MLF005142

FEDERAL ELECTION COMMISSION

May 31, 1996

MEMORANDUM

TO:

FROM:

RON M. HARRIS

PRESS OFFICER

PRESS OFFICE

ROBERT J. COSTA .

ASSISTANT STAFF DIRE TOR

AUDIT DIVISION

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cSUBJECT: PUBLIC ISSUANCE OF THE FINAL AUDIT REPORT ON

UNITED REPUBLICAN FUND OF ILLINOIS, INC. FEDERAL

ELECTION COMMITTEE

Attached please find a copy of the final audit report and

related documents on the United Republican Fund of Illinois,

Inc. Federal Election Committee which was approved by the

Commission on May 17, 1996.

Informational copies of the repo~t have been received by

all parties involved and the report may be released to the

public.

Attachment as stated

cc: Office of General Counsel

Office of Public Disclosure

Reports Analysis Division

FEe Library

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REPORT OfTHE AUDIT DIVISION

ON

United Republican Fund ofDlinois, Inc.

Federal Election Committee

Approved I\lay 17~ 1996

FEDERAL ELECTIO' CO~Il\IISSI0!"

999 F: STREET. !'\.\\'.

\\·ASHI'(;TO~.D.C.
TABLE OF CONTENTS

UNITED REPUBLICAN FUND OF ILLINOIS, INC.

FEDERAL ELECTION COMMITTEE

Page

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Executive Summary

Final Audit Report

Background

Findings

Transmittal to Committee

Chronology

1

3

3

5

17

19
FEDER.\L ELEeTI( )"' (~(),\, , ,ISSI()"

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FINAL AUDIT REPORT

ON

UNITED REPUBLICAN FUND OF ILLINOIS, INC.

FEDERAL ELECTION COMMITTEE

EXECUTIVE SUMMARY

The United Republican Fund of Illinois, Inc. Federal

Election Committee (the Committee) registered with the United

States House of Representatives on April 20, 1972. Based on the

Audit staff's review of Committee activities during the period

covered by the audit, it was determined that for purposes of this

audit the Committee would be considered a non-connected committee

(see 11 CFR S10G.G).

The audit was conducted pursuant to 2 u.s.c. S438(b), which

states that the Commission may conduct audits of any political

committee whose reports fail to meet the threshold level of

compliance set by the Commission.

The findings of the audit were presented to the Committee at

an exit conference held at the completion of fieldwork on

November 6, 1995 and later in an interim audit report. The

Committee's response to those findings are included in this final

audit report.

The following is an overview of the findings contained in

the final audit report.

Apparent Over-funding by the Non-federal Account - 11 CFR

SSI02.5(a) and lOG.G(e). The Audit staff reviewed expenses paid

from federal and non-federal accounts and initially identified

$90,084 in federal expenses that had impermissibly been paid by

the non-federal account between January 1 and December 31, 1992.

That amount was reduced based on Committee documentation

showing that $41,620 of the questioned expenses were actually

non-federal rather than federal expenses. The remaining $48,464,

however, appeared to represent federal expenses paid with

non-federal funds. Those expenses were disclosed as debts owed

to the non-federal account on amended Schedules D (Debts and

Obligations) .

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Schedule H Reporting (Shared Federal/Non-federal Expenses) - 11 CFR SS106.6(d) and (e), 104.10(b), l04.3(b). The Audit staff

identified various disclosure errors relative to the Schedules H

filed by the Committee.

In response to the interim audit report, the Committee

submitted documentation in support of a J0int federal and

non-federal fundraising event and filed an amended Schedule 8-2

(Allocation Ratios) which included revised allocation ratios for

this event. The Committee also filed amended Schedules 8-3

(Transfers from Non-federal Accounts) and Schedules H-4 (Joint Federal/Non-~ederal Activity Schedule) which materially corrected

-he Committee's previous filings.

Misstatement of Financial Activity - 2 U.S.C. SS434(b)

(1),(2) and (4). For 1992, the Committee's reported totals for

receipts and disbursements were overstated by approximately

$23,000 primarily due to the reporting of $15,625 in transfers

made from the federal account to the allocation account, the

over-reporting of a transfer from the non-federal account by

$4,500 and the reporting of an unexplained addition to

disbursements in the amount of $4,500. In response to the

interim audit report, the Committee filed an amendment which

materially corrected these misstatements.

Reporting of Debts and Obligations - 2 u.s.c. S434(b){8} and

11 CFR Sl04.1l. The audit identified 17 debts and obligations,

totaling $11,117, which had not been disclosed as required. In

response to the interim audit report, the Committee filed amended

Schedules D which materially corrected these discrepancies.

Recordkeeping for Contributions - 2 u.s.c. S432(c).

The audit identified 26 contributions, totaling $16,025, which

lacked the required supporting documentation. In response to the

interim audit report, the Committee provided documentation which

the Audit staff determined materially complied with the interim

audit report recommendation.

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MLF005117

A93-89

FEDER.~l ElECTIC)~ C().I\""ISSIO~

REPORT OP '1'RE AUDIT DIVISION

ON

UNITED REPUBLICAN FUND OP ILLINOIS, INC.

PEDERAL ELECTION COMMITTEE

I. Background

A. Audit Authority

This report is based on an audit of the United

Republican Fund of Illinois, Inc. Federal Election Committee (the

Committee) undertaken by the Audit Division of the Federal

Election Commission in accordance with the provisions of the

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

audit was conducted pursuant to Section 438(b) of Title 2 of the

United States Code which states, in part, that the Commission may

conrluct audits and field investigations of any political

committee required to file a report under section 434 of this

title. Prior to conducting any audit under this subsection, the

Commission shall perform an internal review of the 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.

B. Audit Coverage

The audit covered the period from January 1, 1991

through December 31, 1992. The Committee reported a beginning

cash balance at January 1, 1991 of $4,832; total receipts for the

period of 5191,232; total disbursements for the period of

$194,565; and an ending cash balance on December 31, 1992 of

Sl,499.!1

c. Committee Organization

The Committee registered with the United States House

of Representatives on April 20, 1972 and maintains its

headquarters in Chicago, Illinois. The current Treasurer of the

11 All figures in this report have been rounded to the nearest

dollar. The reported receipt and disbursement totals were

overstated (see Finding II.C.).

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Committee is Ms. Deborah D. Dietz. She became Treasurer on

January 27, 1995. The following individuals served as the

Committee Treasurer during the period covered by the audit:

Mr. Michael Ross

Mr. Richard C. Rue

Ms. Joyce Gardner

1/01/91 - 8/02/91

8/03/91 - 4/13/92

4/14/92 - 12/31/92

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Based on the Audit staff's review of Committee

activities during the period covered by the audit, it was

determined that for purposes of this audit the Committee would be

considered a non-connected committee (see 11 CFR §l06.6). At the

exit conference, the Committee Treasurer stated that she agreed

with this determination. To handle its federal finar~cial

activity, the Committee used a federal account and a separate

allocation account. The Committee received contributions from

individuals, a contribution from a poliLical committee, as well

as transfers from a non-federal account for shared expenses.

D. Audit Scope and Procedures

There were several categories covered by this audit

where the scope of our testing was limited due to a lack of

sufficient documentation. We were unable to perform the

substantive testing normally undertaken when reviewing the

following: (1) contributions from individuals (see Finding

II.E.); (2) disbursements (see Finding 11.0.); (3) proceeds from

fundraising events (see Finding II.B.l.); (4) debts and

obligations owed by the Committee (see Finding 11.0.); and,

(5) expens1es associated with transfers from a non-federal account

to the separate allocation account (see Finding II.B.3.).

The audit included testing of the following general

categories:

1. The receipt of contributions or loans in excess of the

statutory lLmi~ations;

2. The receipt of contributions from prohibited sources,

such as those from corporations or labor organizations;

3. Proper disclosure of contributions from individuals,

political committees and other entities, to include the

itemization of contributions when required, as well as,

the completeness and accuracy of the information

disclosed;

4. Proper disclosure of disbursements including the

itemization of disbursements when required, as well as,

the comple~eness and accuracy of the information

disclosed (see Finding II.B.):

5. Proper disclosure of Committee debts and obligations;

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6. Accuracy of total reported receipts, disbursements and

cash balances as compared to Committee bank records

(see Finding II.C.);

7. Adequate recordkeeping for Committee transactions (see

Finding II.E.);

8. Proper reporting and funding of allocable expenses (see

Finding II.A. and B.); and

9. Other audit procedures that were deemed necessary in

the situation.

Unless specifically discussed below, no material

non-compliance was detected. It should be noted that the

Commission may pursue further any of the matters discussed in

this report in an enforcement action.

II. Audit Findings and Recommendations

o A. Apparent Over-funding by the Non-federal Account

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Section 102.5(a)(1)(i) of Title 11 of the Code of ~ederal Regulations states, in part, that if committees which

finance political activity in connection with federal and

non-federal elections establish a separate federal account in a

depository, no transfers may be made to such federal account from

any other accounts maintained by such organization for the

purpose of financing activity in connection with non-federal

elections, except as provided in 11 CFR l06.6(e).

Section 106.6(e)(1) of Title 11 of the Code of Federal

Regulations provides that nonconnected committees that have

established separate federal and non-federal accounts under 11

CFR Sl02.5(a)(1)(i) shall pay the expenses of joint federal and

non-federal activities as follows: (i) pay the entire amount of

an allocable expense from its federal account and transfer funds

from its non-federal account to its federal account solely to

cover the non-federal share of that allocable expense; or (ii)

establish a separate allocation account into which funds from its

federal and non-federal accounts shall be deposited solely for

the purpose paying the allocable expenses of joint federal and

non-federal activities.

Additionally, 11 CFR Sl06.6{e)(1)(B) states that the

committee shall transfer funds from its federal and non-federal

accounts to its allocation account in amounts proportionate to

the federal and non-federal share of each allocable expense.

Section l06.6(e)(2)(iii) of Title 11 of the Code of Federal

Regulations states, in part, that any portion of a transfer from

a committee's non-federal account to its allocation account that

does not meet the requirements of paragraph (e)(2)(ii) of this

section shall be presumed to be a loan or contribution from the

non-federal account to a federal account, in violation of the Act.

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The Committee opened a separate allocation account on

September 11, 1992 pursuant to 11 CFR SI06.6(e)(1)(ii). Prior to

this date, all federal and non-federal operating expenses,

excluding bank service charges, were paid from a non-federal

account; a practice not in accordance with 11 CFR S106.6(e)(l)(i).~/

After September 11, 1992, the majority of payments made from the

non-federal account were either transfers to the allocation

account or direct contributions to non-federal candidates.

The Audit staff identified a fundraising event which,

based on a number of contributor cards entitled "Federal and

State Candidate Reception, t' ~i4"'olved contributions for both

federal and non-federal ~~~D~ses. No documentation was available

relative to the particulaY.~ ~£ this event nor were any records

available relative to any ot~er possible federal/non-federal

fundraising events. As a result, the Audit staff considered all

other expenses administrative and generic voter drive costs.

To determine the correct allocation of administrative

expenses and generic voter drive costs, the Audit staff

calculated the funds expended ratio which is the ratio of funds

spent by the Committee on behalf of federal candidates to funds

spent for all federal and non-federal candidates over the

two-year federal election cycle pursuant to 11 CFR §106.6{c)(1).

The Audit staff then reviewed all expenses paid in 1992

from the non-federal account prior to the opening of the

allocation account and applied the funds expended ratio to

payments considered administrative expenses. As a result, it was

determined that federal expenses totaling $86,746 were paid from

the non-federal account between January 1, 1992 and September 10,

1992. During this time period, the Committee did not follow

either of the two options prOVided for at 11 CFR Sl06.6(e)(1).

Allocable expenses were not initially paid from a federal account

and the Committee had not yet opened an allocation account. The

Committee should have reported these payments as memo entries on

Schedules H-4 (Joint Federal/Non-federal Activity Schedule) (see

Finding 11.8.5).

The Committee disclosed debt owed to the non-federal

account on each of the three FEe disclosure reports covering this

time period. The amounts disclosed by the Committee were

reasonably close to the federal share of allocable expenses as

determined by the Audit staff for these report periods. However,

no transfers were made from the federal accounts to the

non-federal account relative to these expenses and the Committee

discontinued the disclosure of this debt owed to the non-federal

account beginning with the 1992 Post-General report (covering act~vity October 15, 1992 through November 23, 1992).

2/ There was no federal activity during calendar year 1991.

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The Audit staff determined that subsequent to the

opening of the allocation account through December 31, 1992, the

federal portion of e:\'penses paid by the Committee from the

allocation account was $18,963. Since transfers from the federal

account to the allocation account totaled $15,625 during this

period, the Audit staff considered the $3,338 difference as

federal expenses paid with non-federal funds.11

In summary, the Audit staff determined that the federal

portion of shared expenses paid from the non-federal account

totaled $90,084 ($86,746 + $3,338). Photocopies of the

workpapers supporting the $90,084 total were provided to the

Committee at the exit conference. The Committee Treasurer stated

that she understood the analysis and would attempt to demonstrate

that some of the expenses were not shared expenses. She added

that she would reopen a federal account!1 and disclose the amount

owed as a debt to the non-federal account.

In the interim audit report, the Audit staff

recommended that the Committee either demonstrate that the

non-federal account did not over-fund its portion of shared

expenses in the amount of $90,084, or refund the over-funded

amount to the non-federal account. In the event of a refund, the

Audit staff further recommended that the Committee submit

documentation in support of the transaction.

In the Committee's response to the inter~ audit report

the Treasurer stated that certain expenses considered allocable

by the Audit staff were related only to non-federal activities.

The Committee included documentation which demonstrated that

$38,282 of the $86,746 considered by the Audit staff to be the

federal portion of shared expenses paid directly from the

non-federal account were non-federal expenses and therefore not

allocable.

The Treasurer also stated that "[p]revious URF

Treasurers clearly did not understand that only joint expenses

for political, administrative and fundraising were to be paid out

of the separate allocation account. We regret that this

misunderstanding by previous Treasurers resulted in erroneous

reporting. to The Committee also provided documentation

demonstrating that more than $3,338 in expenses paid from the

allocation account were 100% non-federal and therefore not

3/ The Audit staff was unable to test the timing of transfers

from the non-federal account to the separate allocation

account (see Finding II.B.3.)

4/ At the exit conference the Committee Treasurer stated that

the Comm~ttee's federal and allocation accounts were

apparently closed in June 1994 by the previous Treasurer.

No additional information was provided to the Audit staff

concerning why these accounts were closed.

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allocable. Based upon the documentation available during the

audit fieldwork, the Audit staff had initially considered $3,338

in expenses paid from the separate allocation account to have

been ~roperly funded by the non-federal account. In summary,

it now appears that the amount of over-funding by the non-federal

account equaled $48,464 ($90,084 - $38,282 - $3,338)-

No refund was made to the non-federal account, but the

Committee did file amended Schedules 0 (Debts and Obligations) to

several reports disclosing a $48,600 debt owed to the non-federal

account as of December 31, 1992.

B. Schedule H Reporting Irregularities

1. Disclosure of Allocation Ratios on Schedules H-2

Section l06.6(d) of Title 11 of the Code of

Federal Regulations states, in part, that if federal and

non-federal funds are collected by one committee through a joint

activity, that committee shall allocate its direct costs of

fundraising based on the ratio of funds received into its federal

account to its total receipts from each fundraising program or

event.

The Audit staff was aware of at least one joint

federal and non-federal fundraising event based on a number of

contributor cards entitled "Federal and State Candidate

Reception. MNo documentation was available relative to the

particulars of this event nor were any records available relative

to any other possible fundraising events. The Committee should

have filed Schedules H-2 (Allocation Ratios) disclosing the

federal and non-federal allocation ratios for this event and for

any other fundraising events which may have occurred during the

period covered by the audit.

At the exit conference, the Committee treasurer

stated that she had no knowledge of fundraising events occurring

in the audit period since she was not associated with the

Committee at that time. She added that she would attempt to

obtain and provide the Audit staff with the necessary

information.

2. Disclosure of Allocable Activities Funded By

Transfers From the Non-federal Account on

Schedules H-3

Section 104.10{b)(3) of Title 11 of the Code of

Federal Regulations states, in part, that a political committee

that pays allocable expenses in accordance with 11 CFR Sl06.6{e)

shall report each transfer of funds from its non-federal account

to its federal account or to its allocation account for the

purpose of paying such expenses and that in the report covering

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the period in which the transfer occurred, the committee shall

explain in a memo entry the allocable expenses to which the

transfer relates and the date on which the transfer ~as made.

Section 106.6(d)(2) of Title 11 of the Code ~f

~ederal Regulations requires committees that transfer funds from

its non-federal account to its separate allocation account,

following determination of the final cost of each joint federal

and non-federal activity, to itemize in its reports the allocable

activities for which the transferr\~d funds are intended to pay

and further requires that such funds be transferred no more than

10 days before or 60 days after the payments are made to the

vendor.

The Audit staff reviewed the disclosure of all 42

transfers, totaling SI1S r SSO, made from the non-federal account

to the allocation account between OCtober 1, 1992 and December

31, 1992. We determined that the breakdown of the allocable

expenses for 16 of these transfers, totaling $42,600, was not

categorized on Schedules H-3 (Transfers from Non-federal

Accounts) as required.

We were unable to test the timing of transfers

from the non-federal account to the allocation account to

determine if they were made no more than 10 days before or 60

days after the payments were made to the vendor because the

documentation provided did not allow us to identify the expenses

associated with the transfers. It appears that the Committee

transferred monies when funds were needed without documenting the

specific allocable activities as required by 11 CFR

Sl06.6(e)(2)(ii)(A).

A listing of the 16 transfers not disclosed

properly on Schedules H-3 was provided to the Committee at the

exit conference. The Committee Treasurer stated that sh~ wo~..l::'d

file the appropriate amendments to include the missing

information relative to the 16 transfers.

3. Disclosure of Disbursements on Schedules H-4

Section l04.10{b)(4) of Title 11 of the Code of

Federal Regulations states, ~n F3rt, that a political committee

that pays allocable expenses in accordance with 11 CFR §106.6(e)

shall also report each disbursement from its federal account or

its separate allocation accoun~ in payment for a joint federal

and non-federal expense or actiVity. In the report covering the

period in which the disbursement occurred, the committee shall

state the full name and address of each person to whom the

disbursement was made, and the date, amount and purpose of each

such disbursement.

Section l04.3(b}(3)(i)(A) and (B) of Title 11 of

the Code of Federal Regulations stat.es, in part, that "purpose"

means a brief stat.ement or des=ription of why the disbursement

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was made. Examples of statements or descriptions which meet the

requirements include the following: dinner expenses, media,

salary, polling, travel, party fees, phone banks, travel

expenses, travel expense reimbursements, and catering costs.

However, statements or descriptions such as advance, election day

expenses, other expenses, expenses, expense re~ursements,

miscellaneous, outside services, get-out-the-vote and voter

registration would not meet the requirements of 11 CFR

104.3(b)(3) for reporting the purpose of an expenditure.

During the review of disbursements, the Audit

staff noted that the Committee did not provide adequate

disclosure information on Schedules H-4 for 90 items, totaling

$75,856 (43% of the dollar total). The Committee did not

disclose a purpose for 60 of the 90 items and for 26 of the items

disclosed "admin" instead of a purpose as required by 11 CFR

S104.3(b)(3)(i). In addition, the incorrect date was disclosed

for two items and an incomple~e address (no city or state) was

disclosed for two items. The missing information was located in

the Committee's records for 57 of the 90 errors.

A listing of the 90 disbursements not disclosed

properly on Schedules H-4 was provided to the Committee at the

exit conference. The Committee Treasurer stated that she would

file the appropriate amendments to correct the disclosure of

these items.

4 • Disclosure of Expense Classification on

S~hedules H-4

Section 104.10(b)(4) of Title 11 of the Code of

Federal Regulations states, in part, that a political committee

that pays allocable expenses in accordance with 11 CFR Sl06.6(e)

shall also report each disbursement from its federal account or

its separate allocation account in payment for a joint federal

and non-federal expense or activity. If the disbursement

includes payment for allocable costs of more than one activity,

the committee shall itemize the disbursement, showing the amounts

designated for payment of administrative expenses and generic

voter drives, arl~ for each fundraising program or exempt

activity, as described in 11 eFR 106.6(b).

During the revie~ of disbursements, the Audit

staff noted that the Committee did not disclose on Schedules

H-4 ~/ the expense classification (Administrative/Voter Drive,

Fundraising, Exempt or Direct Candidate Support) for 47 items,

totaling $29,375 (21\ of the dollar total). These 47 items were

all disclosed on the 1992 Year End report.

5/ The Committee did not file Schedules H-4 until the 1992

October Quarterly repor~.

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A listing of these disbursements was provided to

the Committee at the exit conference. The Committee Treasurer

:~ated that she would file the appropriate amendments to correct

these items.

5. Discl~~ure of Apparent Shared Expenses Paid from

the Nop-federal Account As Memo Entries on

Schedules H-4

Section 106.6(e)(1) of Title 11 of the Code of

Federal Regulations provides that nonconnected cow~ittees that

have established separate federal and non-federal accounts under

11 CFR Sl02.S(a)(1)(i) shall pay the expenses of joint federal

and non-federal activities as follows: (i) pay the entire amount

of an allocable expense from its federal account and transfer

funds from its non-federal account to its federal account solely

to cover the non-federal share of that allocable expense; or (ii)

establish a separate allocation account into which funds from its

federal and non-federal accounts shall be deposited solely for

the purpose paying the allocable expenses of joint federal and

non-federal activities.

The Committee opened a separate allocation account

0.:'1 September 11, 1992 pursuant to 11 CFR § 106 .6 (e) ( 1) ( ii . Prior

to this date all expenses (federal and non-federal) were ?aid

from a n0n-federal account which did not comply with the

requirements of 11 CFR SI06.6(e)(1). The Audit staff determined

that the federal portion of shared expenses paid from the

non-federal account totaled $86,746 between January 1, 1992 and

September 10, 1992 (see Finding II.A.).

During this time period, the Committee did not

follow either of the two options provided for at 11 CFR

Sl06.6(e)(1). Allocable expenses were not initially paid from a

federal account and the Committee had not yet opened an

allocation account. The Committee should have reported these

payments as memo entries on Schedules H-4.

6. Prohibited Transfers from the Allocation

Account to the Non-federal Account

Section l06.6(e)(1)(ii){C) of Title 11 of the Code

of Federal Regulations states that no funds contained in the

allocation account may be transferred to any other account

maintained by the committee.

On September 18, 1992 and September 22, 1992, the

Committee made $1,000 transfers from the allocation account to

the non-federal account. Letters to the bank signed by the

Committee's Executive D1rector at that time requesting these

transactions were located in the Committee's records, as well as

debit memos from the bank indicating that each $1,000 transfer

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wa. processed. No documentation was available explaining the

reason for these transfers. These transfers did not comply with

11 CFR Sl06.6(e)(1)(ii)(C).

At the exit conference, the Committee Treasurer

stated that she would investigate this matter and provide en

explanation.

In the interim audit report, the Audit staff

recommended that the Committee provide the following information

or corrective amendments:

· Information related to any joint federal and

non-federal fundraising events occurring during the

audit period and file the appropriate Schedules H-2

with the federal/non-federal allocation ratios (see

Finding II.B.1.).

· Amended Schedules H-3 noting the breakdown of the

allocable expenses relative to the 16 transfers,

totaling $42,600, made from the non-federal account

to the allocation account (see Finding 1I.B.2.).

• Amended Schedules H-4 to correct the 90 items,

totaling $75,856, which were disclosed without the

required information or were disclosed albeit with

incorrect information. The Committee should also

provide the missing expense classification

information for the 47 items, totaling $29,975, for

which the expense classification was not designated

by the Committee (see Findings II.B.3. and 4.).

• Amended Schedules H-4 listing as memo entries the

federal portion of shared expenses, totaling $86,746,

paid from the non-federal account between January 1,

1992 and September 10, 1992 (see Finding II.S.S.).

· Evidence that the two $1,000 transfers from the

allocation account to the non-federal account

complied with the requirements of Sl06.6(e)(1)(ii)(C)

(see Finding II.B.6.).

In the Committee's response to the interim audit report

the Treasurer stated that the Committee held a joint fundraising

event on October 24, 1992, a reception for federal and state

candidates, from which funds raised totaled $6,670. She added

that funds totaling $5,060 (76%) were deposited into the federal

account and funds totaling $1,610 (24%) were deposited into the

non-federal account.

Deposit information was provided in support of $2,785

of the funds deposited into the federal account. Since no otheL

deposit information was available relative to this event, the

Treasurer matched the remaining contributor cards from this eve-I·

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to contributions itemized on the Committee's original Schedules A

(Itemized Receipts) and surmised that an additional $2,275 in

funds were deposited into the federal account. The remaining

event cards represented funds totaling $1,610 which she assumed

were deposited into the non-federal account. The Committee filed

an amended Schedule H-2 for the 1992 30 Day post-General report

which included the revised allocation ratios for this event.

The Committee filed amended Schedules H-3 noting the

breakdown of the allocable expenses relative to the 16 transfers,

totaling $42,600, made from the non-federal account to the

allocation account. The Committee also filed amended Schedules

H-4 which included adequate disclosure information relative to 63

of the 90 disbursements noted by the Audit staff as lacking the

required information. The Committee excluded the remaining 21

items from these amendments because most of them were part of the

expenses documented by the Committee as 100% non-federal and

therefore were should not have been paid from the allocation

account or disclosed on Schedules H-4 (see Finding II.A.).

The Committee filed amended Schedules H-4 for the 1992

Year End report which included expense classifications for 36 of

the 47 items noted by the Audit staff as lacking such

information. Seven items were excluded from the amendment

because the Committee documented them as 100% non-federal

expenses in response to Finding II.A. Although not material, the

remaining four items were omitted from the amendment with no

explanation provided.

The Committee also filed amended Schedules H-4 which

included memo entries relative to shared expenses it paid from

its non-federal account prior to opening an allocation account.

These amendments included memo entries relative to $48,464 of the

$86,746 noted by the Audit staff as the federal share of joint

expenses paid from the non-federal account. The $38,282

difference was documented by the Committee as 100% non-federal

and therefore not required to be included as memo entries on the

amendment (see Finding II.A.).

The Treasurer stated in the Committee's response to the

interim audit report that the Committee's former Executive

Director was contacted and queried about the two $1,000 transfers

from the allocation account to the non-federal account and he

responded that he h •••does not recall the reason for the

transfers since it has been nearly four years since this

occurred." She added that the Committee does not dispute that

these transfers occurred but cannot determine a reason for the

transfers.

Pace , -lJ, Approved 5/17/96
c

12

c. Misstatement of Financial Activity

Sections 434(b)(1),(2) and (4) of Title 2 of the United

States Code re~lire a political committee to disclose the amount

of cash on hand at the beginning of each reporting period and the

total amount of all receipts and disbursements fOI each reporting

period and the calendar year.

The Committee filed separate disclosure reports for its

federal and allocation accounts relative to the four reports

covering activity between July 1, 1992 and December 31, 1992.!1

One report should have been filed for each reporting period which

included the activity from both the federal and allocation

accounts.

The Audit staff reconciled the Committee's reported

financial activity to its bank activity for the period January I,

1991 through December 31, 1992 and determined that a material

misstatement occurred relative to reports filed covering 1992

activitY·II

The Committee overstated reported receipts by $23,115.

This overstatement was due to the following: the reporting of

$15,625 in interaccount transfers from the federal account to the

allocation account; the over reporting of a transfer from a

non-federal account by $4,500; and, miscellaneous reporting

errors resulting in a net overstatement of $2,990.

Disbursements were overstated by $23,104. This

overstatement was due to the following: the reporting of $15,625

in interaccount transfers; reporting an unexplained addition to

disbursements in the amount of $4,500; and, miscellaneous

reporting errors resulting in a net overstatement of $2,979.

The Committee Treasurer was made aware of these

discrepancies during the exit conference and agreed to file the

necessary amendment.

In the interim audit report, the Audit staff

recommended that the Committee file a comprehensive amendment

covering 1992 activity to correct the misstatement of financial

activity noted above. An amendment was filed which corrected

these misstatements.

6/ The four reports due for this time period were the October

Quarterly, the 12 Day Pre-General, the 30 Day Post-General

and the Year End.

7/ '10 determine the Committee's total reported activity, the

Audit staff included the activity disclosed on both the

federal and allocat1on account reports for the period July 1,

1992 through December 3l, 1992.

Page
C~

13

D. Reporting of Debts and Obligations

Sectio:1 434(b}(B) of Title 2 of the United States Code

requires that each report shall disclose the amount and nature of

outstanding debts and obligations owed by or to such political

committee. Section 104.11 of Title 11 of the Code of Federal

Regulations states, in part, that debts and obligations owed by

or to a political committee which remain outstanding shall be

continuously reported until extinguished. These debts and

obligations shall be reported on separate schedules together with

a statement explaining the circumstances and conditions under

which each debt and obligation was incurred or extinguished.

During the Audit staff's review of disbursements, the

disclosure of debts and obligations owed by the Committee was

also tested. Although the Committee satisfied the minimum

recordkeeping requirements for disbursements, the Audit staff was

unable to test 78% of these items for compliance with 2 U.S.C.

S434(b)(B) because the Committee had no system for tracking debts

owed and the available documentation was not vendor generated

(such as invoices, receipted bills, etc.). The only debts

disclosed by the Committee were related to amounts owed to the

non-federal account for "Administrative Burden" (see Finding II.A).

The Audit staff had sufficient documentation to test 47

disbursements, totaling $22,452, for compliance with 2 U.S.C.

S434(b)(8). Seventeen of these items, totaling S11,117, were

required to be disclosed as debts but were not.

A listing of the 17 debts and obligations not disclosed

was provided to the Committee at the exit conference. The

Committee Treasurer stated that she would file the appropriate

amendments to correct the disclosure of these items.

In the interim audit report, the Audit staff

recommended that the Committee file amended Schedules 0 (Debts

and Obligations) on a report period basis to correct the 17

errors noted above. The Committee filed amended reports which

materially corrected these errors.

E. Recordkeeping for Contribut~~

Section 432(c)(1),(2), (3) and (4) of Title 2 of the

United States Code requires the treasurer of a political

committee to keep an account of all contributions received by or

on behalf of such political committee: the name and address of

any person who makes any contribution in excess of $50, together

with the date and amount of such contribution by any person; the

identification of any person who makes a contribution or

contributions aggregating more than $200 during a calendar year,

together with the date and amount of any such contribution; and,

the identification of any political committee which makes a

contribution, together with the date and amount of any such

cont.ribution.

Pace 15, Approved 5/17/96
c14

The Audit staff performed a limited review of

contributions using the entries itemized by the Committee on

Schedules A (Itemized Receipts). The Committee itemized 93

contributions, totaling $32,287, in 1992 (91 were from

individuals, 1 was from a political committee and 1 was a loan

from an individual).

The Committee could not produce a computerized file or

a listing of all contributions received during the audit period.

Records made available included some photocopies of contribution

checks, some fundraising event cards apparently filled out by the

contributors and a cash receipts register.

The Audit ~:~ff located documentation which supported

67 of the 93 items, accounting for 50% of the dollar total of

contributions tested for recordkeeping ($16,262/$32,287). No

documentation was located relative to the remaining 26 items,

totaling $16,025. Twenty-five of these items were from

individuals and 1 was from a political committee.

A listing of the 26 contributions which lacked the

required supporting documentation was provided to the Committee

at the exi':" conference. The Committee Treasurer stated that she

would attempt to locate the missing information and submit it to

the Audit staff.

In the interim audit report, the Audit staff

recommended that the Committee submit the missing information for

the 26 contributions noted above. In the COlmmittee' s response to

the interim audit report, the Committee provided microfi1a copies

of the contributors' contribution checks, obtained from the bank,

for 13 of the 26 items. The Committee noted that the bank

informed them that copies were unavailable for four items because

the microfilm had deteriorated. No attempt was made by the

Committee to obtain the missing information relative to the

remaining nine contributions because they were less than $200.

The Audit staff reviewed the documentation provided by

the Committee and concluded that it had materially complied with

the interim audit report recommendation.

Paoe It, Approved 5:17/96
MLFOOS17S

FEDERAL ELECTION COtv1MISSION

'.r)

May 24, 1996

Ms. Deborah D. Dietz, Treasurer

United Republican Fund of Illinois,

Inc. Federal Election Committee

c/o Morris, Rathnau and Dela Rosa

100 W. Monroe St., Suite 1600

Chicago, IL 60603

Dear Ms. Dietz:

Attached please find the Final Audit Report on the

United Republican Fund of Illinois, Inc. Federal Election

Committee. The Commission approved the report on May 17,

1996.

The Commission approved Final Audit Report will be

placed on the public record on May 31, 1996. Should you have

any questions regarding the public release of the report,

please contact the Commission's Press Office a~ (202)

219-4155 or toll-free at (800) 424-9530. Any questions you

have related to matters covered during t~ audit or in the

report should be directed to Marty Favin of the Audit

Division at (202) 219-3720 or at the above toll free number.

Sincerely,

1::4Y:istrAssistant Staff Director

for the Audit Division

Attac~~ent as stated

.. _ " f. \ • 1 ...... " ..

\ l, t 'I ..., .:t t \ \. l~... I'.·"

Page 17, Approved 5/17/96 ;.
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Page 18, approved 5/17/96
CHRONOLOGY

UNITED REPUBLICAN FUND OF ILLINOIS, INC.

FEDERAL ELECTION COMMITTEE

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'f)

c

Audit Fieldwork

Interim Audit Report to

the Committee

Response Received to the

Interim Audit Report

Final Audit Report Approved

10/20/94 -

1/22/96

4/8/96

5/17/96

5/30/95

Page 19, Approved 5/17/96