February 10, 2021 

MEMORANDUM 

To: The Commission 

Through: Alec Palmer 

Staff Director 

From: Patricia C. Orrock 

Chief Compliance Officer 

Dayna C. Brown 

Acting Assistant Staff Director 

Audit Division 

Nicole Burgess 

Audit Manager 

By: Chris Carrell 

Lead Auditor 

Subject: Audit Division Recommendation Memorandum on the 

Grassroots Victory PAC (A19-14) 

Pursuant to Commission Directive No. 70 (FEC Directive on Processing Audit Reports), 

the Audit staff presented the Draft Final Audit Report (DFAR) to the Grassroots Victory 

PAC (GVP) on October 14, 2020 (see attachment). In response to the DFAR, GVP 

requested an audit hearing on November 6, 2020 and the Commission granted the request 

on November 30, 2020. The audit hearing was held on January 28, 2021. 

This memorandum provides the Audit staff’s recommendation for the finding outlined in 

the DFAR. 

In response to the DFAR, GVP provided additional information, as noted below. 
 

 

 

 

 

 

 

 

2 

Misstatement of Financial Activity – Increased Activity 

In response to the DFAR, GVP stated it twice asked the Audit staff to explain their 

choice to work from the original reports rather than the amended reports that were 

on the public record before the audit began. GVP reiterated that it identified 

undisclosed disbursements and amended its disclosure reports in August 2018 and 

indicated that the finding is unwarranted since GVP corrected its disclosure reports 

prior to the audit notification letter. 

At the audit hearing, GVP counsel stated that at the time the audit notification letter 

was sent in October 2019, there was no misstatement of its financial activity within 

its filings on the public record because it had corrected its reports on its own volition 

in August 2018. Counsel further asserted that the Audit staff incorrectly relied on 

the Misstatement of Financial Activity guidelines within its Materiality Thresholds, 

rather than the Increased Financial Activity guidelines, and addressed the differing 

possibilities for referral that exists between the two guidelines. Counsel ultimately 

requested that the Commission remove the words “Misstatement of Financial 

Activity” from the title of the finding. 

As noted during the audit hearing, the Commission has consistently disclosed 

increased activity findings as a sub-category of misstatements of financial activity. 

Additionally, the Audit staff followed all aspects of the Increased Financial Activity 

review, as outlined in the Commission-approved Materiality Thresholds. As such, 

the Audit staff recommends that the Commission find that GVP understated 

disbursements by $106,674 on the original reports filed over the two-year period 

ending December 31, 2018. 

The Office of General Counsel has reviewed this memorandum and concurs with the 

recommendation. 

If this memorandum is approved, the Proposed Final Audit Report will be prepared and 

circulated within 30 days of the Commission’s approval. 

If this Audit Division Recommendation Memorandum is not approved on a tally 

vote, Directive No. 70 states that the matter will be placed on the next regularly 

scheduled open session agenda. 

Documents related to this audit report can be viewed in the Voting Ballot Matters folder. 

Should you have any questions, please contact Nicole Burgess or Chris Carrell at 694-1200. 

Attachment: 

- Draft Final Audit Report of the Audit Division on the Grassroots Victory PAC 

cc: Office of General Counsel 
 

 

 

Draft Final Audit Report of the 

Audit Division on the Grassroots 

Victory PAC 

(January 1, 2017 - December 31, 2018) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that 

is required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.1  The audit 

determines whether the 

committee complied with 

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

About the Committee (p. 2) 

The Grassroots Victory PAC is a non-qualified, non-connected 

political action committee headquartered in Washington, DC. For 

more information, see the chart on the Committee Organization p. 

2. 

Financial Activity (p. 2) 

· Receipts 

o Contributions from Individuals $ 612,987 

o Contributions from Other 

Political Committees 5,000 

o Offsets to Operating 

Expenditures 26 

Total Receipts $ 618,013 

· Disbursements 

o Operating Expenditures $ 36,852 

o Contributions to Federal 

Committees 110,000 

o Independent Expenditures 8,974 

o Contribution Refunds 8,129 

o Other Disbursements 334,999 

Total Disbursements $ 498,954 

Finding and Recommendation (p. 3) 

· Misstatement of Financial Activity – Increased Activity 

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

Audit Division on the 

Grassroots Victory PAC 

(January 1, 2017 – De cember 31, 2018) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 1 

Scope of Audit 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summary 

Finding and Recommendation 3 

Part IV. Finding and Recommendation 

Misstatement of Financial Activity – Increased Activity 4 
1 

Part I 

Background 

Authority for Audit 

This report is based on an audit of the Grassroots Victory PAC (GVP), undertaken by the Audit 

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

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

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

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

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

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

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

§30111(b). 

Scope of Audit 

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

as a result, this audit examined: 

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

2. the consistency between reported figures and bank records; 

3. the completeness of records; and 

4. other committee operations necessary to the review. 
 

 

2 

Part II 

Overview of Committee 

Committee Organization 

Important Dates 

· Date of Registration February 8, 2016 

· Audit Coverage January 1, 2017 - December 31, 2018 

Headquarters Washington, DC 

Bank Information 

· Bank Depositories One 

· Bank Accounts One checking account 

Treasurer 

· Treasurer When Audit Was Conducted Eleanor Collinson 

· Treasurer During Period Covered by Audit Eleanor Collinson (5/17/18-Present), 

Shelbi Warner (2/8/16-5/16/18) 

Management Information 

· Attended FEC Campaign Finance Seminar Yes 

· Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand @ January 1, 2017 $ 28,409 

Receipts 

o Contributions from Individuals 612,987 

o Contributions from Other Political 

Committees 5,000 

o Offsets to Operating Expenditures 26 

Total Receipts $ 618,013 

Disbursements 

o Operating Expenditures 36,852 

o Contributions to Federal Committees 110,000 

o Independent Expenditures 8,974 

o Contribution Refunds 8,129 

o Other Disbursements 334,999 

Total Disbursements $ 498,954 

Cash on hand @ December 31, 2018 $ 147,468 
3 

Part III 

Summary 

Finding and Recommendation 

Misstatement of Financial Activity – Increased Activity 

A comparison of GVP’s bank activity with its original reports filed with the Commission 

revealed that disbursements were understated by $106,674 for calendar years 2017 and 

2018. In response to the Interim Audit Report recommendation, GVP stated that the 

report should be modified to reflect that the reports on file when the audit began 

accurately disclosed their financial activity. (For more detail, see p. 4.) 
4 

Legal Standard 

A. Reporting Requirements. All political committees other than authorized 

committees of a candidate shall file either: 

· Quarterly reports. 52 U.S.C. § 30104(a)(4)(A); or 

· Monthly reports in all calendar years shall be filed no later than the 20th day after 

the last day of the month and shall be complete as of the last day of the month, 

except that, in lieu of filing the reports otherwise due in November and December 

of any year in which a regularly scheduled general election is held, a pre-general 

election report shall be filed in accordance with 52 U.S.C. § 30104(2)(A)(i), a 

post-general election report shall be filed in accordance with 52 U.S.C. § 

30104(2)(A)(ii), and a year-end report shall be filed no later than January 31 of 

the following calendar year. 52 U.S.C. §30104(a)(4)(B) 

B. Contents of Reports. Each report must disclose: 

· The amount of cash on hand at the beginning and end of the reporting period; 

· The total amount of receipts for the reporting period and for the calendar year; 

· The total amount of disbursements for the reporting period and for the calendar 

year; and 

· Certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 52 U.S.C. §30104 (b)(1),(2),(3),(4) and 

(5). 

Facts and Analysis 

Part IV 

Finding and Recommendation 

Misstatement of Financial Activity – Increased Activity 

Summary 

A comparison of GVP’s bank activity with its original reports filed with the Commission 

revealed that disbursements were understated by $106,674 for calendar years 2017 and 

2018. In response to the Interim Audit Report recommendation, GVP stated that the 

report should be modified to reflect that the reports on file when the audit began 

accurately disclosed their financial activity. 

A. Facts 

During audit fieldwork, in addition to examining GVP’s most recent reports filed prior to 

the audit notification, the Audit staff compared GVP’s originally filed reports with its 

bank records. The purpose of this additional reconciliation was to identify the degree to 

which GVP had misstated its original filings. 

The Audit staff calculated that GVP understated its disbursements by $106,674 on the 

original reports filed over the two-year period ending December 31, 2018. Most of the 
understatement ($98,342) was due to GVP not reporting any disbursements from May 

2017 through November 2017. GVP subsequently amended its reports to disclose the 

disbursements that took place during this time. 

B. Interim Audit Report & Audit Division Recommendation 

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

and provided the relevant schedule. In response to the exit conference, GVP stated that 

the finding confirms that it had unreported disbursements for calendar years 2017 and 

2018. GVP further stated that it made proactive efforts, prior to Commission action, to 

correct the public record by amending its reports in August 2018 to disclose the 

unreported disbursements. GVP also stated that it is unclear why the Audit staff 

compared its bank activity to its original reports given that GVP amended its reports in 

August 2018. As noted above, the Audit staff compared GVP’s original reports to its 

bank records to identify the degree to which GVP misstated the activity disclosed on its 

original filings. GVP underreported its disbursements by $106,674 between the time the 

original reports were filed on or near their respective due dates and when the amendments 

were filed in August 2018. 

The Interim Audit Report recommended that GVP provide any additional comments it 

deemed necessary with respect to this matter. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report recommendation, GVP stated the auditors found 

no new information that the Committee had not already disclosed to the Commission. 

According to GVP, it was not the audit that “revealed” GVP understated its 

disbursements by $106,674, it was GVP’s proactive response in August 2018. GVP 

explained that, in early 2018 they discovered unreported disbursements for its September, 

October, and November 2017 Monthly reports and amended those reports. To discover 

the source of these discrepancies GVP hired a compliance firm to review its past reports 

and financial activities. This review identified additional undisclosed disbursements as 

well as some previously reported contributions and disbursements that required 

amendment and resulted in GVP amending its reports in August 2018. GVP stated that 

the Interim Audit Report did not explain why the Audit staff worked from their original 

reports rather than their amended reports that were on the public record before the audit 

began. Further, GVP stated the Interim Audit Report should be modified to reflect that 

the GVP accurately disclosed its financial activity on its own volition, through amended 

reports that preceded the audit. 

 

 

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The Audit staff notes that, as highlighted in the Facts section above, it reviewed GVP’s 

original reports and amended reports during the course of the audit. GVP is correct in 

stating that in August 2018, prior to the October 2019 audit notification, it amended its 

disclosure reports to accurately disclose missing financial activity. However, it was 

GVP’s responsibility to accurately and timely disclose all financial activity on the 

respective due date of the required report. As such, the Audit staff maintains that GVP’s 

original reports understated its disbursements by $106,674.