I.B: Performance Goals, Objectives and Results 9

Strategic Goal 9

Strategic Objectives 9

Section I.C: Analysis of FEC Financial Statements and Stewardship Information 16

Section I.D: Analysis of FEC’s Systems, Controls and Legal Compliance 19

Section I.E: Limitations of the Financial Statements 24

SECTION II – Auditor’s Report and Financial Statements 25

Message from the Chief Financial Officer 26

OIG Transmittal Letter 27

Independent Auditor’s Report 30

Financial Statements 54

Notes to the Financial Statements 60

SECTION III – Other Information 81

Inspector General’s Statement on FEC Management and Performance Challenges 82

Management’s Response to the Office of Inspector General’s Statement on the Federal Election 

Commission’s Management and Performance Challenges 92

Improper Payments Information Act Reporting Details 99

Civil Monetary Penalties Adjustment for Inflation 100

Reporting on Internal Controls Assurances 101

Fraud Reduction Report 102

APPENDIX 103

List of Acronyms 103
i

Message from the Chair
ii

How to Use This Report

This Agency Financial Report presents financial information, as well as relevant performance 

information, on the Federal Election Commission’s (FEC) operations. The report was prepared 

pursuant to the Accountability of Tax Dollars Act of 2002 and Office of Management and Budget 

(OMB) Circular A-136, revised, Financial Reporting Requirements, and covers activities from 

October 1, 2018 through September 30, 2019. 

The FEC places a high importance on keeping the public informed of its activities. To learn more 

about the FEC and what the agency does to serve the American public, visit the FEC’s website 

https://www.fec.gov/about/. This Agency Financial Report as well as other reports about the agency 

can be found at https://www.fec.gov/about/reports-about-fec/strategy-budget-and-performance/. 

The FY 2019 Agency Financial Report is organized into three primary sections: 

Section I – Management’s Discussion and Analysis (MD&A) provides an overview of the FEC. It 

describes our mission, organizational structure and regulatory responsibilities. It also includes 

relevant performance information related to the FEC’s strategic goals and objectives to provide a 

forward-looking discussion of future challenges.

Section II – Financial Information, including the Independent Auditor’s Report, details the FEC’s 

financial performance by highlighting the agency’s financial position and audit results.

Section III – Other Information includes 1) our Inspector General’s (IG) assessment of the FEC’s 

management challenges and the FEC’s response and 2) a description the FEC’s compliance with key 

legal and regulatory requirements.
1

SECTION I – Management’s Discussion and Analysis

Section I.A: Mission and Organizational Structure

The Federal Election Commission is an independent regulatory agency responsible for administering, 

enforcing, defending and interpreting the Federal Election Campaign Act of 1971, as amended 

(FECA or the Act).1 Congress created the FEC to administer, enforce and formulate policy with 

respect to the FECA. The Act reflects a belief that democracy works best when voters can make

informed decisions in the political process—decisions based in part on knowing the sources of

financial support for Federal candidates, political party committees and other political committees. 

Public confidence in the political process also depends on the knowledge that participants in Federal 

elections follow clear and well-defined rules and face consequences for non-compliance.

Under the Act, all Federal political committees, including the committees of Presidential, Senate and 

House candidates, must file reports of receipts and disbursements. The FEC makes disclosure reports,

and the data contained in them, available to the public through the Commission’s Internet-based 

public disclosure system on the Commission’s website, as well as in a public records office at the 

Commission's Washington, D.C. headquarters. The FEC also has exclusive responsibility for civil 

enforcement of the Act, and has litigating authority independent of the Department of Justice in U.S. 

district court and the courts of appeals. Additionally, the Commission promulgates regulations 

implementing the Act and issues advisory opinions responding to inquiries regarding interpretation 

and application of the Act and the Commission’s regulations.

Additionally, the Commission is responsible for administering the Federal public funding programs 

for Presidential campaigns. This responsibility includes certifying and auditing all participating 

candidates and committees and enforcing the public funding laws.

The FEC has chosen to produce an Agency Financial Report (AFR) and an Annual Performance 

Report (APR) pursuant to the Government Performance and Results Act of 1993, as amended. The 

FEC will include its FY 2019 APR with its Congressional Budget Justification and will post it on the 

FEC’s website at https://www.fec.gov/about/reports-about-fec/strategy-budget-and-performance/ in 

2020.

 

1 The Commission’s primary responsibilities pertain to the Federal Election Campaign Act of 1971, Public Law 92-225, 86 Stat.

3 (1972) as amended (codified at 52 U.S.C. §§ 30101-30145) (formerly at 2 U.S.C. §§ 431-55) (the Act or the FECA). The 

Commission’s responsibilities for the Federal public funding programs are contained in the Presidential Election Campaign

Fund Act, Public Law 92-178, 85 Stat. 562 (1971) (codified at 26 U.S.C. §§ 9001-13) and the Presidential Primary Matching

Payment Account Act, Public Law 93-443, 88 Stat. 1297 (1974) (codified at 26 U.S.C. §§ 9031-42).
2

Mission Statement

The FEC’s mission is to protect the integrity of the Federal campaign finance process by providing 

transparency and fairly enforcing and administering Federal campaign finance laws.

Organizational Structure

To accomplish its legislative mandate, the FEC is directed by six Commissioners, who are appointed 

by the President with the advice and consent of the Senate. By law, no more than three Commissioners 

can be members of the same political party. Each member serves a six-year term, and two seats are 

subject to appointment every two years. Commissioners may serve beyond their six-year terms until 

new Commissioners are confirmed. The Chairmanship of the Commission rotates among the 

members, with no member serving as Chair more than once during his or her six-year term. The 

Commissioners are responsible for administering and enforcing the Act and meet regularly to 

formulate policy and to vote on significant legal and administrative matters. The Act requires the 

affirmative vote of four members of the Commission to approve official actions, thus requiring 

bipartisan decision-making. The FEC has its headquarters in Washington, D.C. and does not have any 

regional offices.

On September 1, 2019, the Federal Election Commission began working without a quorum of four 

Commissioners. While the Act requires an affirmative vote by four Commissioners to make decisions 

in many areas, including regulations, advisory opinions, audit matters and enforcement, staff 

continues to further the agency’s vital mission of administering the nation’s campaign finance laws.

The requirements of the Act and Commission regulations remain in effect, and political committees 

and other filers must continue to disclose their campaign finance activity to the Commission on the 

regular schedule. FEC staff continues to help committees and the public understand and comply with 

the law, process and review committee reports, and provide public access to campaign finance data. 

While the Commission cannot take action on many legal matters, staff continues to litigate ongoing 

court cases, process new enforcement complaints and responses, conduct audits that were previously 

authorized by the Commission, and investigate matters previously authorized by the Commission.

As noted in Figure 1, the offices of the Staff Director, General Counsel, Chief Information Officer 

and Chief Financial Officer support the agency in accomplishing its mission. The Office of the 

Inspector General, established within the FEC in 1989 under the 1988 amendments to the Inspector 

General Act, is independent and reports both to the Commissioners and to Congress. The specific 

roles and responsibilities of each office are described in greater detail below.
3

Figure 1: FEC Organizational Chart

 Office of the Staff Director (OSD)

The Office of the Staff Director consists of four offices: 1) Management and Administration; 2) 

Compliance; 3) Communications; and 4) Equal Employment Opportunity. The Office of 

Management and Administration is responsible for the FEC’s strategic planning and performance and 

works with the Commission to ensure the agency’s mission is met efficiently. In addition, this office 

houses the Commission Secretary, the Office of Human Resources (OHR) and the Administrative 

Services Division (ASD). The primary responsibilities of the Office of Compliance are review of 

campaign finance reports and filing assistance, audits, administrative fines and alternative dispute 

resolution. The Office of Communications includes divisions charged with making campaign finance 

reports available to the public, encouraging voluntary compliance with the Act through educational 

outreach and training and ensuring effective communication with Congress, executive branch 

agencies, the media and researchers and the general public. The Equal Employment Opportunity

Office administers and ensures compliance with applicable laws, regulations, policies and guidance 

that prohibit discrimination in the Federal workplace based on race, color, national origin, religion, 

age, disability, sex, pregnancy, genetic information or retaliation. The EEO Officer reports to the 

Staff Director on administrative issues, but has direct reporting authority on all EEO matters. See 29 

CFR 1614.102(b).
4

 Office of General Counsel (OGC)

The Office of General Counsel consists of five organizational units: (1) the Deputy General Counsel

- Administration; (2) the Deputy General Counsel - Law; (3) the Policy Division; (4) the Enforcement 

Division; and (5) the Litigation Division. The Deputy General Counsel - Administration directly 

supervises the Administrative Law Team, the Law Library and all OGC administrative functions. The 

Deputy General Counsel - Law has the primary responsibility for assisting the General Counsel in all 

of the substantive aspects of the General Counsel’s duties and shares in the management of all phases 

of OGC programs, as well as directly supervising the agency’s ethics program. The Policy Division 

drafts for Commission consideration advisory opinions and regulations interpreting the Federal 

campaign finance law and provides legal advice to the FEC’s compliance programs. The Enforcement 

Division recommends to the Commission appropriate action to take with respect to administrative 

complaints and apparent violations of the Act. Where authorized, the Enforcement Division 

investigates alleged violations and negotiates conciliation agreements, which may include civil 

penalties and other remedies. If an enforcement matter is not resolved during the administrative 

process, the Commission may authorize suit in district court, at which point the matter is transferred 

to the Litigation Division. The Litigation Division represents the Commission before the Federal 

district and appellate courts in all civil litigation involving campaign finance statutes. This Division 

assists the Department of Justice’s Office of the Solicitor General when the Commission’s FECA

cases are before the Supreme Court.

 Office of the Chief Information Officer (OCIO)

The Office of the Chief Information Officer (OCIO) consists of four units: (1) Enterprise 

Architecture; (2) Operational Support; (3) Data Administration; and (4) IT Security. The OCIO 

provides secure, stable and robust technology solutions for Commission staff and the public. OCIO 

both develops and maintains the systems that serve as the public's primary source of information 

about campaign finance data and law and ensures agency employees have a technology infrastructure 

that allows them to perform their day-to-day responsibilities administering and enforcing campaign 

finance law. OCIO also develops and supports analytic reporting tools that help staff perform their 

disclosure and compliance duties. 

 Office of the Chief Financial Officer (OCFO)

The Office of the Chief Financial Officer is responsible for complying with all financial management 

laws and standards, and all aspects of budget formulation, budget execution and procurement.
5

Sources of Funds

In addition to its annual appropriation, the FEC has the authority to collect fees from attendees of 

agency-sponsored educational conferences. The Commission may use those fees to defray the costs 

of conducting those conferences. The Commission sets its registration fees at a level that covers only 

the costs incurred by the agency’s conference-management contractor, including meeting room rental 

and conference meals and compensation. All other conference-related expenses, such as materials 

and staff travel, are paid using appropriated funds. Registration fees for FY 2019 were $147,598.

Figure 2 shows the agency’s appropriations and obligations from FY 2015 to FY 2019. December 22, 

2018 through January 25, 2019 the FEC was shut down for 35 days. The shutdown affected the 

agency’s ability to obligate funds at a rate similar to past fiscal years. The shutdown and its residual 

impacts significantly slowed the procurement process, spending, and hiring initiatives. The FEC has 

developed procedures to address and reduce, but not eliminate, the risks any future shutdown has on 

the efficiency of agency operations. 

Figure 2: Summary of Funding (in millions of dollars)

$60

$62

$64

$66

$68

$70

$72

FY 2015 FY 2016* FY 2017** FY 2018 FY 2019

in Millions

Appropriations

Obligations

* $5 million in 2 year funds related to the FEC office move not included in total.

** $8 million in 2 year funds related to the FEC office move not included in total.
6

Personnel vs. Non-Personnel Costs

Figure 3 represents the Commission’s FY 2019 obligations by personnel and non-personnel costs. 

Personnel costs, which are primarily composed of salaries and employee benefits, accounted for 69

percent of the FEC’s costs. The remaining 31 percent of the Commission’s costs was spent on nonpersonnel items, such as infrastructure and support, software and hardware, office rent, building 

security and other related costs.

Figure 3: Fiscal Year 2019 by Major Category

Salaries & Benefits

69.0%

IT Initiatives

21.3%

Facilities

0.6%

Other

9.1%
7

Risk Identification and Mitigation

In Fiscal Year (FY) 2017, the FEC formed a Senior Management Council (SMC) to manage internal 

control and Enterprise Risk Management (ERM) efforts in response to new requirements outlined in 

OMB Circular A-123. The SMC delivered to OMB an agency-wide Risk Profile to assist in the 

effective management of risk areas impacting FEC strategic, operational, reporting, and compliance 

objectives. In FY 2018, the SMC took further steps toward effective management of risk by updating 

Commission Directive 53 Implementation of OMB Circular A-123: Internal Control Program to 

comply with ERM requirements. In FY 2018 and 2019 the SMC submitted an updated Risk Profile 

to OMB. 

As part of the annual Internal Control Review (ICR) process, program offices reported on risks from 

the Risk Profile that affect their operations and identified mitigating activities. In addition, program 

offices thoroughly identified and evaluated fraud risk to support the Fraud Reduction Report. The 

current Agency-wide Risk Profile is shown below and further discussion on risk is included in the

remaining MD&A sections.

Agency Risk Profile

Identified Significant 

Risk

Inherent 

Risk 

Rating

Current Risk 

Response

Residual 

Risk 

Rating

Proposed 

Additional 

Action

Proposed 

Implementation/ 

Monitoring Process

Significant and 

Substantive 

Amendments to 

FECA/Pending Judicial 

Opinions

Medium Acceptance: 

monitoring Medium

Not in 

Management’s 

Control

OGC and 

Congressional Affairs

Absence of 

Quorum/Confirmation 

of Commissioners

Very 

High

Reduction: 

Directive 10

Very 

High

Not in 

Management’s 

Control

OGC and 

Congressional Affairs

Significant Increase in 

Federal Election 

Campaign Disclosure 

Activity

High

Reduction: 

infrastructure 

improvements

High

Move to scalable 

cloud- based 

computing and 

development of 

new e- filing 

platform.

OCIO Performance/ 

Monitoring Reports

Changes to 

Government-wide 

Directives including 

Human Capital and 

Operating 

Requirements

Medium Acceptance: 

monitoring Medium

Establish 

centralized 

repository for new 

executive orders, 

directives, 

memorandums, 

and other 

guidance.

OGC and OHR
8

Multiple Agency 

Vacancies, including 

key positions

Very 

High

Reduction: 

temporary 

assignments

High

Continue to 

support hiring 

initiatives and 

streamline hiring 

process.

Personnel and Finance 

Committees

High Volume of 

Retirement Eligible 

Employees

Medium

Reduction: 

succession 

planning

Medium

Encourage 

succession 

planning, crosstraining, and 

pooling support 

services.

Retirement Eligibility 

Report

HR Process 

Improvements Medium

Reduction: 

corrective 

actions and 

internal 

controls

Medium

Continue to 

implement 

corrective actions 

and enhance 

internal controls. 

Partnership with 

OPM HR 

Solutions.

Corrective Action 

Plan/Internal Controls

Privacy and Data 

Protection Medium

Reduction: 

corrective 

actions and 

internal 

controls

Medium

Continue to 

implement 

corrective actions 

and enhance 

internal controls.

Corrective Action 

Plan/Internal Controls

Assessments and 

System Authorizations Medium

Reduction: 

corrective 

actions and 

internal 

controls

Medium

Continue to 

implement 

corrective actions 

and enhance 

internal controls.

Corrective Action 

Plan/Internal Controls

Procurement and 

Contract Management Medium

Reduction: 

corrective 

actions and 

internal 

controls

Medium

Continue to 

implement 

corrective actions 

and enhance 

internal controls.

Corrective Action 

Plan/Internal Controls

Disaster Recovery Plan 

and COOP Medium

Reduction: 

corrective 

actions

Medium

Modifications to 

the COOP due to 

the recent FEC

move, and 

continue to 

implement 

corrective actions.

Corrective Action Plan
9

Section I.B: Performance Goals, Objectives and Results

This section provides a summary of the results of the FEC’s key performance objectives, which are 

discussed in greater detail in the FEC’s FY 2019 APR.

2 This report will be part of the FEC’s FY 

2021 Congressional Budget Justification, which will be available in 2020 at 

https://www.fec.gov/about/reports-about-fec/strategy-budget-and-performance/.

Strategic Goal

The strategic goal of the Federal Election Commission is to fairly, efficiently and effectively

administer and enforce the Federal Election Campaign Act, promote compliance and engage and 

inform the public about campaign finance data and rules, while maintaining a workforce that delivers 

results.

Strategic Objectives 

The Act reflects a belief that democracy works best when voters can make informed decisions in the 

political process—decisions based in part on knowing the sources of financial support for Federal 

candidates, political party committees and other political committees. As a result, the FEC’s first 

strategic objective is to inform the public about how Federal campaigns and committees are financed. 

Public confidence in the political process also depends on the knowledge that participants in Federal 

elections follow clear and well-defined rules and face consequences for non-compliance. Thus, the 

FEC’s second strategic objective focuses on the Commission’s efforts to promote voluntary 

compliance through educational outreach and to enforce campaign finance laws effectively and fairly. 

The third strategic objective is to interpret the FECA and related statutes, providing timely guidance 

to the public regarding the requirements of the law. The Commission also understands that 

organizational performance is driven by employee performance and that the agency cannot 

successfully achieve its mission without a high-performing workforce that understands expectations 

and delivers results. Consequently, the FEC’s fourth strategic objective is to foster a culture of high 

performance in order to ensure that the agency accomplishes its mission efficiently and effectively. 

Objective 1: Engage and Inform the Public about Campaign Finance Data 

The FEC’s e-filing system acts as the point of entry for submission of electronically filed campaign 

finance reports, providing faster access to reports and streamlining operations. This system provides 

for public disclosure of electronically filed reports, via the FEC website, within minutes of being 

filed. During FYs 2019 and 2020, the FEC will continue work to upgrade the agency’s eFiling 

platform. In FY 2017, the Commission published a study of its current eFiling platform, including a 

survey of the existing functionality of the FEC’s free filing software and an in-depth investigation of 

needs expressed by filers.3 The FEC will rely on the recommendations of this study to improve its 

 

2 The FEC has identified senior-level staff and key managers to serve as goal leaders for each area of the strategic and performance 

plans. In addition, each strategic activity in the Strategic Plan has been assigned one or more program managers, who are responsible 

for the delivery and performance reporting of that activity. These managers serve as measure managers and data quality leads to 

ensure the completeness, consistency and accuracy of the reported data of their respective strategic activity. 

3 Available at https://fec.gov/about/reports-about-fec/agency-operations/e-filing-study-2016/.
10

eFiling platform to allow greater operating system flexibility for users when generating filings for 

submission to the Commission and increase the consistency and accuracy of reporting. The FEC’s 

new eFiling platform is expected to improve the process for validating filings prior to acceptance and 

generate modern file outputs that will provide for more flexibility in accessing data. 

The Commission is continuing the redesign of its website by developing a user-centered online 

platform to deliver campaign finance information to its diverse base of users. This effort will ensure 

that the FEC provides full and meaningful campaign finance data and information in a manner that 

meets the public’s increasing expectations for data customization and ease of use. These initiatives 

respond to the risk significant increases in Federal election campaign disclosure activity pose to the 

agency meeting its strategic objective to engage and inform the public about campaign finance data. 

Performance measures for assessing progress on this Strategic Objective include measures to ensure 

that data from campaign finance reports are quickly made available to the public and that the FEC 

pursues programs to make data more accessible to the public.

Performance Goal 1-1: Improve the public’s access to information about how campaign funds are 

raised and spent.

Key Indicator: Percent of reports processed within 30 days of receipt.

FY 2014

Actual

FY 2015

Actual

FY 2016

Actual

FY 2017

Actual

FY 2018

Actual

FY 2019

Target

FY 2019

Actual

FY 2020

Target

FY 2021

Target

79% 92% 100% 96% 100% 95% 94%4 95% 95%

Objective 2: Promote Compliance with the FECA and Related Statutes

Helping the public understand its obligations under the Act is an essential component of voluntary 

compliance. The FEC places a significant emphasis on encouraging compliance through its 

Information Division, Reports Analysis Division (RAD), Press Office and Office of Congressional, 

Legislative and Intergovernmental Affairs. The FEC measures its progress in meeting this Objective 

through two performance measures: one that measures the agency’s efforts to encourage voluntary 

compliance through educational outreach and information and another that measures the FEC’s 

efforts to seek adherence to FECA requirements through fair, effective and timely enforcement and 

compliance programs. Progress against these measures is detailed in the charts below.

 4 The agency’s ability to meet its target for this performance goal during FY 2019 was negatively impacted by the lapse in 

appropriations from December 22, 2018 to January 25, 2019.
11

Encourage voluntary compliance with FECA requirements through educational outreach and 

information.

The FEC’s education and outreach programs provide information necessary for compliance with 

campaign finance law and give the public the context necessary to interpret the campaign finance 

data filers disclose. The FEC maintains a toll-free line and public email accounts to respond to 

inquiries regarding campaign finance data disclosed to the public and questions about how to comply 

with campaign finance law and its reporting requirements. The FEC’s Public Disclosure and Media 

Relations Division and Congressional Affairs Office also respond to inquiries.

One way the Commission encourages voluntary compliance is by hosting conferences across the 

country, where Commissioners and staff explain how the Act applies to candidates, parties and 

political action committees. These conferences address recent changes in the law and focus on 

fundraising, methods of candidate support and reporting regulations.

The FEC also devotes considerable resources to ensuring that staff can provide distance learning 

opportunities to the general public. The Commission’s website is one of the most important sources 

of instantly accessible information about the Act, Commission regulations, and Commission 

proceedings. In addition to viewing campaign finance data, anyone with Internet access can use the 

website to track Commission rulemakings, search advisory opinions, audits and closed enforcement 

matters, view campaign finance data, and find reporting dates. The Commission places a high 

emphasis on providing educational materials about campaign finance law and its requirements. 

Toward this end, the FEC has moved its focus away from the printing and manual distribution of its 

educational materials and instead looked for ways to leverage available technologies to create and 

disseminate dynamic and up-to-date educational materials through the website. While the 

Commission continues to make available printed copies of its educational brochures and publications, 

transitioning to primarily web-based media has allowed the agency to reduce significantly its printing 

and mailing costs and use of resources while at the same time encouraging new and expanded ways 

of communicating with the public via the website.

As part of this broad effort to improve its Internet communications and better serve the educational 

needs of the public, the Commission maintains its own YouTube channel, which can be found at 

http://www.youtube.com/FECTube. The YouTube channel offers a variety of instructional videos

and tutorials that enable users to obtain guidance tailored to their specific activities. 

The agency’s educational outreach program has been significantly enhanced with the addition of an 

online training service that enables political committees, reporters, students and other groups to 

schedule live, interactive online training sessions with FEC staff. This on-demand service allows the 

FEC to provide tailored, distance learning presentations and training to the public in a manner that 

will significantly increase the availability of FEC staff to serve the public. The service also offers an 

efficient and effective way for alternative dispute resolution and other enforcement respondents to 

satisfy the terms of their agreements with the agency. These efforts are also important in monitoring 

and mitigating the risk that amendments to FECA or judicial opinions have on the campaign finance 

environment and the FEC’s goal of encouraging voluntary compliance with the Act. 
12

Performance Goal 2-1: Encourage voluntary compliance with FECA requirements through 

educational outreach and information.

Key Indicator: Educational outreach programs and events achieve targeted satisfaction 

rating on user surveys.

FY 2014

Actual

FY 2015

Actual 

FY 2016

Actual 

FY 2017

Actual 

FY 2018

Actual 

FY 2019

Target

FY 2019

Actual

FY 2020

Target

FY 2021

Target

N/A 4.34 4.53 4.43 4.53 4.0 or higher 

on a 5.0 scale

4.45 4.0 or higher 

on a 5.0 scale

4.0 or 

higher on a 

5.0 scale

Seek adherence to FECA requirements through fair, effective and timely enforcement and 

compliance programs.

The FEC has formed strategies for ensuring that its enforcement and compliance programs are fair, 

effective and timely. The Commission’s statutory obligation is to administer, interpret and enforce 

the Federal Election Campaign Act, which serves the compelling governmental interest in deterring 

corruption and the appearance of corruption in financing elections. In doing so, the Commission 

remains mindful of the First Amendment’s guarantees of freedom of speech and association, and the 

practical implication of its actions on the political process.

The FEC has exclusive jurisdiction over civil enforcement of Federal campaign finance laws. It 

consults with the U.S. Department of Justice, as appropriate, on matters involving both civil and 

criminal enforcement of the Act. Commission enforcement actions, which are handled primarily by 

the Office of General Counsel (OGC), originate from a number of sources, including external 

complaints, referrals from other government agencies and matters generated by information 

ascertained by the Commission in the normal course of carrying out its supervisory responsibilities.

Enforcement matters are handled by OGC pursuant to the requirements of the FECA. If the 

Commission cannot settle or conciliate a matter involving an alleged violation of the Act, the 

Commission may initiate civil litigation by filing and prosecuting a civil action in Federal district 

court to address the alleged violation. Closed enforcement matters are available via the FEC website.

To augment OGC’s traditional enforcement role, the Office of Compliance manages several programs 

that seek to remedy alleged violations of the Act and encourage voluntary compliance. These 

programs include: 1) the Alternative Dispute Resolution Program, 2) the Administrative Fine 

Program and 3) the Audit Program. The Commission’s Alternative Dispute Resolution Program is 

designed to resolve matters more swiftly by encouraging the settlement of less-complex enforcement 

matters with a streamlined process that focuses on remedial measures for candidates and political 

committees, such as training, internal audits and hiring compliance staff. Violations involving the late 

submission of, or failure to file, disclosure reports are subject to the Administrative Fine Program. 

This Program is administered by the Reports Analysis Division (RAD) and the Office of 

Administrative Review (OAR), which assess monetary penalties and handle challenges to the penalty 

assessments. The Audit Program conducts “for cause” audits under the FECA in those cases where 
13

political committees have failed to meet the threshold requirements for demonstrating substantial 

compliance with the Act, and conducts mandatory audits under the public funding statutes. Subject 

to limited redactions, threshold requirements approved by the Commission and used by RAD and the 

Audit Division are public. 

Performance Goal 2-2: Seek adherence to FECA requirements through fair, effective and timely 

enforcement and compliance programs.

Key Indicator: Of the enforcement matters resolved during the fiscal year, the 

percentage that was resolved within 15 months of the date of receipt.

FY 2014

Actual

FY 2015

Actual

FY 2016

Actual

FY 2017

Actual

FY 2018

Actual

FY 2019

Target

FY 2019

Actual

FY 2020

Target

FY 2021

Target

28% 49% 38% 68% 62% 50% 56% 50% 50%

Objective 3: Interpret the FECA and Related Statutes

Commission initiatives, Congressional action, judicial decisions, petitions for rulemaking or other 

changes in campaign finance law may necessitate that the Commission update or adopt new 

regulations. Consequently, the FEC undertakes rulemakings either to write new Commission 

regulations or revise existing regulations. The Commission also provides guidance on how the Act

applies to specific situations through the advisory opinion process and represents itself in most 

litigation before the Federal district court and the courts of appeals. The Commission’s three primary 

means for providing interpretive guidance for the Act and related statutes are discussed below.

Regulations

The Policy Division of OGC drafts various rulemaking documents, including Notices of Proposed 

Rulemaking (NPRMs), for Commission consideration. NPRMs provide an opportunity for the public 

to review proposed regulations, submit written comments to the Commission and, when appropriate, 

testify at public hearings at the FEC. The Commission considers the comments and testimony and 

deliberates publicly regarding the adoption of the final regulations and the corresponding 

Explanations and Justifications, which provide the rationale and basis for the new or revised 

regulations.

Advisory Opinions

Advisory opinions (AO) are official Commission responses to questions regarding the application of 

Federal campaign finance law to specific factual situations. The Act generally requires the 

Commission to respond to AO requests within 60 days. For AO requests from candidates in the two 

months leading up to an election that present a specific transaction or activity related to that election, 

the Act requires the Commission to respond within 20 days. On its own initiative, the Commission 

also makes available an expedited process for handling certain time-sensitive requests that are not 

otherwise entitled to expedited processing under the Act. The Commission strives to issue these 

advisory opinions in 30 days.
14

Defending Challenges to the Act

The Commission represents itself in most litigation before the Federal district court and courts of 

appeals and before the Supreme Court with respect to cases involving publicly financed Presidential 

candidates. It also has primary responsibility for defending the Act and Commission regulations 

against court challenges. In addition, the Act authorizes the Commission to institute civil actions to 

enforce the Act. 

Performance Goal 3-1: Provide timely legal guidance to the public.

Key Indicator: Percent of legal guidance provided within statutory and courtordered deadlines.

FY 2014

Actual

FY 2015

Actual

FY 2016

Actual

FY 2017

Actual

FY 2018

Actual

FY 2019

Target

FY 2019

Actual

FY 2020

Target

FY 2021

Target

100%5 100%6 100%7 100%8 100%9 100% 100%10 100% 100%

Objective 4: Foster a Culture of High Performance

The Commission understands that the success of its programs depends upon the skills and 

commitment of its staff. The Commission is focused on ensuring that staff training needs are assessed 

and met at every level of the agency and that agency leaders receive training necessary to help manage 

and maintain a fully engage and productive workforce. The FEC is also focused on decreasing the 

time to hire, improving the agency’s performance management systems and developing a supervisory 

and managerial training program for senior leaders, mid-career managers and first time supervisors.

As identified in the Risk Profile, these efforts, along with other mitigation initiatives, support 

reduction of the identified human resource related risks. However, a high volume of retirement 

eligible employees and vacancies across the agency remains a continuing challenge. 

The FEC is also implementing a multi-phase plan to reduce reliance on physical servers and migrate 

appropriate systems and data to a cloud environment. In conjunction with the redesign of the agency’s 

website, the FEC successfully migrated its largest database, the campaign finance database, to a cloud 

environment and shut down one physical data center during FY 2018. Cloud hosting offers a number 

of benefits for the FEC’s campaign finance database and website. The agency’s Internet traffic is 

variable, with many more visitors accessing the website during election years and near reporting 

deadlines. With a cloud-hosted application and database infrastructure, the FEC only needs to pay for 

the actual usage, rather than constantly maintaining the capacity to support peak usage, even during 

periods of reduced usage. Website downtime is minimized and server maintenance is managed by the 

 5 The Commission obtained extensions to consider ten advisory opinion requests in FY 2014; four of those extensions were 

attributable to the Federal government shutdown during October 2013. 

6 The Commission obtained extensions to consider two advisory opinion requests in FY 2015.

7 The Commission obtained extensions to consider six advisory opinion requests in FY 2016. 8 The Commission obtained extensions to consider seven advisory opinion requests in FY 2017. 9 The Commission obtained an extension to consider one advisory opinion request in FY 2018. 10 The Commission obtained extensions to consider six advisory opinion requests in FY 2019; two of those extensions were 

lengthened by the partial Federal government shutdown during the first and second quarters of FY 2019.
15

cloud computing provider. During FY 2020, the FEC will conduct a study to determine how best to 

migrate other appropriate systems and databases to the cloud, allowing the agency to realize greater 

efficiency and performance in future years.

The Commission’s records management program continues to make advancements. In accordance 

with the Transition to Electronic Records Memorandum, which superseded the Managing 

Government Records Presidential Directive as of June 28, 2019, the Commission has made important 

progress toward the Memorandum’s goal of managing all permanent records in an electronic format 

with appropriate metadata by 2022. In support of that goal, the Commission received approval from 

the Archivist of the United States for its National Archives and Records Administration (NARA) 

form 1005 (NA-1005) Verification for Implementing GRS 6.1. This established the Commission’s 

agency-wide Email Management Policy via the Capstone approach. The Commission also received 

approval from the Archivist of the United States for its Commission Meeting Records Schedule. The 

Commission is seeking approval of its January 2018 request, pending with NARA, to electronically 

maintain all records associated with the Office of Alternative Dispute Resolution’s case files, as 

NARA seeks to finalize and formally add to its regulations digitization standards applicable to paper 

records that are ultimately digitized.

Fiscal Years 2020 and 2021 will bring continued focus on updating the agency’s records schedules 

in compliance with the Transition to Electronic Records Memorandum, updating the agency’s 

Records Management Program, and training all staff on the agency and government-wide records 

schedules, policies and responsibilities. 

Performance Goal 4-1: Foster a workforce that delivers results.

Key Indicator: Commission-required quarterly updates meet targeted performance 

goals.

FY 2014

Actual

FY 2015

Actual

FY 2016

Actual

FY 2017

Actual

FY 2018

Actual

FY 2019

Target

FY 2019

Actual

FY 2020

Target

FY 2021

Target

73% 80% 76% 85% 73% 65% 53%11 65% 65%

 11 The agency’s ability to meet its target for this performance goal during FY 2019 was negatively impacted by the lapse in 

appropriations from December 22, 2018 to January 25, 2019.
16

Section I.C: Analysis of FEC Financial Statements and Stewardship 

Information 

The FEC’s FY 2019 financial statements and notes are presented in the required format in accordance 

with OMB Circular A-136, as revised, Financial Reporting Requirements. The FEC’s current-year 

financial statements and notes are presented in a comparative format in Section II of this report. 

The following table summarizes the significant changes in the FEC’s financial position during FY 

2019: 

Net Financial 

Condition FY 2019 FY 2018

Increase 

(Decrease)

% 

Change

Assets $42,400,892 $37,958,046 $4,442,846 12%

Liabilities $15,238,967 $ 15,288,642 ($49,675) -0.3%

Net Position $27,161,925 $22,669,404 $4,492,521 20%

Net Cost $69,259,101 $78,532,451 ($9,273,350) -12%

Budgetary 

Resources $75,551,616 $80,846,191 ($5,294,575) -7%

Custodial Revenue $2,906,662 $1,183,237 $1,723,425 146%

The following is a brief description of the nature of each required financial statement and its 

relevance. The effects of some significant balances or conditions on the FEC’s operations are 

explained. 

Balance Sheet

The Balance Sheet presents the total amounts available for use by the FEC (assets) against the 

amounts owed (liabilities) and amounts that comprise the difference (Net Position). As a small 

independent agency, all of the FEC’s assets consist of Fund Balance with Treasury (FBWT), Property 

and Equipment (P&E) and Accounts Receivable. Fund Balance with Treasury (e.g., cash) is available 

through the Department of Treasury accounts, from which the FEC is authorized to make 

expenditures (i.e., obligations) and payments. FBWT increased by approximately $5.8 million, or 29

percent, from the prior year.

Accounts Receivable primarily represent amounts due from the public for fines and penalties assessed 

by the FEC and referred to Treasury for collection, as deemed appropriate. In compliance with the 

Debt Collection Improvement Act of 1996 (DCIA), the OCFO takes into consideration the most 

appropriate approach to debt management. These amounts are not available for FEC operations and 

are sent to the U.S. Treasury as miscellaneous receipts. Net accounts receivable increased by 

approximately $136 thousand dollars from the prior year.

Total assets increased by $4.4 million from the prior year to $42 million. Total liabilities decreased

by approximately $50 thousand.
17

Statement of Net Cost

The Statement of Net Cost presents the annual cost of operating the FEC program. Gross costs are 

used to arrive at the total net cost of operations. The FEC’s total gross costs in administering the 

FECA experienced a 12% fluctuation from the prior year.

Statement of Changes in Net Position

The Statement of Changes in Net Position presents in greater detail the net position section of the 

Balance Sheet, including Cumulative Results of Operations and Unexpended Appropriations. This 

statement identifies the activity that caused the net position to change during the reporting period. 

Total Net Position increased by 20 percent, or approximately $5 million. In FY 2017, the FEC 

received approximately $8 million in two-year appropriated funds, which expired at the end of FY 

2018.

Statement of Budgetary Resources

The Statement of Budgetary Resources provides information on the source and status of budgetary 

resources made available to the FEC during the reporting period. It presents the relationship between 

budget authority and budget outlays, as well as the reconciliation of obligations to total outlays. Total 

Budgetary Resources and Status of Budgetary Resources decreased by approximately $5 million, or 

seven percent, from the prior year.

Statement of Custodial Activity

The Statement of Custodial Activity represents an accounting of revenue and funds collected by the 

FEC that are owed to the U.S. Treasury’s general fund. These monies are not available for the FEC’s 

use. Collection and revenue activity primarily result from enforcement actions that come before the 

Commission during the fiscal year. Revenue and collections on the Statement of Custodial Activity

consist of collections on new assessments, prior year(s) receivables and Miscellaneous Receipts. In 

FY 2019, the total custodial revenue and collections increased by approximately $1.7 million from 

the prior year.
18

The chart below displays the assessment history for the past 20 years.

12

Figure 4: Fines Assessed, by Fiscal Year (in millions of dollars)

 12 One MUR resolved during 2006 yielded the largest civil penalty in agency history, which was $3.8 million paid by Federal Home 

Loan Mortgage Corporation (Freddie Mac) for prohibited corporate activity. This 2006 penalty is the primary reason for the largest 

Fines Assessed (approximately $6.71 million) in Figure 4.

$0.54 

$6.71

$2.68 

FY 1999 FY 2019

FIGURE 4 - FINES ASSESSED, BY FISCAL YEAR

(in Millions of Dollars)
19

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

I.D.i – FEC Integrated Internal Control Framework and Legal Compliance

The Commission is subject to numerous legislative and regulatory requirements that promote and 

support effective internal controls. The FEC complies with the following laws and regulations:

Annual Appropriation Law – establishes the FEC’s budget authority;

The Antideficiency Act of 1884, as amended;

Inspector General Act of 1978, as amended;

Federal Managers’ Financial Integrity Act of 1982;

Federal Civil Penalties Inflation Adjustment Act of 1990;

Government Performance and Results Act of 1993, as amended;

Federal Financial Management Improvement Act of 1996;

Clinger-Cohen Act of 1996;

Debt Collection Improvement Act of 1996, as amended;

Chief Financial Officers Act, as amended by the Accountability of Tax Dollars Act of 2002;

The Digital Accountability and Transparency Act of 2014; and

Fraud Reduction and Data Analytics Act of 2015

The proper stewardship of Federal resources is a fundamental responsibility of the FEC. These laws 

help the FEC improve the management of its programs and financial operations, and assure that 

programs are managed in compliance with applicable law.

I.D.ii – Management Assurances 

The Federal Managers’ Financial Integrity Act of 1982 (FMFIA) is implemented by OMB Circular 

A-123, revised, Management’s Responsibility for Enterprise Risk Management and Internal Control,

with applicable appendices. The FEC management is responsible for establishing and maintaining 

effective internal control and financial management systems that meet the objectives of the FMFIA

and for performing a self-assessment under the guidance of its Directive 53, Implementation of OMB 

Circular A-123, Internal Control Review. Directive 53 outlines the process and describes roles and 

responsibilities for conducting risk assessments and internal control reviews. 

Section 2 of the FMFIA requires Federal agencies to report, on the basis of annual assessments, any 

material weaknesses that have been identified in connection with their internal and administrative 
20

controls. The reviews that took place during FY 2019 provide unqualified assurance that FEC systems 

and management controls comply with the requirements of the FMFIA.

Section 4 of the FMFIA requires that agencies annually provide assurance on programmatic internal 

controls and financial management systems, and effectiveness of internal control over financial 

reporting. The FEC evaluated its financial management systems in accordance with the FMFIA, OMB 

Circular A-123, as applicable, and reviewed the Statements on Standards for Attestation 

Engagements, Reporting on Controls at a Service Organization (SSAE 18) reports received from its 

shared service providers. The results of management reviews provided an unmodified opinion that 

the FEC’s financial systems controls generally conform to the required principles and standards as 

per Section 4 of the FMFIA.

Enterprise Risk Management

In the current fiscal year, the FEC – led by the Senior Management Council (SMC) – successfully 

updated its Enterprise Risk Management (ERM) Risk Profile of enterprise risks, as required by the 

revised OMB Circular A-123. The SMC identified a total of 11 enterprise risks in the areas of 

strategic, operational, and compliance objectives rated as being a medium or high inherent risk, and 

delivered the Risk Profile to the Office of the Inspector General (OIG) and to OMB. The SMC looks 

forward to continuing to work closely with the Office of the Inspector General to remediate any 

weaknesses which the OIG may deem to be at the level of a material weakness.

Prompt Payment Act 

The Prompt Payment Act (PPA) 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 2019 was 

nearly 100 percent, with less than 0.51 percent of all invoices paid after the date required by the PPA. 

Improper Payments 

The Improper Payments Information Act of 2002 (IPIA), the Improper Payments Elimination and 

Recovery Act of 2010 (IPERA), Improper Payments Elimination and Recovery Improvement Act of 

2012 (IPERIA) and OMB guidance require agencies to identify programs that are susceptible to 

significant erroneous payments, and determine an annual estimated amount of erroneous payments 

made in their operations. The FEC reviewed all of its programs and activities to identify those 

susceptible to significant erroneous payments. Approximately 69 percent of the FEC’s obligations 

pertain to salaries and benefits, which represents a low risk for improper payments, based on 

established internal controls. The FEC also reviewed all of its FY 2019 non-personnel procurements, 

charge card, and payroll costs to verify their accuracy and completeness. Accordingly, the FEC is 

unaware of any improper payments. The FEC continues to monitor its payment and internal control 

process to ensure that the risk of improper payments remains low.
21

Civil Monetary Penalties Adjustment for Inflation

The FEC Civil Monetary Penalties Adjustment for Inflation is included in Section III.
22

Annual Assurance Statement on Internal Control
23

Section I.D.iii – Management’s Response to the Inspector General’s Management and 

Performance Challenges

The Inspector General’s (IG) Statement Summarizing the Major Management and Performance 

Challenges Facing the FEC can be found in Section III. In the Statement, the IG identifies the 

following five management challenges, in order of significance: 1) Lack of quorum, 2) Improve IT 

Governance to prevent external threats into FEC systems, 3) Lack of full-time support to the Chief 

Information Officer (CIO) position and vacancies to key leadership positions, 4) Address outstanding 

OIG audit recommendations, and 5) Address results from the annual Federal Employee Viewpoint 

Survey (FEVS) and 2016 Root Causes of Low Employee Morale Study. FEC Management’s full 

response to the IG’s assessment of its challenges appears in Section III.
24

Section I.E: Limitations of the Financial Statements 

The principal financial statements have been prepared to report the financial position and results of 

operations of the FEC pursuant to the requirements of 31 U.S.C. §3515(b). While the statements have 

been prepared from the books and records of the FEC in accordance with United States generally 

accepted accounting principles (GAAP) for Federal entities and the formats prescribed by the OMB, 

the statements are in addition to the financial reports used to monitor and control budgetary resources 

which are prepared from the same books and records.

The statements should be read with the realization that they are for a component of the U.S. 

Government, a sovereign entity.
25

SECTION II – Auditor’s Report and Financial Statements
26

Message from the Chief Financial Officer
27

OIG Transmittal Letter
28
29
30

Independent Auditor’s Report
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53

This page marks the end of the Independent Auditor’s Report
54

Financial Statements

BALANCE SHEET

As of September 30, 2019 and 2018 (in dollars)

2019 2018

Assets: (Note 2)

Intragovernmental:

Fund Balance With Treasury (Note 3) $ 26,164,174 $ 20,287,566

Total Intragovernmental 26,164,174 20,287,566

Accounts Receivable, net (Note 4) 583,160 447,136

General Property, Plant and Equipment, Net (Note 5) 15,653,558 17,223,344

Total Assets $ 42,400,892 $ 37,958,046

Liabilities: (Note 6,8)

Intragovernmental:

Accounts Payable $ 276,752 $ 206,652

Other: (Note 7)

Employer Contributions and Payroll Taxes Payable 413,442 369,966

 Other Post Employment Benefits Due and Payable 3,500 3,500

Unfunded FECA Liability 61 6,052

Custodial Liability (Note 13) 583,160 447,136

Deferred Rent (Note 9) 7,850,409 8,446,642

Total Intragovernmental 9,127,324 9,479,949

Accounts Payable 1,363,678 1,876,045

Federal Employees and Veterans Benefits 7,792 8,122

Other: (Note 7)

Accrued Funded Payroll and Leave 1,505,528 1,352,064

Employer Contributions and Payroll Taxes Payable 65,896 57,390

Unfunded Leave 3,112,591 2,515,072

Liability for Advances and Prepayments 56,158 -

Total Liabilities

 

15,238,967 15,288,642

Net Position:

Unexpended Appropriations - All Other Funds (Consolidated 

Totals) 22,479,219 16,421,949

Cumulative Results of Operations - All Other Funds 

(Consolidated Totals) 4,682,706 6,247,456

Total Net Position - All Other Funds (Consolidated 

Totals) 27,161,925 22,669,404

Total Net Position 27,161,925 22,669,404

Total Liabilities and Net Position $ 42,400,892 $ 37,958,046

The accompanying notes are an integral part of these statements.
55

STATEMENT OF NET COST

For The Years Ended September 30, 2019 and 2018 (in dollars)

2019 2018

Program Costs:

Administering and Enforcing the FECA

Gross Costs $ 69,333,519 $ 78,532,995

Less: Earned Revenue 74,418 544

Net Program Costs 69,259,101 78,532,451

Net Cost of Operations (Note 10) $ 69,259,101 $ 78,532,451

The accompanying notes are an integral part of these statements.
56

STATEMENT OF CHANGES IN NET POSITION

For The Years Ended September 30, 2019 and 2018 (in dollars)

FY 2019

All Other Funds 

(Consolidated Totals) Consolidated Total

Unexpended Appropriations:

Beginning Balance $ 16,421,949 $ 16,421,949

Budgetary Financing Sources:

Appropriations received 71,250,000 71,250,000

Other adjustments (386,245) (386,245)

Appropriations used (64,806,485) (64,806,485)

Total Budgetary Financing Sources 6,057,271 6,057,271

Total Unexpended Appropriations 22,479,219 22,479,219

Cumulative Results from Operations:

Beginning Balances 6,247,456 6,247,456

Beginning balance, as adjusted 6,247,456 6,247,456

Budgetary Financing Sources:

Appropriations used 64,806,485 64,806,485

Other Financing Sources (Non-Exchange):

Imputed financing (Note 11) 2,887,867 2,887,867

Total Financing Sources 67,694,351 67,694,351

Net Cost of Operations 69,259,101 69,259,101

Net Change (1,564,750) (1,564,750)

Cumulative Results of Operations 4,682,706 4,682,706

Net Position $ 27,161,925 $ 27,161,925

The accompanying notes are an integral part of these statements.
57

STATEMENT OF CHANGES IN NET POSITION

For The Years Ended September 30, 2019 and 2018 (in dollars)

FY 2018

All Other Funds 

(Consolidated Totals) Consolidated Total

Unexpended Appropriations:

Beginning Balance $ 21,012,019 $ 21,012,019

Budgetary Financing Sources:

Appropriations received 71,250,000 71,250,000

Other adjustments (312,874) (312,874)

Appropriations used (75,527,196) (75,527,196)

Total Budgetary Financing Sources (4,590,071) (4,590,071)

Total Unexpended Appropriations 16,421,949 16,421,949

Cumulative Results from Operations:

Beginning Balances 6,851,313 6,851,313

Beginning balance, as adjusted 6,851,313 6,851,313

Budgetary Financing Sources:

Appropriations used 75,527,196 75,527,196

Other Financing Sources (Non-Exchange):

Imputed financing 2,401,397 2,401,397

Total Financing Sources 77,928,593 77,928,593

Net Cost of Operations 78,532,451 78,532,451

Net Change (603,858) (603,858)

Cumulative Results of Operations 6,247,456 6,247,456

Net Position $ 22,669,404 $ 22,669,404

The accompanying notes are an integral part of these statements.
58

STATEMENT OF BUDGETARY RESOURCES

For The Years Ended September 30, 2019 and 2018 (in dollars)

2019 2018

Budgetary Budgetary

BUDGETARY RESOURCES

Unobligated balance from prior year budget authority, net (discretionary and 

mandatory)

$ 4,169,352 $ 9,595,647

Appropriations (discretionary and mandatory) 71,250,000 71,250,000

Spending authority from offsetting collections (discretionary and mandatory) 132,264 544

Total budgetary resources (Note 12) $ 75,551,616 $ 80,846,191

STATUS OF BUDGETARY RESOURCES

New obligations and upward adjustments (total) 69,232,534 77,411,365

Unobligated balance, end of year:

Apportioned, unexpired account 2,851,236 1,810,910

Unapportioned, unexpired accounts 7,264 -

Unexpired unobligated balance, end of year 2,858,500 1,810,910

Expired unobligated balance, end of year 3,460,582 1,623,916

Unobligated balance, end of year (total) 6,319,082 3,434,826

Total budgetary resources $ 75,551,616 $ 80,846,191

OUTLAYS, NET

Outlays, net (discretionary and mandatory) 64,987,148 74,144,210

 Agency outlays, net (discretionary and mandatory) (Note 12, 15) $ 64,987,148 $ 74,144,210

The accompanying notes are an integral part of these statements.
59

STATEMENT OF CUSTODIAL ACTIVITY

For The Years Ended September 30, 2019 and 2018

2019 2018

Revenue Activity

Sources of cash collections

Civil penalties $ 2,046,477 $ 1,100,416

Administrative fines 362,800 148,770

Miscellaneous receipts 361,361 115,443

Total cash collections 2,770,638 1,364,629

Accrual adjustments 136,024 (181,392)

Total custodial revenue (Note 13) $ 2,906,662 $ 1,183,237

Disposition of Collections

Transferred to Treasury $ 2,770,638 1,364,629

Amount yet to be transferred 136,024 (181,392)

Total disposition of collections $ 2,906,662 $ 1,183,237

Net custodial activity $ - $ -

The accompanying notes are an integral part of these statements.
60

Notes to the Financial Statements

Note 1 – Summary of Significant Accounting Policies

Reporting Entity

The Federal Election Commission (FEC or Commission) was created in 1975 as an independent 

regulatory agency with exclusive responsibility for administering, enforcing, defending and 

interpreting the Federal Election Campaign Act of 1971 (FECA), 2 U.S.C. 431 et seq., as amended 

(“the Act”). The Commission is also responsible for administering the public funding programs (26

U.S.C. §§ 9001- 9039) for Presidential campaigns, which include certification and audits of all 

participating candidates and committees, and enforcement of public funding legislation.

The financial activity presented relates to the execution of the FEC’s Congressionally approved 

budget. Consistent with Federal Accounting Standards Advisory Board’s (FASAB) Statement of 

Federal Financial Accounting Concept No. 2, “Entity and Display,” the Presidential Election 

Campaign Fund is not a reporting entity of the FEC. Financial activity of the fund is budgeted, 

apportioned, recorded, reported and paid by the U.S. Department of Treasury (Treasury). The 

accounts of the Presidential Election Campaign Fund are therefore not included in the FEC’s 

financial statements.

Basis of Accounting and Presentation

As required by the Accountability of Tax Dollars Act of 2002, the accompanying financial statements 

present the financial position, net cost of operations, changes in net position, budgetary

resources and custodial activity of the FEC. While these 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 in accordance with the form and content for

entity financial statements specified by the Office of Management and Budget (OMB) in Circular A136, as revised, Financial Reporting Requirements, as well as the accounting policies of the FEC,

the statements may differ from other financial reports submitted pursuant to OMB directives for the 

purpose of monitoring and controlling the use of the FEC’s budgetary resources.

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.

Throughout these financial statements, assets, liabilities, revenues and costs have been classified 

according to the type of entity with which the transactions are associated. Intragovernmental assets

and liabilities are those resulting from transactions with other federal entities. Intragovernmental

earned revenues are collections or accruals of revenue from other federal entities and 
61

intragovernmental costs are payments or accruals to other federal entities. These statements should

be read with the understanding that they are for a component of the Federal Government, a sovereign 

entity.

Assets

Assets that an entity is authorized to use in its operations are termed entity assets, whereas assets that

are held by an entity and are not available for the entity’s use are termed non-entity assets. Most of

the FEC’s assets are entity assets and are available for use in carrying out the mission of the FEC

as appropriated by Congress. The FEC also has non-entity assets which primarily consist of

receivables from fines and penalties. These custodial collections are not available to the FEC to 

use in its operations and must be transferred to Treasury.

Fund Balance with Treasury

The FEC does not maintain cash in commercial bank accounts. Treasury processes cash receipts and

disbursements. Fund Balance with Treasury consists of appropriated funds and custodial collections.

With the exception of the custodial collections, these funds are available to pay current liabilities and 

finance authorized purchase commitments. Custodial collections, which are not available to finance 

FEC activities, are classified as non-entity assets.

Accounts Receivable

The FEC’s Accounts Receivable mainly represents amounts due from the public for fines and 

penalties assessed by the FEC and referred to Treasury for collection. The FEC establishes an 

allowance for the estimated loss on accounts receivable from the public that are deemed uncollectible

accounts. This allowance is included in Accounts Receivable, net on the balance sheet. The

allowance is a percentage of the overall receivable balance, based on the collection rate of past 

balances.

General Property and Equipment

General Property and Equipment (P&E) is reported at acquisition cost, and consists of items that are 

used by the FEC to support its mission. Depreciation or amortization on these assets is calculated

using the straight-line method with zero salvage value. Depreciation or amortization of an asset 

begins the day it is placed in service. Maintenance, repairs and minor renovations are expensed as

incurred. Expenditures that materially increase the value, capacity or useful life of existing assets are

capitalized. Refer to Note 5 General Property and Equipment, Net for additional details.

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 
62

appropriations have not been enacted (e.g., annual leave benefits and actuarial liability under the 

Federal Employees Compensation Act), or those resulting from the agency’s custodial activities. The

FEC has an intragovernmental liability to Treasury for fines, penalties and miscellaneous receipts

which are due from the public but have not yet transferred. These funds may not be used to fund 

FEC operations.

Accounts Payable

Accounts Payable consists of liabilities to other entities or persons for amounts owed for goods and

services received that have not yet been paid at the end of the fiscal year. Accounts Payable also

consists of disbursements in-transit, which are payables that have been recorded by the FEC and are

pending payment by Treasury. In addition to accounts payables recorded through normal business 

activities, unbilled payables are estimated based on historical data.

Accrued Payroll and Employer Contribution

Accrued payroll and benefits represent salaries, wages and benefits earned by employees, but not yet

disbursed as of the statement date. Accrued payroll and Thrift Savings Plan contributions are not 

classified as intragovernmental. Employer contributions and payroll taxes payable are classified as 

intragovernmental.

Annual, Sick and Other Leave

Annual leave is recorded as a liability when it is earned by FEC employees; the liability is reduced

as leave is taken. On a quarterly basis, the balance in the accrued leave account is adjusted to reflect 

the current leave balances and pay rates. Accrued annual leave is paid from future funding sources

and is reflected as a liability not covered by budgetary resources. Sick leave and other types of 

non-vested leave are expensed as taken.

Federal Employee Benefits

A liability is recorded for estimated and actual future payments to be made for workers’ 

compensation pursuant to the Federal Employees Compensation Act. The liability consists of the net

present value of estimated future payments calculated by the Department of Labor (DOL) and

the actual unreimbursed cost paid by DOL for compensation paid to recipients under the Federal

Employee’s Compensation Act. The future workers' compensation estimate is generated by DOL

through an application of actuarial procedures developed to estimate the liability for the Federal 

Employee’s Compensation Act, which includes the expected liability for death, disability, 

medical and miscellaneous costs for approved compensation cases. The liability is calculated using 

historical benefit payment patterns related to a specific incurred period to estimate the total payments

related to that period. These projected annual benefits payments are discounted to present value.
63

Employee Retirement Plans

Each fiscal year, the Office of Personnel Management (OPM) estimates the Federal Government 

service cost for all covered employees. This estimate represents an annuity dollar amount which, if 

accumulated and invested each year of an employee’s career, would provide sufficient funding to 

pay for that employee’s future benefits. As the Federal Government’s estimated service cost exceeds 

the amount of contributions made by employer agencies and covered employees, this plan is not fully 

funded by the FEC and its employees. As of September 30, 2019, the FEC recognized approximately 

$ 2,824,200 as an imputed cost and related financing source, for the difference between the estimated 

service cost and the contributions made by the FEC and its employees. This represents a 1% increase 

when compared to the $ 2,808,853 of imputed cost and related financing source recognized in Fiscal 

Year 2018.

FEC employees participate in either the Civil Service Retirement System (CSRS) or the Federal 

Employees Retirement System (FERS), which became effective on January 1, 1987. For employees 

participating in CSRS, the FEC withheld 7% of base pay earnings and provided a matching 

contribution equal to the sum of the withholding. For employees covered by FERS, the FEC withheld 

.8% of base pay earnings and provided the agency contribution. The majority of FEC employees 

hired after December 31, 1983, are automatically covered by FERS.

Effective January 1, 2013, the Middle Class Tax Relief and Job Creation Act of 2012 created a new

FERS retirement category, Revised Annuity Employees (RAE) for new federal employees hired in 

calendar year (CY) 2013 or thereafter. In FY 2019, the FERS-RAE employee contribution rate was 

3.1%.

Effective January 1, 2014, the Bipartisan Budget Act of 2013 introduced a new FERS retirement 

category, Further Revised Annuity Employees (FRAE) for new federal employees hired in CY

2014 and thereafter. In FY 2019, the FERS-FRAE employee contribution rate was 4.4%.

FERS contributions made by employer agencies and covered employees are comparable to the 

Federal Government’s estimated service costs. For FERS covered employees, the FEC made 

contributions of 13.7% of basic pay for FY 2019. For both FERS-RAE and FERS-FRAE 

covered employees, the FEC made contributions of 11.9% of basic pay for FY 2019.

Employees participating in FERS are covered under the Federal Insurance Contribution Act (FICA),

for which the FEC contributed 6.2% to the Social Security Administration in FY 2019. Effective in 

FY 2012 FERS and CSRS – Offset employees were granted a 2% decrease in Social Security for tax 

year (CY) 2012 under the Temporary Payroll Tax Cut Continuation Act of 2011; and H.R. 3630, the 

Middle Class Tax Relief and Job Creation Act of 2012. During FY 2013, employees contributed

4.2% to Social Security through December 31, 2012. Effective January 1, 2013 the employee 

contribution rate is 6.2%.
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Thrift Savings Plan

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for employees 

covered by either CSRS or FERS. The TSP is administered by the Federal Retirement Thrift 

Investment Board on behalf of federal agencies. For employees belonging to FERS, the FEC 

automatically contributes 1% of base pay to their account and matches contributions up to an 

additional 4%. For employees belonging to CSRS, there is no governmental matching contribution.

The FEC does not report on its financial statements CSRS and FERS assets, accumulated plan 

benefits or unfunded liabilities, if any, which may be applicable to FEC employees. Reporting such

amounts is the responsibility of the Office of Personnel Management. The portion of the current and 

estimated future outlays for CSRS and FERS not paid by the FEC is in accordance with Statement 

of Federal Financial Accounting Standards (SFFAS) No. 5, Accounting for Liabilities of the Federal 

Government, and is included in the FEC's financial statements as an imputed financing source.

Commitments and 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. SFFAS No. 5, as amended by SFFAS No. 12, Recognition of Contingent 

Liabilities Arising from Litigation, contains the criteria for recognition and disclosure of 

contingent liabilities. A contingency is recognized in the financial statements when a past event or 

exchange transaction has occurred, a future outflow or other sacrifice of resources is probable and

the future outflow or sacrifice of resources is measurable. A contingency is disclosed in the footnotes 

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. In other words, 

contingent losses that are assessed as probable and measurable are accrued in the financial 

statements. Losses that are assessed to be at least reasonably possible are disclosed in the notes.

According to OMB Circular A-136, as revised, in addition to the contingent liabilities required by 

SFFAS No. 5, the following commitments should be disclosed: 1) an estimate of obligations related

to cancelled appropriations for which the reporting entity has a contractual commitment for payment; 

and 2) amounts for contractual arrangements which may require future financial obligations. The 

FEC does not have commitments related to cancelled appropriations or amounts for contractual 

arrangements that would require future financial obligations.

Revenues and Other Financing Sources

Annual Appropriation

The FEC received all of its funding through an annual appropriation as provided by Congress. 

Additionally, the FEC received funding through reimbursement for services provided to other 

Federal agencies. Services performed for other Federal agencies under reimbursable agreements are
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financed through the account providing the service and reimbursements are recognized as revenue 

when earned.

Imputed Financing Sources

In accordance with OMB Circular A-136, as revised, 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 (SNC). 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, as described above.

Statement of Net Cost

Net cost of operations is the total of the FEC’s expenditures. The presentation of the statement is 

based on the FEC’s strategic plan, which presents one program that is based on the FEC’s 

mission and strategic goal. The program that reflects this strategic goal is to administer and enforce 

the Federal Election Campaign Act efficiently and effectively.

Net Position

Net position is the residual difference between asset and liabilities and consists of unexpended 

appropriations and cumulative results of operations. Unexpended appropriations include the portion

of the FEC’s appropriations represented by undelivered orders and unobligated balances. 

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 cancelled, five

years after the appropriations expire. Cumulative results of operations represent the excess of 

financing sources over expenses since inception.

Statement of Custodial Activity

The Statement of Custodial Activity summarizes collections transferred or transferable to Treasury 

for miscellaneous receipts, fines and penalties assessed by the FEC. These amounts are not available 

for FEC operations, and accordingly, are reported as custodial revenue.

Use of Estimates

The preparation of the accompanying financial statements in accordance with GAAP requires 

management to make certain estimates and assumptions that directly affect the reported amounts of 

assets, liabilities, revenues and expenses. Actual results could differ from these estimates.

Classified Activities

Accounting standards require all reporting entities to disclose that accounting standards allow 

certain presentations and disclosures to be modified, if needed, to prevent the disclosure of classified 

information. The FEC has no classified activities. 
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Note 2 Non-Entity Assets

Non–entity assets, which primarily represent amounts due to the FEC for fines and penalties on 

those that violated the requirements of the Federal Election Campaign Act, consisted of the 

following as of September 30, 2019 and September 30, 2018:
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Note 3 Fund Balance with Treasury

Fund Balance with Treasury consisted of the following as of September 30, 2019 and September 30, 

2018:

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 that are no longer available to 

incur new obligations. Obligated balances not yet disbursed include amounts designated for payment 

of goods and services ordered but not received, or goods and services received but for which payment 

has not yet been made.
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Note 4 - Accounts Receivables, Net

All accounts receivable are with the public and consisted of the following as of September 30, 

2019 and September 30, 2018:

Non-Entity receivables consist of civil penalties and administrative fines assessed by the FEC 

through its enforcement processes or conciliation agreements reached with parties. The FEC has three 

offices that administer the penalties: the Office of General Counsel (OGC); the Office of 

Administrative Review (OAR); and the Office of Alternative Dispute Resolution (ADR). Each office

has a distinct role in the enforcement and collection process. The allowance is based on the

historical rate of collection and an overall assessment of the debtor’s willingness and ability to pay.

Delinquent debts are referred to Treasury in accordance with the Debt Collection Improvement Act 

of 1996. The terms of the agreement between the FEC and the parties establish the conditions for 

collection.
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Note 5 General Property and Equipment, Net 

General Property and Equipment (P&E) is reported at acquisition cost. The capitalization threshold 

is established at $25,000 and a useful life of two or more years. For bulk purchases, items are 

capitalized when the individual useful lives are at least two years and have an aggregate

value of $250,000 or more. Acquisitions of P&E that do not meet the capitalization criteria are 

recorded as operating expenses.

General P&E consists of items that are used by the FEC to support its mission. Depreciation or 

amortization on these assets is calculated using the straight-line method with no salvage value. 

Depreciation or amortization begins the day 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.

Effective FY 2017, the estimated useful life of assets such as office furniture and motor vehicles is 

five years. The estimated useful life of assets such as office equipment, IT equipment, IT software, 

telecommunications equipment, and audio/visual equipment is three years. 

The office building in which the FEC operates is leased through the General Services 

Administration (GSA) under an occupancy agreement, which manages the lease agreement between

the Federal Government and the commercial leasing entity. The FEC is billed by GSA for the leased

space based upon estimated lease payments made by GSA plus an administrative fee. The cost of

the office building is not capitalized. The costs of any leasehold improvements, which are managed 

through GSA, are financed with FEC appropriated funds. Construction costs of $25,000 or more

are accumulated as construction in progress until completion and then are transferred and

capitalized as a leasehold improvement. Leasehold improvements are amortized over the lesser of 

five years or the remaining life of the lease term.

The internal use software development and acquisition costs capitalization threshold changed as a

result of a new policy that was implemented in FY 2011. Internal use software development and

acquisition costs of $250,000 are capitalized as software in development until the development

stage is completed and the software is tested and accepted. At acceptance, costs of software in 

development are reclassified as internal use software costs and amortized using the straight-line

method over an estimated useful life of three years. Purchased commercial software that does not

meet the capitalization criteria is expensed. In addition, enhancements which do not add significant 

new capability or functionality are also expensed.

The general components of capitalized property and equipment, net of accumulated depreciation or

amortization, consisted of the following as of September 30, 2019 and September 30, 2018, 

respectively:
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Note 6 Liabilities Not Covered by Budgetary Resources 

Liabilities Not Covered by Budgetary Resources consisted of the following as of September 30, 

2019 and September 30, 2018:

Beginning FY 2018, the FEC entered into a new lease agreement for its office building that provided 

a rent abatement of $8,943,504, which covers the equivalent of 22 months of rent. Consistent with 

generally accepted accounting principles, the FEC has recorded rent abatement as deferred rent, 

which is amortized over the life of the ten-year lease.

The FEC accrued a liability related to the Federal Employees’ Compensation Act as of September 30, 

2019 and September 30, 2018. 

Liabilities for Advances and Prepayments consist of unearned revenue from registration fees 

collected for the Regional Campaign Finance Conferences. As part of its program to encourage 

voluntary compliance with the Federal Election Campaign Act, the Federal Election Commission 

hosts educational conferences throughout the country. The FEC has received additional reimbursable 

authority for FY 2019 for conferences.
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Note 7 Other Liabilities 

As of September 30, 2019, components of amounts reported on the Balance Sheet as Other 

Intragovernmental Liabilities and Other Liabilities along with a categorization of current versus 

long-term are as follows: 
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Note 8 Commitments and Contingencies

As of September 30, 2019, in the opinion of the FEC’s OGC, the FEC was not party to any legal 

actions which result in a probable, measurable future outflow of resources that require recognition in 

the financial statements. However, the FEC was party to legal actions which could result in losses 

that are at least reasonably possibly. Furthermore, there are cases where amounts have not been 

accrued or disclosed because the amounts of the potential loss cannot be estimated or the likelihood 

of an unfavorable outcome is considered remote. 

As of September 30, 2018, the FEC was not party to any legal action that required recognition.

Contingent Loss Table

Accrued 

Liabilities

Estimated Range of Loss

Lower End Upper End

As of September 30, 2019

Legal Contingencies:

Probable $ - $ - $ -

Reasonably Possible $ - $ 255,401 $ 255,401

As of September 30, 2018

Legal Contingencies:

Probable $ - $ - $ -

Reasonably Possible $ - $ - $ -
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Note 9 Leases

The FEC did not have any capital leases as of September 30, 2019 or September 30, 2018. The FEC 

has a non-cancellable operating lease for its office space through November 30, 2032.

As contained in the FEC’s Occupancy Agreement with the General Services Administration (GSA), 

as amended July 30, 2019, future payments under the operating lease are as follows:

As per the terms of the lease agreement, the FEC was granted a total of $8,943,504, or 22 months, in 

free rent from the lessor. Per the FEC’s policy, the total free rent will be amortized as deferred rent 

over the life of the lease.

The table above represents the actual cash outlays for rent payments as contained in the FEC’s 

Occupancy Agreement with GSA, and does not include the amortized Deferred Rent referenced 

above.
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Note 10 Statement of Net Cost 

The FEC’s costs are consolidated into one program, “Administering and Enforcing the FECA,” and 

consisted of the following as of September 30, 2019 and September 30, 2018, respectively:

Costs incurred for goods and services provided by other Federal entities are reported in the full costs 

of the FEC’s program and are identified as “intragovernmental.” The “intragovernmental earned 

revenue” is primarily attributed to the Deputy Inspector General servicing a Federal agency on a 

reimbursable basis pursuant to the Inspector General Act. All other costs are identified as “with the 

public.” 
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Note 11 Inter-Entity Costs

The FEC recognizes certain inter-entity costs for goods and services that are received from other 

Federal entities at no cost or at a cost less than the full cost. Certain costs of the providing entity that 

are not fully reimbursed are recognized as imputed cost and are offset by imputed revenue. Such 

imputed costs and revenues relate to employee benefits and claims to be settled by the Treasury 

Judgement Fund. The FEC recognizes as inter-entity costs the amount of accrued pension and postretirement benefit expenses for current employees. The assets and liabilities associated with such 

benefits are the responsibility of the administering agency, OPM. For the periods ended September 

30, 2019 and 2018, respectively, inter-entity costs were as follows:

2019 ` 2018

Office of Personnel Management $ 2,887,867 $ 2,401,397

Total Imputed Financing Sources $ 2,887,867 $ 2,401,397
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Note 12 Explanation of Differences between the Statement of Budgetary Resources and 

the Budget of the U.S. Government

The Statement of Budgetary Resources (SBR) compares budgetary resources with the status of those 

resources. For the year ended September 30, 2019, budgetary resources were $75,551,616 and net 

outlays were $64,987,148. For the year ended September 30, 2018, budgetary resources were 

$80,846,191 and net outlays were $74,144,210.

Apportionment Categories of Obligations Incurred

The FEC receives apportionments of its resources from OMB. Apportionments are for resources that 

can be obligated without restriction, other than to be in compliance with legislation for which the 

resources were made available.

For the years ended September 30, 2019 and September 30, 2018, direct obligations incurred 

amounted to $69,100,270 and $77,410,821, respectively. For the years ended September 30, 2019 

and September 30, 2018, reimbursable obligations incurred amounted to $132,264 and $544, 

respectively.

Comparison to the Budget of the United States Government

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). The Budget that will include FY 2019 actual budgetary execution information 

is scheduled for publication in February 2020, which will be available through OMB’s website at 

http://www.whitehouse.gov/omb/budget. Accordingly, information required for such disclosure is 

not available at the time of publication of these financial statements.

Balances reported in the FY 2018 SBR and the related President’s Budget reflected the following:

The difference between the Statement of Budgetary Resources and the Budget of the United States 

Government for budgetary resources is primarily due to expired unobligated balances. The differences 

for obligations incurred and net outlays are due to rounding.
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Note 13 Custodial Revenues and Liability 

The FEC uses the accrual basis of accounting for the collections of fines, penalties and miscellaneous 

receipts. The FEC’s ability to collect fines and penalties is based on the responsible parties’ 

willingness and ability to pay:

The Custodial Liability account represents the amount of custodial revenue pending transfer to 

Treasury. Accrual adjustments reflected on the Statement of Custodial Activity represent the 

difference between the FEC's opening and closing accounts receivable balances. Accounts receivable 

are the funds owed to the FEC (as a custodian) and ultimately to Treasury. The accrual adjustment 

for civil penalties is composed of a net increase of approximately $119,000 for FY 2019 and a net 

decrease of approximately $186,000 for FY 2018, respectively. The accrual adjustment for 

administrative fines is composed of a net decrease of approximately $74,000 in FY 2019 and a net 

decrease of approximately $58,000 in FY 2018, respectively.
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Note 14 Undelivered Orders at the End of the Period

For Fiscal Year 2019, Unpaid Undelivered orders were $16,582,115, of which $3,331,937 were 

Federal and $ 13,250,178 were non Federal. As of September 30, 2019 there were no Fiscal Year 

2019 Paid Delivered Orders.

For Fiscal Year 2018, Unpaid Undelivered Orders were $12,059,857, of which $1,763,481 were 

Federal and $10,296,376 were non Federal. As of September 30, 2018 there were no Fiscal Year 

2018 Paid Delivered Orders.
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Note 15 - Reconciliation of Net Cost to Net Outlays

Budgetary and financial accounting information differ. Budgetary accounting is used for planning 

and control purposes and relates to both the receipt and use of cash, as well as reporting the federal 

deficit. Financial accounting is intended to provide a picture of the government's financial operations 

and financial position so it presents information on an accrual basis. The accrual basis includes 

information about costs arising from the consumption of assets and the incurrence of liabilities. The 

reconciliation of net outlays, presented on a budgetary basis, and the net cost, presented on an accrual 

basis, provides an explanation of the relationship between budgetary and financial accounting 

information. The reconciliation serves not only to identify costs paid for in the past and those that 

will be paid in the future, but also to assure integrity between budgetary and financial accounting. 

The analysis below illustrates this reconciliation by listing the key differences between net cost and 

net outlays. 
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SECTION III – Other Information
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Inspector General’s Statement on FEC Management and Performance 

Challenges
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Management’s Response to the Office of Inspector General’s Statement on the 

Federal Election Commission’s Management and Performance Challenges 13

November 7, 2019

In its Statement on the FEC’s Management and Performance Challenges (“Statement”), the Office of 

the Inspector General (“OIG”) identified five overarching management and performance challenges 

for inclusion in the FEC’s Agency Financial Report for Fiscal Year 2019. Management’s response to 

the OIG statement is below.

Challenge 1: Lack of a quorum

On September 1, 2019, the FEC began working without a quorum of four Commissioners.

Management agrees that the present lack of a quorum presents challenges for agency staff and 

managers. In the agency’s Enterprise Risk Profile, management has listed the potential lack of quorum 

as a very high risk since FY 2018. 

While the Federal Election Campaign Act of 1971, as amended (the Act), requires an affirmative vote 

by four Commissioners to make decisions in many areas, including regulations, advisory opinions, 

audit matters and enforcement, the Commission remains open for business. Staff continues to further 

the agency’s vital mission of administering the nation’s campaign finance laws.

The requirements of the Act and Commission regulations remain in effect, and political committees 

and other filers must continue to disclose their campaign finance activity to the Commission on the 

regular schedule. FEC staff remains ready to help committees and the public understand and comply 

with the law, process and review committee reports including issuing Requests for Additional 

Information, and provide public access to campaign finance data. While the Commission cannot take 

action on many legal matters, staff continues to litigate ongoing court cases, process new enforcement 

complaints and responses, conduct audits that were previously authorized by the Commission, and 

investigate matters previously authorized by the Commission.

Commission Directive 10, Section L sets forth the rules of procedure to be followed when the 

Commission has fewer than four sitting members and includes a list of matters on which the 

Commission may still act. These include notices of filing dates, non-filer notices, debt settlement 

plans, administrative terminations, and appeals under the Freedom of Information and Privacy Acts. 

The Commission intends to comply with the statutory requirement set forth at 52 USC §30106(d) that 

the Commission meet at least once each month.

Challenge 2: Improve IT Governance to prevent external threats into FEC Systems

The FEC secures the agency’s infrastructure and prevents intrusions through a holistic cybersecurity 

program led by the Chief Information Security Officer (CISO). The FEC’s overarching strategy to 

protect the security and privacy of its systems and network begins with the adoption of the National 

Institute of Standards and Technology (NIST) Risk Management Framework and NIST IT security 

control “best practices.” NIST Special Publication 800-37 2 – Risk Management Framework for 

 13 Management consists of the agency’s senior managers, including the Staff Director, General Counsel and Chief Financial Officer. 
93

Information Systems and Organizations,” identifies seven steps essential to the successful execution 

of the risk management framework (RMF):

• Prepare to execute the RMF from an organization- and a system-level perspective by 

establishing a context and priorities for managing security and privacy risk. 

• Categorize the system and the information processed, stored, and transmitted by the system 

based on an analysis of the impact of loss.

• Select an initial set of controls for the system and tailor the controls as needed to reduce risk 

to an acceptable level based on an assessment of risk. 

• Implement the controls and describe how the controls are employed within the system and 

its environment of operation. 

• Assess the controls to determine if the controls are implemented correctly, operating as 

intended, and producing the desired outcomes with respect to satisfying the security and 

privacy requirements. 

• Authorize the system or common controls based on a determination that the risk to 

organizational operations and assets, individuals, other organizations, and the Nation is 

acceptable. 

• Monitor the system and the associated controls on an ongoing basis to include assessing 

control effectiveness, documenting changes to the system and environment of operation, 

conducting risk assessments and impact analyses, and reporting the security and privacy 

posture of the system. 

The FEC currently employs this continuous monitoring and ongoing authorization approach to assess 

the risk to systems and networks and allow the authorizing official to determine whether that risk is 

acceptable. Three of the FEC’s major systems follow the formal Authority to Operate (ATO) process: 

the General Support System, the FEC website and the FEC’s eFiling system.

Robust Security Architecture

As a result of, and in support of, the RMF, the FEC’s Office of the Chief Information Officer (OCIO) 

continues to take steps to implement a robust security architecture. For example, in partnership with 

the Department of Homeland Security (DHS), Massachusetts Institute of Technology and the Pacific 

Northwest National Laboratory, the OCIO has collaborated with FEC stakeholders and technical 

experts to identify, protect, detect, and respond to the impact of known and unknown threats, 

continuously assessing security controls and addressing the remaining residual risks. The FEC has 

also entered into an inter-agency agreement with DHS to participate in the Federal Continuous 

Diagnostics and Mitigation program (CDM) during this fiscal year. CDM will:

• Establish a consistent, government-wide set of information security continuous monitoring 

tools (commercial off-the-shelf) to help protect .gov networks;

• Leverage the buying power of government organizations to achieve savings for cybersecurity 

tools and services;

• Provide dashboards to improve situational awareness and enhance agencies’ ability to identify 

and respond to the risk of emerging cyber threats on the agency and government-wide level;

• Move to stronger risk management, from checklist-based risk determination to automated 

management of assets and performance-based measures; and

• Provide CDM data feeds that report to an agency-level dashboard for display and action. 

Aggregation from agency dashboards feed into a federal-level dashboard to assist in security 

oversight and reporting.
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In addition, the Chief Information Officer signed an agreement in September 2019 with DHS for 

services from the Cybersecurity and Infrastructure Security Agency (CISA). These services include: 

penetration testing, phishing campaign assessment, cyber hygiene scan, and risk and vulnerability 

assessment as well as a Red Team review. FEC OCIO remains deeply committed to ensuring the 

security of our network and systems and to continuing to build upon our partnerships with other 

federal government agencies as we make the best use of our limited resources.

Cloud-First Initiative

The FEC has also adopted a cloud first initiative for security, accessibility and recoverability. Hosting 

systems and data in a cloud environment allows the FEC to utilize our cloud service providers’ 

significant resources that are dedicated to maintaining the highest level of security. In addition, by 

utilizing the cloud service providers’ robust disaster recovery solutions, the FEC eliminates the need 

to maintain physical disaster recovery sites, which are costly to maintain and secure. The FEC has 

already completed the migration of its largest database, the campaign finance database, and its website 

to a cloud environment. The FEC’s new website, launched in May 2017, uses FedRAMP Authorized 

cloud services, which provides a standardized approach to security assessment, authorization, and 

continuous monitoring for cloud products and services. 

Building a Cybersecurity Culture

At the same time, the FEC is working to build a cybersecurity culture among its employees. The first 

line of defense in maintaining the protection and integrity of the agency’s network is the ongoing 

education of employees about their role in identifying and preventing malicious actors—internal or 

external—from compromising the FEC’s systems and networks. Efforts to build a cybersecurity 

culture include steps to educate staff about FEC IT security policies and to ensure staff awareness of 

potential cybersecurity threats, such as phishing scams. The FEC promotes this cybersecurity culture 

in part through annual, mandatory IT security trainings and through year-round communication and 

notices to staff from the CISO.

Earlier this year, FEC OCIO discovered, through its continuous monitoring processes, that an 

employee had violated FEC IT security policies by downloading prohibited software. Because the 

employee’s violation of the FEC’s IT security policies created a security concern, OCIO proactively 

engaged in an agreement with DHS CISA Hunt and Incident Response Team (HIRT) to identify any 

threat actor activity in the agency’s network. HIRT did not identify any threat actor activity. However, 

HIRT recommended the FEC take additional steps to protect its network, including implementing a 

Network Access Control (NAC) solution and reviewing its Trusted Internet Connection (TIC) data 

flow architecture. In response to these recommendations, the FEC is currently reviewing its TIC data 

flow architecture. A NAC solution has been developed for the FEC and will be implemented at the 

FEC in November 2019.

Building Capacity in the Information Security Office

The FEC’s Information Security Office is currently staffed by the CISO and an Information System 

Security Officer (ISSO), who joined the office on October 28, 2019. The FEC is seeking additional 

opportunities to recruit and train talent with cybersecurity expertise. In April 2019, the FEC entered 

into a partnership with the Partnership for Public Service to participate in the Cybersecurity Talent 

Initiative. This selective, cross-sector program, which provides loan forgiveness to top bachelors and 

masters graduates around the United States in exchange for at least two-years’ service at a Federal 

agency, addresses the immediate cybersecurity talent deficiency faced by Federal government 
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agencies by attracting service-minded individuals to government who might not otherwise have 

applied.

Challenge 3: Lack of full-time support to Chief Information Officer (CIO) position and vacancies to 

key leadership positions

Management fully supports the Commission’s ongoing efforts to fill vacant leadership positions and 

to ensure senior leadership roles are filled by separate individuals. The Commission specifically 

addressed this issue in response to questions posed by the Committee on House Administration in a 

letter dated April 1, 2019. In their response, the Commission stated: 

All of the Commissioners agree that the Commission should have separate individuals filling 

the senior leadership roles of Staff Director and CIO. As is true of the General Counsel 

position, the salary limit placed on the Staff Director by the FECA (Level IV of the Executive 

Schedule) means that the Staff Director supervises personnel whose positions, on the GS-15 

and Senior Level pay scales, often provide higher salaries than the statutory salary for the 

Staff Director. The Commission has long recommended that Congress de-link the Staff 

Director’s salary from the Executive Schedule. 

When the Commission promoted our CIO to Staff Director, we allowed him to continue to 

serve as CIO and be compensated at that level rather than absorb a substantial pay cut in order 

to accept the promotion. This has allowed the Commission to maintain consistency in its most 

senior staff leadership.14

Because of the challenges in maintaining consistent senior leadership, the Commission unanimously 

adopted a Legislative Recommendation in 2018, 2017, 2016, 2015, 2014, 2013 and 2011 that urges 

Congress to address this situation. Specifically, the Commission recommends that Congress remove 

the statutory bar on the FEC’s participation in the Senior Executive Service (SES) Program and 

remove the statutory references to the Executive Schedule in FECA with respect to the General 

Counsel and Staff Director, so that those two positions would be compensated under the same 

schedule as the Commission’s other senior managers. This revision would remedy the current 

situation where the Commission’s top managers are compensated at a lower rate than many of their 

direct reports, and would ensure that the Commission can retain highly qualified individuals to serve 

in those positions as well as enable it to remain competitive in the marketplace for Federal executives 

when filing the current vacancy or when further vacancies arise.

During FY 2019, the Commission made four permanent Senior Leadership appointments: Inspector 

General, Chief Financial Officer, Deputy Staff Director for Management & Administration, and 

Associate General Counsel for Policy. Additionally, permanent selections were made for the CISO, 

Deputy CIO for Operations, and Assistant General Counsel for Administrative Law. The Personnel 

Committee has approved the following positions to be filled on a permanent basis: Director of Human 

Resources, Assistant General Counsel for Litigation, and Assistant General Counsel for Enforcement. 

However, due to the lack of a quorum and in accordance with Commission Directive 10, the 

Commission is unable to approve the selections of GS-15 and Senior Level positions. Upon 

resumption of quorum, management anticipates the hiring process for these positions to be quickly 

completed. 

 14 https://www.fec.gov/about/committee-on-house-administration-april-2019-questions/
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Management continues to work with the Personnel and Finance Committees for approval to post and 

hire qualified individuals for all of the identified positions. As the senior leadership vacancies are 

filled, the Personnel and Finance Committees will closely scrutinize any remaining vacancies. In light 

of recent budget guidance from the Office of Management and Budget, prudent management requires 

that close examination is paid to the potential impact of each vacancy that is approved to hire. The 

Personnel and Finance Committees are committed to analyzing the current FEC workforce and 

looking ahead to fiscal years in order to avoid having to implement a reduction in force. 

Challenge 4: Address outstanding OIG audit recommendations

Management continues to address outstanding OIG audit recommendations and has made significant 

progress in FY 2019, closing 18 recommendations during the fiscal year. In late- FY 2019 and the 

first months of FY 2020, management has made additional progress in addressing findings from the 

Inspection of the FEC’s Disaster Recovery Plan and Continuity of Operations Plans, Audit of the 

FEC’s Office of Human Resources, and Audit of the FEC Telework Program, which management 

expects will close out additional recommendations during the next review period. With the 

appointment of a permanent Inspector General, management looks forward to continued discussions 

with the OIG on the remaining recommendations. Management believes these discussions will help 

focus attention on current processes and allow OIG to identify recommendations that align with 

current high-risk areas. 

Challenge 5: Address results from the annual FEVS and 2016 Root Causes of Low Employee Morale 

Study

The Commission understands that the success of its programs depends upon the skills and 

commitment of its staff. On July 26, 2016, the FEC’s OIG released a Morale Study that identified 

causes of low employee morale at the agency, including poor communication, a perceived lack of 

effectiveness by management, and a perceived lack of diversity among managers. Following the 

release of the Morale Study, Commissioners met with staff members one-on-one and in small groups 

to hear their concerns. The FEC Staff Director expanded his open door policy to actively invite staff 

members to meet one-on-one to discuss their suggestions for process improvements, improvements 

to work-life balance issues and innovations. While we recognize there are multiple factors that 

contribute to agency morale, and there are no simple solutions, the Commission has outlined a plan 

based in part on the results of these discussions to continue to foster a workplace that is positive and 

productive, where everyone feels valued. The primary elements of this plan are outlined below and 

were published in the FEC’s FY 2018 Agency Financial Report.

Notably, the FEC has already seen successes in improving morale. In the 2018 Federal Employee 

Viewpoint Survey (FEVS) results, the FEC achieved the second largest gain of all small agencies 

with more than 100 employees. The agency’s improvement earned it the Most Improved Small 

Federal Agency award from the Partnership for Public Service, Best Places to Work in 2018.

The FEC’s 2019 FEVS results show continued positive improvement in key areas. Since 2017, the 

FEC’s results reflect a nine percentage point improvement in the employee engagement index, which 

measures employees’ perception of the agency’s senior leaders, supervisors, and work experience.

The FEC had a five percentage point increase in satisfaction with management communication and a 

ten percentage point increase in satisfaction with agency policies and programs to promote diversity 

in the workplace this year as compared to 2018. In addition, the 2019 results reflect that 88% of 
97

respondents were satisfied with the support, communication, assistance, and guidance that FEC 

leadership provided during the partial government shutdown. Employee satisfaction scores were also 

high across all of the work-life programs, including Health and Wellness (76%), Telework (79%), 

and Alternative Work Schedules (81%).

Employee Morale Plan for FYs 2018 and 2019

Management Performance Plans. The following items have been included in all managers’ 

performance plans beginning with the 2017-18 review year: 

• Engage in efforts to improve morale and foster a culture of trust within the manager’s area of

responsibility, including implementing recommendations from the Morale Study. 

• Engage in efforts to improve as a manager, including training, participation in a 360 Review, 

and development and implementation of a Leadership Development Plan.

• Provide training opportunities (both formal and informal) for all staff. Utilize in-house 

resources including Skillport and OCIO one-on-one trainings.

• Meet with each employee at least one time during the performance year in addition to the sixmonth and annual reviews to get the employee’s input on how things are going and ideas for 

improvement. 

Involving Staff in Preparation for the FEC’s Office Space Move. In the spring of 2018, the FEC 

moved its entire workforce to new office space. Throughout the entire FEC move process, 

management was committed to engaging staff and keeping staff informed. Bargaining Unit members 

served on the Lease Renewal Advisory Team (LRAT) and on each of its subcommittees. 

Management also regularly updated an internal communications portal, “FEC Move,” on the 

agency’s intranet page that provided LRAT meeting minutes, photos of construction progress, and 

news about the move. Management has continued to solicit feedback from staff about the new office 

space and remains responsive to employee concerns.

Management Training. The agency has implemented several training programs targeted to areas 

where improved performance by managers and supervisors can boost employee morale. Trainings 

have been held on topics such as diversity and inclusion, conflict resolution, general management 

skills, and individual leadership training. The Commission also partnered with OPM to deliver onsite supervisory training to managers in the fall of 2018. Moreover, the Commission has included 

the phased implementation of a supervisory training plan as FY 2018 and 2019 performance measures 

in its Annual Performance Report. FY 2020 will bring additional training to the FEC for managers 

including courses on Dealing with Poor Performance and Conduct, Engaging and Encouraging 

Employees, and Coaching and Mentoring for Excellence.

Since September 2016, over half of agency managers have undertaken 360 Reviews conducted by 

OPM and developed leadership plans to develop strengths and improve. Importantly, language has 

been added to all managers’ performance plans requiring that the managers demonstrate a 

commitment to improving morale and documenting steps taken within his or her area of 

responsibility.

Staff Professional Development. Divisions throughout the agency continue to give staff 

opportunities for professional growth. These opportunities include:
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• Office of General Counsel (OGC) detail program with the US Attorney’s Office in the District 

of Columbia, which provides staff attorneys the opportunity to prosecute general 

misdemeanor cases and develop their investigative and litigation skills; 

• OGC staff opportunities to serve details within different divisions in the Office, as well as on 

details to Commissioner’s offices; 

• OCIO staff partnering one-on-one with staff from the General Services Administration’s 18F 

to learn new information technology skills; 

• Reports Analysis Division (RAD) staff on detail to other agency divisions;

• Information Division conducted training sessions for agency staff that participate in outreach 

efforts to learn how to maximize webinar participation; 

• RAD conducted branch-wide professional development months focused on skills training and 

one-on-one coaching sessions available to all staff; 

• Brown-bag lunches and informational sessions where staff can learn about what other 

divisions do and ask questions of senior staff and Commissioners; and 

• Expanded opportunities for eligible FEC staff to compete for detail positions and temporary 

promotions within the agency. 

Diversity in Hiring and Promotion. Agency managers have undertaken a substantial effort to 

expand the diversity of the pool of applicants that apply for FEC positions. Every year OGC attends 

multiple internship fairs hosted by local law schools reaches out to other law schools in the country 

in its ongoing efforts to create diverse internship classes. OGC has also reached out to Black Law 

Students Associations from around the country and continues to reach out to Howard Law School 

about opportunities with its externship program. Agency managers continue to ensure that hiring 

panels are diverse and inclusive, ensuring that multiple viewpoints are present. 

Communication. Management has undertaken efforts to communicate more clearly and consistently 

across the agency as well as within divisions. Each division has been encouraged to hold regular 

division meetings, and senior leaders routinely attend those meetings to answer questions on any 

topic, as schedules have allowed. We have also attempted to be more proactive in getting information 

out. Some divisions are holding brown bag lunch and learn programs and are undertaking other, 

informal activities to give staff and managers a chance to interact. Most importantly, management 

continues to encourage an open door policy for employees to come with any questions or concerns 

at any time. 

In FY 2020, management plans to launch an outreach program to learn from staff how best to build 

on the successes reported in the 2019 FEVS and how to address those employee issues that continue 

to require management’s focused attention. To help ensure the success of this program, the agency’s 

FEVS engagement coordinator will participate in the Partnership for Public Service’s Engagement 

Coordinator Collective to learn strategies for achieving and maintaining high rates of satisfaction 

within our workforce. Additionally, in FY 2020 the Chief Human Capital Officer and Acting Director 

of Human Resources will participate in the Small Agency Human Resources Council and other 

forums targeted for small agencies to leverage partnerships and networking opportunities to learn best 

practices to improve employee morale.
99

Improper Payments Information Act Reporting Details

The Improper Payments Information Act of 2002, as amended by the Improper Payments Elimination 

and Recovery Act of 2010, and Improper Payments Elimination and Recovery Improvement Act of 

2012 requires agencies to review all programs and activities they administer and identify those which 

may be susceptible to significant erroneous payments. In FY 2019, the FEC performed a systematic 

review of its program and related activities to identify processes which may be susceptible to 

significant erroneous payments. Significant erroneous payments are defined as annual erroneous 

payments in the program exceeding both $10 million and 1.5 percent or $100 million of total annual 

program payments. The risk assessment included the consideration of risk factors that are likely to 

contribute to significant improper payments. The risk assessment was performed for the FEC’s only 

program area which is to administer and enforce the Federal Election Campaign Act. 

Risk Assessment

In FY 2019, the FEC considered risk factors outlined in OMB Memorandum M-18-20, Transmittal 

of Appendix C to OMB Circular A-123, Requirements for Payment Integrity Improvement, which 

may significantly increase the risk of improper payments and determined that none are applicable to 

the FEC’s operations. Based on the systematic review performed, the FEC concluded that none of 

its program activities are susceptible to significant improper payments at or above the threshold 

levels set by OMB. 

Recapture of Improper Payments Reporting

The FEC has determined that the risk of improper payments is low; therefore, implementing a 

payment recapture audit program is not applicable to the agency.

IPIA (as amended by IPERA) Reporting Details Agency Response

Risk Assessment Reviewed as noted above. 

Statistical Sampling Not Applicable.*

Corrective Actions Not Applicable.*

Improper Payment Reporting Not Applicable.*

Recapture of Improper Payments Reporting Not Applicable.*

Accountability Not Applicable.*

Agency information systems and other infrastructure Not Applicable.*

Barriers Not Applicable.*

*The FEC does not have programs or activities that are susceptible to significant 

improper payments.
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Civil Monetary Penalties Adjustment for Inflation

The following is the FEC’s table of Civil Monetary Penalties Adjustment for Inflation for FY 2019.

US Code

Statutory Authority; 

Public Law

Year of 

Enactment/Ad

justment 

Other Than 

Pursuant to 

IAA

Name/Description of 

Penalty Latest Annual Inflation of Adjustment

Section in 

Title 11 of 

CFR for 

Penalty 

Update 

Detail

Current Penalty or 

Penalty Formula

52 U.S.C. 

30109(a)(5)(A), 

(6)

Federal Election 

Campaign Act 

Amendments of 1976, 

PL 94-283 sec. 109 1976

Violations of FECA or 

chapters 95 or 96 of title 

26 of U S Code

Civil Monetary Penalties Annual Inflation 

Adjustments, 83 Fed. Reg. 66593 (Dec. 27, 

2018), 

https://sers.fec.gov/fosers/showpdf.htm?docid

=401529 111.24(a)(1) 19,936

52 U.S.C. 

30109(a)(5)(B)

Federal Election 

Campaign Act 

Amendments of 1976, 

PL 94-283 sec. 109 1976

Knowing and willful 

violations of FECA or 

chapters 95 or 96 of title 

26 of U S Code

Civil Monetary Penalties Annual Inflation 

Adjustments, 83 Fed. Reg. 66593 (Dec. 27, 

2018), 

https://sers.fec.gov/fosers/showpdf.htm?docid

=401529 111.24(a)(2)(i) 42,530

52 U.S.C. 

30109(a)(5)(B)

Bipartisan Campaign 

Reform Act of 2002, 

PL 107-155 sec. 

312(a) 2002

Knowing and willful 

contributions in the name 

of another

Civil Monetary Penalties Annual Inflation 

Adjustments, 83 Fed. Reg. 66593 (Dec. 27, 

2018), 

https://sers.fec.gov/fosers/showpdf.htm?docid

=401529 111.24(a)(2)(ii) 69,743

52 U.S.C. 

30109(a)(12)

Federal Election 

Campaign Act 

Amendments of 1976, 

PL 94-283 sec. 109 1980

Making public an 

investigation without 

consent

Civil Monetary Penalties Annual Inflation 

Adjustments, 83 Fed. Reg. 66593 (Dec. 27, 

2018), 

https://sers.fec.gov/fosers/showpdf.htm?docid

=401529 111.24(b) 5,964

52 U.S.C. 

30109(a)(12) 94-283 sec. 109 1980

Knowingly and willfully 

making public an 

investigation without 

consent

Civil Monetary Penalties Annual Inflation 

Adjustments, 83 Fed. Reg. 66593 (Dec. 27, 

2018), 

https://sers.fec.gov/fosers/showpdf.htm?docid

=401529 111.24(b) 14,910

52 U.S.C. 

30109(a)(4)(C)

Treasury and General 

Government 

Appropriations Act, 

2000, PL 106-58 sec. 

640 2003

Late and Non- Filed 

Reports

Civil Monetary Penalties Annual Inflation 

Adjustments, 83 Fed. Reg. 66593 (Dec. 27, 

2018), 

https://sers.fec.gov/fosers/showpdf.htm?docid

=401529 111.43(a)

Penalty formula that 

accounts for (a) level of 

activity in late or non-filed 

report; and (b) if report was 

filed late, (i) the number of 

days late and (ii) the 

number of previous 

violations; or (c) if the 

report was not filed, the 

number of previous 

violations) 

52 U.S.C. 

30109(a)(4)(C)

Treasury and General 

Government 

Appropriations Act, 

2000, PL 106-58 sec. 

640 2003

Election Sensitive Late 

and Non-Filed Reports

Civil Monetary Penalties Annual Inflation 

Adjustments, 83 Fed. Reg. 66593 (Dec. 27, 

2018), 

https://sers.fec.gov/fosers/showpdf.htm?docid

=401529 111.43(b)

Penalty formula that 

accounts for (a) level of 

activity in late or non-filed 

report; and (b) if report was 

filed late, (i) the number of 

days late and number of 

previous violations; or (c) if 

the report was not filed, the 

number of previous 

violations) 

52 U.S.C. 

30109(a)(4)(C)

Treasury and General 

Government 

Appropriations Act, 

2000, PL 106-58 sec. 

640 2000

Late or Non-Filed 

Reports where 

Commission cannot 

calculate amount of 

activity

Civil Monetary Penalties Annual Inflation 

Adjustments, 83 Fed. Reg. 66593 (Dec. 27, 

2018), 

https://sers.fec.gov/fosers/showpdf.htm?docid

=401529 111.43(c) 7,994

52 U.S.C. 

30109(a)(4)(C)

Treasury and General 

Government 

Appropriations Act, 

2000, PL 106-58 sec. 

640 2000

Late or Non-Filed 48 

hour notices

Civil Monetary Penalties Annual Inflation 

Adjustments, 83 Fed. Reg. 66593 (Dec. 27, 

2018), 

https://sers.fec.gov/fosers/showpdf.htm?docid

=401529 111.44

Penalty formula is 146+ 

(.10 x amount of 

contribution(s) not timely 

reported), subject to a 25% 

increase for each prior 

violation
101

Reporting on Internal Controls Assurances

The FEC is responsible for establishing and maintaining effective internal control and financial 

management systems that meet the objectives of the Federal Managers’ Financial Integrity Act of 

1982 (FMFIA), as implemented by OMB Circular A-123, revised, Management’s Responsibility for

Enterprise Risk Management and Internal Control. Internal control is an integral component of 

management to provide reasonable assurance that (1) programs operate effectively and efficiently, 

(2) financial reports are reliable, and (3) programs comply with applicable laws and regulations. The 

FEC conducted its evaluation of internal control in accordance with OMB Circular A-123. Based 

on the results of the Fiscal Year 2019 internal control review, the FEC reported no material 

weaknesses under the FMFIA and is able to provide an unqualified statement of assurance that the 

internal controls and financial management systems meet the objectives of the FMFIA.

The Annual Assurance Statement on Internal Control which was signed by the FEC Chair in 

accordance with OMB Circular A-123 and provided in “Section I.D: Analysis of FEC’s Systems, 

Controls and Legal Compliance” is supported by detailed assurances from each of the FEC’s 

assessable units.

The assessable units that participated in the internal controls review process and provided assurances 

were as follows:

• Office of Communications

• Office of Compliance

• Office of Equal Employment Opportunity

• Office of Management and Administration

• Office of the Chief Financial Officer

• Office of the Chief Information Officer

• Office of the General Counsel

• Office of the Inspector General

Detailed assurances from each of these assessable units were provided to the FEC’s OIG and 

independent auditor to support the single assurance statement signed by the FEC Chair.
102

Fraud Reduction Report

The Fraud Reduction and Data Analytics Act of 2015 (Pub. L. 114-186, 31 USC 3321) requires 

agencies to report on their progress in implementing financial and administrative controls to identify 

and assess fraud risks. In FY 2019, the FEC assessed its progress and can report that it has adequate 

financial and administrative controls in place to identify and assess fraud risks as well as monitor 

and mitigate the potential for fraud and improper payments.

The agency uses OMB Circular A-123, as revised, GAO-14-704G, The Standards for Internal 

Control in the Federal Government (the Green Book), GAO-15-593SP, A Framework for Managing 

Fraud Risks in Federal Programs, and the Association of Government Accountant’s Fraud 

Prevention Tool as a guide for its fraud reduction efforts. 

In FY 2017, the agency created the Senior Management Council (SMC) to monitor and manage risk 

to the agency achieving its operational, strategic, and compliance objectives. The SMC updates the 

agency Risk Profile on an annual basis, facilitates the detection and remediation of fraud risk 

throughout the agency, and addresses potential fraud issues during its quarterly meetings. The 

agency Risk Profile can be found in Section I, Management’s Discussion and Analysis, under Risk 

Identification and Mitigation. In addition, the SMC oversees the agency’s annual Internal Control 

Review (ICR) process which is based on GAO’s Green Book. As part of the ICR, each program 

office conducts an evaluation of fraud risk, documents controls in place, and reports on mitigating 

activities.

The FEC uses a risk-based approach to design and implement controls. It has controls in place to 

address identified fraud risks related to payroll, procurement, information technology and security, 

asset safeguards, and purchase and travel cards. The agency does not issue beneficiary payments or 

grants. 

Financial and administrative controls in place to monitor and mitigate potential fraud include 

documented system authorization procedures, manager oversight and approval of transactions, and 

separation of duties. Financial activity is tracked, monitored, and reviewed or reconciled on a 

periodic (monthly or quarterly) basis. The agency utilizes resources such as Treasury’s Do Not Pay 

system, GSA’s System for Award Management (SAM), and the Internal Revenue Service’s 

Taxpayer Identification Number (TIN) Match Program to facilitate data analytics. To safeguard 

assets, the FEC has tracking processes in place, conducts a biannual physical inventory count, and 

maintains equipment in a secure location. The FEC has comprehensive controls in place to address 

information technology and security fraud risks to include automated system controls. 

Payroll is the largest expenditure for the agency, with salaries and benefits constituting sixty-nine 

(69) percent of the FEC’s costs. Payroll is tested for improper payments under the Improper 

Payments Elimination and Recovery Act (IPERA). Improper Payments Act reporting details can be 

found in Section III of the AFR under Other Information. 

Finally, the FEC works closely with the OIG to identify and address fraud. The FEC had no reported 

instances of fraud in FY 2019. 
103

APPENDIX 

List of Acronyms

AFR Agency Financial Report

AO Advisory Opinion

APR Annual Performance Report

ASD Administrative Services Division

CFR Code of Federal Regulations

CSRS Civil Service Retirement System

CY Calendar Year

DCIA Debt Collection Improvement Act of 1996

DOL Department of Labor

EEO Equal Employment Opportunity

ERM Enterprise Risk Management

FAR Financial Audit Report

FASAB Federal Accounting Standards Advisory Board

FBWT Fund Balance with Treasury

FEC Federal Election Commission

FECA Federal Election Campaign Act

FERS Federal Employees' Retirement System

FMFIA Federal Managers' Financial Integrity Act

FRAE Further Revised Annuity Employees

FRDAA Fraud Reduction and Data Analytics Act

FY Fiscal Year

GAAP Generally Accepted Accounting Principles

GSA General Services Administration

IG Inspector General

IPERA Improper Payments Elimination and Recovery Act

IPERIA Improper Payments Elimination and Recovery Improvement Act

IPIA Improper Payments Information Act

MD&A Management's Discussion and Analysis

NPRM Notices of Proposed Rulemaking

NTEU National Treasury Employee Union

OAR Office of Administrative Review

OCFO Office of the Chief Financial Officer

OCIO Office of the Chief Information Officer

OGC Office of General Counsel

OHR Office of Human Resources

OMB Office of Management and Budget
104

OPM Office of Personnel Management

OSD Office of the Staff Director

P&E Property and Equipment

PPA Prompt Payment Act

RAD Reports Analysis Division

RAE Revised Annuity Employees

SBR Statement of Budgetary Resources

SCA Statement of Custodial Activity

SFFAS Statement of Federal Financial Accounting Standards

SMC Senior Management Council

SNC Statement of Net Cost

SSAE Statements on Standards for Attestation Engagements

TSP Thrift Savings Plan